Stock Code: 603899 Short Name: M&G Corporation
SHANGHAI M&G STATIONERY INC.
Annual Report 2021
Starting Afresh
2021 was a year full of challenges and opportunities for M&G and also was a year whenM&G started afresh once again. Affected by COVID-19 resurgence, "Double Reduction",and weakening domestic expectations, the year 2021 was tough for all of us. Our colleaguesand upstream and downstream partners demonstrated strong resilience and tackled thedifficulties head on. The Company’s "One main body and two wings" businesses maintainedsteady development and solid growth, core competitiveness of the Company continued toimprove. In the past year, every person was remarkable and it was not easy for everyone. Wepushed the boundaries of our self-perception and limits of performance. As we all kow, lifegoes on and business needs to develop. We salute every remarkable M&G colleague!
In 2021, the Company recorded revenue of RMB17.6 billion, an increase of 34%, and a netprofit attributable to the parent company of RMB1.52 billion, an increase of 21%. The year2021 is the beginning of China's 14th Five-Year Plan, and also the first year of M&G's newfive-year strategy. The Company applied new development philosophy to guide high-qualitydevelopment and steadily executed Company's strategy. One important reason underlyingthe Company’s solid and high-quality development is that we have a strong sense of missionand responsibility, and we have been insist on doing the tough but right things for more than3 decades.
In 2022, the international situation is complicated and the COVID-19 pendamic still has along way to go. Some investors are concerned that demographic trends and "DoubleReduction" negatively impact the realization of the Company's new five-year strategy. Webelieve that if you desire something strong enough, you can always work out a way, thereare always new demands in market, which need to be satisfied with innovative products andnew capabilities. The key question is not whether you can or can not, but whether you wantit or not. If you truly aspire to something, you can make the seemingly impossible come true.We see more opportunities in product categories, channel improvement, new businessdevelopment, and international markets. We believe that difficulties and challenges are thetouchstones of a good company, those with stronger management capability and betterbusiness models can excel. We also believe that in the face of difficulties, a strong internal
drive can better unleash our potentials. In addition to having a good "energy, will and spirit",we also keep pace with the times, strive for innovation and embrace change, keep an eye onmacro trends, carbon neutrality, learn from outstanding industry leaders, take initiative toembrace new technologies such as artificial intelligence and metaverse, and continue tooptimize our business eco-chain. This year, we also formulated our sustainable developmentstrategy, with the mission of "Writing a Sustainable Business Future", with sustainableproducts, response to climate change, sustainable supply chain, and empowering employeesand communities, as key pillars, in a bid to achieve high-quality and sustainable development.
M&G has made its jouney for more than three decades. To realize our vision to become a"world-class M&G", we need passion and dreams, sharing and focus, mission andresponsibility, to provide better products and services for China and the world. We wouldlike to express our heartfelt thanks to our employees, to our customers and partners, and toour shareholders, for your support and trust. M&G is willing to work together with all of you,remain true to our original aspiration, and forge ahead to promote a sustainable, sound andhigh-quality development, and create better value for all shareholders. Strive towards a"world-class M&G". We look forward to working with you towards a bright future!
Board of Directors of Shanghai M&G Stationery Inc.
29 March 2022
Important Notice
I. The Board of Directors, Supervisory Committee, directors, supervisors and senior managementof the Company warrant that the contents of this report are true, accurate and complete,without any misrepresentation, misleading statements or material omissions, and severally andjointly bear the legal responsibilities thereof.
II. All directors of the Company attended the Board meeting.
III. BDO China Shu Lun Pan CPAs (LLP) has issued the audit report with unqualified opinions to
the Company.
IV. Chen Huwen, the chairman of the Company, Quan Qiang, CFO of the Company and Zhai Yu,the head of the accounting department (person in charge of accounting), warrant thetruthfulness, accuracy and completeness of the financial report in this annual report.
V. Profit distribution plan or plan to convert surplus reserves into share capital approved by the
Board of Directors during the Reporting PeriodThe Company proposes to distribute cash dividend of RMB6.00 (tax inclusive) per 10 shares basedon the Company's total share capital registered as at the registration date for the implementation ofdividend distribution. The profit distribution plan is subject to being submitted to the Company's 2021annual general meeting of shareholders for deliberation.
VI. Risks statement of the forward-looking statements
√ Applicable □ Not applicable
Forward-looking statements including future plans and development strategies involved in thisannual report do not constitute the Company's substantive commitments to investors. The investors areadvised to pay attention to investment risks.
VII. Is there any non-operating misappropriation of funds of the Company by any controlling
shareholders and their related partiesNo
VIII. Has the Company provided any external guarantees in violation of the decision-makingproceduresNo
IX. Are there more than half of the directors who cannot warrant the truthfulness, accuracy and
completeness of the annual report disclosed by the CompanyNo
X. Warning on significant risksThe Company has illustrated various risks and corresponding measures that the Company might facein the production and operation. Please refer to the "Potential Challenges and Risks" set out in "SectionIII Management Discussion and Analysis". Investors are advised to pay attention to risk of investment.
XI. Others
□ Applicable √ Not applicable
本报告分别以中、英文编制，在对中外文文本的理解上发生歧义时，以中文文本为
准。This English version is converted from the Chinese version.In case of any discrepancy between the Chinese version and the English version, the
Chinese version shall prevail.
Contents
Section I Definition ...... 7
Section II Company Profile and Key Financial Indicators ...... 8
Section III Management Discussion and Analysis ...... 12
Section IV Corporate Governance ...... 38
Section V Environmental and Social Responsibility ...... 52
Section VI Major Events ...... 54
Section VII Changes in Shares and Shareholders ...... 71
Section VIII Preferred Shares ...... 79
Section IX Bonds ...... 80
Section X Financial Report ...... 81
| References | Financial statements signed and sealed by the legal representative, the person in charge of accounting work, and the person in charge of the accounting agency. |
| Original of the auditor's report with the seal of the accounting firm and the signature and seal of the certified public accountant. | |
| Originals of all company documents and announcements publicly disclosed on the designated information disclosure media by CSRC during the Reporting Period. |
Section I DefinitionI. DefinitionIn this report, unless the content requires otherwise, the following terms shall have the following meanings:
| Definition of common terms | ||
| The Report | Refers to | Annual Report 2021 |
| Company, the Company, M&G Stationery, M&G Corporation | Refers to | SHANGHAI M&G STATIONERY INC. |
| M&G Group | Refers to | M&G Holdings (Group) Co., Ltd. |
| M&G Colipu | Refers to | Shanghai M&G Colipu Office Supplies Co., Ltd. |
| M&G Life（晨光生活馆） | Refers to | M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司）/Large retail store of the Company |
| Colipu Information Technology | Refers to | Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） |
| M&G Technologies | Refers to | Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） |
| Jiekui Investment | Refers to | Shanghai Jiekui Investment Management Firm (L.P.) |
| Keying Investment | Refers to | Shanghai Keying Investment Management Office (L.P.) |
| Jiumu Store（九木杂物社） | Refers to | Jiumu M&G Store Enterprise Management Co., Ltd.（九木杂物社企业管理有限公司）/Large retail store of the Company |
| M&G Office Stationery（晨光办公） | Refers to | Shanghai M&G Office Stationery Co., Ltd. |
| Axus Stationery | Refers to | Axus Stationery (Shanghai) Company Ltd. |
| Beckmann | Refers to | Back to School Holding AS |
| KA | Refers to | Key Account, usually referring to large cross-regional retailers with large operating space and dense customer flow, including RT-MART, Walmart, Carrefour, and Hualian Supermarket. |
| Core traditional business | Refers to | The designing, developing, manufacturing and selling writing instruments, student stationery, office supplies and other products under M&G brands, and also the e-commerce business M&G Technologies |
| New business | Refers to | Large retail store business and direct office supplies business |
| Reporting period | Refers to | Year 2021, from 1 January 2021 to 31 December 2021 |
| Yuan, ten thousand Yuan, hundred million Yuan | Refers to | RMB, RMB10,000, RMB100 million |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Chinese name of the Company | 上海晨光文具股份有限公司 |
| Short name of the Company in Chinese | 晨光股份 |
| English name of the Company | SHANGHAI M&G STATIONERY INC. |
| Abbreviation of English name of the Company | M&G |
| Legal representative of the Company | Chen Huwen |
II. Contact Information
| Board Secretary | Securities Affairs Representative | |
| Name | Quan Qiang | Bai Kai |
| Office address | No.5, Lane 288, Qianfan Road, Xinqiao Town, Songjiang District, Shanghai | No.5, Lane 288, Qianfan Road, Xinqiao Town, Songjiang District, Shanghai |
| Telephone | 021-57475621 | 021-57475621 |
| Fax | 021-57475621 | 021-57475621 |
| ir@mg-pen.com | ir@mg-pen.com |
III. Introduction to General Information
| Registered address | Building 3, No. 3469 Jinqian Road, Fengxian District, Shanghai |
| Historical change of the Company's registered address | No |
| Office address | No.5, Lane 288, Qianfan Road, Xinqiao Town, Songjiang District, Shanghai |
| Postal code of office address | 201612 |
| Website of the Company | http://www.mg-pen.com |
| ir@mg-pen.com |
IV. Information Disclosure and Place for Obtaining the Report
| Media for the Company's information disclosure | Shanghai Securities News, China Securities Journal, Securities Daily, Securities Times |
| CSRC's designated website for the Company's Annual Report disclosure | www.sse.com.cn |
| The Company's Annual Report may be obtained at | Board of Director's Office |
V. Stock Information
| Stock Information | ||||
| Share class | Exchanges on which the stocks are listed | Stock short name | Stock code | Stock short name before change |
| A share | Shanghai Stock Exchange | M&G Corporation | 603899 | M&G Stationery |
VI. Other Relevant Information
| Auditor of the Company (domestic) | Name | BDO China Shu Lun Pan CPAs (LLP) |
| Office address | 4F, No. 61, Nanjing East Road, Shanghai | |
| Name of the signing accountant | Chen Luying, Wang Aijia |
VII. Major Accounting Data and Financial Indicators for the Past Three Years
(1) Major accounting data
Unit: Yuan Currency: RMB
| Major accounting data | 2021 | 2020 | Year-on-year change (%) | 2019 |
| Revenue | 17,607,403,250.12 | 13,137,745,727.18 | 34.02 | 11,141,101,364.44 |
| Net profit attributable to shareholders of the listed companies | 1,517,866,131.16 | 1,255,426,655.27 | 20.90 | 1,060,083,625.03 |
| Net profit attributable to shareholders of the listed companies, net of non-recurring gains and losses | 1,349,538,372.72 | 1,102,712,281.50 | 22.38 | 1,005,187,834.38 |
| Net cash flow generated from operating activities | 1,561,196,420.77 | 1,271,697,892.28 | 22.76 | 1,081,941,383.68 |
| End of 2021 | End of 2020 | Year-on-year change (%) | End of 2019 | |
| Net assets attributable to shareholders of the listed companies | 6,194,891,978.00 | 5,193,568,712.05 | 19.28 | 4,201,500,384.99 |
| Total assets | 11,424,387,930.33 | 9,709,908,436.32 | 17.66 | 7,565,115,311.74 |
(2) Key financial indicators
| Key financial indicators | 2021 | 2020 | Year-on-year change (%) | 2019 |
| Basic earnings per share (Yuan/share) | 1.6450 | 1.3558 | 21.33 | 1.1523 |
| Diluted earnings per share (Yuan/share) | 1.6425 | 1.3558 | 21.15 | 1.1523 |
| Basic earnings per share, net of non-recurring gains and losses (Yuan/share) | 1.4623 | 1.1908 | 22.80 | 1.0926 |
| Weighted average ROE (%) | 26.82 | 26.91 | Decrease by 0.09 percentage points | 28.17 |
| Weighted average ROE, net of non-recurring gains and losses (%) | 23.84 | 23.63 | Increase by 0.21 percentage points | 26.71 |
Explanation of major accounting data and financial indicators for the past three years by the end of theReporting Period
√ Applicable □ Not applicable
Revenue increased by 34% over the same period of last year, mainly due to the steady growth of coretraditional businesses, and the rapid growth of new businesses, such as direct office supplies, M&G Colipu,and large retail store, Jiumu Store.
VIII. Difference in the Accounting Information under the PRC Accounting Standards for BusinessEnterprise ("PRC GAAP") and Overseas Accounting Standards
(1) Difference in net profit and net asset attributable to shareholders of the listed company infinancial reports disclosed under International Accounting Standards and PRC GAAP
□ Applicable √ Not applicable
(2) Differences in net profit and net assets attributable to shareholders of the listed company infinancial reports disclosed under International Accounting Standards and PRC GAAP
□ Applicable √ Not applicable
(3) Explanation on the differences between PRC GAAP and Overseas Accounting Standards:
□ Applicable √ Not applicable
IX. Key Financial Data for the Year of 2021 by Quarter
Unit: Yuan Currency: RMB
| 1st Quarter (January - March) | 2nd Quarter (April - June) | 3rd Quarter (July - September) | 4th Quarter (October - December) | |
| Revenue | 3,812,032,207.40 | 3,874,205,885.94 | 4,465,378,769.43 | 5,455,786,387.35 |
| Net profit attributable to shareholders of the listed companies | 328,287,641.63 | 337,933,717.24 | 450,980,712.92 | 400,664,059.37 |
| Net profit attributable to shareholders of the listed company after non-recurring profit or loss | 294,898,619.82 | 317,991,294.61 | 379,204,649.17 | 357,443,809.12 |
| Net cash flow generated from operating activities | 164,242,625.68 | 195,854,913.73 | 624,933,296.07 | 576,165,585.29 |
Explanation on difference between information by quarter and information disclosed in periodical reports
□ Applicable √ Not applicable
X. Items and Amounts of Non-recurring Gains or Losses
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Items of Non-recurring Gains or Losses | Amounts in 2021 | Notes (if applicable) | Amounts in 2020 | Amounts in 2019 |
| Gains or losses on disposal of non-current assets | 6,098,090.22 | Compensation for land expropriation by the Government | 169,704.92 | 6,081,606.95 |
| Government subsidies included in profits and losses for the current period, excluding those closely related to the normal business and of fixed amount or fixed quantity granted on an on-going basis in accordance with certain standards and in compliance with the State policies | 163,887,877.43 | Mainly including government subsidies received during the Reporting Period and government subsidies transferred from deferred income | 135,222,930.01 | 42,747,681.46 |
| Investment income arising from changes in fair values held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities, and investment gains on the disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investment, except the Company normal operations related to effective hedging business | 43,557,663.15 | Revenue generated from purchase of wealth management products | 37,743,018.95 | 29,184,868.54 |
| Reversal of provision for impairment of receivables and contractual assets which are individually tested for impairment. | 20,000,000.00 | Mainly due to the provision reversal of bad debts on individual receivables of M&G Colipu | 8,958,818.94 | 1,803,027.63 |
| Other net non-operating income and expenses, other than the above items | -11,127,909.82 | Mainly including the expenditure of charity donations and the loss generated by scrapping part of the old equipment | 18,746,671.42 | -5,743,388.02 |
| Minus: Effect of income tax | 33,537,580.85 | 29,169,213.11 | 14,413,308.64 | |
| Effect of minority equity (after tax) | 20,550,381.69 | 18,957,557.36 | 4,764,697.27 | |
| Total | 168,327,758.44 | 152,714,373.77 | 54,895,790.65 |
Non-recurring profit and loss items listed in the Explanatory Announcement on Information Disclosureby Companies Offering Securities to the Public No. 1: Non-Recurring Profits and Losses are defined asrecurring profits and losses
□ Applicable √ Not applicable
XI. Items Measured at Fair Values
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Items | Opening balance | Closing balance | Changes in the Period | Effect on profit for the Period |
| Held-for-trading financial assets | 1,428,277,848.33 | 1,609,123,552.86 | 180,845,704.53 | 38,636,606.71 |
| Receivables financing | 61,412,976.46 | 22,824,707.62 | -38,588,268.84 | |
| Derivative financial assets | ||||
| Other debt investments (including other current assets) | ||||
| Other non-current financial assets | ||||
| Investments in other equity instruments | 5,476,577.42 | 6,745,402.14 | 1,268,824.72 | |
| Held-for-trading financial liabilities | ||||
| Derivative financial liabilities | 147,570.52 | 147,570.52 | ||
| Total | 1,495,167,402.21 | 1,638,841,233.14 | 143,673,830.93 | 38,636,606.71 |
XII. Others
□ Applicable √ Not applicable
Section III Management Discussion and Analysis
I. Discussion and Analysis of OperationThe year 2021 is the beginning of China's 14th Five-Year Plan, also the first year of M&G's newfive-year strategy. The year was full of opportunities and challenges. In face of the challenges posed byrepeated COVID-19 outbreaks, "Double Reduction" policy and competition, the Company implementedthe new development philosophy, to build a new development pattern, and focused on consumers toimprove the quality and efficiency of development. Core traditional business was steadily deveolopingwhile new businesses was fast expanding. In 2021, revenue reached RMB17.6 billion, an increase of 34%,and a net profit attributable to shareholders of listed companies was RMB1.52 billion, an increase of 21%.Under the leadership of the Board of Directors, the management and all employees achieved annual targets,laying a solid foundation for the new five-year strategy, established the Company's sustainabledevelopment strategy, and striding forward towards the vision of "world-class M&G".Operation of the Company in 2021 is reported as follows:
1. Core traditional core businesses continued product optimization
During the Reporting Period, we adjusted the structure to promote growth and reduced the quantityand improved the quality of product development. The Company developed products with the idea of best-selling products and controlled number of SKUs. Achieved good results in reducing quantity andimproving quality. The number of new products dropped significantly, while the contribution of a singleproduct increased significantly. The Company optimized the quality control process, enhanced theefficiency of supply chain, and improved new product development process. The growth performance ofcategories developed through IPD method was much better than average level. The Company adjusted thestructure to promote growth by continuing to exert more efforts on high-end product development andoptimize the product mix. We introduced a number of popular IPs, enriching our product category andfurther improving our product identity.Mass market stationery segment. With "exploitation of potential, collaboration, product capability"as the key words, continued the strong product strategy and developed less and better products. Thissegment continued to optimize product structure and increase contribution of individual products. Itestablished a mechanism to unleash the potential of long life cycle products and has achieved initial results.Promotion for category was carried out collaboratively with offline distribution channel to increase onshelf ratio, coordination was made with online channel to identify potential products and form individualbest-selling products for distribution. Online product management and ordering procedures wereformulated to meet customer ordering needs and increase online sales of consumer products.Premium stationery segment. With the direction of "structural adjustment and high growth", wecarried out product upgrading and best-selling products development, and M&G Youpin series saw acontinuous upgrade. The contribution of individual products increased. The Company focused on thedevelopment of high-end products to satisfy high-end consumer demand and optimize the existing productoffering of premium stationery segment. We focused on Tiers 2 and 3 distribution centers and keystationery retail shops, promoted structural adjustment of partners and terminals through better categorypositions, and improved the proportion of premium stationery segment in traditional stationery shops.
Arts and kids drawing segment. The Company optimized the product structure and new productdevelopment process, focused on the promotion of long life cycle products and essential products,continued to promote the building of arts and kids drawing area in key stationery shops in various channels,developed national art stores, exerted more efforts on the leading stores and incremental stores, andimproved the marketing rate of arts and kids drawing at stationery shops. We accelerated the expansionof online product lines and opportunity categories and created online best-selling products, seeingsignificant increase in the online share. We also actively seek to expand professional art and educationalproducts.
Office stationery segment. The Company strengthened the development and promotion of officeproducts, focused on the development of innovative products solving pain points of end users, and createdonline product offering. The Company expanded M&G stores for office supplies and developed modelstores for office supplies and developed large office stationery customers across the country.
2. Core traditional businesses continued omni-channel, and improved retail service capabilities
During the Reporting Period, core traditional businesses continued omni-channel, followingchanging trend of consumption demand and habits, continued to optimize retail operation, towards achannel structure where multi-level distribution as the main body, with more online, more direct tocustomer, omni-channle and multiple contact point. Further the change from a wholeseller toward a brandretail service provider.
Develop traditional channels with a focus on improving individual store quality. The Companyimproved single store quality with a focus on model stores; strengthened categories promotion anddedicated retail spaces for key products and increased on shelf ratio; promoted the upgrading of channelstructure, and expanded leading stores and community business districts in the industry; empoweredstationery shops and helped stationery shops improve retail capacities. As of the end of the ReportingPeriod, the Company had 36 Tier 1 distributor partners across China, and Tiers 2 and 3 distributor partnersin about 1,200 cities, covering over 80,000 retail stationery shops using the store sign "M&G Stationery"across China.
Empowers stationery shops with digital tools. M&G Alliance APP covered more than 100,000stationery shops, with a unified merchadize pool, built automated inventory replenishment mechanism.Based on users' behavioral and order data, continuously tested and iterated product offering, empoweringchannel partners to manage merchandize and improved order satisfaction rate. Therefore helped "the rightmatch between right shops and right productss", practiced our idea of partnership in business operation.
Actively explore direct model. Continued to promote direct supply business from the headquartersto partners of the Company. The office direct supply model has effectively developed, forming a buildingplan and combination strategy for the best-selling products of leading office stationery stores. Premiumstationery segment continued to expand coverage of ideal domestic retail stationery shops (physicalbookstores, variety retail shops, and stationery retail terminals), and explored other new models.
Increase online channels. Actively promoted online businesses, collaborated with the varioussegments to improve schedule and criterion for online product development; continued to optimize thestructure of direct sales and explored ways to optimize the creation of best-selling products; developednew channel businesses, continued to promote Pinduoduo and Tiktok, Kuaishou and other new channelbusinesses; improved membership program management. M&G Tmall Flagship Store has more than onemillion members and growing well. During the Reporting Period, M&G Technologies revenue wasRMB527,01 million, representing an increase of 11% from the previous year.
3. Continue to improve brand image
During the Reporting Period, the Company made progress in corporate brand, brand communication,and public relations, launched a number of season-themed events such as cherry blossom season, childrenseason and exam season, communicated unique selling points of products, and improved media efficiencyand input-output ratio. Focusing on the concept of "good Chinese stationery with warmth", we enhancedbrand recognition of M&G in stationery shops and consumers. The company won the title of 2021 "ChinaAnnual No.1 Stationery Brand Award" and "China's 500 Most Valuable Brands".
4. Increase R&D investment, promote digitalization, and form new organizational capabilities
Promote design and R&D. During the Reporting Period, the Company actively performed forward-looking research and design, focused on core technology of products, accelerated the speed oftechnological progress and results transformation, improved quality based on the application performanceindicators and actual usage scenarios that consumers can directly perceive. The Company has developedoriginal products, such as the cutting technology of "arc surface" of pen tip, the development of quick-dryand smooth gel pen, and the industry's first food-grade kids art products (oil painting stick and color mud).Besides, the Company exerted efforts on quality improvement and control and applied machine visionintelligent detection technology. During the Reporting Period, the Company led and participated in thecompilation of a number of national standards, industry standards and group standards, enhancing theCompany's influence in the pen-making industry and the cultural and sports industry.
Improve production management. During the Reporting Period, the Company vigorouslypromoted lean management, implemented cost reduction and efficiency enhancement, continued topromote MBS (M&G Business System) management, and integrated the MBS process improvementprinciple-standard with the Company's business model to continuously improve management capabilities.For the best-selling products, we established a rapid response mechanism among product development,sales, and production, shortened production lead time and improved order fulfillment rate.
Coordinate supply chain. During the Reporting Period, the Company promoted the integratedproduct development model from series to parallel model. The Company applied digitalizationtechnologies to improve the accuracy of order forecasting; continued to make innovation with consumersas the center; continued to expand high-quality supply chain resources at home and abroad to provideguarantee for the development of high-end products.Logistics support. During the Reporting Period, the Company worked on building a logistics servicethat can support multiple business models. According to requirements of different business and diversescenarios, to provide differentiated, refined and efficient logistics service support for each businesssegment, strengthened logistics service support capability.
Digitalization development. During the Reporting Period, following the blueprint for digitaltransformation, the Company focused on such key areas as membership operations and channel operations,strengthened data application and analysis capabilities as well as scalable system architecture capabilities,promoted the gradual integration of production, sales, and supply chain links, improved order responsespeed, and strengthened the management and internal control, standardization and risk management.
Construction of organization and talent. Organization and talents are important basis for realizingour strategy. During the Reporting Period, based on the Company's new five-year strategy, the HumanResources Center formulated targeted human resources plans based on business needs, continued tooptimize organizational efficiency, incentive, talent management and corporate culture system. Focusingon the selection, use, training and retention of talents, we strived to build an efficient team that can supportthe realization of our five-year strategy plan. We exerted intensified efforts on the MT program, improvedlong- and short-term incentive plan, ensure that employees pay attention to the achievement of theCompany's performance in the current year and realize the long-term synchronous development of coreemployees and the Company. M&G keeps in mind the social responsibility of national enterprises andencourages employees to actively participate in various public welfare programs of the Company. Duringthe Reporting Period, M&G was awarded the best social responsibility award in HRflag EmployerBranding Creativity Competition.
5. Large retail store business steadily developed
Jiumu Store has a clear positioning in the Company’s new five-year strategy, which is to become thebridgehead for M&G brand and product upgrading, and also to become a national leading premiumrecreation and creativity retail brand. Through more exposure of M&G brand and products, more productdevelopment of M&G's premium strationery products, sharing retail capabilities, and providing timelyconsumer insights.
During the Reporting Period, Jiumu Store improved merchandize capacity and efficiency; establisheda dynamic analysis platform to improve merchandize operation; devleped omni-channel marketing andpromotion, better thematic seasonal marketing and rollout schedule, improved the accuracy of salesforecast, strengthened the accuracy of inventory replenishment and allocation, optimized in-storeinventory. Jiumu Store improved operation quality of individual stores, through better store display,marketing & promotion, staff training; analyzed and followed up on the implementation of key retailindicators; continued to improve membership programs. It has more than one million registered members,which improved outreach to and interaction with consumers.
During the Reporting Period, facing the repeated outbreaks of the pandemic, M&G Life (includingJiumu Store) revenue was RMB1.05 billion, an increase of 60%, among which Jiumu Store revenue wasRMB950 million, an increase of 70%. As of the end of the Reporting Period, the Company had 523 largeretail stores in China, of which 60 are M&G Life stores, and 463 are Jiumu Stores (319 own stores and144 franchise stores). During the Reporting Period, losses of the large retail stores reduced.
Unit: RMB 0'000
| M&G Life (Jiumu Store) | 2021 | 2020 | 2019 | 3-year average |
| Revenue | 105,406.13 | 65,484.36 | 60,063.70 | 76,984.73 |
| Net profit | -2,108.65 | -5,022.93 | -804.67 | -2,645.42 |
| Of which, Jiumu Store | 2021 | 2020 | 2019 | 3-year average |
| Revenue | 94,949.81 | 55,849.09 | 46,043.51 | 65,614.14 |
| Net profit | -2,255.78 | -4,207.86 | -693.11 | -2,385.58 |
6. Rapid growth of direct office supplies business
Direct office supplies business, M&G Colipu saw continuous development. After nearly a decadesince its start, it has been built competitive capabilities needed as an industry-leader. Focusing on in-depth
exploration of existing customers and sales from new customers, Colipu expanded opportunities for newcategories and new businesses such as MRO and marketing gifts, further enhancing brand influence in thedirect office supplies market, and being selected as the 2020 Shanghai "specialized, refined, special andnew" SME.
Customer development. As for central SOEs customers, we were shortlisted for projects of CHNEnergy and China General Technology (Group) Holding Co. Ltd.; as for government customers, we wereshortlisted for Jiangsu Provincial Government Procurement Online Mall; as for financial customers, wewere shortlisted for the projects of Agricultural Bank and China Development Bank; as for MRO, we wonthe projects of PowerChina and China National Nuclear Corporation.Warehouse distribution logistics. The East China Intelligent New Warehouse (Phase I) was put intouse, starting a new generation of e-commerce intelligent warehousing system, and advanced automaticstorage & retrieval system was adopted, becoming more intelligent warehousing logistics.
Technology platform construction. We upgraded and transformed the rule engine, realized processautomation through RPA robots, and build a big data system and data center, improving Colipu’s overallwork efficiency, and enhanced rapid response to provide customers with high-quality services.
During the Reporting Period, M&G Colipu’s revenue was RMB7.76 billion, an increase of 55%, netprofit was RMB240 million, an increase of 68%.
Unit: RMB 0'000
| M&G Colipu | 2021 | 2020 | 2019 | 3-year average |
| Revenue | 776,565.05 | 500,027.59 | 365,806.17 | 547,466.27 |
| Net profit | 24,198.53 | 14,382.86 | 7,580.35 | 15,387.25 |
7. Deepen long-term incentives and protect shareholders' rights and interests
During the Reporting Period, the Company continued to better align Company's core managementteam and the Company's long-term value creation. Completed the additional stock grant under the 2020restricted stock incentive plan. The initial grant of the 2020 restricted stock incentive plan was exemptedfrom restricted sales, strengthened alignment mechanism of the Company's senior management, key staffand shareholders. During the Reporting Period, the Company's share-based payment expenses for wasRMB77.65 million. last year such expenses was RMB 82.19 million.
The Company safeguards shareholders' rights and interests and adopts a sustainable and stabledividend policy. Since the Company went public in 2015, including profit distribution plan for 2021,cumulative cash distribution has reached around RMB2.4 billion, sharing the Company's growth with allshareholders.
During the Reporting Period, due to confidence in the Company's future development prospects, theCompany's controlling shareholders acted in concert, Keying Investment and Jiekui Investment launcheda shareholding increase plan to increase their holdings by 3 million shares from December 2021 to March2022, with a total amount of RMB176 million.
8. Actively explore overseas markets
The Company's products are exported to more than 50 countries and regions, with distribution andprocurement networks in Thailand, Vietnam, Malaysia and other countries. During the Reporting Period,the COVID-19 pandemic situation in overseas markets varied greatly, and the Company activelycommunicated with foreign customers to control business risks; used better marketing modes and onlinechannels for product promotion and sales to adapt to market changes; promoted overseas markets andcapability improvement, promoted M&G's products and business models in Africa according to localconditions, sorted out product offerings suitable for the local market and carried out targeted productdevelopment. With the mission of "providing affordable stationery for local students", we exploredchannels suitable for local conditions, laying a foundation for steadily enhancing global competitiveness.
9. M&A progress
Working on Axus Stationery turnaround
Export business accounts for more than 70% of the sales revenue of Axus Stationery, and the overseasmarket has not fully recovered. During the Reporting Period, Axus Stationery focused on sales growth,cost reduction, and organizational downsizing and determined the positioning of "specialized, full-scene,and mid-range". We increased revenue and reduced expenditure while reducing costs and increasingefficiency, improved quality and reduced cost, and properly adjusted the capacity and resource allocationof production bases.
Acquire Beckmann, a Norwegian brandDuring the Reporting Period, the Company acquired the Norwegian high-end schoolbag brandBeckmann, which specializes in functional spin protection backpacks, an industry leader and nationalbrand in Norway. We look forward to ushering in a new chapter of development by combining M&G'schannel and supply chain advantages. During the Reporting Period, revenue of Beckmann was RMB120million, among which RMB21 million was incorporated since acquision closing.
II. Industry Situation of the Company during the Reporting Period
1. Industry situation of the Company
According to Guidelines for the Industry Classification of Listed Companies (revised in 2012) issuedby China Securities Regulatory Commission, and results of industry classification of listed companiesreleased by China Securities Regulatory Commission, the Company is classified to stationery, arts, sportsand entertainment products industry. The Company is a member of China Stationery & Sporting GoodsAssociation, and China Writing Instrument Association.During January-November 2021, revenue of China's stationery and office supplies industry amountedto RMB147.1 billion, an increase of 11%. There were 1,082 enterprises above designated size in China'sstationery and office supplies industry (source: China Stationery & Sporting Goods Association).In 2021, 217 enterprises above designated size in writing instrument industry recorded the revenueof RMB15 billion from principal business, an increase of 1%. In 2021, writing instrument industry exportsamounted to USD2.8 billion, an increase of 21% from previous year, and the imports amounted to USD900million, an increase of 13% from previous year. China's writing instrument industry imports have grownat an average annual rate of 3% over the past decade. (Source: China Writing Instrument Association)The demand for stationery and office supplies were affected due to the joint release of Opinions onFurther Reducing the Burden of Homework and Off-Campus Training in Compulsory Education by theGeneral Office of the Central Committee of the CPC and the General Office of the State Council in July2021 ("Double Reduction") and the repeated outbreaks of the pandemic. At the same time, some newcategory opportunities arose, such as kids art and educational products ushering in new development space.The market of the direct office supplies has been growing very fast in China. In 2020, the Ministryof Finance and the State Council further promoted centralized government procurement. At the same time,the standardization of centralized procurement by state-owned enterprises was further improved, and theconcept of supply chain innovation and supplier credit investigation mechanism were introduced.According to relevant estimates, the market size of office supplies in China exceeds RMB2 trillion (source:
www.chyxx.com).
2. Industry features
(1) Periodicity
Writing instruments, student stationery and office supplies are less affected by economic fluctuations.With low unit price, writing instruments and student stationery are more of necessity goods with relativelylow income elasticity, relatively less sensitive to economic fluctuations.
(2) Seasonality
There is seasonality in the demand for student stationery. Months before a new semester (summerand winter vacation) is what the stationery industry calls "schooling peak season", during which sales ofstudent stationery usually peaks. Students and their parents will buy a lot of stationery in advance andstationery manufacturers promote their products.
There is less seasonality in the demand for student stationery. However, the demand for officestationery in the second half of the year might be slightly higher than that in the first half, as somecompanies bought stationery at the end of the year.
Under the COVID-19 pandemic, the delay in school return date may affect the seasonal peak.
3. Development trend of the industry
With the changes in the way of life and consumption habit of consumers, China’s retail industryentered a new stage of redevelopment and innovation. Stationery industry faces challenges withuncertainty of external environment, diversification of retail channels, and more individualized demandsfrom main customers group (now being the post-90s and post-00s). With the changing demographics ofChina in particular the decreasing birth rate, stationery industry revenue growth comes less from by unit
volume growth, and more from consumption upgrade and product upgrade. Domestic market demand formid- to high-end stationery products keeps increasing, reshaping market structure dominated by low-endproducts. This provides opportunities for mid- to high-end stationery products with better quality andhigher price. China's population of 1.4 billion accounts for about 18% of global population, while leadingstationery companies in China can continue to mostly rely on the huge domestic market, they also haveroom for international expansion in international markets, which could reinforce each other underfavorable conditions.Leading enterprises focused on building omni-channel operation capabilities and realized refinedmanagement over the offline channels. With the popularity of the Internet, smart phones, and onlinetransactions, people's consumption habits and consumption scenarios have changed. Consumers' access toinformation is becoming more fragmented, and new-generation marketing means are becoming morediversified, including online media platforms (such as Weibo, WeChat, Xiaohongshu, Tiktok) and IP topiccreation, which further tests enterprises' ability to make quick response to industry trends. Compared withsmall- and medium-sized enterprises, leading enterprises boast stronger and richer whole networkmarketing and operation capabilities. They formulate refined marketing strategies by city to reachconsumers and capture fragmented traffic to achieve traffic attraction and conversion for online and offlinebusinesses. To improve the stores' initiative marketing and traffic operation capabilities, in addition toonline traffic, offline channels are also required to realize refined management by empowering channelsthrough organizational reform and information system. According to the National Bureau of Statistics,online retail sales across the country recorded RMB13 trillion in 2021, an increase of 14%. Outstandingcompanies in the consumer industry seized the development opportunities of online consumption andachieved continuous sales growth through online and offline integration.Traditional retail stationery shops nearby school are still the dominant channel for China’s stationeryindustry, and shares of other retail formats are increasing faster. Sales terminals and channels of theindustry are becoming more diversified, upgrading and competition in channels becomes more obvious.Domestic consumption for stationery in China becomes more brand conscious, innovative, individualizedand more premium. There is a growing demand for premium cultural and creative products, stationeryproducts are moving from those primarily focus on functionality towards those with more cultural andcreative elements catering to customers. There are around thousands of stationery manufacturers in China'sdomestic stationery industry and the industry is quite decentralized. There are a few leading companiesfor most sub-category stationery products, with continued development in the stationery industry, therecould be higher industry consolidation, and leading companies could gain larger market shares.In recent years, in the context of the digital economy, thanks to favorable factors such as policydriving, the rapid advancement of centralized procurement by large- and medium-sized enterprises, andthe competition among various digital procurement service providers, great progress has been made in thedigitalization, e-commerce and centralization of public procurement in China, which have become themain form of public resource transactions from central to local governments. Facing the shock of economicsituation at home and abroad, digital, e-commerce, and centralized procurement exhibits advantageouscoordination and quick response ability.According to the China Public Procurement Development Report (2020) compiled and released byChina Federation of Logistics & Purchasing, the scale of public procurement transactions in China in 2019exceeded RMB20 trillion, accounting for more than 20% of China's total GDP. In terms of the procurementscale of the government, State-owned Key Enterprises, and local state-owned enterprises, the annualprocurement scale of government and enterprises in China is also quite large. According to relevantestimates, the market size of office supplies in China exceeds RMB2 trillion (data source:
www.chyxx.com). In addition, the market size of employee benefits and other categories is also quite large.With the further development and application of information technology. Traditional industries havegained growth momentum in the digital age. Industrial digitization is becoming the main pillar of thedigital economy, and traditional industries are actively gaining new development momentum throughdigital empowerment. The investment in the manufacturing industry has shifted from the investment inequipment and assembly lines to the transformation of digital processes and digital transformation ofproducts, in a bid to apply digital technology to reduce channel costs and management costs and becomea digital-driven modern enterprise.
With smart technology and products upgrade, promotion of national education informatization andthe development of the online education market, smart stationery products have developed rapidly in thepast few years. Technology-empowered smart pens and smart books are widely adopted in online
education, providing an increasingly better user experience. Technology-empowered smart pens and smartbooks are widely adopted in online education, providing a better user experience.
4. Company position in the industry
As a leader of "own brand + domestic demand" in China's stationery industry, the Company has astrong first-mover and leading advantage, with a wide and deep distribution network coverage in China'sstationery market. At the end of the Reporting Period, the Company has a national distribution networkcovering over 80,000 retail stationery shops using the store sign "M&G Stationery" across China, enablingthe Company to establish market leading position for its own brand products amidst competitions. TheCompany ranked first in "Top Ten Enterprises in China's Light Industry and Writing Instrument" for nineconsecutive years.M&G Colipu is a leader in the field of B2B office supplies in China. After nearly ten years since itsstart, thanks to its electronic transaction system, intelligent warehousing logistics management system,high-quality supply chain management and customized service, M&G Colipu has become one of theindustry leaders of digital enterprise procurement service provider. For many years, M&G Colipu has wonmany awards such as the Outstanding E-commerce Platform in China's Stationery and Office SuppliesIndustry, the Outstanding Supplier of Government Procurement, and the Most Influential E-commercePlatform in Financial Procurement.
III.The Company's Businesses during the Reporting Period
1. Principal business
M&G Stationery is a comprehensive stationery supplier and an office servicer. The Companyintegrates the value of creativity into its products and service advantages, advocates fashionable stationerylifestyle, and provides solutions for study and work. Its core traditional businesses include designing,developing, manufacturing and selling writing instruments, student stationery, office supplies and otherproducts under brands, and also the e-commerce business M&G Technologies; its newbusinesses mainly comprise of large retail store business - Jiumu Store and M&G Life, and direct officesupplies business - M&G Colipu. During the Reporting Period, there were no significant changes in theCompany's principal business and operation model.
2. Principal operation model
The Company has an independent and complete operation from design and development of brandsand products, procurement of raw materials and accessories, product manufacturing, supply chainmanagement and warehouse and logistics, to distribution network management. The Company is capableof performing independent operation of business in the market. For R&D and new products developmentmodel, the Company has an "entire design system" covering the whole process starting from customervalue proposition to product design, product mold to brand image design, incorporating trend-, theme andexperience-oriented development model to develop new products with a comprehensive categoriesapproach based on consumer insight. For manufacturing model, the Company uses the brandmanufacturing model that features sales-driven production, in-house and OEM outsourcing. The Companyhas an independent system from raw material procurement to manufacturing and selling, and hasestablished its brands in the market. We have the advantages from participating in the whole value chainfrom design, research and developing, manufacturing and selling stationery. For sales model, based onfeatures of stationery products and current situations of domestic stationery consumption, the Companyhas developed its sales model that relies on regional distributors, complemented by direct sales to offices2B customers, direct-sale store, KA sales, online sales, as well as international distribution. We are theone of leading companies in China’s stationery business that engage in large-scale brand salesmanagement and franchise management. The business of M&G Technologies is mainly divided intoplatform business such as Tmall, JD, and Pinduoduo, and live streaming business such as Tiktok andKuaishou. M&G Technologies is also responsible for online full platform marketing and management ofauthorized online stores.
M&G large retail store businesses include two store types: Jiumu stores and M&G Life stores.Targeting female consumers aged 15-29, Jiumu Stores primarily sell stationery, cultural and recreativeproducts, educational and entertainment products, and daily household and home products. Jiumu storesare mostly located in high-quality shopping malls in prime urban districts. Jiumu stores represent theCompany's ongoing exploration in new retail model in lifestyle products with a distinct cultural element.
Jiumu Store started franchising in July 2018, where franchisees pay contract deposit and decoration feeaccording to contracts, and store rent, store staff salary, utilities and other costs incurred in franchisingstores. M&G Life stores mainly target students aged 8-15, primarily selling stationery products. M&GLife stores mostly locate in Xinhua Bookstore and compound bookstores, M&G Life stores represent theCompany's efforts to move beyond the dominant traditional channels of retail stationery shops nearbyschools.In the direct office supplies business, M&G Colipu provides governments, public institutions,Fortune Global 500 companies and other SMEs with cost-effective one-stop office supplies procurementservice. M&G Colipu has a rich product offering, covering office supplies, MRO industrial products,marketing gifts, employee benefits and corporate services, more than one million products including officepaper, office stationery, office supplies, office equipment, computers and accessories, digital andcommunications, office appliances, daily necessities, labor protection industrial supplies, food andbeverages, business gifts and office furniture. By shortening the supply chain, M&G Colipu providescustomers with cost-effective procurement and customized value-added services.
With changing demographics of China in particular the decreasing birth rate, it becomes increasinglydifficult to achieve revenue growth from unit volume growth in the future, and stationery industry growthis increasingly driven by consumption upgrade and product upgrade. The Company’s core traditionalbusinesses are challenged with changing demands from more individualized population born after 1990and 2000. Stationery consumption in China is becoming more brand conscious, innovative, individualizedand more premium. There is a clear growth in demand for better cultural and creative products, whichaccelerates industry transformation towards one with more cultural and creative elements. M>echnologies reflects channel diversification trend and helps the Company's omni-channel strategy byexpansion of online business. Jiumu stores and M&G Life stores both serve as the Company's bridgeheadto continue products and channels upgrading of its core traditional businesses, and they play an importantrole in promoting the Company's brands and products upgrade. M&G Colipu's direct office suppliesbusiness meets demands for purchasing office supplies from large corporations and institutions, whichhelps boosting the sales of writing instruments and office stationery of the Company's core traditionalbusiness.
3. Major driver for revenue growth
Driven by market force
With the changes in the way of life and consumption habit of consumers, the mix of "people, product,and place" in retail industry has been reconstructed, sales channels have become more diversified, andchannel upgrades and channel competition have become increasingly fierce. The per capita income ofresidents has continued to grow, and consumption and products have been upgraded. As the domesticmarket demand for mid- to high-end stationery products keeps increasing, this provides opportunities formid- to high-end stationery products. China's population accounts for about 18% of global population,while leading stationery companies in China can continue to mostly rely on the huge domestic market,they also have room for international expansion in international markets, which could reinforce each otherunder favorable conditions.
Driven by innovation
Innovation as one of driving forces for continuous development with a focusing on consumers. TheCompany continued to promote technological innovation, product innovation, channel innovation andbusiness model innovation. Through product innovation and business model innovation, the Company hasformed a pattern of coordinated development, high-quality development and sustainable development ofmulti-business model.
Driven by the Company's competitive advantages
With professional teams, market insights, unique brand advantages, channel advantages, supply chainadvantages, R&D and design advantages, the Company continued to promote technological innovationand product innovation, and maintained a strong forward driving force through high-end, omni-channel,digital empowerment, lean production and dynamic organization.
Driven by policy
The continuous investment of the state in education, the three-child policy and a favorable policycontext for the development of the cultural industry encourage and promote the integrated developmentof the cultural industry and upstream and downstream industries, invigorate economic transformation andsocial development, and drive the steady development of the stationery industry. A series of nationalpolicies on the centralized procurement industry have been promulgated, rapid progress was made in
centralized procurement of large- and medium-sized enterprises, various digital procurement serviceproviders competed with each other, the transparency of procurement information and the competitivemechanism of centralized procurement promoted the concentration of office supplies industry andpromoted the vigorous development of direct office supplies industry.Driven by industry integrationWith continued development in the market, market concentration of stationery industry becomesgreater, leaving more room for industry consolidation. Leading companies in the stationery industry withgood brand recognition are in a strong position, and more market share are gained by leading companies.Through mergers and acquisitions of high-quality targets at home and abroad, the Company furtherenhanced its competitiveness and brand power in segmented categories.
IV. Analysis on Core Competitiveness during the Reporting Period
√ Applicable □ Not applicable
As one of the largest stationery manufacturers in the world, the Company has formed a uniquecompetitive advantage in terms of brand, channel, supply chain, design, and R&D. During the ReportingPeriod, the Company withstood the test of COVID-19 pandemic, greatly improving the product strength,channel strength and brand strength and the Company's core competitiveness.
1. Corporate culture and team
M&G is a company with a strong sense of mission and social responsibility. With the mission of"make study and work more joyful and effective", it is committed to providing Chinese students withaffordable good domestic stationery, and continues to devote itself to various social welfare undertakings,thereby promoting its continuous development. At the same time, the Company has cultivated a team thathighly recognizes the Company's values, has passion and technology, is competitive in the industry, isunited and enterprising, and keeps unremitting struggle.
2. Brand advantage
As a leader of "own brand + domestic demand" in China's stationery industry, the Company hasestablished a leading position for its own brand products amidst competitions of domestic market. TheCompany ranked the first in "Top Ten Enterprises in China's Light Industry and Writing Instrument" forten consecutive years. M&G brand has sound brand recognition among consumers, and served as thedesignated stationery brand for Boao Forum for Asia for many years. During the Reporting Period, theCompany won the title of 2021 "China Annual No.1 Stationery Brand Award" and "China's 500 MostValuable Brands", winning international praise with excellent quality and brand reputation and showingthe brand value of Chinese stationery to the world.
3. Channel advantage
The Company has a strong first-mover and leading advantage with a wide and deep coverage ofdistribution network across China. The Company has established an efficient distribution managementsystem and a domestic terminal network with deep penetration. During the Reporting Period, the Companycontinued to broaden and deepen the national network and perfected online and offline channels, formingan omni-channel, multi-level and multi-contact marketing network. At the end of the Reporting Period,the Company has 36 tier-one distributor partners, and about 1,200 tier-two and tier-three distributorpartners across China, covering over 80,000 retail stationery shops with "M&G Stationery" logo acrossChina, 523 direct large retail stores, and thousands of authorized stores in Taobao system, JD.com,Pinduoduo and other e-commerce channels.
4. Supply chain advantage
The Company benefits from experience of large-scale manufacturing accumulated throughout thepast years, independent mold development capability, stable supply chain, sound quality control systemand introduction of various information management systems. The Company has the capability of large-scale manufacturing with high quality control standard. The good and stable product quality has wongeneral recognition and favorable comments from consumers. The Company promotes the application ofintelligent manufacturing technology in the production and inspection links of the stationery industry, andapplies machine vision technology in various key links to greatly improve the efficiency of production
and inspection, thus serving as a benchmark and demonstration role for transforming the extensiveindustrial mode into an intensive one.With the idea of partnership in its business operation, the Company has strived to build a highstandard supply chain ecosystem. The Company keeps iterating and upgrading its scientific managementfor supply chain, and has obtained new practice achievements in information collaboration across the valuechain, inventory optimization, financial support for supply chain, management informatization of qualityand order, and optimization of supplier performance to help business partners get stronger operationsystem and simultaneously improve both loyalty and operation capability of our business partners.
5. Design and R&D advantage
The Company has the capability to respond timely to market and strong R&D capacity for newproducts. The Company conducts market research for new product development and identifies markettrends. The Company launches about one thousand new products each year to meet consumer needs. TheCompany has been awarded with such four major international industrial design awards as German iFAward, Red Dot Design Award, G-mark, and IDEA for its product design. The Company has a designstudio in Israel, highlighting the world-class design capabilities of M&G Stationery. During the ReportingPeriod, through structural innovation and technological innovation, the Company has developed a varietyof products such as quick-dry gel pens, super durable writing pencils, and food-grade art painting materials.The magnetic levitation gel pen, Magneter, won German iF Award again, the automatic compass won G-mark Award again, and TIKITAKA press marker won the Silver Award for Innovation in Culture andEducation - Technological Innovation in 2021. At the end of the Reporting Period, the company has gotten841 patents.The Company has broken through the foreign technical barriers and got hold of the raw materialformula and production technology with domestic independent intellectual property rights, greatlyenhancing the percentage of home-made raw materials and finished products. The Company has beenrecognized as a national high-tech enterprise since 2010, and has built a number of national or provinciallevel technology platforms such as National Industrial Design Center, China Key Laboratory of LightIndustry and Writing Instrument Engineering Technology, Shanghai Writing Instrument EngineeringTechnology Research Center. The testing laboratory of the Company had CNAS certification qualificationand its testing capabilities have reached world-class level. During the Reporting Period, the Company wonthe "13th Five-Year Plan" China Light Industry Science and Technology Innovation Advanced GroupAward. The "development and industrialization of water-based ballpoint pen with regulator" won the FirstPrize for Science and Technology Progress Award of China National Light Industry Council. The"material and key manufacturing technology and industrialization of gel ballpoint pens" won the secondprize of Shanghai Science and Technology Award.
6. M&G Colipu's competitive advantages
As a B2B comprehensive e-commerce platform built by M&G Group, M&G Colipu is committed toproviding customers with smart office and MRO (Maintenance, Repair and Operations) solutions and hasbecome one of the industry leaders.
After nearly ten years of development, M&G Colipu has accumulated rich experience in key accountsand large project services, and has boasted the leading advantage as a professional office and MRO serviceprovider in the industry. Through the customer service network covering 31 provinces and cities acrossChina, it is now serving more than 60,000 customers in 5 categories including government, finance, State-owned Key Enterprises and state-owned enterprises, intermediate market, and MA (Fortune Global 500),providing customers with one-stop procurement service solutions. Nowadays, more and more customerstake M&G Colipu as their preferred comprehensive e-commerce service platform.
M&G Colipu is committed to providing high-quality, low-price, and professional procurementservices for customers. Relying on its own advantages in the global procurement supply chain platform,M&G Group's strong brand influence, strong financial strength, and rich product strength, M&G Colipustrictly selects authorized manufacturers and genuine licensed products, directly cooperates withmanufacturers and brand owners, forms strategic alliances and conducts large-scale procurement, fullyenjoying the market price advantage. At the same time, M&G Colipu not only owns nearly one millionsquare meters of super-large commodity storage space, but also has a 5-level warehousing system networkthat effectively covers the whole country, responds to orders efficiently and quickly, and maximizescustomer demand for delivery timeliness. It uses intelligent warehousing and distribution systems such asAGV (Automated Guided Vehicle), WMS (Warehousing Management System), TMS (Transportation
Management System), G7 (Vehicle Management System), and built 7 regional distribution centers acrossthe country. Its logistics network covers 100% of the counties in Chinese mainland, providing timely andaccurate service to customers.
Meanwhile, M&G Colipu is also a pioneer and industry leader in procurement digitalization, and haswon the titles of National E-commerce Demonstration Enterprise and Shanghai E-commerceDemonstration Enterprise. M&G Colipu has invested a professional technical development teamconsisting of more than 200 people in digitalization for a long time. Through independent research anddevelopment of core digital transaction system and rapid and professional system integration developmenttechnology, by virtue of AI and big data analysis, it provides a variety of personalized system integrationand value-added services for different customers to offer flexible ordering modes, thereby rendering one-stop office procurement service for different types of customers. The realization of process automationthrough RPA robots and the establishment of big data systems and a data middleground effectivelyguarantee M&G Colipu's ability to provide high-quality services and rapid response to major enterprisesand public institutions.M&G Colipu has a professional team of nearly 2,000 people with enterprising spirit, profession, yearsof industry experience and lofty ideals, end-to-end service teams from pre-sales to after-sales covering 31provinces, municipalities and autonomous regions across China. Through the flattening of the supply chain,M&G Colipu continues to provide customers with one-stop service procurement solutions that reduce costand enhance efficiency. Relying on M&G Group's strong brand influence, strong financial strength, andrich product strength, M&G Colipu adheres to the information-based construction of an integrated,transparent and efficient procurement system. With the application of software and hardware intelligenttechnology and strong system integration technical support, such procurement system meets thediversified, complex and digital procurement needs of customers, creates a new enterprise serviceecological chain, and continues to create value for customers.
V. Financial Performance during the Reporting Period
In 2021, the Company revenue was RMB17,607,403,300, representing a year-on-year increase of
34.02%. The net profit attributable to shareholders of the listed company amounted to RMB1,517,866,100,representing a year-on-year increase of 20.90%, while net profit attributable to shareholders of the listedcompany after deducting non-recurring profit and loss amounted to RMB1,349,538,400, representing ayear-on-year increase of 22.38%. As at the end of 2021, the total asset of the Company amounted toRMB11,424,387,900, representing a year-on-year increase of 17.66%. The net asset attributable toshareholders of the listed company amounted to RMB6,194,892,000, representing a year-on-year increaseof 19.28%. The Company has maintained health growth and sound asset condition.
(1) Analysis of principal operation
1. Analysis of change in certain items in income statement and cash flow statement
Unit: Yuan Currency: RMB
| Item | Amount in the current period | Amount in the same period last year | Change in the proportion (%) |
| Revenue | 17,607,403,250.12 | 13,137,745,727.18 | 34.02 |
| Operation cost | 13,520,841,753.26 | 9,806,609,999.48 | 37.87 |
| Selling expenses | 1,397,645,460.82 | 1,103,184,023.51 | 26.69 |
| Administrative expenses | 745,024,738.28 | 602,627,135.41 | 23.63 |
| Financial expenses | 6,904,764.52 | 9,060,176.35 | -23.79 |
| R&D expenses | 188,758,215.50 | 160,178,941.89 | 17.84 |
| Net cash flow generated from operating activities | 1,561,196,420.77 | 1,271,697,892.28 | 22.76 |
| Net cash flow generated from investing activities | -662,837,857.46 | -1,065,448,932.04 | Not applicable |
| Net cash flow from financing activities | -729,259,846.78 | -200,057,726.09 | Not applicable |
| Taxes and surcharges | 66,507,958.32 | 50,694,964.71 | 31.19 |
| Other income | 72,747,727.93 | 45,665,409.77 | 59.31 |
| Investment income | 6,293,164.04 | 3,851,154.70 | 63.41 |
| Credit impairment losses | -7,013,714.54 | -38,225,902.12 | Not applicable |
| Asset impairment loss | -17,091,366.45 | -40,287,483.83 | Not applicable |
| Gains from asset disposal | 6,098,090.22 | 169,704.92 | 3,493.35 |
Explanation on the reason for change in revenue: During the Reporting Period, sales continued to grow,with 17% growth in core traditional business and 56% growth in new business.Explanation on the reason for change in operating cost: The increase in sales results in the increase inoperating cost.Explanation on the reason for change in net cash flow from investing activities: During the reportingperiod, the net outflow decreased compared with the same period last year, mainly due to the decrease inthe net outflow of bank financial products compared with the same period last year.Explanation on the reason for change in net cash flow from financing activities: The increase in net outflowduring the Reporting Period compared with the same period last year is mainly due to: 1. minorityshareholders paying cash in equity for the acquisition of M&G Life during the Reporting Period; 2.implementing new lease criteria and reclassifying the rent paid from operating activities to financingactivities; 3. increase in cash dividend distribution from the same period last year.Reason for the change in taxes and surcharges: The increase in sales results in the increase in taxes.Explanation on the reason for change in other income: M&G Colipu received more government subsidiesrelated to its operations compared with the same period last year.Explanation on the reason for change in investment income: The income from wealth managementproducts received during the Reporting Period increased compared with the same period last year.Explanation on the reason for change in credit impairment losses: M&G Colipu accrued the bad debtprovision for prepaid accounts in the same period last year.Explanation on the reason for change in asset impairment losses: The provision for goodwill impairmentloss was accrued in the same period last year.Explanation on the reason for change in income from asset disposal: The income from disposal of someassets during the Reporting Period increased compared with the same period last year.
A detailed description of the major changes in the Company's business type, profit composition or profitsource in the current period
□ Applicable √ Not applicable
2. Analysis of revenue and cost
√ Applicable □ Not applicable
During the Reporting Period, the Company's core traditional business increased by 17% as compared tothe corresponding period of last year, and new business increased by 56% as compared to thecorresponding period of last year.
(1). Result of principal business by industry, product, region and sales model
Unit: Yuan Currency: RMB
| Result of principal business by industry | ||||||
| By industry | Revenue | Operation cost | Gross margin (%) | Change in revenue from last year (%) | Change in cost from last year (%) | Change in gross profit margin from last year (%) |
| Manufacturing and sales of stationery and office supplies | 9,164,013,924.44 | 6,154,383,727.87 | 32.84 | 18.31 | 19.15 | Decrease by 0.47 percentage points |
| Retail industry | 8,436,809,332.25 | 7,362,168,406.68 | 12.74 | 56.66 | 58.63 | Decrease by 1.08 percentage points |
| Service industry | 1,261,896.79 | / | / | -46.71 | / | / |
| Result of principal business by product | ||||||
| By product | Revenue | Operation cost | Gross margin (%) | Change in revenue from last year (%) | Change in cost from last year (%) | Change in gross profit margin from last year (%) |
| Writing | 2,819,668,310.67 | 1,675,601,917.98 | 40.57 | 23.65 | 24.18 | Decrease by 0.25 |
| instruments | percentage points | |||||
| Student stationery | 3,128,136,090.69 | 2,092,845,598.55 | 33.10 | 15.61 | 16.18 | Decrease by 0.33 percentage points |
| Office stationery | 3,338,458,451.38 | 2,406,762,021.35 | 27.91 | 18.32 | 18.88 | Decrease by 0.34 percentage points |
| Other products | 548,909,924.21 | 303,216,598.14 | 44.76 | 69.81 | 68.34 | Increase by 0.48 percentage points |
| Direct office supplies | 7,765,650,479.74 | 7,038,125,998.53 | 9.37 | 55.30 | 58.12 | Decrease by 1.61 percentage points |
| Management fee for franchising | 1,261,896.79 | / | / | -46.71 | / | / |
| Result of principal business by region | ||||||
| By geography | Revenue | Operation cost | Gross margin (%) | Change in revenue from last year (%) | Change in cost from last year (%) | Change in gross profit margin from last year (%) |
| China | 17,183,757,602.59 | 13,183,280,401.69 | 23.28 | 34.56 | 38.65 | Decrease by 2.26 percentage points |
| Other countries | 418,327,550.89 | 333,271,732.86 | 20.33 | 15.26 | 11.91 | Increase by 2.39 percentage points |
Principal business by industry, product, region, and sales model
1. Revenue from principal business of the Company includes revenue from manufacturing and sellingstationery and office supplies, revenue from retail industry and revenue from service industry.
2. Revenue from retail industry refers to revenue gained by M&G Colipu and M&G Life through sellingnon-M&G products. During the Reporting Period, sales of the above categories grew continuously.
3. Revenue from service industry refers to management fee for franchising. The reason for the decreaseduring the Reporting Period was that the management fee for franchising in the same period last yearconsisted of traditional channels and Jiumu Store. The franchise stores of traditional channels stoppedcharging franchise management fees since 2017. The management fees that have been collected arerecognized in the benefit year, and have been fully recognized by the end of 2020. During the ReportingPeriod, the management fee for franchising is only the part charged by Jiumu Store.
4. Writing instruments refer to products of writing utensil sold by the Company (excluding M&G Colipu).
5. Student stationery refers to products of student stationery sold by the Company (excluding M&GColipu).
6. Office stationery refers to products of office supplies sold by the Company (excluding M&G Colipu).
7. Other products refer to products sold by the Company (excluding M&G Colipu) apart from writinginstruments, student stationery and office supplies. During the Reporting Period, the business of JiumuStore developed rapidly.
8. Direct office supplies refer to products in all categories sold by M&G Colipu. During the ReportingPeriod, business of M&G Colipu developed rapidly.
Unit: RMB 0'000
| Result of revenue by business | ||||
| Business | Revenue in 2021 | Revenue in 2020 | Change in amount | Change |
| Core traditional business | 888,041.44 | 757,611.01 | 130,430.43 | 17% |
| Colipu Office Supplies business | 776,565.05 | 500,027.59 | 276,537.46 | 55% |
| Large retail store business | 105,406.13 | 65,484.36 | 39,921.77 | 61% |
| Transactions offset | -9,272.29 | -9,348.39 | 76.10 | Notapplicable |
| Total | 1,760,740.33 | 1,313,774.57 | 446,965.76 | 34% |
(2). Analysis of production and sales volume
√ Applicable □ Not applicable
| Major products | Unit | Production | Sales | Inventory | Change in production from last year (%) | Change in sales from last year (%) | Change in inventory from last year (%) |
| Writing instruments | Piece | 2,725,504,078 | 2,722,066,365 | 598,473,624 | 17.09 | 17.67 | 0.58 |
| Student stationery | Piece | 5,740,014,834 | 5,738,966,028 | 665,367,649 | 7.17 | 7.55 | 0.16 |
| Office stationery | Piece | 1,901,462,010 | 1,893,466,329 | 163,035,860 | 17.26 | 17.96 | 5.16 |
| Other products | Piece | 17,478,919 | 16,031,840 | 7,540,044 | 70.78 | 67.82 | 23.75 |
| Direct office supplies | Numbers | 462,390,344 | 462,875,797 | 21,797,693 | 23.20 | 23.71 | -2.18 |
Explanation on production and sales volumeThe simultaneous increase in the production volume and sales volume of other products was mainlyattributable to the growth of the business of Jiumu Store.
(3). Performance of major procurement contracts and major sales contracts
□ Applicable √ Not applicable
(4). Analysis of cost
Unit: RMB Yuan
| By industry | |||||||
| By industry | Cost item | Amount in the current period | Percentage of total costs for the current period (%) | Amount in the same period last year | Percentage of total costs for the same period last year (%) | Percentage change in the amount for the current period as compared to the same period last year (%) | Explanation on the situation |
| Manufacturing and sales of stationery and office supplies | Cost of principal business | 6,154,383,727.87 | 45.53 | 5,165,288,162.73 | 52.67 | 19.15 | |
| Retail industry | Cost of principal business | 7,362,168,406.68 | 54.47 | 4,641,066,357.09 | 47.33 | 58.63 | |
| Service industry | / | / | / | / | / | / | |
| By product | |||||||
| By product | Cost item | Amount in the current period | Percentage of total costs for the current period (%) | Amount in the same period last year | Percentage of total costs for the same period last year (%) | Percentage change in the amount for the current period as compared to the same period last year (%) | Explanation on the situation |
| Writing instruments | Cost of principal business | 1,675,601,917.98 | 12.40 | 1,349,337,371.37 | 13.76 | 24.18 | |
| Student stationery | Cost of principal business | 2,092,845,598.55 | 15.48 | 1,801,327,917.08 | 18.37 | 16.18 | |
| Office stationery | Cost of principal business | 2,406,762,021.35 | 17.81 | 2,024,465,110.41 | 20.64 | 18.88 | |
| Other products | Cost of principal business | 303,216,598.14 | 2.24 | 180,119,757.57 | 1.84 | 68.34 | |
| Direct office supplies | Cost of principal business | 7,038,125,998.53 | 52.07 | 4,451,104,363.39 | 45.39 | 58.12 | |
| Management fee for franchising | / | / | / | / | / | / | |
Explanation on other situations of cost analysisCost increased simultaneously with sales. The growth in the costs of other products and direct officesupplies business is mainly due to the rapid development of the businesses of Jiumu Store and M&GColipu as well as the increase in sales volume.
(5). Change in the scope of consolidation due to change in the equity of major subsidiaries duringthe Reporting Period
□ Applicable √ Not applicable
(6). Major change in or adjustment to the Company's business, products or services during theReporting Period
□ Applicable √ Not applicable
(7). Major customers and suppliers
A. Major customers of the CompanySales of the top 5 customers amounted to RMB3,428,820,000, accounting for 19.47% of the total annualsales. Of the sales of the top 5 customers, sales of related parties amounted to RMB0, accounting for 0%of the total annual sales.
Unit: RMB Yuan
| Rank | Customer name | Amount | Related relationship |
| 1 | First | 955,989,559.24 | No |
| 2 | Second | 951,207,384.99 | No |
| 3 | Third | 573,513,431.36 | No |
| 4 | Fourth | 485,163,509.56 | No |
| 5 | Fifth | 462,949,866.20 | No |
| Total | 3,428,823,751.35 |
During the Reporting Period, the sales attributable to a single customer exceeded 50% of the total sales,there are new customers among the top 5 customers, or a small number of customers were heavilydepended on.
□ Applicable √ Not applicable
B. Major suppliers of the CompanyPurchase amount of the top 5 suppliers amounted to RMB1,542,210,000, accounting for 11.57% of thetotal annual purchase amount. Of the purchase amount of the top 5 suppliers, purchase amount of relatedparties amounted to RMB0, accounting for 0% of the total annual purchase amount.
Unit: RMB Yuan
| Rank | Rank of suppliers | Amount | Related relationship |
| 1 | First | 469,791,220.48 | No |
| 2 | Second | 374,546,120.03 | No |
| 3 | Third | 323,688,344.90 | No |
| 4 | Fourth | 254,466,232.55 | No |
| 5 | Fifth | 119,720,153.14 | No |
| Total | 1,542,212,071.10 |
During the Reporting Period, the procurement from a single supplier exceeded 50% of the total amount,and there were new suppliers among the top 5 suppliers or a small number of suppliers were heavilydepended on.
□ Applicable √ Not applicable
Other descriptionsNo
3. Expenses
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item in statement | Amount in the current period | Amount in the last period | Change in the proportion (%) | Reason for change |
| Selling expenses | 1,397,645,460.82 | 1,103,184,023.51 | 26.69 | |
| Administrative expenses | 745,024,738.28 | 602,627,135.41 | 23.63 | |
| R&D expenses | 188,758,215.50 | 160,178,941.89 | 17.84 | |
| Financial expenses | 6,904,764.52 | 9,060,176.35 | -23.79 |
4. R&D investment
(1). Table of R&D investment
√ Applicable □ Not applicable
Unit: RMB Yuan
| Expensed R&D investment in the current period | 188,758,215.50 |
| Capitalized R&D investment in the current period | 0.00 |
| Total R&D investment | 188,758,215.50 |
| Proportion of total R&D investment in revenue (%) | 1.07 |
| Percentage of capitalized R&D investment (%) | 0.00 |
(2). Details of R&D personnel
√ Applicable □ Not applicable
| Number of the Company's R&D staff | 450 |
| Percentage of the number of R&D staff to the Company's total number of employees (%) | 8.14 |
| Educational background structure of R&D personnel | |
| Category | Number of people |
| Doctor's degree | 1 |
| Master's degree | 36 |
| Bachelor | 251 |
| College degree | 91 |
| High school and below | 71 |
| Age structure of R&D personnel | |
| Category | Number of people |
| < 30 years old (exclusive) | 232 |
| 30 - 40 years old (including 30 years old, excluding 40 years old) | 162 |
| 40 - 50 years old (including 40 years old, excluding 50 years old) | 48 |
| 50 - 60 years old (including 50 years old, excluding 60 years old) | 8 |
| > 60 years old | 0 |
(3). Explanation
√ Applicable □ Not applicable
The total R&D investment of the parent company accounted for 3.42% of the parent company's revenue.
(4). Reasons for the major changes in the composition of R&D personnel and the impact on the
future development of the Company
□ Applicable √ Not applicable
5. Cash flow
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item | Amount in the current period | Amount in the same period last year | Change in the proportion (%) | Reason for change |
| Net cash flow generated from operating activities | 1,561,196,420.77 | 1,271,697,892.28 | 22.76 | |
| Net cash flow generated from investing activities | -662,837,857.46 | -1,065,448,932.04 | Not applicable | During the Reporting Period, the net outflow decreased compared with the same period last year, mainly due to the decrease in the net outflow of bank financial products compared with the same period last year. |
| Net cash flow from | -729,259,846.78 | -200,057,726.09 | Not applicable | The increase in net outflow during the Reporting |
| financing activities | Period compared with the same period last year is mainly due to: 1. minority shareholders paying cash in equity for the acquisition of M&G Life during the Reporting Period; 2. implementing new lease criteria and reclassifying the rent paid from operating activities to financing activities; 3. increase in cash dividend distribution from the same period last year. |
(2) Explanation on significant change of profit caused by non-core business
□ Applicable √ Not applicable
(3) Analysis of assets and liabilities
√ Applicable □ Not applicable
1. Assets and liabilities
Unit: RMB Yuan
| Items | Amount as at the end of the current period | Percentage of total assets at the end of current period (%) | Amount as at the end of last period | Percentage of total assets at the end of last period (%) | Change in percentage for the current period over the last period (%) | Explanation |
| Bills receivable | 39,712,146.72 | 0.35 | / | / | Not applicable | During the Reporting Period, the commercial acceptance bills of M&G Colipu increased compared with the beginning of the year. |
| Receivables financing | 22,824,707.62 | 0.20 | 61,412,976.46 | 0.63 | -62.83 | During the Reporting Period, the bank acceptance bills of M&G Colipu decreased compared with the beginning of the year. |
| Prepayment | 90,826,293.94 | 0.80 | 131,596,384.76 | 1.36 | -30.98 | The advance payment by M&G Colipu decreased compared with the beginning of the year. |
| Other current assets | 85,797,733.53 | 0.75 | 27,286,607.30 | 0.28 | 214.43 | The Company's receivable return cost and VAT credit refund increased compared with the beginning of the year. |
| Right-of-use assets | 357,540,113.34 | 3.13 | / | / | Not applicable | During the Reporting Period, the new lease criteria were implemented to increase the lease-related right-of-use assets. |
| Intangible assets | 434,848,138.70 | 3.81 | 320,746,328.60 | 3.30 | 35.57 | The intangible asset of trademark right of Back to School Holding AS in Norway was acquired during the Reporting Period. |
| Goodwill | 63,529,740.20 | 0.56 | / | / | Not applicable | Consideration for the acquisition of Back to School Holding AS in Norway exceeded the assessed net assets during the Reporting Period |
| Long-term | 162,206,827.46 | 1.42 | 99,035,852.78 | 1.02 | 63.79 | The decoration costs for |
| prepaid expenses | office buildings in Songjiang were increased. | |||||
| Deferred income tax assets | 153,856,300.50 | 1.35 | 99,939,414.58 | 1.03 | 53.95 | The deferred income tax assets formed increased due to the implementation of new lease criteria to recognize the lease liabilities during the Reporting Period, the difference in the asset amortization between the parent and subsidiary companies of M&G Colipu, and the time difference in the recognition of estimated return income. |
| Other non-current assets | 8,543,306.18 | 0.07 | 6,258,468.47 | 0.06 | 36.51 | The prepayment for equipment increased during the Reporting Period. |
| Derivative financial liabilities | 147,570.52 | 0.00 | / | / | Not applicable | The derivative financial liabilities of Back to School Holding AS in Norway were acquired during the Reporting Period. |
| Bills payable | 172,167.42 | 0.00 | / | / | Not applicable | Commercial bill issued by M&G Colipu for procuring commodities during the Reporting Period. |
| Non-current liabilities due within one year | 178,611,602.65 | 1.56 | / | / | Not applicable | During the Reporting Period, the new lease criteria were implemented to increase the lease-related lease liabilities due within one year. |
| Other current liabilities | 90,875,521.97 | 0.80 | 13,746,089.97 | 0.14 | 561.10 | The possible return liabilities estimated by M&G Colipu increased. |
| Lease liabilities | 172,924,166.21 | 1.51 | / | / | Not applicable | During the Reporting Period, the new lease criteria were implemented to increase the lease-related lease liabilities for more than one year. |
| Estimated liabilities | 35,311,258.55 | 0.31 | 12,211,357.80 | 0.13 | 189.17 | The repurchase obligations of the minority shareholders of Back to School Holding AS in Norway were acquired during the Reporting Period. |
| Deferred income tax liabilities | 92,665,937.38 | 0.81 | 36,781,069.25 | 0.38 | 151.94 | The deferred income liabilities formed increased due to the premium acquisition of Back to School Holding AS in Norway, the implementation of the new lease criteria to |
recognize the right-of-use assets, and the timedifference in therecognition of estimatedreturn costs.
Other descriptionsNo
2. Overseas assets
√ Applicable □ Not applicable
(1) Asset size
Including: overseas assets of 270,595,910.87 (unit: Yuan, currency: RMB), accounting for 2.37% of thetotal assets.
(2) Explanation for the high proportion of overseas assets
□ Applicable √ Not applicable
3. Major restricted assets as at the end of the Reporting Period
√ Applicable □ Not applicable
(1) On 16 September 2021, Axus Stationery and China Merchants Bank Shanghai Branch enteredinto the Line Credit Agreement numbered 121XY2021031380 with the credit line of RMB180,000,000.00for 36 months from 16 September 2021 to 15 September 2024. The specific types of line business include,but are not limited to, working capital loans, bank notes, and letters of credit.On 16 September 2021, Axus Stationery and China Merchants Bank Shanghai Branch entered intothe Maximum Mortgage Contract numbered 121XY2021031380, which is a sub-contract of the LineCredit Agreement. The maximum principal limit of the mortgage under this contract isRMB180,000,000.00, and the mortgage limit is valid from 16 September 2021 to 15 September 2024.The mortgage term runs from the effective date of the mortgage contract to the expiration of theperiod of the creditor's rights claims under the Credit Agreement. The collaterals for mortgage include:
| Name of collateral | Ownership No. | Original value | Accumulated depreciation | Net value |
| No. 111, Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 015437 | 47,061,453.52 | 27,468,676.83 | 19,592,776.69 |
| No. 233, Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 013396 | 32,156,238.78 | 14,464,816.47 | 17,691,422.31 |
| No. 333, Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2015) No. 015718 | 60,230,210.97 | 18,199,423.55 | 42,030,787.42 |
| Total | 139,447,903.27 | 60,132,916.85 | 79,314,986.42 | |
As of 31 December 2021, the outstanding loan of Axus Stationery was RMB156,500,000.00 andUSD1,500,000.00.
(2) On 7 August 2017, the subsidiary, Back to School Holding AS, borrowed a long-term loan froma local bank in Norway with all the shares held by the Group's subsidiary, Beckmann AS, as pledge. Asof 31 December 2021, the balance of the loan was NOK14 million and was presented in the non-currentliabilities due within one year in the statements.
(3) As of the end of the Reporting Period, the Company had restricted monetary funds ofRMB1,471,167,575.95, mainly including letter of credit deposit, performance bond, and fixed depositover 3 months.
4. Other descriptions
□ Applicable √ Not applicable
(4) Analysis on industry operating information
√ Applicable □ Not applicable
For details, see "II. Description of the Company's industry conditions during Reporting Period" in"Section III Management Discussion and Analysis" of this report.
(5) Analysis of investment
Overall analysis of external equity investment
√ Applicable □ Not applicable
During the Reporting Period, the Company made foreign investments.
(1) In June 2021, the Company signed the Equity Transfer Agreement with Shanghai TianwanInternational Logistics Co., Ltd. to transfer 40% of the equity of M&G Life held by it at the transfer priceof RMB180 million. The equity change registration and equity delivery have been completed on 25 June2021.In July 2021, M&G Life and Shanghai Youherui Enterprise Management Consulting Partnershipsigned the Equity Transfer Agreement to transfer its 15% equity in Jiumu Store at the transfer price ofRMB67.5 million. The equity change registration and equity delivery have been completed on 29 July2021.
(2) In August 2021, the Company held a cloud signing ceremony with Back to School Holding AS,a Norwegian schoolbag brand. The Company invested RMB186 million to acquire 91.4% of Back toSchool Holding AS's equity, and the equity delivery has been completed on 1 September 2021. Theacquisition of Back to School Holding AS is an important milestone in M&G's world-class vision and anew round of five-year strategy plan. In the future, the Company will provide more diversified purchasingoptions and professional quality assurance for global consumers.
1. Significant equity investment
□ Applicable √ Not applicable
2. Significant non-equity investment
□ Applicable √ Not applicable
3. Financial assets measured at fair value
□ Applicable √ Not applicable
4. Progress of major asset restructuring and integration during the Reporting Period
□ Applicable √ Not applicable
(6) Sale of significant assets and equity interests
□ Applicable √ Not applicable
(7) Analysis of major controlled companies and shareholding companies
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Company Name | Nature of the business | Major products and services | Registered capital | Total asset | Net assets | Net profit |
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | Wholesale and retail | Stationery and office supplies | 1,000.00 | 3,710.41 | -40.45 | 562.94 |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | Wholesale and retail | Office supplies | 66,000.00 | 309,536.21 | 82,018.44 | 24,198.53 |
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | Wholesale and retail | Stationery and office supplies | 19,941.94 | 132,902.25 | 57,615.46 | 10,859.99 |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | Wholesale and retail | Stationery and office supplies | 10,000.00 | 88,764.87 | -2,827.83 | -2,108.65 |
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | Manufacturing, wholesale and retail | Stationery and office supplies | 3,000.00 | 4,357.70 | 3,952.32 | 110.01 |
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | Wholesale and retail | Office supplies | 5,000.00 | 18,042.15 | 3,069.15 | -2,529.62 |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | Design and so forth | Design, office supplies and so forth | 2,000.00 | 1,948.30 | 1,189.83 | -26.36 |
| Shanghai M&G Office Stationery Co., Ltd. | Wholesale and retail | Office supplies | 5,000.00 | 49,808.34 | 23,724.15 | 10,672.06 |
| Axus Stationery (Shanghai) Company Ltd. | Production, sale and so forth | Stationery and office supplies | 8,100.00 | 66,266.56 | 9,561.57 | -7,727.66 |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | Service | Information Consultation | 22,000.00 | 28,948.55 | 22,081.14 | -827.92 |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | Service | Creative service | 10,000.00 | 4,944.44 | 4,494.75 | -505.25 |
(8) Structured entities controlled by the Company
□ Applicable √ Not applicable
VI.Discussion and Analysis on Future Development of the Company
(1) Industry pattern and trend
√ Applicable □ Not applicable
With the changes in the way of life and consumption habit of consumers, China’s retail industryentered a new stage of redevelopment and innovation. Stationery industry faces challenges withuncertainty of external environment, diversification of retail channels, and more individualized demandsfrom main customers group (now being the post-90s and post-00s). With the changing demographics ofChina in particular the decreasing birth rate, stationery industry revenue growth comes less from by unitvolume growth, and more from consumption upgrade and product upgrade. Domestic market demand formid- to high-end stationery products keeps increasing, reshaping market structure dominated by low-endproducts. This provides opportunities for mid- to high-end stationery products with better quality andhigher price. China's population of 1.4 billion accounts for about 18% of global population, while leadingstationery companies in China can continue to mostly rely on the huge domestic market, they also haveroom for international expansion in international markets, which could reinforce each other underfavorable conditions.
Leading enterprises focused on building omni-channel operation capabilities and realized refinedmanagement over the offline channels. With the popularity of the Internet, smart phones, and onlinetransactions, people's consumption habits and consumption scenarios have changed. Consumers' access toinformation is becoming more fragmented, and new-generation marketing means are becoming morediversified, including online media platforms (such as Weibo, WeChat, Xiaohongshu, Tiktok) and IP topiccreation, which further tests enterprises' ability to make quick response to industry trends. Compared withsmall- and medium-sized enterprises, leading enterprises boast stronger and richer whole networkmarketing and operation capabilities. They formulate refined marketing strategies by city to reachconsumers and capture fragmented traffic to achieve traffic attraction and conversion for online and offlinebusinesses. To improve the stores' initiative marketing and traffic operation capabilities, in addition to
online traffic, offline channels are also required to realize refined management by empowering channelsthrough organizational reform and information system. According to the National Bureau of Statistics,online retail sales across the country recorded RMB13 trillion in 2021, an increase of 14%. Outstandingcompanies in the consumer industry seized the development opportunities of online consumption andachieved continuous sales growth through online and offline integration.Traditional retail stationery shops nearby school are still the dominant channel for China’s stationeryindustry, and shares of other retail formats are increasing faster. Sales terminals and channels of theindustry are becoming more diversified, upgrading and competition in channels becomes more obvious.Domestic consumption for stationery in China becomes more brand conscious, innovative, individualizedand more premium. There is a growing demand for premium cultural and creative products, stationeryproducts are moving from those primarily focus on functionality towards those with more cultural andcreative elements catering to customers. There are around thousands of stationery manufacturers in China'sdomestic stationery industry and the industry is quite decentralized. There are a few leading companiesfor most sub-category stationery products, with continued development in the stationery industry, therecould be higher industry consolidation, and leading companies could gain larger market shares.
In recent years, in the context of the digital economy, thanks to favorable factors such as policydriving, the rapid advancement of centralized procurement by large- and medium-sized enterprises, andthe competition among various digital procurement service providers, great progress has been made in thedigitalization, e-commerce and centralization of public procurement in China, which have become themain form of public resource transactions from central to local governments. Facing the shock of economicsituation at home and abroad, digital, e-commerce, and centralized procurement exhibits advantageouscoordination and quick response ability.
According to the China Public Procurement Development Report (2020) compiled and released byChina Federation of Logistics & Purchasing, the scale of public procurement transactions in China in 2019exceeded RMB20 trillion, accounting for more than 20% of China's total GDP. In terms of the procurementscale of the government, State-owned Key Enterprises, and local state-owned enterprises, the annualprocurement scale of government and enterprises in China is also quite large. According to relevantestimates, the market size of office supplies in China exceeds RMB2 trillion (data source:
www.chyxx.com). In addition, the market size of employee benefits and other categories is also quite large.
With the further development and application of information technology, traditional industries havegained growth momentum in the digital age. Industrial digitization is becoming the main pillar of thedigital economy, and traditional industries are actively gaining new development momentum throughdigital empowerment. The investment in the manufacturing industry has shifted from the investment inequipment and assembly lines to the transformation of digital processes and digital transformation ofproducts, in a bid to apply digital technology to reduce channel costs and management costs and becomea digital-driven modern enterprise.
With smart technology and products upgrade, promotion of national education informatization andthe development of the online education market, smart stationery products have developed rapidly in thepast few years. Technology-empowered smart pens and smart books are widely adopted in onlineeducation, providing an increasingly better user experience. Technology-empowered smart pens and smartbooks are widely adopted in online education, providing a better user experience.
(2)Development strategy of the Company
√ Applicable □ Not applicable
1. Development strategy of the Company
To consolidate competitive advantages of core businesses by adhering to the mission of "make studyand work more joyful and effective", being consumer centric, and emphasizing on innovation oftechnology and products; to further expand new businesses of one-stop office supplies service and directretail; to actively expand international market; and to promote digitalization, organization developmentand talents, and investment and mergers and acquisitions with synergy. With continued efforts in thosefour areas, the Company will realize the vision of becoming a "world-class M&G".
2. Sustainable development strategy
In order to realize the vision of “World-class M&G”, M&G Stationery has developed a sustainabledevelopment strategy together with its business strategy. With its vision of “Writing a SustainableBusiness Future”, M&G Stationery aims to lead the sustainable development of the industry by focusing
on four pillars: sustainable products, response to climate change, sustainable supply chain and empoweringemployees and communities.
(3)Operation plan
√ Applicable □ Not applicable
In 2022, the Company plans revenue of RMB20,900,000,000, a year-on-year increase of 19%, mainlythrough the following:
Making good use of the advantages in channel, brand, design and R&D and supply chain, theCompany is expected to maintain fast and stable growth in core traditional business, improve the qualityof development, implement high-end strategy and enhance quality of online products.
Push the four segments comprehensively
① Mass market stationery segment
The Company will continue to focus on medium and long life cycle products, exert more efforts inthe development of long-term products that are available with new functions, new technologies and athigher prices, distribute the price range reasonably, and focus on breaking through key categories. TheCompany continuously optimizes the new product development process to reduce the lead time of productdevelopment and sorts out high-quality sub new products. Coordination will be made with online channelto output integrated promotion program so as to enhance the sales of mass market segment products.
② Premium stationery segment
The Company will continue to optimize the existing product mix of premium stationery segment,achieve quality upgrade and category breakthroughs, increase the contribution of single products, create aseries of best-selling products, increase the on-shelf rate of best-selling products at key stationery shops,and increase the proportion of premium stationery segment in traditional channels; develop tailoredpremium stationery products for Jiumu Store, direct supply channels nationwide, E-commerce and APPsto better meet demand of high-end consumers; focus on online leading stores and achieve breakthroughsin core best-selling products.
③ Office supplies segment
The Company will strengthen the development and promotion of office products, continue to promotethe development of M&G office stores and the development of model office stores, and realize the rolloutof core products; strengthen service empowerment through direct supply from the headquarters, focus onthe exploitation of potential key accounts through the direct supply from partners, highlight thedevelopment of online product offerings, and drive the overall growth of the office segment.
④ Arts and kids drawing segment
The Company will improve the management mechanism of new and old products, sort out thecategory structure in grid, focus on the continuous promotion of best-selling products and long life cycleproducts, and expand the educational products; offer all categories of products in various online platforms
to continue to increase online share; put more efforts on key stores in key cities, build dedicated zones andpromote the launch of key products.
Promote omni-channel offeringsThe Company will focus on key stationery shops, improve single store quality, facilitate theoptimization and upgrade of franchise stores and distribution centers, and upgrade channels. Besides, theCompany will also strengthen promotion for categories and dedicated zones for products to increase onshelf ratio of the must-have products, increase presence in major business districts, increase the salesvolume, and expand market share; promote direct supply of office products and premium stationeryproducts both at headquarters and partners level to create incremental sales; continue to improve the orderfulfillment rate and the number of active stationery shops of M&G Alliance APP.M&G Technologies will join in hands with product segments to launch online products and build astandard process for online product development, and use multi-store + flagship store for refinedoperations to improve efficiency; accelerate the development of new channel business, quickly achievemarket ranking, and build promotion matrix of celebrity, live broadcast and video, to promote new channelbusiness; promote a more refined membership operations
Promote digital constructionIn line with corporate strategy, the Company plans to build the foundation for M&G's datagovernance, initiate quick-win projects for members and channels, and improve products and corebusiness processes of the supply chain. The Company will establish a unified data standard to improveM&G's data analysis capabilities, further strengthen the construction of data middleground, enhance datagovernance, and better drive business improvement by virtue of data; sort out and upgrade the existingdealer information system to improve the ability to "select the right stores and deliver the right goods";use member operations as a key handle to grow online business.
Reasonably plan capacity layoutThe Company will plan the national layout of logistics and capacity to lay a stronger foundation forfuture development; realize the transportation of products from the production base to the logistics basethrough the trunk line, quickly respond to market demand, and optimize the efficiency of the overall supplychain; consider setting up new logistics and production bases in South China and other regions in a bid tosupport existing business development, improve supply chain and logistics efficiency and achievesustainable development.
Continue to develop retail large store businessThe Company will continue to exert efforts on the optimization of membership operation and storeoperation standards, maintain the high-quality and rapid growth of offline channels and the higher growthof online business, and increase the repurchase rate and customer unit price. As M&G's bridgehead inupgrading its products and channels, Jiumu Store will work with the Company to increase the sales ratioof high-end products in this channel. M&G Life will sort out the product category structure, establish amanagement mechanism for regular products, increase the sales proportion of M&G, improve storeoperation capabilities, enhance the sales per employee, improve the quality of existing single store, andexplore together with the premium stationery segment to explore new business model.
Continue to grow M&G ColipuBusiness in direct office supplies continues to achieve booming development since M&G Colipufollows requirement on well-informed, open and transparent government procurement, and meetsrequirements that enterprises desire to increase procurement efficiency and reduce procurement cost fornon-production office and administration supplies. Brand enterprise continues to enhance competitivenessthrough improving service quality, enriching product categories, seeking more customers and developingnational supply chain system, so M&G Colipu is expected to maintain relatively rapid growth, and becomeone of the main competitors in the market of direct office supplies. M&G Colipu will focus on theexecution of the awarded projects and the promotion and expansion of the newly awarded large-scaleprojects; put forth effort into expanding the development of marketing gifts and MRO supply chain;continue to strengthen the construction of digitalization and information systems, with the digitalconstruction based on "four online": online organization, online communication, online business, andonline management, so as to improve efficiency by providing information tools instead of manual labor;
attract high-end leadership talents, consolidate the management team, improve the leadership ability ofthe management, and strengthen the construction of talent team.
(4) Potential risks
√ Applicable □ Not applicable
1. Risks in operation management
With the great growth in the scale of assets and sale of the Company, the Company faces newchallenges in operation management system, internal control system and staff management. Although theCompany has developed operation management system and internal control system that accord withfeatures of its business and technology in its development, and has recruited and cultivated stable coremanagement team, operation of the Company will be adversely affected if the aforesaid managementsystem and management staff fail to promptly adapt to the rapid expansion of the Company. Therefore,the Company will keep improving its management system and internal control system, and adopt variousmeasures to improve qualification of management staff.
2. Market risks
With social transformation and consumption upgrading, stationery market presents opportunities forstructure-based development. If the Company is unable to anticipate market trends in time and adapt tomarket changes from aspects of product upgrading, quality management to sale strategy, the Companywill encounter certain risks in market competition. Having been aware of the problem, the Companyenhanced product R&D under the guidance of the market, optimized product structure, and developed asounder quality management and control system. Market strategies are formulated based on market survey,analysis of big data and management discussion.
3. Risks from fiscal and taxation
According to Article 28 of Enterprise Income Tax Law of the People's Republic of China, theenterprise income tax on important high- and new-tech enterprises that are necessary to be supported bythe state shall be levied at the reduced tax rate of 15%. The Company was re-recognized as a nationalhigh- and new-tech enterprise on 28 October 2019, and started to implement the policy of reducedenterprise income tax rate of 15% on 1 January 2019 for 3 years. If the state adjusts preferential incometax policy for high- and new-tech enterprises, or the Company fails to pass the review after its qualificationof high- and new-tech enterprise expires, operation performance of the Company will be adverselyaffected. As such, the Company performs strict control according to assessment standards for high- andnew-tech enterprises to ensure that it meets all indicators, and qualifies and passes the annual review andrenewal for high- and new-tech enterprises.
4. Risks from COVID-19
At present, COVID-19 pandemic in China has been effectively controlled, but the impact of virusmutation and repeated epidemics on the macro–economy is uncertain, adding uncertainties to theCompany's operation in 2022. The Company pays close attention to the development of COVID-19, andadopts active measures to reduce risks and uncertainties brought by COVID-19.
5. Risks from macro policy
In July 2021, the release of the Opinions on Further Reducing the Burden of Homework and Off-Campus Training in Compulsory Education ("Double Reduction" policy) has a great impact on the K12education and training industry. In the stationery and office supplies industry, the release of the "DoubleReduction" policy and the online teaching driven by the epidemic control policy may affect the demandfor writing instruments and paper products. The Company will continue to pay attention to the impact ofthe "Double Reduction" policy and actively take countermeasures.
(5) Others
□ Applicable √ Not applicable
VII. Explanation on the Failure to Disclose as per Rules due to Inapplicability or Special Reasons
such as State Secrets and Business Secrets and the Reasons Thereof
□ Applicable √ Not applicable
Section IV Corporate Governance
I. Particulars on Corporate Governance
√ Applicable □ Not applicable
During the Reporting Period, the Company, in strict compliance with the Company Law, theSecurities Law, the Code of Corporate Governance for Listed Companies, and other relevant laws andregulations promulgated by the China Securities Regulatory Commission and the Shanghai StockExchange, continuously optimized the corporate governance structure of the Company and improved theoperational level of the Company, strengthened the management of insider information, and enhanced theawareness of information disclosure responsibility, to ensure continuous and stable development andeffectively protect the legitimate rights and interests of investors and relevant stakeholders. The specificgovernance situation was as follows:
1. Shareholders and general shareholders' meetings: The Company could hold general shareholders'meetings in accordance with the requirements of the Company Law, the Articles of Association, and theRules of Procedure of the General Shareholders' Meeting. Proposals, procedures, and voting at the generalshareholders' meetings were strictly implemented in accordance with the relevant provisions. Whenconsidering proposals related to related-party transactions, related shareholders avoided voting to ensurefair and reasonable related-party transactions. For the convenience of the Company's shareholders, generalshareholders' meetings allow its shareholders to vote on site or online. This ensures the minorityshareholders have the right to stay informed about and vote on major issues of the Company and participatein the operation of the company and this also helps protect the interests of minority shareholders.Resolutions adopted at general shareholders’ meetings met the requirements of laws and regulations, andcomplied with the lawful rights and interests of all shareholders, especially minority shareholders.
2. Controlling shareholders and the listed companies: the Company and the controlling shareholdersachieved "five independences" in finance, personnel, assets, business, and organization, and theCompany's Board of Directors, Board of Supervisors and internal control institutions operatedindependently; the Company's related transaction procedures were legal and the price was fair, and theobligation of information disclosure was fulfilled; the controlling shareholders had a normative behavior,and did not directly or indirectly interfere with the Company's decision-making and business activities bymanipulating the general shareholders' meetings.
3. Directors and the Board of Directors: All directors of the Company could, in accordance with theRules of Procedure of the Board of Directors and other systems, earnestly perform their duties as directorsand make prudent and scientific decisions. The convening of each meeting met the requirements ofrelevant regulations. The Company's Board of Directors had four special committees, namely, the StrategyCommittee, the Audit Committee, the Remuneration and Appraisal Committee, and the NominationCommittee. Each special committee carried out work in accordance with the relevant provisions of theimplementation rules, gave full play to the professional role of each special committee, strengthened thedemocratic and scientific decision-making of the Board of Directors, and ensured the sound developmentof the Company.
4. Supervisors and the Board of Supervisors: The Board of Supervisors of the Company wasresponsible for the Company and its shareholders, strictly implemented the relevant provisions of theCompany Law, the Articles of Association and the Rules of Procedure of the Board of Supervisors,earnestly fulfilled its duties, attended the general meeting of shareholders and the meetings of the Boardof Directors, convened the meetings of the Board of Supervisors, and exercised supervisory functions andpowers in accordance with the law, supervising corporate governance, major issues, financial conditions,and the compliance with rights and regulations of the Company's directors and senior management inperforming their duties, and promoting the legal and standardized operations of the Company.
5. Information disclosure and transparency: The Company adhered to the principle of "truth, accuracy,completeness, timeliness, and fairness", and strictly followed the requirements of temporaryannouncement and periodic report format guidelines for information disclosure. To help investors getfamiliar with the situation of the Company, the content to be disclosed must be concise, clear, and easy tounderstand and must truly and duly reflect the operating status of the Company.
Whether there are significant differences between corporate governance and laws, administrativeregulations and the requirements of the relevant regulations of the China Securities Regulatory
Commission on the governance of listed company; if there are significant differences, the reasons shouldbe explained
□ Applicable √ Not applicable
II. Measures taken by the controlling shareholders and actual controllers of the Company toensure the independence of the Company's assets, personnel, finance, organization, andbusiness, as well as the solutions taken to address the impact on the Company's independence,work progress and follow-up work plans
√ Applicable □ Not applicable
The Company was completely separated from the controlling shareholders in assets, personnel,finance, organization and business, possessing independent and complete business and the ability tooperate independently.
1. Asset independence
The Company had business premises that are independent from the controlling shareholders and hadan independent and complete asset structure. The Company had complete control over all assets, and noasset or fund was occupied by controlling shareholders to damage the interests of the Company.
2. Personnel independence
The personnel and remuneration management of the Company were completely independent. Thedirectors, supervisors and senior management of the Company were elected and appointed in strictaccordance with the relevant provisions of the Company Law and the Articles of Association. The president,vice president, chief financial officer and secretary of the Board of Directors of the Company did notreceive remuneration from the controlling shareholders and their affiliated enterprises and held anypositions other than directors and supervisors.
3. Financial independence
The Company had an independent financial and accounting department, has established anindependent accounting system and financial management system, and made financial decisionsindependently. The Company's chief financial officer and financial accounting personnel are all full-timestaff and do not hold part-time jobs in the controlling shareholder or their affiliated enterprises. TheCompany opened a basic deposit account independently and paid taxes independently.
4. Organizational independence
The Company has established a sound organizational system, which operates independently and hasno affiliation with the controlling shareholders or their functional departments.
5. Business independence
The Company's business is independent from the controlling shareholders and their affiliatedenterprises. The Company has an independent and complete design, R&D, manufacturing and sales system,conducts business independently, and does not rely on shareholders or any other related parties.
Engagement of controlling shareholders, actual controllers and other organizations under their control inthe same or similar business as the Company, as well as the impact of horizontal competition or majorchanges in horizontal competition on the Company, measures taken, progress of the resolution and thefollow-up resolution
□ Applicable √ Not applicable
III. Brief Introduction to General Shareholders' Meetings
| Session number | Convening date | Query index of the designated website on which the resolution is published | Disclosure date when the resolution is published | Resolution of meeting |
| 2020 annual general shareholders' meeting | 20 April 2021 | www.sse.com.cn | 21 April 2021 | Considered and approved 9 proposals, including the 2020 Work Report of the Board of Directors, the 2020 Work Report of the Board of Supervisors, the 2020 Financial Settlement Report, the 2020 Profit Distribution Plan, the 2020 Annual Report and Summary, and the Proposal on the Expected Daily Related Transactions in 2021, the 2021 Annual Financial Budget Report, the Proposal on the Remuneration Criteria of the Company's Directors in 2021, and the Proposal on the Appointment of the |
Company's 2021 Financial Report Audit Organizationand Internal Control Audit Organization.
Holders of the preferred shares with restored voting power request for convening extraordinary generalshareholders' meetings
□ Applicable √ Not applicable
Particulars on general shareholders' meetings
□ Applicable √ Not applicable
IV. Information on Directors, Supervisors and Senior Management
(1) Shareholding change and remuneration of directors, supervisors and senior management currently employed and retired during the Reporting Period
√ Applicable □ Not applicable
Unit: share
| Name | Position (note) | Gender | Age | From | To | Number of shares held at the beginning of the year | Number of shares held at the end of the year | Change in share of the year | Reasons for change | Total pre-tax remuneration from the Company during the Reporting Period (RMB 0'000) | Whether to get remuneration from related parties of the Company |
| Chen Huwen | Chairman | Male | 52 | 2014-6-12 | 2023-5-07 | 17,100,000 | 13,609,300 | -3,490,700 | Personal capital needs | 180.00 | No |
| Chen Huxiong | Vice Chairman and President | Male | 52 | 2014-6-12 | 2023-5-07 | 17,100,000 | 13,609,300 | -3,490,700 | Personal capital needs | 180.00 | No |
| Chen Xueling | Director and Vice President | Female | 55 | 2014-6-12 | 2023-5-07 | 10,800,000 | 8,100,000 | -2,700,000 | Personal capital needs | 100.00 | No |
| Fu Chang | Director and Vice President | Male | 52 | 2018-3-23 | 2023-5-07 | 109,200 | 108,016 | -1.184 | Equity incentive (Note 1) | 99.09 | No |
| Zhang Jingzhong | Independent director | Male | 59 | 2017-5-11 | 2023-5-07 | 0 | 0 | 0 | 15.00 | No | |
| Chen Jingfeng | Independent director | Male | 54 | 2017-5-11 | 2023-5-07 | 0 | 0 | 0 | 15.00 | No | |
| Cheng Bo | Independent director | Male | 47 | 2016-4-19 | 2022-4-19 | 0 | 0 | 0 | 15.00 | No | |
| Zhu Yiping | Chairman of the Board of Supervisors | Female | 63 | 2014-6-12 | 2023-5-07 | 0 | 0 | 0 | 0 | Yes | |
| Han Lianhua | Supervisor | Female | 44 | 2014-6-12 | 2023-5-07 | 0 | 0 | 0 | 0 | Yes | |
| Zhang Chaohua | Employee Supervisor | Female | 43 | 2020-5-08 | 2023-5-07 | 0 | 0 | 0 | 25.43 | No | |
| Zhou Yonggan | Vice President | Male | 47 | 2020-5-08 | 2023-5-07 | 102,400 | 102,928 | 528 | Equity incentive (Note 2) | 75.41 | No |
| Quan Qiang | Board Secretary | Male | 49 | 2017-3-31 | 2023-5-07 | 71,700 | 69,549 | -2,151 | Equity incentive (Note 3) | 98.63 | No |
| Total | / | / | / | / | / | 45,283,300 | 35,599,093 | -9,684,207 | / | 803.56 | / |
Note 1: During the Reporting Period, the 1,184 restricted shares of Fu Chang that had been granted but had not been lifted from the restriction were repurchased andcancelled due to the failure of personal performance assessment.
Note 2: During the Reporting Period, 3,600 restricted shares were granted to Zhou Yonggan. The 3,072 restricted shares of Zhou Yonggan that had been granted buthad not been lifted from the restriction were repurchased and cancelled due to the failure of personal performance assessment.Note 3: During the Reporting Period, the 2,151 restricted shares of Liu Quanqiang that had been granted but had not been lifted from the restriction were repurchasedand cancelled due to the failure of personal performance assessment.
| Name | Main working experience |
| Chen Huwen | Tsinghua University - Carlson School of Management, University of Minnesota - Doctor's degree Has been involved in the stationery and office manufacturing industry since 1997, PE equity investment since 2007, and stock and bond financial investment since 2015 and is one of the founders of M&G Group. Once worked as General Manager of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. Now works as the chairman of the Company and the chairman of M&G Colipu. Has won honors such as the Model Worker in China Light Industry and the "Top Ten Brand Leaders" in Shanghai in 2013. |
| Chen Huxiong | Executive MBA, Cheung Kong Graduate School of Business. Has been involved in the stationery manufacturing industry since 1995. Worked as General Manager of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. from 2001 to 2004, and Chairman of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd. from 2004 to 2009. Now works as Vice Chairman and President of the Company, and is also Vice Chairman of China Writing Instrument Association, Deputy Director of Ballpoint Pen Professional Committee of China Writing Instrument Association, and Chairman of China Writing Instrument Industry Technology Innovation Alliance. Won the "Nominated Award of Outstanding Entrepreneur of Shanghai in 2019-2020". |
| Chen Xueling | Has been involved in the stationery manufacturing industry since 1997 and is one of the founders of M&G Group. Once worked as Deputy General Manager of the Company's Production Center, and now works as a director and Vice President of the Company. |
| Fu Chang | Joined M&G Stationery in May 2006 and successively served as Deputy Director of Marketing Center and Director of Production Center. Now works as a director and Vice President of the Company. |
| Zhang Jingzhong | Worked in the Research Office of the Politics and Law Committee under the Zhejiang Provincial Party Committee from August 1984 to September 1988; and has been the Director at Zhejiang T & C Law Firm from October 1988 to present; served as a member of the Party Committee of the National Lawyer Industry since October 2017. |
| Chen Jingfeng | Once worked as Deputy General Manager and General Manager of Shanghai Dazhong Public Utilities (Group) Co., Ltd. and President of CMC Holdings, and is currently the Chairman of Zhongyun Capital. |
| Cheng Bo | Professor of accounting, doctor of accounting, senior accountant, senior member of the Accounting Society of China, the third-level talent of the New Century 151 Talent Project in Zhejiang Province. Started to work in a college or university in 2008 and is currently a teacher of economics and accounting specialty at Nanjing Audit University. Has long been engaged in scientific research and teaching in auditing and internal control, corporate governance and financial management. Has chaired more than 20 projects such as the National Social Science Fund of China and the Humanities and Social Science Fund under the Ministry of Education, and published more than 130 academic papers in various authoritative accounting journals and 5 academic monographs. |
| Zhu Yiping | Once worked as Deputy General Manager of Jiangsu Life Group Co., Ltd. and Deputy General Manager of Shanghai Yuhui Industrial Co., Ltd. Joined M&G Stationery in May 2003 and served successively as Chief Financial Officer of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Deputy Director of the Company's Financial Center, and Chief Financial Officer of M&G Group. Now works as the person in charge of internal control of M&G Group. |
| Han Lianhua | Once worked as Cashier of Shanghai Fengxian Qianqiao Grain Management Office, Chief Accountant of Shanghai Rongjian Chemical Plant, and Financial Director of Shanghai Office of Fengxian Modern Agricultural Park. Joined M&G Stationery in June 2006. Successively served as Financial Supervisor of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Shanghai M&G Zhenmei Stationery Co., Ltd., and Shanghai M&G Stationery & Gift Chain Management Co., Ltd., and Financial Manager of M&G Group. Now works as Chief Financial Officer of M&G Group. |
| Zhang Chaohua | Once worked as Business Commissioner of Shanghai Sino-Korean M&G Stationery Manufacturing Co., Ltd., Manager of Shanghai Apollo Machinery Co., Ltd., and Deputy Manager of M&G Group. Now works as Deputy Manager of the Company. |
| Zhou Yonggan | Joined M&G Stationery in August 2005 and successively served as Assistant to the Chairman, Deputy Director, Director of the Marketing Center, and General Manager of the Office Business Department. Now works as Vice President of the Company. |
| Quan Qiang | Senior manager of BNP Paribas Peregrine Brokerage, executive director of RBS China and chief representative of Beijing office, chief financial officer, BOD secretary and director of Guangxi Fenglin Wood Industry Group, general manager of Capital Market Department of China Wanda. Now works as the secretary of the BOD and acting as the chief financial officer of the Company. |
Particulars on other information
□ Applicable √ Not applicable
(2) Employment of directors, supervisors and senior management currently employed and retiredduring the Reporting Period
1. Employment in shareholders’ companies
√ Applicable □ Not applicable
| Name of person employed | Name of shareholder's company | Position held in shareholder's company | From | To |
| Chen Huwen | M&G Group | President | 2007-5-10 | |
| Chen Huwen | Keying Investment | General partner | 2011-2-18 | |
| Chen Huxiong | M&G Group | Chairman | 2007-5-10 | |
| Chen Huxiong | Jiekui Investment | General partner | 2011-2-18 | |
| Chen Xueling | M&G Group | Director | 2007-5-10 | |
| Zhu Yiping | M&G Group | Person in charge of internal control | 2020-1-01 | |
| Han Lianhua | M&G Group | Chief Financial Officer | 2020-1-01 | |
| Particulars on employment in shareholders' companies | Save for the personnel disclosed above, none of other directors, supervisors and senior management of the Company were employed by the shareholders' companies. | |||
2. Employment in other companies
√ Applicable □ Not applicable
| Name of person employed | Name of other companies | Position held in other companies | From | To |
| Chen Huwen | Shanghai Chenguang Venture Capital Center (L.P.) | General partner | 12 May 2011 | |
| Chen Huwen | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | General Manager | 26 May 2008 | |
| Chen Huxiong | Shanghai Chenguang Venture Capital Center (L.P.) | Limited Partner | 12 May 2011 | |
| Chen Huxiong | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | Chairman | 26 May 2008 | |
| Chen Xueling | Shanghai Chenguang Venture Capital Center (L.P.) | Limited Partner | 12 May 2011 | |
| Chen Xueling | Shanghai Chenguang Sanmei Property Investment Co., Ltd. | Director | 26 May 2008 | |
| Zhang Jingzhong | Zhejiang T & C Law Firm | Director | October 1988 | |
| Zhang Jingzhong | Kweichow Moutai Co., Ltd. | Independent director | August 2016 | |
| Zhang Jingzhong | Gansu Huangtai Wine-Marketing Industry Co., Ltd. | Independent director | October 2020 | |
| Zhang Jingzhong | Sundy Service Group Co., Ltd. | Independent non-executive director | January 2021 | |
| Chen Jingfeng | Zhongyun Capital | Chairman | October 2017 | |
| Cheng Bo | Nanjing Audit University | Full-time Teacher | July 2021 | |
| Cheng Bo | Hangzhou Silan Microelectronics Co., Ltd. | Independent director | June 2019 | |
| Cheng Bo | Shanghai Xinpeng Industry Co., Ltd. | Independent director | June 2020 | |
| Cheng Bo | Shanghai Construction Building Materials Technology Group Co., Ltd. | Independent director | June 2020 | |
| Particulars on employment in other companies | Save for the personnel disclosed above, none of other directors, supervisors and senior management of the Company were employed by other related companies. | |||
(3) Remuneration of directors, supervisors and senior management
√ Applicable □ Not applicable
| Decision-making procedures for the remuneration of directors, supervisors and senior management | According to the Articles of Association, the remuneration of directors and supervisors is determined by the general shareholders' meeting; and the remuneration of senior management is determined by the Board of Directors. |
| Determination basis for the remuneration of directors, supervisors and senior management | The annual remuneration of independent directors of the Company is considered and approved by the general shareholders' meeting. Other directors, supervisors and senior management who receive remuneration from the Company are subject to the operation performance appraisal on an annual basis and the pre-paid base salary on a monthly basis, and the annual remuneration is settled |
| after the Company's annual operation target is completed. | |
| Actual payment of the remuneration of directors, supervisors and senior management | RMB8,035,600 |
| Total remuneration actually received by all directors, supervisors and senior management at the end of the Reporting Period | RMB8,035,600 |
(4) Changes in directors, supervisors and senior management of the Company
□ Applicable √ Not applicable
(5) Particulars on punishments by securities regulatory authorities in the past three years
□ Applicable √ Not applicable
(6) Others
□ Applicable √ Not applicable
V. Meetings of the Board of Directors held during the Reporting Period
| Session number | Convening date | Resolution of meeting |
| The 5th meeting of the 5th session of Board of Directors | 26 March 2021 | 1. Considered and approved the 2020 Work Report of the Board of Directors 2. Considered and approved the 2020 Work Report of the President 3. Considered and approved the 2020 Financial Settlement Report 4. Considered and approved the 2020 Profit Distribution Plan 5. Considered and approved the Proposal on Changes in Accounting Policies 6. Considered and approved the 2020 Auditor’s Report 7. Considered and approved the 2020 Annual Report and Summary 8. Considered and approved the 2020 Work Report of Independent Directors 9. Considered and approved the 2020 Performance Report of the Audit Committee under the Board of Directors 10. Considered and approved the 2020 Internal Control Evaluation Report 11. Considered and approved the 2020 Social Responsibility Report 12. Considered and approved the Proposal on Determining the Annual Audit Remuneration in 2020 13. Considered and approved the Proposal on the Expected Daily Related Transactions in 2021 14. Considered and approved the 2021 Annual Financial Budget Report 15. Considered and approved the Proposal on the Remuneration Criteria of the Company's Directors in 2021 16. Considered and approved the Proposal on the Remuneration Criteria of the Company's Senior Management in 2021 17. Considered and approved the Proposal on the Appointment of the Company' 2021 Financial Report Audit Organization and Internal Control Audit Organization 18. Considered and approved the Proposal on Using Some Owned Funds for Investment and Financial Management 19. Considered and approved the Proposal on Repurchase and Cancellation of Some Restricted Shares 20. Considered and approved the Proposal to Hold the Company's 2020 Annual Shareholders' Meeting |
| The 6th meeting of the 5th session of Board of Directors | 28 April 2021 | 1. Considered and approved the main body and full text of the Report for the First Quarter of 2021 2. Considered and approved the Proposal on Adjusting the Repurchase Price of Restricted Shares |
| 7th meeting of the 5th session of Board of Directors | 29 April 2021 | Considered and approved the Proposal on Granting Reserved Restricted Shares to Incentive Objects under the 2020 Restricted Share Incentive Plan |
| The 8th meeting of the 5th session of Board of Directors | 28 May 2021 | Considered and approved the Proposal on Establishment of Conditions for Lifting Restricted Sales in Phase 1 of Initial Grant in 2020 Restricted Share Incentive Plan |
| The 9th meeting of the 5th session of Board of Directors | 26 August 2021 | Considered and approved the 2021 Semi-annual Report and Summary |
| The 10th meeting of the 5th session of Board of Directors | 28 October 2021 | Considered and approved the Report for the Third Quarter of 2021 |
VI. Performance of Functions and Duties by Directors
(1) Attendance of directors at board meetings and general shareholders' meetings
| Director Name | Independent director | Attendance at board meetings | Attendance at general shareholders' meetings | |||||
| Number of attendance required | Number of attendance in person | Number of attendance by communication | Number of attendance by proxy | Number of absence | Two consecutive absences in person | Number of attendance at general shareholders' meetings | ||
| Chen Huwen | No | 6 | 6 | 4 | 0 | 0 | No | 1 |
| Chen Huxiong | No | 6 | 6 | 4 | 0 | 0 | No | 0 |
| Chen Xueling | No | 6 | 6 | 4 | 0 | 0 | No | 1 |
| Fu Chang | No | 6 | 6 | 4 | 0 | 0 | No | 0 |
| Zhang Jingzhong | Yes | 6 | 6 | 5 | 0 | 0 | No | 0 |
| Chen Jingfeng | Yes | 6 | 6 | 4 | 0 | 0 | No | 0 |
| Cheng Bo | Yes | 6 | 6 | 5 | 0 | 0 | No | 1 |
Particulars on two consecutive absences in person from board meetings
□ Applicable √ Not applicable
| Number of board meetings held during the year | 6 |
| Including: on site | 2 |
| by communication | 4 |
| on site and by communication | 1 |
(2) Directors' objections to the Company's related matters
□ Applicable √ Not applicable
(3) Others
□ Applicable √ Not applicable
VII. Special Committees under the Board of Directors
√ Applicable □ Not applicable
(1). Members of special committees under the Board of Directors
| Type | Name of member |
| Audit Committee | Cheng Bo, Chen Huwen, Zhang Jingzhong |
| Nomination Committee | Chen Jingfeng, Chen Huxiong, Zhang Jingzhong |
| Remuneration and Appraisal Committee | Zhang Jingzhong, Chen Huxiong, Cheng Bo |
| Strategy Committee | Chen Huwen, Chen Jingfeng, Cheng Bo |
(2). During the Reporting Period, the Audit Committee held 5 meetings
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 19 March 2021 | First meeting of the Audit Committee in 2021 | 1. Considered and approved the Work Summary of the Audit Department in 2020 2. Considered and approved the Work Plan of the Audit Department in 2021 | Debriefed and reviewed the work summary for this year and the next year's work plan of the Company's Internal Audit Department, and guided the operation of the Internal Audit Department. |
| 26 March 2021 | Second meeting of the Audit Committee in 2021 | 1. Considered and approved the 2020 Performance Report of the Audit Committee under the Board of Directors 2. Considered and approved the Proposal on Changes in Accounting Policies 3. Considered and approved the 2020 Auditor's Report 4. Considered and approved the 2020 Internal Control Evaluation Report 5. Considered and approved the Proposal on Determining the Annual Audit Remuneration in 2020 6. Considered and approved the Proposal on the Expected Daily Related Transactions in 2021 7. Considered and approved the Proposal on the Appointment of the Company’ 2021 Financial Report Audit Organization and Internal Control Audit Organization | During the preparation of the annual report, the Audit Committee under the Board of Directors communicated with BDO China Shu Lun Pan CPAs (LLP), which was responsible for the Company's annual audit, on the composition of the annual audit working group, audit plan, risk judgment and audit priorities, and continued to pay attention to the preparation of the Company's annual financial report. Debriefed and reviewed the work summary for this year and the next year's work plan of the Company's Internal Audit Department, and guided the operation of the Internal Audit Department. |
| 27 April 2021 | Third meeting of the Audit Committee in 2021 | Considered and approved the full text and main body of the Report for the First Quarter of 2021 | No |
| 26 August 2021 | Fourth meeting of the Audit Committee in 2021 | Considered and approved the 2021 Semi-annual Report and Summary | No |
| 27 October 2021 | Fifth meeting of the Audit Committee in 2021 | Considered and approved the full text and main body of the Report for the Third Quarter of 2021 | No |
(3). During the Reporting Period, the Remuneration and Appraisal Committee held 3 meetings
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 26 March 2021 | First meeting of the Remuneration and Appraisal Committee in 2021 | 1. Considered and approved the Proposal on the Remuneration Criteria of the Company's Directors in 2021 2. Considered and approved the Proposal on the Remuneration Criteria of the Company's Senior Management in 2021 3. Considered and approved the Proposal on Repurchase and Cancellation of Some Restricted Shares | No |
| 27 April 2021 | Second meeting of the Remuneration and Appraisal Committee in 2021 | Considered and approved the Proposal on Granting Reserved Restricted Shares to Incentive Objects under the 2020 Restricted Share Incentive Plan | No |
| 23 May 2021 | Third meeting of the Remuneration and Appraisal Committee in 2021 | Considered and approved the Proposal on Establishment of Conditions for Lifting Restricted Sales in Phase 1 of Initial Grant in 2020 Restricted Share Incentive Plan | No |
(4). During the Reporting Period, the Strategy Committee held 1 meeting
| Convening date | Contents of meetings | Important comments and recommendations | Other performance of duties |
| 26 March 2021 | First meeting of the Strategy Committee in 2021 | Considered and approved the Proposal on the Company's 2021 Business Plan | No |
(5). Details of the matter in question
□ Applicable √ Not applicable
VIII. Particulars on Risks in the Company Identified by the Board of Supervisors
□ Applicable √ Not applicable
The Board of Supervisors has no objection to the supervision matters during the Reporting Period.
IX. Employee of Parent Company and the Principal Subsidiaries of the Company at the End of the
Reporting Period
(1) Employees
| Number of employees in the parent company | 2,407 |
| Number of employees in major subsidiaries | 3,120 |
| Number of employees | 5,527 |
| Number of retirees of whom the parent company and major subsidiaries are responsible for the expenses | |
| Professional structure | |
| Category | Number |
| Production personnel | 1,770 |
| Sales personnel | 1,238 |
| Technical personnel | 450 |
| Finance personnel | 198 |
| Administration personnel | 295 |
| Management personnel | 1,072 |
| Others | 504 |
| Total | 5,527 |
| Education background | |
| Category | Number (person) |
| University (including college) and above | 3,210 |
| High school, technical secondary school | 1,094 |
| Others | 1,223 |
| Total | 5,527 |
(2) Remuneration policy
√ Applicable □ Not applicable
To conform to the Company's organizational strategy, the Company implements a competitiveremuneration policy where the employees' remuneration is determined considering the job value, person-job fit and performance. By establishing and improving competitive remunerations and benefits,performance appraisal systems and incentive systems, the Company actively promoted equity incentiveplans, attracted all kinds of professional talents and formed healthy competitive work environment tostimulate the vitality and potential of employees, build a stable, professional team, and ensure the growthof the Company's performance.
(3) Training program
√ Applicable □ Not applicable
The Company attached great importance to the development of talents in the organization, especiallythe establishment of leadership talent echelon and the cultivation of managers at all levels and personnelfor strategic key positions. Through development methods such as the leadership curriculum system andinternal trainer team construction, high-potential training projects, mentor guidance, job rotation learning,personal development path design, etc., talent training and ability enhancement were carried out. Thetraining of the manufacturing system focused on the ability enhancement of grassroots managementpersonnel and the cultivation of reserve talents in core technical positions, and attention was paid to thecultivation of branch managers.
(4) Labor outsourcing
√ Applicable □ Not applicable
| Total working hours of labor outsourcing | 20,967,240 hours |
| Total remuneration paid for labor outsourcing | RMB740,459,091 |
X. Profit Distribution or Capital Accumulation Plan
(1) Formulation, implementation or adjustment of the cash dividend policy
√ Applicable □ Not applicable
1. The existing profit distribution policy of the Company is implemented after it was passed at the5th meeting of the 5th session of the Board of Directors and 2020 annual shareholders' meeting.
2. Principle in profit distribution of the Company: The Company implements the dividenddistribution policy which entitles the shareholders to the same rights and same dividends, under whichshareholders are entitled to receive dividends and other kinds of distribution of interests based on thenumber of shares held by them. The Company adopts active profit distribution policy, which emphasizesinvestors' reasonable investment returns while maintaining sustainability and stability. The Company isallowed to distribute profit in cash or shares, but its profit distribution shall not exceed the range of theaccumulated distributable profits or affect the Company's ability to continue as a going concern.
3. Overall approaches to distribute profit of the Company: The Company distributes dividends incash or shares, or cash-and-shares, and if the Company satisfies the conditions for cash dividends, priorityshould be given to profit distribution by means of cash dividends.
4. Specific conditions and proportion for cash dividends: The Company primarily adopts cashdividend as its profit distribution policy. The Company may distribute cash dividend when it makes aprofit in the current year and the distributable profits are positive after making up losses, contributing tothe statutory reserves and surplus reserves, but the profit distribution shall not exceed the range of theaccumulated distributable profits. In general, if there are no material investment plans or significant cashexpenditure, the Company may distribute profit in cash for a single year not less than 20% of thedistributable profit realized in the current year.
In addition, as for the proportion of cash dividends to the total profit distribution, the Board ofDirectors shall take into full account of various factors such as features of the industries where theCompany operates, the stage of development, its own business model, level of profitability, and whetherthere is significant capital expenditure arrangement, to distinguish the following situations and determinedifferentiated cash dividend proportion in accordance with the procedures as required by the Articles ofAssociation:
(1) If the Company is at a mature stage of development and has no significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 80% when theprofit distribution is made;
(2) If the Company is at a mature stage of development and has significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 40% when theprofit distribution is made;
(3) If the Company is at a growing stage of development and has no significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 30% when theprofit distribution is made;
(4) If the Company is at a growing stage of development and has significant capital expenditurearrangement, the proportion of cash dividends in the profit distribution shall be at least 20% when theprofit distribution is made.
The aforesaid "significant investment plans" or "significant cash expenditure" refers to one of thefollowing:
(1) The proposed external investment, acquisition of assets or purchase of equipment by the Companyin the coming twelve months with accumulated expenses amounting to or exceeding 50% of the latestaudited net assets of the Company and exceeding RMB50 million;
(2) The proposed external investment, acquisition of assets or purchase of equipment by the Companyin the coming twelve months with accumulated expenses amounting to or exceeding 30% of the latestaudited total assets of the Company.
Significant investment plans or significant cash expenditure that meets the above conditions shall bereviewed and approved at the general meeting after being reviewed by the Board meeting.
5. During the Reporting Period, the formulation and implementation of the cash dividend policy hascomplied with the Articles of Association and the resolutions of the general meetings. The dividenddistribution standards and proportions are clearly stated, and relevant decision-making procedures andsystems are complete. Independent directors have diligently served their obligations, and played their roles.
As minority shareholders have opportunities to fully express their opinions and appeals, their legitimateinterests have been fully protected.
(2) Special description of the cash dividend policy
√ Applicable □ Not applicable
| Does it meet the requirements of the Company's Articles of Association or the resolutions adopted at the Annual General Meeting of Shareholders: | √Yes □No |
| Are the dividend criteria and ratio definite and clear: | √Yes □No |
| Are the relevant decision-making procedures and mechanisms complete | √Yes □No |
| Do the independent directors perform their duties and play their due role | √Yes □No |
| Do the minority shareholders have the opportunity to fully express their opinions and requests, and whether their legitimate rights and interests get fully protection | √Yes □No |
(3) If the Company records profit distributable to shareholders of the Company during the
Reporting Period is positive but there is no proposal for cash dividend, the Company shalldisclose the reasons, the usage and the utilization plan of the undistributed profits in detail
□ Applicable √ Not applicable
XI. Equity Incentive Plan, Employee Shareholding Plan or Other Employee Incentive Measures of
the Company and Their Impacts
(1) Incentive matters disclosed in temporary announcements and without further progress or
change in subsequent implementation
√ Applicable □ Not applicable
| Item | Query index |
| On 26 March 2021, the Company held the 5th meeting of the 5th session of Board of Directors and the 4th meeting of the 5th session of Board of Supervisors, and considered and approved the Proposal on Repurchase and Cancellation of Some Restricted Shares. | Announcement on Resolutions of the 5th Meeting of the 5th Session of Board of Directors numbered 2021-005 Announcement on Resolutions of the 4th Meeting of the 5th Session of Board of Supervisors numbered 2021-006 Announcement on Repurchase and Cancellation of Some Restricted Shares numbered 2021-012 Announcement on Notifying Creditors of Repurchase and Cancellation of Some Restricted Shares numbered 2021-013 |
| On 28 April 2021, the Company held the 6th meeting of the 5th session of Board of Directors and the 5th meeting of the 5th session of Board of Supervisors, and considered and approved the Proposal on Adjusting the Repurchase Price of Restricted Shares. | Announcement on Resolutions of the 6th Meeting of the 5th Session of Board of Directors numbered 2021-019 Announcement on Resolutions of the 5th Meeting of the 5th Session of Board of Supervisors numbered 2021-020 Announcement on Adjusting the Repurchase Price of Restricted Shares numbered 2021-021 |
| On 29 April 2021, the Company held the 7th meeting of the 5th session of Board of Directors and the 6th meeting of the 5th session of Board of Supervisors, and considered and approved the Proposal on Granting Reserved Restricted Shares to Incentive Objects under the 2020 Restricted Share Incentive Plan. | Announcement on Resolutions of the 6th Meeting of the 5th Session of Board of Supervisors numbered 2021-022 Announcement on Granting Reserved Restricted Shares to Incentive Objects under the 2020 Restricted Share Incentive Plan numbered 2021-023 |
| On 27 May 2021, the Company completed the cancellation of some restricted stocks that have been granted but have not yet been lifted with China Securities Depository and Clearing Corporation Limited Shanghai Branch. | Announcement on the Implementation of Repurchase and Cancellation of Restricted Share for Equity Incentive numbered 2021-025 |
| On 28 May 2021, the Company held the 8th meeting of the 5th session of the Board of Directors and the 7th meeting of the 5th session of the Board of Supervisors, and considered and approved the Proposal on Establishment of Conditions for Lifting Restricted Sales in Phase 1 of Initial Grant in 2020 Restricted Share Incentive Plan. | Announcement on Resolutions of the 7th Meeting of the 5th Session of Board of Supervisors numbered 2021-026 Announcement on the Unlocking and Listing of Phase 1 of the Initial Grant of 2020 Restricted Share Incentive Plan numbered 2021-027 |
| On 3 June 2021, the Company completed the registration of reserved restricted shares with China Securities Depository and Clearing Corporation Limited Shanghai Branch. | Announcement on the Results of the Reserved Grant of 2020 Restricted Share Incentive Plan numbered 2021-028 |
(2) Incentive matters which have not been disclosed in temporary announcements or with further
progressEquity incentive
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Employee shareholding plan
□ Applicable √ Not applicable
Other incentive measures
□ Applicable √ Not applicable
(3) Equity incentives granted to directors and senior management during the Reporting Period
□ Applicable √ Not applicable
√ Applicable □ Not applicable
Unit: share
| Name | Position | Number of restricted shares at the beginning of the year | Number of new restricted shares during the Reporting Period | Granted price of the restricted shares (Yuan) | Locked shares | Unlocked shares | Number of the restricted shares at the end of the period | Market price at the end of the Reporting Period (Yuan) |
| Zhou Yonggan | Senior management | 102,400 | 3,600 | 45.03 | 27,648 | 75,280 | 75,280 | 64.51 |
| Total | / | 102,400 | 3,600 | / | 27,648 | 75,280 | 75,280 | / |
Note: During the Reporting Period, the 3,072 restricted shares of Zhou Yonggan that had been grantedbut had not been lifted from the restriction were repurchased and cancelled due to the failure of personalperformance assessment.
(4) Establishment and implementation of appraisal mechanism and the incentive mechanism for
senior management during the Reporting Period
√ Applicable □ Not applicable
The Company has established a relatively perfect performance evaluation and incentive system.Based on the principle that the income of senior management is linked to the business performance of theenterprise, the Company followed an open, fair and impartial process to appoint senior management, andcontinuously and timely improved the assessment mechanism. The Company has established acompensation system in line with the development needs of the Company and the actual situation of theindustry to ensure the enthusiasm of senior management.
The Company implemented the 2020 Restricted Share Incentive Plan to provide long-term incentivesfor senior management and core technicians, and formulated corresponding assessment methods to carryout scientific, standardized and institutionalized assessment management for senior management and coretechnicians included in restricted share incentive plan. The Company has guaranteed the stability of thecore team and key employees and mobilizing their enthusiasm by virtue of a reasonable, sound, flexibleand effective remuneration and welfare system, and a long-term benefit mechanism based on thesupporting equity incentive plan.
XII. Construction and implementation of internal control system during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company has established a strict internal control managementsystem in strict accordance with the requirements of the China Securities Regulatory Commission, theShanghai Stock Exchange, the Company Law, the Articles of Association and other laws and regulations.The Company has set up an Audit Committee under the Board of Directors to review the internal controlof the Company, supervise the effective implementation of internal control and self-evaluation of internal
control, and guide and coordinate internal audit and other related matters. The Company has set up anAudit Department to independently carry out audit under the guidance of the Audit Committee under theBoard of Directors. The Audit Department is accountable to the Audit Committee. The Audit Departmentevaluates the efficiency and effect of the design and implementation of internal control through the designand implementation of internal control audits, business management audits, special audits and economicresponsibility audits, supervises and inspects the effectiveness of the Company’s internal control designand operation, and promotes the Company's continuous improvement and enhancement of the quality ofinternal control. The Audit Department reports the internal control defects found in the audit to the Boardof Supervisors, the Audit Committee or the management according to the seriousness of the problems, andurges the relevant departments to take active measures to rectify them. According to the identification ofmajor defects in the Company's internal control, in 2021, the Company had no significant defects andimportant defects in the internal control of financial reporting and non-financial reporting. The Companyhas continuously improved the internal control system. Therefore, the internal control operationmechanism is effective, which has achieved the expected internal control objectives and protected theinterests of the Company and all shareholders.
Particulars on major defects in the internal control during the Reporting Period
□ Applicable √ Not applicable
XIII. Management and Control over the Subsidiaries during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company has implemented the Management System for HoldingSubsidiaries, stipulating the control measures and the responsibilities and authority of the parent companyand the subsidiaries in the subsidiary's articles of association, personnel appointment and removal,financial management, operation decision, information management, inspection and assessment, so as toensure that the various businesses of the subsidiaries meet the requirements of the Company's overalldevelopment strategy, ensure that the financial position of the subsidiaries is effectively monitored by theCompany, prevent significant operating risks of the subsidiaries, and protect the security and integrity ofassets.
| Company Name | Integration plan | Integration progress | Problems encountered in integration | Measures taken | Resolution progress | Follow-up resolution plan |
| Back to School Holding AS | Integration of organization, management system, operation mode and business | The integration of organizational structure, management system, operation mode and business has been completed. | No significant problems occurred yet | Marketing management | Completed | Subsequently, according to the Company's business, complete the relevant integration in a timely manner, to ensure the normal operation and management control of subsidiaries |
XIV. Particulars on the Auditor's Report on Internal Control
√ Applicable □ Not applicable
The Company engaged BDO China Shu Lun Pan CPAs (LLP) to audit the implementation of internalcontrol in its 2021 financial statements and the Audit Report on Internal Control was issued. For the fulltext of the report, see 2021 Audit Report on Internal Control disclosed on the website of the ShanghaiStock Exchange (www.sse.com.cn) on 29 March 2022.Whether to disclose the audit report on internal control: yesOpinion type of the audit report on internal control: With unqualified opinion
XV. Self-inspection and Rectification of Problems in the Special Action on Governance of Listed
CompaniesNot applicable
XVI. Others
□ Applicable √ Not applicable
Section V Environmental and Social Responsibility
I. Environmental Information
(1) Explanation on environmental protection of the companies and their major subsidiaries falling
into the category of key pollutant discharging organizations designated by the environmentalprotection authorities
□ Applicable √ Not applicable
(2) Explanation on environmental protection of companies other than key pollutant discharging
units
√ Applicable □ Not applicable
The Company does not belong to the key pollutant discharging units published by national environmentalprotection authorities. As the Company pays great attention to environmental protection, the greening rate ofits sites is high. During the production process, the plastic raw granular edges did not produce solid waste orenvironmental pollution after going through smashing, re-granulating and recycling process; paperboardedges for package was recycled and sold by classification to local recycle stations for recycled paper. TheCompany has not admixed any harmful recycling waste in its production, so no volatile gas that is harmful tothe health of human beings was produced. Besides, domestic wastewater was disposed in accordance withsewage treatment regulations set by the local government. In routine management, the Company strengthensthe monitoring and handling of "three wastes" and ensures that they are discharged as per the requirements toreduce the impact on the environment.
1. Administrative penalties for environmental issues
□ Applicable √ Not applicable
2. Disclosing other environmental information with reference to key pollutant discharging units
□ Applicable √ Not applicable
3. Reason for not disclosing other environmental information
□ Applicable √ Not applicable
(3) Information that is conducive to ecological protection, pollution prevention and control, and
fulfillment of environmental responsibility
√ Applicable □ Not applicable
During the Reporting Period, M&G Public Welfare Foundation cooperated with the Red CrossSociety of Gansu Province and the Qingsuo Public Welfare Development Center to establish a Haloxylonammodendron forest in Minqin County, the source of the four major deserts in China, which has beenexpanded to 900 mu (600,000 m
), and joined hands with M&G Colipu in environmental protectionprojects. M&G employees also voluntarily went to inspect the conditions of the Haloxylon ammodendronforest. While controlling the desert, it can also increase the subsidized living income for the local villagers,and establish a public welfare model of ecological poverty alleviation and rural revitalization.
(4) Measures taken to reduce carbon emissions during the Reporting Period and their effects
√ Applicable □ Not applicable
The Company attached great importance to the efficient management of energy and the improvementof energy use efficiency. Each department took corresponding measures according to their respectivefunctions to gradually reduce energy consumption and carbon emissions during production and operation.In terms of clean energy use, photovoltaic power generation projects have been constructed in GuangmingPark and Qingcun Park, which have been fully connected to the grid and put into use for energy supply,reducing carbon emissions by more than 4,300 ton per year.For more details, see 2021 Environment, Society and Governance Report disclosed by the Companyon the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 March 2022.
II. Overview of Social Responsibility
√ Applicable □ Not applicable
For more details, see 2021 Environment, Society and Governance Report disclosed by the Companyon the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 March 2022.
III. Consolidation and Expansion of the Achievements of Poverty Alleviation and Rural
Revitalization
√ Applicable □ Not applicable
M&G Charity Foundation continued to focus on rural education, rural revitalization, and povertyalleviation, boosted various projects in an orderly manner, unleashed the Company's advantages,coordinated the social development, promoted the concern of the public and stakeholders on ruraleducation, and advanced such programs as creative classroom and gold seed, in a bid to reach a consensuswith more consumers on this social issue through public welfare activities and enrich the brandconnotation and influence of the Company.
For more details, see 2021 Environment, Society and Governance Report disclosed by the Company onthe website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 March 2022.
Section VI Major Events
I. Performance of Undertakings
(1) Undertakings by the Company's beneficial controllers, shareholders, related parties, acquirers, the Company and other related parties during or
subsisted in the Reporting Period
√ Applicable □ Not applicable
| Background of undertakings | Type of undertakings | Undertaking party | Contents of the undertaking | Time and term of the undertaking | Whether there is deadline for performance | Whether strictly performed in a timely manner | If not performed in time, describe the specific reasons | If not performed in time, describe plans in next steps |
| Undertakings related to initial public offering | Restriction on sale of shares | Keying Investment Jiekui Investment | Undertaking for restriction on sale of shares and voluntary lockup undertaking by Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The proportion of shares unlocked every year shall not exceed 25% of the total shares held by the Company; (2) Notwithstanding any change in the position of some of the partners in the joint venture or their departure from the joint venture, the joint venture will strictly perform the above undertakings. | Permanent | No | Yes | ||
| Undertakings related to initial public offering | Others | M&G Group | Shareholding and intention to reduce shareholding of the controlling shareholder—M&G Group (1) M&G Group advocates that shares of the Company should be held in the long term to ensure that M&G Group shares operation achievements of the Company on a continuous basis. Therefore, M&G Group has the intention to hold shares of the Company for a long term. (2) After the lockup period of the Company's shares held by M&G Group expires, it is possible that M&G Group might reduce shareholding of the Company appropriately for the development requirement of M&G Group. In this situation, M&G Group is expected to reduce its shareholdings by no more than 5% of the total shares of the Company held by M&G Group within the first year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. The shareholding reduction shall not exceed 10% of the total shares of the Company held by M&G Group within the second year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering at the time of the offering and the listing. If there are any ex-rights or ex-dividends events, such as the declaration of dividends, bonus issue, and capitalization from capital reserve to share capital in the Company before the reduction of the aforesaid shares, the price of the shareholding reduction for M&G Group should not be lower than the adjusted offering price of the Company's initial public offering shares at the time of the offering and the listing. (3) If M&G Group intends to reduce shareholding of the Company, it will announce its reduction plan 3 transaction days before reducing the shareholding. Furthermore, the reduction will be performed legally according to rules of Shanghai Stock Exchange in the | Permanent | No | Yes |
| form of block trade, auction transaction as well as other methods recognized by China Securities Regulatory Commission. | ||||||||
| Undertakings related to initial public offering | Others | Keying Investment and Jiekui Investment | Shareholding and intention to reduce shareholding of Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The joint venture, which is an employee-owned enterprise established by officials and important business professionals of the Company, advocates that shares of the Company should be held in the long term to ensure that operation achievements of the Company are shared on a continuous basis. Therefore, the joint venture has the intention to hold shares of the Company for a long term. (2) After the lockup period of the Company's shares held by joint venture expires, it is possible that the joint venture might reduce shareholding of the Company appropriately for the development requirement of the joint venture. In this situation, the joint venture is expected to reduce its shareholdings by no more than 25% of the total shares of the Company held by the joint venture within the first year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. The shareholding reduction shall not exceed 25% of the total shares of the Company held by joint venture within the second year after the lockup period expires with the price of the shareholding reduction not lower than the offering price of the Company's initial public offering. If there are any ex-rights or ex-dividends events, such as the declaration of dividends, bonus issue, and capitalization from capital reserve to share capital before the Company reduces its holding of the aforesaid shares, the price of the shareholding reduction for the Company should not be lower than the adjusted offering price of the Company's initial public offering shares at the time of the offering and the listing; (3) If the joint venture intends to reduce shareholding of the Company, it will announce its reduction plan 3 transaction days before reducing the shareholding. Furthermore, the reduction will be performed legally according to rules of Shanghai Stock Exchange in the form of block trade, auction transaction as well as other methods recognized by China Securities Regulatory Commission. | Permanent | No | Yes | ||
| Undertakings related to initial public offering | Address competition between counterparts | M&G Group, Keying Investment and Jiekui Investment | Undertaking in relation to non-competition by M&G Group, Keying Investment and Jiekui Investment (1) The enterprise and other enterprises (except the Company and enterprises controlled by it) controlled and (or) invested by it currently have not engaged in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with principal businesses of the Company and enterprises controlled by it. (2) After the initial public offering and listing of the Company, the enterprise and other enterprises (except the Company and enterprises controlled by it) controlled and (or) invested by it will not: ① engage in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ② support other enterprises other than the Company and enterprises controlled by it in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ③ interfere in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in. Apart from the aforesaid undertaking, the enterprise further guarantees that it will | Permanent | No | Yes |
| ① ensure its independence in assets, businesses, employees, finance and institution according to relevant rules of laws and regulations; ② adopt legal and effective measures to stop companies, enterprises and other economic organizations that the Company has control right from engaging directly or indirectly in the same or similar businesses with the Company; ③ not take advantage of its position as the controlling shareholder of the Company to carry out any other activities that may harm the rights of the Company and other shareholders. | ||||||||
| Undertakings related to initial public offering | Address competition between counterparts | Chen Huwen, Chen Huxiong, and Chen Xueling | Undertaking in relation to non-competition by beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling (1) I currently hold no position in other companies or economic organizations that have the same or similar business with the Company or enterprises controlled by it. (2) Other enterprises (except the Company and enterprises controlled by it) which are controlled by me independently and/ or in which I am one of the beneficial shareholders currently have not engaged in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with principal businesses of the Company and enterprises controlled by it. (3) After the initial public offering and listing of the Company, other enterprises (except the Company and enterprises controlled by it) which are controlled by me independently and/ or in which I am one of the beneficial shareholders will not: ① engage in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ② support other enterprises other than the Company and enterprises controlled by it in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in; ③ interfere in any form of business or activity that constitutes or may constitute a direct or indirect competition relationship with current or future principal businesses that the Company and enterprises controlled by it specialize in. Apart from the aforesaid undertaking, I further guarantee that I will: ① ensure its independence in assets, businesses, employees, finance and institution according to relevant rules of laws and regulations; ② adopt legal and effective measures to stop companies, enterprises and other economic organizations that I have control right from engaging directly or indirectly in the same or similar businesses with the Company; ③ not take advantage of the position as the beneficial controller of the Company to carry out any other activities that may harm the rights of the Company and other shareholders. | Permanent | No | Yes | ||
| Undertakings related to initial public offering | Others | M&G Stationery | Undertaking on the binding measures in case of the failure to fulfill the undertaking by M&G Stationery (1) The Company will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing. (2) If the Company fails to perform various obligations and responsibilities set out in the undertaking issues, the Company undertakes to take the following measures for restrictions: | Permanent | No | Yes |
| ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between the Company and investors, or the method or amount determined by the securities supervision and administration department and the judicial authority; ② Within 12 months after the date when the Company fully eliminates the adverse effect due to failure on related undertaking issues, the Company shall not issue securities, including but not limited to shares, corporate bonds, convertible corporate bonds and other types of securities approved by securities regulatory authorities; ③ The Company shall not increase the salary or allowance of our directors, supervisors and senior management in any form until the Company has fully eliminated the adverse effect due to failure on related undertaking issues. | ||||||||
| Undertakings related to initial public offering | Others | M&G Group | Undertaking on the binding measures in case of the failure to fulfill the undertaking by the controlling shareholder—M&G Group (1) M&G Group will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing of M&G Stationery. (2) If M&G Group fails to perform various obligations and responsibilities set out in the aforesaid undertaking issues, M&G Group undertakes to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between M&G Group and investors, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery's shares held by M&G Group will be automatically extended to the date when M&G Group fully eliminates the adverse effect due to failure on related undertaking issues. | Permanent | No | Yes | ||
| Undertakings related to initial public offering | Others | Chen Huwen, Chen Huxiong, and Chen Xueling | Undertaking on the binding measures in case of the failure to fulfill the undertaking by beneficial controllers—Chen Huwen, Chen Huxiong, and Chen Xueling (1) I will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing of M&G Stationery. (2) If I fail to perform various obligations and responsibilities set out in the aforesaid undertaking issues, I undertake to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between investors and me, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery's shares held by me directly or indirectly will be automatically extended to the date when I fully eliminate the adverse effect due to failure on related undertaking issues. ③ I shall not require M&G Stationery to increase my salary or allowance in any form, nor shall I accept the increase of salary or allowance by M&G Stationery in any | Permanent | No | Yes |
| form until I have fully eliminated the adverse effect due to failure on related undertaking issues. | ||||||||
| Undertakings related to initial public offering | Others | Keying Investment and Jiekui Investment | Undertaking on the binding measures in case of the failure to fulfill the undertaking by Keying Investment and Jiekui Investment, shareholders holding more than 5% of the equity (1) The joint venture will strictly perform various obligations and responsibilities set out in all public undertaking issues (hereinafter referred to as "Undertaking Issues") in the initial public offering and listing of M&G Stationery. (2) If the joint venture fails to perform various obligations and responsibilities set out in the aforesaid undertaking issues, the joint venture undertakes to take the following measures for restrictions: ① Compensate public investors for direct losses suffered by relying on relevant undertakings to implement transactions through self-owned capital with the amount of compensation being determined according to negotiation between the joint venture and investors, or the method or amount determined by the securities regulatory authorities and the judicial authority; ② The lockup period of M&G Stationery's shares held by the joint venture will be automatically extended to the date when the joint venture fully eliminates the adverse effect due to failure on related undertaking issues. | Permanent | No | Yes | ||
| Undertaking related to equity incentive | Others | M&G Stationery | The Company undertakes not to provide loans and any other financial assistance in respect of restricted shares in accordance with the Incentive Plan for the incentive object, including the provision of guarantees for its loans. | Not applicable | No | Yes | ||
| Other undertaking | Others | Keying Investment and Jiekui Investment | During the implementation period of the increase in holdings and the statutory period, the shares held by the Company will not be reduced. | Not applicable | Yes | Yes |
(2) Where the Company has profit forecasts on assets or projects, and the Reporting Period was
within the term of profit forecasts, the Company has to state whether such profit forecasts onassets or projects are fulfilled and the reasons thereofWhether the original profit forecast is reached and the description of reasons
□Fulfilled □Unfulfilled √ Not applicable
(3) Execution of the performance undertakings and its impact on the goodwill impairment testing
□ Applicable √ Not applicable
II. Non-operating Misappropriation of Funds of the Company by any Controlling Shareholders and Their Related Parties during the Reporting Period
□ Applicable √ Not applicable
III. Illegal Guarantee
□ Applicable √ Not applicable
IV. Explanation of the Company's Board of Directors on the "Auditor's Report with Modified
Audit Opinions" Issued by the CPA
□ Applicable √ Not applicable
V. Analysis and Explanation from the Company on the Reasons and Impact of the Change of
Accounting Policies, Accounting Estimates or Correction on Significant Accounting Errors
(1) Analysis and explanation from the Company on the reasons and impact of the change of
accounting policies or accounting estimates
√ Applicable □ Not applicable
1. Implementation of the Accounting Standards for Business Enterprises No. 21 - Leases (revised in2018)The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 21 - Leases(hereinafter referred to as "New Lease Standards") in 2018. The Company implements the new leasestandards from 1 January 2021. In accordance with the revised standards, the Company has chosen not toreassess whether a contract executed prior to the first implementation date is a lease contract or containsa lease at the first implementation date.
(1) The Company as the lessee
According to the cumulative effects of first implementation of the New Lease Standards, theCompany chose to adjust the current retained earnings at the beginning of the period for firstimplementation of the New Lease Standards as well as the amount of other related items in the financialstatements, without adjustment to the information for the comparable period.
For operating leases prior to the first implementation date, the Company measured the lease liabilityat the date of initial implementation based on the present value of the remaining lease payments discountedat the Company's incremental borrowing rate on the date of initial implementation and chose one of thefollowing two methods to measure the right-of-use assets by each lease:
-Assuming that the carrying amount under the New Lease Standards prevails from thecommencement date of the lease term, the Company's incremental borrowing rate as of the firstimplementation date is deemed as the discount rate.
-A necessary adjustment is made to an amount equal to the lease liability according to prepaid rents.
By each lease, a company may choose to measure the right-of-use assets with either of the above twomethods.
For operating leases prior to the first implementation date, the Company conducted one or more ofthe following simplified treatments by each lease option, while applying the above method:
① Leases that are completed within 12 months after the first implementation date are deemed asshort-term leases;
② The same discount rate is used for leases with similar characteristics when measuring the leaseliability;
③ The measurement of right-to-use assets does not include initial direct costs;
④ Where a renewal option or terminal option exists, the lease term is determined based on the actualexercise of the option prior to the first implementation date and other recent circumstances;
⑤ As an alternative for impairment test on right-of-use assets, the Company assessed whether thecontract containing the lease is an onerous contract prior to the first implementation date at estimatedliabilities, and adjusted the right-of-use asset by the amount of the provision for losses recorded in thebalance sheet prior to the first implementation date.
⑥ Lease changes before the first implementation are not retroactively adjusted and are accounted forin accordance with final arrangements for lease changes and New Lease Standards.
In measuring the lease liability, the Company discounted the lease payments at the lessee'sincremental borrowing rate (weighted mean: 4.75%) as of 1 January 2021.
Outstanding minimum lease payments for significant operating leasesdisclosed in the consolidated financial statements as of 31 December 2020
| Discounted present value at the Company's incremental borrowing rate as of 1 January 2021 | 307,325,185.80 |
| Lease liabilities under the New Lease Standards as of 1 January 2021 | 176,620,358.65 |
| Non-current liabilities due within one year under the New Lease Standards as of 1 January 2021 | 130,704,827.15 |
| Difference between the above discounted present value and the lease liability |
(2) The Company as the lessor
For subleases classified as operating leases prior to the first implementation date and still in existenceafter the first implementation date, the Company reassessed these leases based on the remainingcontractual term and conditions of the original lease and sublease on the first implementation date andclassifies them in accordance with the provisions of the new lease standards. If reclassified as a financelease, the Company will treat it as a new financial lease.
Except for subleases, the Company is not required to adjust leases as the lessor in accordance withthe New Lease Standards. The Company accounted for leases in accordance with the New Lease Standardsfrom the first implementation date.
(3) The major impact of the Company's implementation of the New Lease Standards on the financialstatements is as follows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Affected item in statement | Effect on balance on 1 January 2021 | |
| Consolidation | Parent company | |||
| (1) Adjustments made by the Company as a lessee to the existing operating leases before the date of initial implementation | The 5th meeting of the 5th session of Board of Directors | Right-of-use assets | 327,386,662.94 | 7,470,972.21 |
| Lease liabilities | 176,620,358.65 | 1,264,270.31 | ||
| Non-current liabilities due within one year | 130,704,827.15 | 3,648,655.35 | ||
| Prepayments | -20,061,477.14 | -2,558,046.55 | ||
2. Implementation of the Interpretation of Accounting Standards for Business Enterprises No. 14
The Ministry of Finance issued the Interpretation of Accounting Standards for Business EnterprisesNo. 14 (CK [2021] No. 1, hereinafter referred to as "Interpretation No. 14") on 2 February 2021, whichcomes into force as of the date of promulgation. The relevant businesses increased from 1 January 2021to the implementation date were adjusted as required by Interpretation No. 14.
① Public-Private Partnership (PPP) project contract
Interpretation No. 14 is applicable to PPP project contracts that meet both the "dual characteristics"and "dual control" described in such Interpretation. Retrospective adjustments should be made to relevantPPP project contracts that were implemented before 31 December 2020 and have not been completed bythe implementation date. In the event that retrospective adjustment is not feasible, such Interpretation shallbe applied from the beginning of the initial stage at which the retrospective adjustment is feasible. Theretained earnings at the beginning of the current year and other relevant items in the financial statementson the effective date of the adjustment of cumulative impact other than those in the comparable periodsshall be adjusted. The Company's implementation of this Provision has no impact.
② Reform of benchmark interest rate
Interpretation No. 14 provides a simplified accounting treatment for cases where the benchmark ratereform results in a change in the basis for determining cash flows related to financial instrument contractsand lease contracts.
According to the provisions of such Interpretation, the business pertaining to the benchmark interestrate reform before 31 December 2020 should be adjusted retrospectively, except where retrospectiveadjustment is not feasible, and there is no need to adjust the data in the comparative financial statementsof the previous period. On the implementation date of such Interpretation, the difference between theoriginal carrying amount and the new carrying amount of financial assets and financial liabilities, shall beincluded in the beginning retained earnings or other comprehensive income of the Reporting Period inwhich such Interpretation is implemented. The implementation of this provision has not had a materialimpact on the financial position and operating results of the Company.
3. Implementation of the Circular on Adjusting the Scope of Application of the Provisions on theAccounting Treatment of COVID-19-related Rent Concessions
On 19 June 2020, the Ministry of Finance issued the Provisions on the Accounting Treatment ofCOVID-19-related Rent Concessions (CK (2020) No. 10), allowing companies to resort to a simplifiedmethod for accounting treatment for rental reductions, deferred rent payment and other rental concessionsrelated to COVID-19 pandemic that meet the stipulations of the Provisions.
On 26 May 2021, the Ministry of Finance issued the Circular on Adjusting the Scope of Applicationof the Provisions on the Accounting Treatment of COVID-19-related Rent Concessions (CK [2021] No.
9), which was implemented on 26 May 2021. According to such Circular, the scope of application of"using simplified method for rental reductions related to COVID-19 pandemic" is changed from"concession is only applicable to lease payments payable before 30 June 2021" to "concession is onlyapplicable to lease payments payable before 30 June 2022", with other applicable conditions unchanged.
The Company has adopted simplified accounting methods for all lease contracts that meet therequirements before the adjustment of scope of application, and also adopted the simplified method foraccounting treatment of all similar lease contracts that meet the requirements after the adjustment of thescope of application. Retrospective adjustments have been made to the relevant lease contracts which havebeen subjected to accounting treatment by lease change before the issuance of the Circular, but thecomparative financial statements of the previous period have not been adjusted; the relevant rentalconcessions that occurred between 1 January 2021 and the effective date of the Circular and were notsubjected to accounting treatment as required by such provisions shall be adjusted according to theCircular.
4. Implementation of presentation of the centralized management of funds set forth in InterpretationNo. 15 of the Accounting Standards for Business Enterprises
On 30 December 2021, the Ministry of Finance issued the Interpretation No. 15 of AccountingStandards for Business Enterprises (CK [2021] No. 35, hereinafter referred to as "Interpretation No. 15").The "presentation of centralized management of funds" was implemented as of the date of publication andthe financial statements in comparable periods were adjusted accordingly.
Interpretation No. 15 clearly stipulates how the balance involved in the centralized and unifiedmanagement of the funds of the parent company and members through internal settlement centers andfinancial companies, should be presented and disclosed in the balance sheet. The implementation of thisprovision has not had a material impact on the financial position and operating results of the Company.
(2) Analysis and explanation from the Company on the reasons and impact of the correction on
significant accounting errors
□ Applicable √ Not applicable
(3) Communication with the previous accounting firm
□ Applicable √ Not applicable
(4) Other descriptions
□ Applicable √ Not applicable
VI. Appointment and Dismissal of the Accounting Firm
Unit: 0'000 Currency: RMB
| Current accounting firm | |
| Name of domestic accounting firm | BDO China Shu Lun Pan CPAs (LLP) |
| Remuneration of domestic accounting firm | 160 |
| Term of office of domestic accounting firm | 12 |
| Name | Remuneration | |
| Internal control audit accounting firm | BDO China Shu Lun Pan CPAs (LLP) | 70 |
Explanation on appointment and dismissal of the accounting firm
√ Applicable □ Not applicable
During the Reporting Period, the BDO China Shu Lun Pan CPAs (LLP) was re-appointed as the auditinstitution.
Explanation on the change of accounting firm during the auditing period
□ Applicable √ Not applicable
VII. Risk of Suspension of Listing
(1) Causes of suspension of listing
□ Applicable √ Not applicable
(2) Measures to be taken by the Company
□ Applicable √ Not applicable
(3) Situation and causes for termination of listing
□ Applicable √ Not applicable
VIII. Matters Related to Bankruptcy and Reorganization
□ Applicable √ Not applicable
IX. Material Litigation and Arbitration
□ The Company had material litigation and arbitration during the year √ The Company did not havematerial litigation and arbitration during the year
X. Suspected Violation of Laws and Regulations, Punishment and Rectification to the ListedCompany, Its Directors, Supervisors, Senior Management, Controlling Shareholders, andActual Controllers
□ Applicable √ Not applicable
XI. Explanation on Credibility Status of the Company, Its Controlling Shareholders and Beneficial
Controllers during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, since the Company, its controlling shareholders and beneficialcontrollers maintained sound credibility, there had been no refusal to implement effective judgments of acourt or default of any material overdue debt.
XII. Major Related Transactions
(1) Related transactions in relation to daily operation
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation
√ Applicable □ Not applicable
The 5th meeting of the 5th session of Board of Directors and 2020 annual general meeting of theCompany considered and approved the Proposal on the Expected Daily Related Transactions in 2021, andissued the Announcement on the Implementation of Expected Daily Related Transactions in 2021 (number:
2021-009) on 30 March 2021.
In 2021, the estimated income from selling goods to the sales entities controlled by Guo Weilongamounted to RMB520,000,000.00. It was estimated that fees for leasing the houses of M&G Group(including office buildings, workshops, parking space, warehouses and dormitories) amounted toRMB4,620,952.38; fees for leasing the office buildings and parking space of M&G Group amounted to
RMB3,861,563.33; utilities amounted to RMB6,000,000.00. It was estimated that the expenses incurredby M&G Colipu, Colipu Information Technology, M&G Technologies, and Jiumu Store in leasing M&GGroup's office building and parking space amounted to RMB11,775,442.14, RMB3,125,755.71,RMB1,675,847.14, and RMB493,795.59, respectively and the expenses incurred by M&G Life in leasingM&G Group's parking space amounted to RMB20,571.43.In 2021, the actual income from selling goods to the sales entities controlled by Guo Weilongamounted to RMB421,648,593.59. The actual fees for leasing the houses of M&G Group (including officebuildings, workshops, parking space, warehouses and dormitories) amounted to RMB4,620,952.60; feesfor leasing the office buildings and parking space of M&G Group amounted to RMB3,055,612.47; utilitiesamounted to RMB5,819,952.08. The actual expenses incurred by M&G Colipu, Colipu InformationTechnology, M&G Technologies, and Jiumu Store in leasing M&G Group's office building and parkingspace amounted to RMB11,206,556.28, RMB2,969,468.08, RMB1,252,961.62, and RMB729,409.82,respectively and the actual expenses incurred by M&G Life in leasing M&G Group's parking spaceamounted to RMB8,682.02.
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(2) Related transactions as a result of acquisition and disposal of assets or equity
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change in
subsequent implementation
□ Applicable √ Not applicable
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
4. Disclosable performance achievements during the Reporting Period when involved withagreed-upon performance
□ Applicable √ Not applicable
(3) Major related transactions in joint external investment
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change insubsequent implementation
□ Applicable √ Not applicable
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(4) Creditor’s rights and debts with related parties
1. Events disclosed in temporary announcements and without further progress or change in
subsequent implementation
□ Applicable √ Not applicable
2. Events disclosed in temporary announcements and with further progress or change in
subsequent implementation
□ Applicable √ Not applicable
3. Events not disclosed in temporary announcements
□ Applicable √ Not applicable
(5) Financial business between the Company and the affiliated financial companies, the Company'sholding financial company and the related party
□ Applicable √ Not applicable
(6) Others
□ Applicable √ Not applicable
XIII. Material Contracts and Their Performance
(1) Trusteeship, contracting and leasing matters
1. Trusteeship
□ Applicable √ Not applicable
2. Contracting
□ Applicable √ Not applicable
3. Leasing
□ Applicable √ Not applicable
(2) Guarantees
□ Applicable √ Not applicable
(3) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Types | Source of fund | Amount incurred | Undue balance | Overdue uncollected amount |
| Entrusted wealth management of banks | Raised capital | 0 | 0 | 0 |
| Entrusted wealth management of banks | Self-owned capital | 160,000 | 160,000 | 0 |
Others
□ Applicable √ Not applicable
(2) Individual entrusted wealth management
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Trustee | Type of entrusted wealth management | Amount of entrusted wealth management | Beginning date of entrusted wealth management | Termination date of entrusted wealth management | Source of fund | Usage of fund | Method to determine return way | Annual rate of return | Expected return (if any) | Actual gains or loss | Actual recovery | Whether it has gone through a legal procedure or not | Whether there is a future entrusted wealth management plan or not | Amount of provision for the impairment (if any) |
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 10,000 | 2019/7/4 | 2021/9/22 | Self-owned capital | 3.57% | 788.66 | Recovered | Yes | Yes | ||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2019/7/4 | 2021/2/26 | Self-owned capital | 3.41% | 1,732.16 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 30,000 | 2020/8/5 | 2021/9/22 | Self-owned capital | 3.30% | 1,108.29 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2020/12/31 | 2021/4/6 | Self-owned capital | 2.82% | 300.16 | Recovered | Yes | Yes | ||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 20,000 | 2020/12/31 | 2021/3/31 | Self-owned capital | 3.50% | 172.60 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 34,000 | 2021/4/7 | 2021/9/22 | Self-owned capital | 3.30% | 503.69 | Recovered | Yes | Yes | ||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 30,000 | 2021/4/7 | 2021/10/9 | Self-owned capital | 2.88% | 438.45 | Recovered | Yes | Yes | ||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 40,000 | 2021/4/7 | 2021/7/6 | Self-owned capital | 3.50% | 345.21 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 25,000 | 2021/9/30 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 50,000 | 2021/9/30 | 2021/12/29 | Self-owned capital | 3.60% | 443.84 | Recovered | Yes | Yes | ||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 10,000 | 2021/10/8 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Agricultural Bank of China Limited Shanghai Guangming Sub-branch | Non-principal guaranteed with floating returns | 45,000 | 2021/10/13 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 10,000 | 2021/10/13 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| SPD Bank Co., Ltd. Fengxian Sub-branch | Non-principal guaranteed with floating returns | 50,000 | 2021/12/30 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 12,000 | 2019/6/20 | 2021/5/8 | Self-owned capital | 3.07% | 365.16 | Recovered | Yes | Yes |
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 2,000 | 2019/7/31 | 2021/3/15 | Self-owned capital | 2.89% | 94.04 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 1,000 | 2019/8/30 | 2021/3/15 | Self-owned capital | 2.87% | 44.30 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 1,000 | 2019/9/29 | 2021/3/25 | Self-owned capital | 2.86% | 42.58 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 3,550 | 2020/6/3 | 2021/5/8 | Self-owned capital | 2.75% | 90.70 | Recovered | Yes | Yes | ||||
| Bank of Shanghai Co., Ltd. Puxi Sub-branch | Non-principal guaranteed with floating returns | 2,000 | 2020/6/22 | 2021/5/20 | Self-owned capital | 2.73% | 49.72 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 3,000 | 2020/7/8 | 2021/4/19 | Self-owned capital | 2.76% | 64.59 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 3,000 | 2021/4/28 | 2021/5/13 | Self-owned capital | 3.28% | 4.04 | Recovered | Yes | Yes | ||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 7,000 | 2021/9/14 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| Industrial and Commercial Bank of China Limited Shanghai Gumei Road Sub-branch | Non-principal guaranteed with floating returns | 3,000 | 2021/10/9 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| China Merchants Bank Co., Ltd. Shanghai Branch Wujiaochang Sub-branch | Non-principal guaranteed with floating returns | 5,000 | 2021/10/9 | Self-owned capital | Unrecovered | Yes | Yes | |||||||
| China Merchants Bank Co., Ltd. Shanghai Branch Wujiaochang Sub-branch | Non-principal guaranteed with floating returns | 5,000 | 2021/10/13 | Self-owned capital | Unrecovered | Yes | Yes |
Others
□ Applicable √ Not applicable
(3) Provision for the impairment of entrusted wealth management
□ Applicable √ Not applicable
2. Entrusted loans
(1) Overall condition of entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(2) Individual entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(3) Provision for the impairment of entrusted loans
□ Applicable √ Not applicable
3. Others
□ Applicable √ Not applicable
(4) Other material contracts
□ Applicable √ Not applicable
XIV. Explanation of Other Major Events that Have a Material Impact on Investors' ValueJudgments and Investment Decisions
□ Applicable √ Not applicable
Section VII Changes in Shares and Shareholders
I. Changes in Share Capital
(1) Statement of changes in shares
1. Statement of changes in shares
Unit: share
| Before the change | Increase/decrease of the change (+, -) | After the change | |||||||
| Quantity | Percentage (%) | Issue of new shares | Bonus shares | Capital reserve-converted shares | Others | Subtotal | Quantity | Percentage (%) | |
| I. Restricted shares | 7,427,600 | 0.80 | 689,400 | -2,381,790 | -1,692,390 | 5,735,210 | 0.62 | ||
| 1. State-owned shares | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Other domestic shares | 7,427,600 | 0.80 | 689,400 | -2,381,790 | -1,692,390 | 5,735,210 | 0.62 | ||
| Including: Shares held by domestic non-state-owned legal person | |||||||||
| Shares held by domestic natural person | 7,427,600 | 0.80 | 689,400 | -2,381,790 | -1,692,390 | 5,735,210 | 0.62 | ||
| 4. Overseas shares | |||||||||
| Including: Shares held by foreign legal person | |||||||||
| Shares held by overseas natural person | |||||||||
| II. Non-restricted circulating shares | 920,000,000 | 99.20 | 2,010,380 | 2,010,380 | 922,010,380 | 99.38 | |||
| 1. Ordinary RMB shares | 920,000,000 | 99.20 | 2,010,380 | 2,010,380 | 922,010,380 | 99.38 | |||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 927,427,600 | 100.00 | 689,400 | -371,410 | 317,990 | 927,745,590 | 100.00 | ||
2. Explanation of changes in shares
√ Applicable □ Not applicable
According to the Company's 2020 Restricted Stock Incentive Plan and the authorization of the 2019Annual General Meeting of Shareholders and upon consideration and approval at the 5th meeting of the5th session of Board of Directors and the 4th meeting of the 5th session of Board of Supervisors, the
Company completed the cancellation of part of the restricted shares under such Incentive Plan with ChinaSecurities Depository and Clearing Corporation Limited Shanghai Branch on 27 May 2021, repurchasingand canceling 371,410 restricted shares of 111 incentive objects.After the completion of the repurchase and cancellation, the total shares of the Company decreasedfrom 927,427,600 shares to 927,056,190 shares.
Upon consideration and approval at the 8th meeting of the 5th session of the Board of Directors andthe 7th meeting of the 5th session of the Board of Supervisors, the conditions for lifting the sellingrestrictions for the initial grant as required by the Company's 2020 Restricted Stock Incentive Plan havebeen established, and the 2,010,380 restricted shares held by 324 incentive objects have been unlockedand outstanding on 3 June 2021 and have been converted from restricted shares to unrestricted negotiableshares.
Upon consideration and approval at the 7th meeting of the 5th session of Board of Directors and the6th meeting of the 5th session of Board of Supervisors, the Company completed the registration ofrestricted stock granted under this Incentive Plan with China Securities Depository and ClearingCorporation Limited Shanghai Branch on 3 June 2021, granting 689,400 restricted shares to 119 incentiveobjects. After the registration of this grant, the Company's total shares increased from 927,056,190 sharesto 927,745,590 shares.
3. Impact of changes in shares on the earnings per share, net asset value per share and otherfinancial indicators in the last year and period (if any)
√ Applicable □ Not applicable
(1) Basic earnings per share
Basic earnings per share are based on the combined net profit attributable to the ordinary shareholdersof the parent company divided by the weighted mean of the Company's outstanding ordinary shares:
| Item | Amount in the current period | Amount in the last period |
| Combined net profit attributable to ordinary shareholders of the parent company | 1,515,343,226.16 | 1,247,295,968.55 |
| Weighted mean of the Company's outstanding ordinary shares | 921,172,721.67 | 920,000,000.00 |
| Basic earnings per share | 1.6450 | 1.3558 |
| Including: Basic earnings per share from continuing as a going concern | 1.6450 | 1.3558 |
| Basic earnings per share from not continuing as a going concern |
(2) Diluted earnings per share
Diluted earnings per share are based on the combined net profit (diluted) attributable to the ordinaryshareholders of the parent company divided by the weighted mean (diluted) of the Company's outstandingordinary shares:
| Item | Amount in the current period | Amount in the last period |
| Combined net profit (diluted) attributable to ordinary shareholders of the parent company | 1,517,866,131.16 | 1,255,426,655.27 |
| Weighted mean of the Company's outstanding ordinary shares (diluted) | 921,172,721.67 | 925,997,158.63 |
| Diluted earnings per share | 1.6425 | 1.3558 |
| Including: Diluted earnings per share from continuing as a going concern | 1.6425 | 1.3558 |
| Diluted earnings per share from not continuing as a going concern |
4. Other contents that the Company deems necessary and the securities regulatory authoritiesrequire disclosing
□ Applicable √ Not applicable
(2) Changes in restricted shares
√ Applicable □ Not applicable
Unit: share
| Name of shareholder | Number of restricted shares at the beginning of the year | Number of restricted shares removed during the year | Increase in number of restricted shares during the year | Number of restricted shares at the end of the year | Reason for selling restrictions | Date of lifting of selling restrictions |
| Incentive objects of restricted shares in 2020 | 7,427,600 | 2,381,790 | 689,400 | 5,735,210 | Equity incentive selling restrictions | 3 June 2021 |
| Total | 7,427,600 | 2,381,790 | 689,400 | 5,735,210 | / | / |
Note: "Number of shares lifted from sales restrictions this year" in the above table includes2,010,380 shares lifted from sales restrictions and 371,410 shares repurchased and cancelled. Thecancellation date is 27 May 2021.
II. Issuance and Listing of Securities
(1) Issuance of securities as at the Reporting Period
√ Applicable □ Not applicable
Unit: Share Currency: RMB
| Type of stock and its derivative securities | Issuing date | Issue price (or interest rate) | Number of the issued shares | Listing date | Number of shares approved for listing | Transaction end date |
| Ordinary shares | ||||||
| Restricted shares | 3 June 2021 | RMB45.03/share | 689,400 | 689,400 | ||
Explanation on issuance of securities as at the Reporting Period (please provide separate explanation onthe bonds with different interest rates during their duration):
√ Applicable □ Not applicable
According to the Company's 2020 Restricted Stock Incentive Plan, 689,400 reserved restricted shareswere issued during the Reporting Period.
(2) Changes in the total number of ordinary shares and shareholder structure of the Company andchanges in the structure of assets and liabilities of the Company
√ Applicable □ Not applicable
According to 2020 Restricted Stock Incentive Plan, 689,400 shares were reserved and granted to 119incentive objects, and the Company's shares increased by 689,400 shares, all of which were restrictedshares. Thereafter, the Company's total shares were 927,745,590 shares.
As of 31 December 2021, the total assets of the Company were RMB11,424,387,900, an increase of
17.66% over RMB9,709,908,400 at the end of last year; the liabilities were RMB4,901,235,300, anincrease of 14.81% over RMB4,268,921,600 at the end of last year; the asset-liability ratio dropped to
42.90% from 43.96% at the end of last year.
(3) Existing internal employee shares
□ Applicable √ Not applicable
III. Shareholder and Beneficial Controller
(1) Total number of shareholders
| Total number of shareholders of ordinary shares as at the end of the Reporting Period | 31,902 |
| Total number of shareholders of ordinary shares at the end of last month prior to the disclosure date of this annual report | 35,247 |
| Total number of shareholders of preferred shares whose voting rights have been restored as at the end of the Reporting Period | 0 |
| Total number of shareholders of preferred shares whose voting rights have been restored at the end of last month prior to the disclosure date of this annual report | 0 |
(2) Table of shareholdings of the top ten shareholders and the top ten shareholders of shares in
circulation (or shareholders not subject to selling restrictions) as at the end of the Reporting
Period
Unit: share
| Shareholdings of the top ten shareholders | |||||||
| Name of shareholder (full name) | Change during the Reporting Period | Number of shares held as at the end of the period | Percentage (%) | Number of shares held subject to selling restrictions | Pledged, marked, or frozen | Nature of shareholder | |
| Status of share | Quantity | ||||||
| M&G Holdings (Group) Co., Ltd. | 0 | 536,000,000 | 57.77 | 0 | No | 0 | Domestic nonstate-owned legal person |
| Hong Kong Securities Clearing Company Limited | 14,647,807 | 47,609,233 | 5.13 | 0 | No | 0 | Others |
| Industrial and Commercial Bank of China Limited-Invesco Great Wall Emerging Mature and Hybrid Equity Investment Funds（中国工商银行股份有限公司－景顺长城新兴成长混合型证券投资基金） | 6,499,945 | 27,999,893 | 3.02 | 0 | No | 0 | Others |
| Shanghai Keying Investment Management Office (L.P.) | -3,677,442 | 13,872,558 | 1.50 | 0 | No | 0 | Others |
| Shanghai Jiekui Investment Management Firm (L.P.) | -3,611,100 | 13,713,900 | 1.48 | 0 | No | 0 | Others |
| Chen Huxiong | -3,490,700 | 13,609,300 | 1.47 | 0 | No | 0 | Domestic natural person |
| Chen Huwen | -3,490,700 | 13,609,300 | 1.47 | 0 | No | 0 | Domestic natural person | |
| Bank of China Limited-Invesco Great Wall Ding Yi Hybrid Security Investment Fund (LOF)（中国银行股份有限公司－景顺长城鼎益混合型证券投资基金） | 3,299,876 | 11,999,876 | 1.29 | 0 | No | 0 | Others | |
| Aberdeen Standard Investments (Asia) Limited - Aberdeen Standard - China A Share Fund | 1,402,912 | 9,685,935 | 1.04 | 0 | No | 0 | Others | |
| Chen Xueling | -2,700,000 | 8,100,000 | 0.87 | 0 | No | 0 | Domestic natural person | |
| Shareholdings of the top ten shareholders of non-restricted circulating shares | ||||||||
| Name of shareholder | Number of non-restricted circulating shares held | Type and number of shares | ||||||
| Type | Quantity | |||||||
| M&G Holdings (Group) Co., Ltd. | 536,000,000 | Ordinary RMB Shares | 536,000,000 | |||||
| Hong Kong Securities Clearing Company Limited | 47,609,233 | Ordinary RMB Shares | 47,609,233 | |||||
| Industrial and Commercial Bank of China Limited-Invesco Great Wall Emerging Mature and Hybrid Equity Investment Funds（中国工商银行股份有限公司－景顺长城新兴成长混合型证券投资基金） | 27,999,893 | Ordinary RMB Shares | 27,999,893 | |||||
| Shanghai Keying Investment Management Office (L.P.) | 13,872,558 | Ordinary RMB Shares | 13,872,558 | |||||
| Shanghai Jiekui Investment Management Firm (L.P.) | 13,713,900 | Ordinary RMB Shares | 13,713,900 | |||||
| Chen Huxiong | 13,609,300 | Ordinary RMB Shares | 13,609,300 | |||||
| Chen Huwen | 13,609,300 | Ordinary RMB Shares | 13,609,300 | |||||
| Bank of China Limited-Invesco Great Wall Ding Yi Hybrid Security Investment Fund (LOF)（中国银行股份有限公司－景顺长城鼎益混合型证券投资基金） | 11,999,876 | Ordinary RMB Shares | 11,999,876 | |||||
| Aberdeen Standard Investments (Asia) Limited - Aberdeen Standard - China A Share Fund | 9,685,935 | Ordinary RMB Shares | 9,685,935 | |||||
| Chen Xueling | 8,100,000 | Ordinary RMB Shares | 8,100,000 | |||||
| Special repurchase account of the top ten shareholders | Not applicable | |||||||
Explanation on the above-mentioned shareholders'entrusting voting rights, accepting voting rightsentrusted and waiver of voting rights
| Not applicable | |
| Explanation on the related relationship or parties acting in concert among the above shareholders | There is related relationship among the shareholders—M&G Group, Keying Investment, Jiekui Investment, Chen Huwen, Chen Huxiong, and Chen Xueling. Chen Huwen, Chen Huxiong, and Chen Xueling are parties acting in concert. Save as the above, the Company is not aware of any related relationship or parties acting in concert as set out in Measures for the Administration of the Takeover of Listed Companies among the aforesaid shareholders. |
| Explanation on the preference shareholders with voting rights restored and their shareholdings | Not applicable |
Shareholdings of the top ten shareholders subject to trading moratorium and the condition of tradingmoratorium
√ Applicable □ Not applicable
Unit: share
| No. | Name of shareholder subject to selling restrictions | Number of shares held subject to selling restrictions | Available-for-listing-and-trading conditions of shares held subject to selling restriction | Selling restrictions | |
| Available-for-listing-and-trading time | Number of new available-for-listing-and-trading shares | ||||
| 1 | Incentive objects of restricted shares in 2020 | 5,735,210 | Equity incentive selling restrictions | ||
| Explanation on the related relationship or parties acting in concert among the above shareholders | Not applicable |
Note: The restricted stocks granted by the equity incentive plan implemented in 2020 must beunlocked in batches in accordance with the Company's 2020 Restricted Stock Incentive Plan.
(3) Strategic investors or general legal persons becoming the top ten shareholders because of
placing of new shares
□ Applicable √ Not applicable
IV. Controlling Shareholder and Beneficial Controllers
(1) Controlling shareholder
1 Legal person
√ Applicable □ Not applicable
| Name | M&G Holdings (Group) Co., Ltd. |
| Person in charge of the Company or legal representative | Chen Huxiong |
| Establishment date | 2007-5-10 |
| Main operation businesses | Industrial investment, infrastructure investment, consultation for investment information (except broker), consultation for enterprise management and relevant businesses, domestic trade (excluding projects with national special approval) (For the above items subject to licensing or permit, relevant approval must be obtained prior to operation) |
| Equity interests of other domestic and overseas listed companies controlled or invested during the Reporting Period | No |
| Other explanations | No |
2 Natural person
□ Applicable √ Not applicable
3 Special explanation on the Company not having controlling shareholders
□ Applicable √ Not applicable
4 Explanation of the change in controlling shareholders during the Reporting Period
□ Applicable √ Not applicable
5 Diagram of the ownership and controlling relationship between the Company and its
controlling shareholders
√ Applicable □ Not applicable
M&G Group
M&G Stationery
(2) Beneficial controllers
1 Legal person
□ Applicable √ Not applicable
2 Natural person
√ Applicable □ Not applicable
| Name | Chen Huwen |
| Nationality | China |
| Acquire right of residence in other countries or regions or not | No |
| Main job and title | Chairman of the Board of Shanghai M&G Stationery Inc. |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | No |
| Name | Chen Huxiong |
| Nationality | China |
| Acquire right of residence in other countries or regions or not | Yes |
| Main job and title | Vice-chairman of the Board and CEO of Shanghai M&G Stationery Inc. |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | No |
| Name | Chen Xueling |
| Nationality | China |
| Acquire right of residence in other countries or regions or not | No |
| Main job and title | Chairman of the Board and vice president of Shanghai M&G Stationery Inc. |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | No |
3 Special explanation on the Company not having beneficial controllers
□ Applicable √ Not applicable
4 Explanation of the change of the Company's control during the Reporting Period
□ Applicable √ Not applicable
5 Diagram of the ownership and controlling relationship between the Company and its beneficial
controllers
√ Applicable □ Not applicable
ChenXueling
ChenHuwen
ChenHuxiong
M&GGroup
KeyingInvestment
JiekuiInvestmentM&GStationery
6 Control of the Company by beneficial controllers by way of trust or other means of assetmanagement
□ Applicable √ Not applicable
(3) Other explanation regarding the controlling shareholders and the beneficial controllers
□ Applicable √ Not applicable
V. The Total Shares Pledged by the Controlling Shareholder or the First Majority Shareholderand the Person Acting in Concert Account for More Than 80% of the Company’s Shares Heldby Them
□ Applicable √ Not applicable
VI. Other Legal Person Shareholders with More Than 10% Shareholdings
□ Applicable √ Not applicable
VII. Explanation on Limitation on Reduction of Shareholding
□ Applicable √ Not applicable
VIII. Implementation of Share Repurchase during the Reporting Period
□ Applicable √ Not applicable
Section VIII Preferred Shares
□ Applicable √ Not applicable
Section IX BondsI. Enterprise Bonds, Corporate Bonds and Non-financial Enterprise Debt Financing Instruments
□ Applicable √ Not applicable
II. Convertible Corporate Bonds
□ Applicable √ Not applicable
Section X Financial Report
I. Auditor’s Report
√ Applicable □ Not applicable
Xin Kuai Shi Bao Zi [2022] No. ZA10458
To the shareholders of Shanghai M&G Stationery Inc.:
I. Audits' OpinionWe have audited the accompanying financial statements of Shanghai M&G Stationery Inc.(hereinafter referred to as "M&G Stationery"), which comprise the consolidated and parent company'sbalance sheets as at 31 December 2021, the consolidated and parent company's income statements, theconsolidated and parent company's cash flow statements, and the consolidated and parent company'sstatements of changes in shareholders' equity for the year of 2021, as well as notes to financial statements.In our opinion, the accompanying financial statements were prepared in accordance with theAccounting Standards for Business Enterprises in all material aspects and give a true and fair view of theconsolidated and parent company's financial position of M&G Stationery as at 31 December 2021 and ofits consolidated and parent company's operating results and cash flows for the year of 2021.
II. Basis of Auditors' OpinionWe have conducted our audit in accordance with the Chinese Auditing Standards for Certified PublicAccountants. The "Responsibilities of Certified Public Accountants for Auditing of Financial Statements"in the auditor's report further illustrate our responsibilities under those standards. In accordance with theCode of Professional Ethics of Chinese Certified Public Accountants, we are independent of M&GStationery and have performed other responsibilities in respect of professional ethics. We believe that theaudit 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 inour audit of the financial statements for the current period. These matters were addressed in the context ofour audit of the financial statements as a whole and, in forming our opinion thereon, we do not provide aseparate opinion on these matters.
The key audit matters identified in our audit are summarized as follows:
| Key audit matters | How our audit addressed the key audit matter |
| (I) Recognition of the revenue | |
| Please refer to notes to financial statements for accounting policies set out in "III Significant Accounting Policies and Accounting Estimates" (XXIII) and "V Notes to Consolidated Financial Statements" (XXXVII). M&G Stationery mainly specializes in selling stationery and office supplies. In 2021, M&G Stationery's revenue from principal business in sales recognition amounted to RMB17,602,085,200. M&G Stationery recognized revenue based on the expected amount of consideration that it is entitled to receive when the customer | 1. We understood and evaluated design of the key internal control designed by management and we tested the effectiveness of implementing key controls; 2. We inspected customer contracts, on a sample basis, to identify terms and conditions related to the transfer of control over the goods, and assessed the timing of revenue recognition with reference to the requirements of prevailing accounting standards; 3. We selected samples for revenue transactions recorded during the current year, with invoices, sales contracts, goods delivery notes or transport documents to assess whether the related revenue was recognized in accordance with M&G Stationery's revenue recognition accounting policies; |
| obtains control of the relevant products. Since revenue is one of the key performance indicators of M&G Stationery, there is possibly inherent risk of inappropriately recognizing revenue to reach specific purpose in revenue recognition made based on the sales group of distributor; there is possibly potential risk of material misstatement in revenue recognition made based on the sales group of end customer because it involves many transactions with small amount for each transaction, so we recognized revenue recognition as a key audit matter. | 4. We performed analytical procedures on revenue and cost, including analysis of revenue, cost, gross profit margin fluctuations in each month of the current period, and performed analysis on sales model to observe whether there is any abnormal transaction; 5. We took samples from revenue transactions that took place shortly before and after the balance sheet date, by checking delivery orders and other supportive documents to assess whether revenue was recognized in the correct accounting period. 6. We evaluated the accuracy and authenticity of the revenue amount by implementing the income letter verification procedure and checking goods return after the period. |
| (II) Anticipated credit loss of accounts receivable | |
| Please refer to notes to financial statements for accounting policies set out in "III Significant Accounting Policies and Accounting Estimates" (IX) and "V Notes to Consolidated Financial Statements" (IV). As at 31 December 2021, balance of accounts receivable amounted to RMB1,761,134,300, and provision made for credit impairment loss of accounts receivable amounted to RMB40,265,900. M&G Stationery measured provision for loss of accounts receivable in accordance with amount of anticipated credit loss in the entire lifetime. The anticipated credit loss requires the management to take into consideration of forward-looking information apart from combining historical experience and current situations, involving lots of estimation and judgment, so we recognized anticipated credit loss of accounts receivable as a key audit matter. | 1. We understood and evaluated design of the key internal control regarding impairment of financial assets (including accounts receivable) designed by management and we tested the effectiveness of implementing key controls; 2. We evaluated rationality of the estimation on anticipated credit loss of accounts receivable, including judgment of forward-looking information; basis of estimation on anticipated credit loss made on a single item, and basis of estimation on anticipated credit loss made on portfolio, including rationality of the division for portfolio; 3. We reviewed credit risk assessment performed by the management on internal and external environment of M&G Stationery's operation, integrity of different customers, repayment history, repayment capacity, and historical experience in credit loss; 4. We recalculated to check whether measurement of provision for loss made by the management on single and portfolio accounts receivable is consistent with the amount of anticipated credit loss in the entire existing period. |
IV. Other InformationThe management of M&G Stationery (hereinafter referred to as the "management") is responsible forthe other information which comprises all the information covered in M&G Stationery 2021 AnnualReport other than the financial statements and this auditor's report.
Our audit opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.
In conjunction with our audit to the financial statements, our responsibility is to read the otherinformation. During the process, we considered whether there is material inconsistency or there is likelymaterial misstatement between the other information and the financial statements or the information weobtained during the audit.
As we have performed the work on the other information obtained before the date of our auditor'sreport, we shall report if we confirmed there was a material misstatement among the other information.We have nothing needed to be reported on this case.
V. Responsibilities of the Management and Governing Bodies for the Financial StatementsThe management shall be responsible for the preparation of financial statements in accordance withthe Accounting Standards for Business Enterprises to enable them to be fairly reflected, and to design,implement and maintain the necessary internal controls so that there is no material misstatement due tofraud or error in the financial statements.In the preparation of the financial statements, the management is responsible for assessing M&GStationery's continuous operating capacity, disclosing matters relating to continuous operations (ifapplicable), and applying the continuing operating assumptions unless the management plans to performliquidation, cease operation or otherwise has no realistic choice.The governing bodies are responsible for overseeing the financial reporting process of M&GStationery.
VI. Responsibilities of CPA for the Audit of the Financial StatementsOur objective is to obtain reasonable assurance of the financial statements as a whole whether thereis a material misstatement due to fraud or error and to issue an auditor's report containing audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with China Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.As part of an audit in accordance with the auditing standards, we exercised professional judgmentand maintained professional skepticism throughout the audit. We also performed the following works:
(1) to identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) to understand the internal control related to the audit to design the appropriate audit procedures.
(3) to evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the management.
(4) to draw a conclusion on the appropriateness of the management's use of the going concern basisof accounting and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the ability of M&G Stationery to continue as agoing concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause M&G Stationery to cease to continue asa going concern.
(5) to evaluate the overall presentation, structure and content (including disclosure) of the financialstatements, and to assess whether the financial statements reflect the related transactions and events fairly.
(6) to obtain sufficient and appropriate audit evidence of the financial information of the entity orbusiness activity of the M&G Stationery in order to express an opinion on the consolidated financialstatements. We are responsible for directing, supervising and performing group audits. We take fullresponsibility for the audit opinion.
We communicated with the governing bodies regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal controlthat we identify during the audit.
We also provided a statement to management on compliance with ethical requirements related toindependence, and communicated with governing bodies about all relationships and other matters thatmay be reasonably considered to affect our independence, as well as related precautions (if applicable).From the matters we had discussed with the governing bodies, we confirmed which matters weremost important to the audit of the financial statements for the current period and thus constituted the keyaudit matters. We set out these matters in the auditor's report. Unless the disclosure of these matters areforbidden by the laws and regulations, or, in rare cases, if it is reasonably expected that the negativeimpacts caused by discussing certain matters in the auditor's report would be larger than the benefits forpublic interest, we shall not disclose the matters in the auditor's report under such circumstances.
| BDO China Shu Lun Pan CPAs (LLP) | Chinese Certified Public Accountant: Chen Luying (Project Partner) |
| Chinese Certified Public Accountant: Wang Aijia | |
| Shanghai? China | 25 March 2022 |
II. Financial Statements
Consolidated Balance Sheet31 December 2021
Prepared by: Shanghai M&G Stationery Inc.
Unit: RMB Currency: RMB
| Item | Notes | 31 December 2021 | 31 December 2020 |
| Current assets: | |||
| Cash and equivalents | VII. 1 | 3,010,652,190.64 | 2,562,158,926.11 |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | VII. 2 | 1,609,123,552.86 | 1,428,277,848.33 |
| Derivative financial assets | |||
| Bills receivable | VII. 4 | 39,712,146.72 | |
| Accounts receivable | VII. 5 | 1,720,868,415.43 | 1,561,211,468.90 |
| Receivables financing | VII. 6 | 22,824,707.62 | 61,412,976.46 |
| Prepayment | VII. 7 | 90,826,293.94 | 131,596,384.76 |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | VII. 8 | 163,987,201.97 | 141,753,102.00 |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | VII. 9 | 1,546,653,299.30 | 1,322,812,846.83 |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | VII. 12 | 3,312,295.00 | 4,637,213.00 |
| Other current assets | VII. 13 | 85,797,733.53 | 27,286,607.30 |
| Total current assets | 8,293,757,837.01 | 7,241,147,373.69 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | VII. 17 | 36,512,701.80 | 34,722,395.67 |
| Investments in other equity instruments | VII. 18 | 6,745,402.14 | 5,476,577.42 |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | VII. 21 | 1,840,104,394.34 | 1,847,635,724.45 |
| Construction in progress | VII. 22 | 66,743,168.66 | 54,946,300.66 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | VII. 25 | 357,540,113.34 | |
| Intangible assets | VII. 26 | 434,848,138.70 | 320,746,328.60 |
| Development expenses | |||
| Goodwill | VII. 28 | 63,529,740.20 | |
| Long-term prepaid expenses | VII. 29 | 162,206,827.46 | 99,035,852.78 |
| Deferred income tax assets | VII. 30 | 153,856,300.50 | 99,939,414.58 |
| Other non-current assets | VII. 31 | 8,543,306.18 | 6,258,468.47 |
| Total non-current assets | 3,130,630,093.32 | 2,468,761,062.63 | |
| Total assets | 11,424,387,930.33 | 9,709,908,436.32 | |
| Current liabilities: | |||
| Short-term borrowings | VII. 32 | 179,925,570.29 | 180,176,000.00 |
| Borrowings from central bank | |||
| Placements from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | VII. 34 | 147,570.52 | |
| Bills payable | VII. 35 | 172,167.42 | |
| Accounts payable | VII. 36 | 2,809,593,441.42 | 2,602,020,507.99 |
| Accounts received in advance | |||
| Contract liabilities | VII. 38 | 146,585,240.81 | 114,100,035.35 |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | VII. 39 | 191,303,383.26 | 152,625,106.89 |
| Taxes payable | VII. 40 | 353,228,927.57 | 477,240,219.10 |
| Other payables | VII. 41 | 593,242,385.96 | 625,468,675.97 |
| Including: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Reinsured accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | VII. 43 | 178,611,602.65 | |
| Other current liabilities | VII. 44 | 90,875,521.97 | 13,746,089.97 |
| Total current liabilities | 4,543,685,811.87 | 4,165,376,635.27 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | VII. 47 | 172,924,166.21 | |
| Long-term payable | VII. 48 | 8,420,000.00 | 8,420,000.00 |
| Long-term employee benefits payable | |||
| Estimated liabilities | VII. 50 | 35,311,258.55 | 12,211,357.80 |
| Deferred income | VII. 51 | 48,089,564.76 | 46,132,513.40 |
| Deferred income tax liabilities | VII. 30 | 92,665,937.38 | 36,781,069.25 |
| Other non-current liabilities | |||
| Total non-current liabilities | 357,410,926.90 | 103,544,940.45 | |
| Total liabilities | 4,901,096,738.77 | 4,268,921,575.72 | |
| Owner's equity (or shareholders' equity): | |||
| Share capital | VII. 53 | 927,745,590.00 | 927,427,600.00 |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VII. 55 | 454,186,790.79 | 533,384,131.66 |
| Less: Treasury shares | VII. 56 | 148,106,474.00 | 176,034,120.00 |
| Other comprehensive income | VII. 57 | 264,042.14 | 2,141,402.48 |
| Special reserve | |||
| Surplus reserve | VII. 59 | 464,201,654.91 | 464,042,659.91 |
| General risk provision | |||
| Undistributed profit | VII. 60 | 4,496,600,374.16 | 3,442,607,038.00 |
| Total equity attributable to the owners of the parent company | 6,194,891,978.00 | 5,193,568,712.05 | |
| Minority equity | 328,399,213.56 | 247,418,148.55 | |
| Total owners' equity (or shareholders' equity) | 6,523,291,191.56 | 5,440,986,860.60 | |
| Total liabilities and owner's equity (or shareholders' equity) | 11,424,387,930.33 | 9,709,908,436.32 | |
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge ofAccounting Department: Zhai Yu
Parent Company's Balance Sheet
31 December 2021Prepared by: SHANGHAI M&G STATIONERY INC.
Unit: RMB Currency: RMB
| Item | Notes | 31 December 2021 | 31 December 2020 |
| Current assets: | |||
| Cash and equivalents | 1,745,979,385.16 | 1,887,003,379.89 | |
| Held-for-trading financial assets | 1,408,461,028.23 | 1,272,219,811.46 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | XVII. 1 | 127,794,215.77 | 177,648,799.65 |
| Receivables financing | |||
| Prepayment | 30,780,762.76 | 36,987,935.22 | |
| Other receivables | XVII. 2 | 600,504,253.91 | 399,678,347.22 |
| Including: Interest receivable | 35,000.00 | ||
| Dividend receivable | |||
| Inventories | 442,836,008.14 | 332,755,309.92 | |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | 3,312,295.00 | 4,637,213.00 | |
| Other current assets | 154,197,220.48 | 150,000,000.00 | |
| Total current assets | 4,513,865,169.45 | 4,260,930,796.36 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | XVII. 3 | 1,538,161,599.01 | 1,098,535,037.00 |
| Investments in other equity instruments | 6,745,402.14 | 5,476,577.42 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 1,495,059,787.67 | 1,471,196,714.32 | |
| Construction in progress | 61,619,438.17 | 50,603,926.95 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 7,418,455.85 | ||
| Intangible assets | 171,561,670.92 | 177,722,510.27 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 67,556,926.66 | 5,417,965.45 | |
| Deferred income tax assets | 26,498,132.15 | 29,239,636.35 | |
| Other non-current assets | 7,295,018.30 | 5,829,768.47 | |
| Total non-current assets | 3,381,916,430.87 | 2,844,022,136.23 | |
| Total assets | 7,895,781,600.32 | 7,104,952,932.59 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 252,733,729.26 | 320,744,916.72 | |
| Accounts received in advance | |||
| Contract liabilities | 71,836,265.91 | 76,291,447.04 | |
| Employee benefits payable | 112,456,576.65 | 84,898,291.78 | |
| Taxes payable | 113,254,643.17 | 263,690,993.11 | |
| Other payables | 1,177,159,560.69 | 1,089,678,737.94 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | 5,950,751.45 | ||
| Other current liabilities | 9,338,714.57 | 9,917,888.11 | |
| Total current liabilities | 1,742,730,241.70 | 1,845,222,274.70 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 496,319.19 | ||
| Long-term payable | 260,420,000.00 | 260,420,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 26,576,868.80 | 23,417,137.82 | |
| Deferred income tax liabilities | 2,853,732.94 | 3,614,458.33 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 290,346,920.93 | 287,451,596.15 | |
| Total liabilities | 2,033,077,162.63 | 2,132,673,870.85 | |
| Owner's equity (or shareholders' equity): | |||
| Share capital | 927,745,590.00 | 927,427,600.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 638,242,426.13 | 538,163,670.62 | |
| Less: Treasury shares | 148,106,474.00 | 176,034,120.00 | |
| Other comprehensive income | 3,825,730.75 | 2,329,031.21 | |
| Special reserve | |||
| Surplus reserve | 463,872,795.00 | 463,713,800.00 | |
| Undistributed profit | 3,977,124,369.81 | 3,216,679,079.91 | |
| Total owners' equity (or shareholders' equity) | 5,862,704,437.69 | 4,972,279,061.74 | |
| Total liabilities and owner's equity (or shareholders' equity) | 7,895,781,600.32 | 7,104,952,932.59 | |
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge ofAccounting Department: Zhai Yu
Consolidated Income StatementJanuary - December 2021
Unit: RMB Currency: RMB
| Item | Notes | 2021 | 2020 |
| I. Total revenue | 17,607,403,250.12 | 13,137,745,727.18 | |
| Including: Revenue | VII. 61 | 17,607,403,250.12 | 13,137,745,727.18 |
| Interest income | |||
| Premium received | |||
| Handling fee and commission income | |||
| II. Total operating costs | 15,925,682,890.70 | 11,732,355,241.35 | |
| Including: Operating cost | VII. 61 | 13,520,841,753.26 | 9,806,609,999.48 |
| Interest expenses | |||
| Handling fee and commission expenses | |||
| Payment on surrenders | |||
| Net compensation expenses | |||
| Net provision drawn for insurance contract | |||
| Policy dividend expenses | |||
| Reinsurance expenses | |||
| Taxes and surcharges | VII. 62 | 66,507,958.32 | 50,694,964.71 |
| Selling expenses | VII. 63 | 1,397,645,460.82 | 1,103,184,023.51 |
| Administrative expenses | VII. 64 | 745,024,738.28 | 602,627,135.41 |
| R&D expenses | VII. 65 | 188,758,215.50 | 160,178,941.89 |
| Financial expenses | VII. 66 | 6,904,764.52 | 9,060,176.35 |
| Including: Interest expenses | 22,849,307.31 | 6,948,206.51 | |
| Interest income | 31,800,258.52 | 13,415,173.15 | |
| Add: Other gains | VII. 67 | 72,747,727.93 | 45,665,409.77 |
| Income from investment ("-" refers to loss) | VII. 68 | 6,293,164.04 | 3,851,154.70 |
| Including: Investment income from associates and joint ventures | 1,372,107.60 | -1,610,614.02 | |
| Derecognition of income from financial assets at amortized cost | |||
| Exchange gains ("-" refers to loss) | |||
| Net gain on exposure hedging ("-" refers to loss) | |||
| Gain on change in fair value ("-" refers to loss) | VII. 70 | 38,636,606.71 | 32,281,250.23 |
| Losses on credit impairment ("-" refers to loss) | VII. 71 | -7,013,714.54 | -38,225,902.12 |
| Losses on assets impairment ("-" refers to loss) | VII. 72 | -17,091,366.45 | -40,287,483.83 |
| Gains from asset disposal ("-" refers to loss) | VII. 73 | 6,098,090.22 | 169,704.92 |
| III. Operating profits ("-" refers to loss) | 1,781,390,867.33 | 1,408,844,619.50 | |
| Add: Non-operating profits | VII. 74 | 98,159,047.88 | 128,775,498.09 |
| Less: Non-operating expenses | VII. 75 | 18,146,808.20 | 20,471,306.43 |
| IV. Total profits ("-" refers to total loss) | 1,861,403,107.01 | 1,517,148,811.16 | |
| Less: Income tax expenses | VII. 76 | 327,807,441.64 | 278,775,085.16 |
| V. Net profits ("-" refers to net loss) | 1,533,595,665.37 | 1,238,373,726.00 | |
| (I) Classified by operation continuity | |||
| 1. Net profits from continuing activities ("-" refers to net loss) | 1,533,595,665.37 | 1,238,373,726.00 | |
| 2. Net profits from discontinuing activities ("-" refers to net loss) | |||
| (II) Classified by ownership | |||
| 1. Net profits attributable to shareholders of the parent company ("-" refers to net loss) | 1,517,866,131.16 | 1,255,426,655.27 | |
| 2. Profit or loss attributable to minority shareholders ("-" refers to net loss) | 15,729,534.21 | -17,052,929.27 | |
| VI. Net amount of other comprehensive income after tax | -2,290,233.39 | 1,284,183.22 | |
| (I) Net amount of other comprehensive income after tax attributable to owners of the parent company | -1,877,360.34 | 1,615,042.93 | |
| 1. Other comprehensive income not to be reclassified into profit or loss | 1,496,321.29 | 2,024,062.42 | |
| (1) Change in re-measurement of defined benefit plans | |||
| (2) Other comprehensive income that may not be reclassified to profit or loss under equity method | 417,820.28 | 738,151.54 | |
| (3) Change in fair value of investments in other equity instruments | 1,078,501.01 | 1,285,910.88 | |
| (4) Change in fair value of enterprise's own credit risk | |||
| 2. Other comprehensive income to be reclassified into profit or loss | -3,373,681.63 | -409,019.49 | |
| (1) Other comprehensive income that may be reclassified to profit or loss under equity method | 378.25 | 12,074.68 | |
| (2) Change in fair value of other debt investments | |||
| (3) Amount included in other comprehensive income on reclassification of financial assets | |||
| (4) Credit impairment provisions of other debt investments | |||
| (5) Cash flow hedging reserve | 108,696.70 | ||
| (6) Exchange differences from translation of financial statements | -3,482,756.58 | -421,094.17 | |
| (7) Others | |||
| (II) Net amount of other comprehensive income after tax attributable to minority shareholders | -412,873.05 | -330,859.71 | |
| VII. Total comprehensive income | 1,531,305,431.98 | 1,239,657,909.22 | |
| (I) Total comprehensive income attributable to owners of the parent company | 1,515,988,770.82 | 1,257,041,698.20 | |
| (II) Total comprehensive income attributable to minority shareholders | 15,316,661.16 | -17,383,788.98 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | 1.6450 | 1.3558 | |
| (II) Diluted earnings per share (Yuan/share) | 1.6425 | 1.3558 | |
In case of business combination under common control, net profit realized by the combined before thecombination in the period was nil; net profit realized by the combined in the previous period was nil.The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge ofAccounting Department: Zhai Yu
Income Statement of the Parent Company
January - December 2021
Unit: RMB Currency: RMB
| Item | Notes | 2021 | 2020 |
| I. Revenue | XVII. 4 | 4,775,891,830.59 | 4,195,911,462.19 |
| Less: Operating cost | XVII. 4 | 2,568,184,822.14 | 2,164,311,904.18 |
| Taxes and surcharges | 18,798,817.87 | 18,164,236.07 | |
| Selling expenses | 251,254,499.88 | 205,919,659.54 | |
| Administrative expenses | 522,541,509.33 | 425,917,972.99 | |
| R&D expenses | 163,122,840.94 | 135,381,593.07 | |
| Financial expenses | -32,451,619.70 | -7,024,536.16 | |
| Including: Interest expenses | 2,525,853.91 | 1,517,396.53 | |
| Interest income | 38,922,886.92 | 18,306,911.40 | |
| Add: Other gains | 10,189,418.97 | 10,610,663.43 | |
| Income from investment ("-" refers to loss) | XVII. 5 | 5,439,519.84 | 3,153,311.04 |
| Including: Investment income from associates and joint ventures | 1,372,107.60 | -1,610,614.02 | |
| Derecognition of income from financial assets at amortized cost | |||
| Net gain on exposure hedging ("-" refers to loss) | |||
| Gain on change in fair value ("-" refers to loss) | 36,977,984.23 | 28,634,739.23 | |
| Losses on credit impairment ("-" refers to loss) | 2,127,911.75 | -3,408,970.51 | |
| Losses on assets impairment ("-" refers to loss) | -968,847.45 | 872,454.58 | |
| Gains from asset disposal ("-" refers to loss) | 3,907,817.69 | 25,621.30 | |
| II. Operating profits ("-" refers to loss) | 1,342,114,765.16 | 1,293,128,451.57 | |
| Add: Non-operating profits | 92,512,492.98 | 90,245,541.69 | |
| Less: Non-operating expenses | 5,626,551.17 | 5,632,154.87 | |
| III. Total profits ("-" refers to total loss) | 1,429,000,706.97 | 1,377,741,838.39 | |
| Less: Income tax expenses | 204,682,622.07 | 205,164,355.15 | |
| IV. Net profits ("-" refers to net loss) | 1,224,318,084.90 | 1,172,577,483.24 | |
| (I) Net profits from continuing activities ("-" refers to net loss) | 1,224,318,084.90 | 1,172,577,483.24 | |
| (II) Net profits from discontinuing activities ("-" refers to net loss) | |||
| V. Net amount of other comprehensive income after tax | 1,496,699.54 | 2,036,137.10 | |
| (I) Other comprehensive income not to be reclassified into profit or loss | 1,496,321.29 | 2,024,062.42 | |
| 1. Change in re-measurement of defined benefit plans | |||
| 2. Other comprehensive income that may not be reclassified to profit or loss under equity method | 417,820.28 | 738,151.54 | |
| 3. Change in fair value of investments in other equity instruments | 1,078,501.01 | 1,285,910.88 | |
| 4. Change in fair value of enterprise's own credit risk | |||
| (II) Other comprehensive income to be reclassified into profit or loss | 378.25 | 12,074.68 | |
| 1. Other comprehensive income that may be reclassified to profit or loss under equity method | 378.25 | 12,074.68 | |
| 2. Change in fair value of other debt investments | |||
| 3. Amount included in other comprehensive income on reclassification of financial assets |
| 4. Credit impairment provisions of other debt investments | |||
| 5. Cash flow hedging reserve | |||
| 6. Exchange differences from translation of financial statements | |||
| 7. Others | |||
| VI. Total comprehensive income | 1,225,814,784.44 | 1,174,613,620.34 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (Yuan/share) | |||
| (II) Diluted earnings per share (Yuan/share) | |||
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge ofAccounting Department: Zhai Yu
Consolidated Cash Flow StatementJanuary - December 2021
Unit: Yuan Currency: RMB
| Item | Notes | 2021 | 2020 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 18,775,664,300.30 | 14,375,933,624.40 | |
| Net increase in customer and interbank deposits | |||
| Net increase in borrowings from central bank | |||
| Net increase in placements from banks and other financial institutions | |||
| Cash received from premiums under original insurance contract | |||
| Net cash received from reinsurance business | |||
| Net increase in deposits of policy holders and investments | |||
| Cash received from interest, fees and commissions | |||
| Net increase in borrowings | |||
| Net increase in repurchase business capital | |||
| Net cash received from securities trading agency services | |||
| Tax rebates | 10,369,246.97 | 11,398,390.80 | |
| Other cash received from operating activities | VII. 78 | 1,329,822,604.24 | 744,295,214.21 |
| Sub-total of cash inflows from operating activities | 20,115,856,151.51 | 15,131,627,229.41 | |
| Cash paid for goods and services | 13,782,147,395.98 | 10,196,223,261.78 | |
| Net increase in customer loans and advances | |||
| Net increase in deposits with PBOC and interbank deposits | |||
| Cash paid for compensation payments under original insurance contract | |||
| Net increase in funds for lending | |||
| Cash paid for interests, handling charges and commissions | |||
| Cash paid for policy dividends | |||
| Cash paid to and on behalf of employees | 964,853,485.39 | 820,264,591.39 | |
| Taxes and fees paid | 1,061,608,286.98 | 663,182,452.66 | |
| Cash paid for other operating activities | VII. 78 | 2,746,050,562.39 | 2,180,259,031.30 |
| Sub-total of cash outflows from operating activities | 18,554,659,730.74 | 13,859,929,337.13 | |
| Net cash flow generated from operating activities | 1,561,196,420.77 | 1,271,697,892.28 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 2,970,000,000.00 | 2,291,000,000.00 | |
| Cash received from returns on investments | 62,458,333.69 | 21,189,324.39 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 11,181,134.17 | 16,631.67 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | VII. 78 | 1,324,918.00 | 1,987,377.00 |
| Sub-total of cash inflows from investing activities | 3,044,964,385.86 | 2,314,193,333.06 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 381,903,887.13 | 323,935,562.77 | |
| Cash paid for investment | 3,170,000,000.00 | 3,042,050,000.00 | |
| Net increase in pledged loans | |||
| Net cash paid for acquiring subsidiaries and other operating entities | 155,898,356.19 | 13,656,702.33 | |
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 3,707,802,243.32 | 3,379,642,265.10 | |
| Net cash flow generated from investing activities | -662,837,857.46 | -1,065,448,932.04 | |
| III. Cash flow generated from financing activities: | |||
| Proceeds received from financing activities | 52,543,682.00 | 176,034,120.00 | |
| Including: Proceeds received by subsidiaries from minority shareholders' investment | 21,500,000.00 | ||
| Cash received from borrowings | 211,087,200.00 | 180,000,000.00 | |
| Other cash received from financing-related activities | VII. 78 | 67,500,000.00 | |
| Sub-total of cash inflows from financing activities | 331,130,882.00 | 356,034,120.00 | |
| Cash repayments of borrowings | 224,956,154.64 | 180,000,000.00 | |
| Dividends paid, profit distributed or interest paid | 478,576,740.11 | 374,506,316.09 | |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | |||
| Other cash paid for financing-related activities | VII. 78 | 356,857,834.03 | 1,585,530.00 |
| Sub-total of cash outflows from financing activities | 1,060,390,728.78 | 556,091,846.09 | |
| Net cash flow from financing activities | -729,259,846.78 | -200,057,726.09 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | -6,960,237.09 | -6,291,534.79 | |
| V. Net increase in cash and cash equivalents | 162,138,479.44 | -100,300.64 | |
| Add: Cash and cash equivalents at the beginning of the period | 1,377,346,135.25 | 1,377,446,435.89 | |
| VI. Cash and cash equivalents at the end of the period | 1,539,484,614.69 | 1,377,346,135.25 | |
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge ofAccounting Department: Zhai Yu
Cash Flow Statement of the Company
January - December 2021
Unit: RMB Currency: RMB
| Item | Notes | 2021 | 2020 |
| I. Cash flow from operating activities: | |||
| Cash received from sales of goods or rendering of services | 5,385,576,848.34 | 4,597,258,430.48 | |
| Tax rebates | 3,189,697.74 | ||
| Other cash received from operating activities | 1,403,304,335.52 | 1,051,218,859.99 | |
| Sub-total of cash inflows from operating activities | 6,792,070,881.60 | 5,648,477,290.47 | |
| Cash paid for goods and services | 2,779,458,377.10 | 2,109,943,577.01 | |
| Cash paid to and on behalf of employees | 477,407,103.64 | 403,578,239.43 | |
| Taxes and fees paid | 586,015,675.64 | 398,632,878.68 | |
| Cash paid for other operating activities | 1,592,162,349.00 | 1,641,002,312.95 | |
| Sub-total of cash outflows from operating activities | 5,435,043,505.38 | 4,553,157,008.07 | |
| Net cash flow generated from operating activities | 1,357,027,376.22 | 1,095,320,282.40 | |
| II. Cash flow from investing activities: | |||
| Cash received from disposal of investments | 2,790,000,000.00 | 2,150,000,000.00 | |
| Cash received from returns on investments | 54,804,179.70 | 20,645,914.20 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 8,508,833.33 | 604,365.44 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received relating to investing activities | 1,324,918.00 | 1,987,377.00 | |
| Sub-total of cash inflows from investing activities | 2,854,637,931.03 | 2,173,237,656.64 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets | 306,645,976.60 | 254,982,539.91 | |
| Cash paid for investment | 3,368,500,000.00 | 2,900,000,000.00 | |
| Net cash paid for acquiring subsidiaries and other operating entities | 13,656,702.33 | ||
| Other cash paid relating to investing activities | |||
| Sub-total of cash outflows from investing activities | 3,675,145,976.60 | 3,168,639,242.24 | |
| Net cash flow generated from investing activities | -820,508,045.57 | -995,401,585.60 | |
| III. Cash flow generated from financing activities: | |||
| Proceeds received from financing activities | 31,043,682.00 | 176,034,120.00 | |
| Cash received from borrowings | |||
| Other cash received from financing-related activities | |||
| Sub-total of cash inflows from financing activities | 31,043,682.00 | 176,034,120.00 | |
| Cash repayments of borrowings | |||
| Dividends paid, profit distributed or interest paid | 465,698,100.00 | 369517396.53 | |
| Other cash paid for financing-related activities | 19,004,886.14 | 1,585,530.00 | |
| Sub-total of cash outflows from financing activities | 484,702,986.14 | 371,102,926.53 | |
| Net cash flow from financing activities | -453,659,304.14 | -195,068,806.53 | |
| IV. Effects of exchange rate fluctuations on cash and cash equivalents | -4,202,451.81 | -5,972,061.74 | |
| V. Net increase in cash and cash equivalents | 78,657,574.70 | -101,122,171.47 | |
| Add: Cash and cash equivalents at the beginning of the period | 705,217,858.93 | 806,340,030.40 | |
| VI. Cash and cash equivalents at the end of the period | 783,875,433.63 | 705,217,858.93 |
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge ofAccounting Department: Zhai Yu
Consolidated Statements of Changes in Owners' Equity
January - December 2021Unit: RMB Currency: RMB
| Item | 2021 | ||||||||||||||
| Equity attributable to owners of the parent company | Minority equity | Total equity attributable to owners | |||||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of last year | 927,427,600.00 | 533,384,131.66 | 176,034,120.00 | 2,141,402.48 | 464,042,659.91 | 3,442,607,038.00 | 5,193,568,712.05 | 247,418,148.55 | 5,440,986,860.60 | ||||||
| Add: Changes in accounting policies | |||||||||||||||
| Correction for previous errors | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 927,427,600.00 | 533,384,131.66 | 176,034,120.00 | 2,141,402.48 | 464,042,659.91 | 3,442,607,038.00 | 5,193,568,712.05 | 247,418,148.55 | 5,440,986,860.60 | ||||||
| III. Increase and decrease for the period ("-" for decrease) | 317,990.00 | -79,197,340.87 | -27,927,646.00 | -1,877,360.34 | 158,995.00 | 1,053,993,336.16 | 1,001,323,265.95 | 80,981,065.01 | 1,082,304,330.96 | ||||||
| (I) Total comprehensive income | -1,877,360.34 | 1,517,866,131.16 | 1,515,988,770.82 | 15,316,661.16 | 1,531,305,431.98 | ||||||||||
| (II) Owner's contribution and capital reduction | 317,990.00 | -43,886,082.32 | -27,927,646.00 | -15,640,446.32 | 65,573,846.26 | 49,933,399.94 | |||||||||
| 1. Ordinary shares contributed by the owners | 317,990.00 | 22,075,530.00 | -27,927,646.00 | 50,321,166.00 | 33,078,168.15 | 83,399,334.15 | |||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payments credited to owners' equity | 68,319,695.36 | 68,319,695.36 | 68,319,695.36 | ||||||||||||
| 4. Others | -134,281,307.68 | -134,281,307.68 | 32,495,678.11 | -101,785,629.57 | |||||||||||
| (III) Profit distribution | 158,995.00 | -463,872,795.00 | -463,713,800.00 | -463,713,800.00 | |||||||||||
| 1. Withdrawal of surplus reserve | 158,995.00 | -158,995.00 | |||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -463,713,800.00 | -463,713,800.00 | -463,713,800.00 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||||||
| 3. Surplus reserve to cover loss | |||||||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Withdrawal for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | -35,311,258.55 | -35,311,258.55 | 90,557.59 | -35,220,700.96 | |||||||||||
| IV. Balance at the end of the period | 927,745,590.00 | 454,186,790.79 | 148,106,474.00 | 264,042.14 | 464,201,654.91 | 4,496,600,374.16 | 6,194,891,978.00 | 328,399,213.56 | 6,523,291,191.56 |
| Item | 2020 | ||||||||||||||
| Equity attributable to owners of the parent company | Minority equity | Total equity attributable to owners | |||||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of last year | 920,000,000.00 | 272,347,764.53 | 526,359.55 | 440,260,399.59 | 2,568,365,861.32 | 4,201,500,384.99 | 259,424,856.61 | 4,460,925,241.60 | |||||||
| Add: Changes in accounting policies | 10,596,781.73 | 10,596,781.73 | 146,751.13 | 10,743,532.86 | |||||||||||
| Correction for previous errors | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 272,347,764.53 | 526,359.55 | 440,260,399.59 | 2,578,962,643.05 | 4,212,097,166.72 | 259,571,607.74 | 4,471,668,774.46 | |||||||
| III. Increase and decrease for the period ("-" for decrease) | 7,427,600.00 | 261,036,367.13 | 176,034,120.00 | 1,615,042.93 | 23,782,260.32 | 863,644,394.95 | 981,471,545.33 | -12,153,459.19 | 969,318,086.14 | ||||||
| (I) Total comprehensive income | 1,615,042.93 | 1,255,426,655.27 | 1,257,041,698.20 | -17,383,788.98 | 1,239,657,909.22 | ||||||||||
| (II) Owner's contribution and capital reduction | 7,427,600.00 | 261,036,367.13 | 176,034,120.00 | 92,429,847.13 | 5,230,329.79 | 97,660,176.92 | |||||||||
| 1. Ordinary shares contributed by the owners | 7,427,600.00 | 168,606,520.00 | 176,034,120.00 | -1,050,000.00 | -1,050,000.00 | ||||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payments credited to owners' equity | 71,971,792.64 | 71,971,792.64 | 71,971,792.64 | ||||||||||||
| 4. Others | 20,458,054.49 | 20,458,054.49 | 6,280,329.79 | 26,738,384.28 | |||||||||||
| (III) Profit distribution | 23,782,260.32 | -391,782,260.32 | -368,000,000.00 | -368,000,000.00 | |||||||||||
| 1. Withdrawal of surplus reserve | 23,782,260.32 | -23,782,260.32 | |||||||||||||
| 2. Withdrawal of general risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -368,000,000.00 | -368,000,000.00 | -368,000,000.00 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||||||
| 3. Surplus reserve to cover loss | |||||||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||||||
| 6. Others |
| (V) Special reserve | |||||||||||||||
| 1. Withdrawal for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of the period | 927,427,600.00 | 533,384,131.66 | 176,034,120.00 | 2,141,402.48 | 464,042,659.91 | 3,442,607,038.00 | 5,193,568,712.05 | 247,418,148.55 | 5,440,986,860.60 |
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of Accounting Department: Zhai Yu
Parent Company's Statement of Changes in Owners' Equity
January - December 2021
Unit: RMB Currency: RMB
| Item | 2021 | ||||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total equity attributable to owners | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| I. Balance at the end of last year | 927,427,600.00 | 538,163,670.62 | 176,034,120.00 | 2,329,031.21 | 463,713,800.00 | 3,216,679,079.91 | 4,972,279,061.74 | ||||
| Add: Changes in accounting policies | |||||||||||
| Correction for previous errors | |||||||||||
| Others | |||||||||||
| II. Balance at the beginning of the year | 927,427,600.00 | 538,163,670.62 | 176,034,120.00 | 2,329,031.21 | 463,713,800.00 | 3,216,679,079.91 | 4,972,279,061.74 | ||||
| III. Increase and decrease for the period ("-" for decrease) | 317,990.00 | 100,078,755.51 | -27,927,646.00 | 1,496,699.54 | 158,995.00 | 760,445,289.90 | 890,425,375.95 | ||||
| (I) Total comprehensive income | 1,496,699.54 | 1,224,318,084.90 | 1,225,814,784.44 | ||||||||
| (II) Owner's contribution and capital reduction | 317,990.00 | 100,078,755.51 | -27,927,646.00 | 128,324,391.51 | |||||||
| 1. Ordinary shares contributed by the owners | 317,990.00 | 22,075,530.00 | -27,927,646.00 | 50,321,166.00 | |||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners' equity | 68,319,695.36 | 68,319,695.36 | |||||||||
| 4. Others | 9,683,530.15 | 9,683,530.15 | |||||||||
| (III) Profit distribution | 158,995.00 | -463,872,795.00 | -463,713,800.00 | ||||||||
| 1. Withdrawal of surplus reserve | 158,995.00 | -158,995.00 | |||||||||
| 2. Distribution to owners (or shareholders) | -463,713,800.00 | -463,713,800.00 | |||||||||
| 3. Others | |||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||
| 3. Surplus reserve to cover loss | |||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Balance at the end of the period | 927,745,590.00 | 638,242,426.13 | 148,106,474.00 | 3,825,730.75 | 463,872,795.00 | 3,977,124,369.81 | 5,862,704,437.69 | ||||
| Item | 2020 | ||||||||
| Paid-up capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Special reserve | Surplus reserve | Undistributed profit | Total equity attributable to owners | ||
| Preference shares | Perpetual bonds | Others | Other comprehensive income | ||||||||
| I. Balance at the end of last year | 920,000,000.00 | 274,008,599.09 | 292,894.11 | 439,931,539.68 | 2,435,883,856.99 | 4,070,116,889.87 | |||||
| Add: Changes in accounting policies | |||||||||||
| Correction for previous errors | |||||||||||
| Others | |||||||||||
| II. Balance at the beginning of the year | 920,000,000.00 | 274,008,599.09 | 292,894.11 | 439,931,539.68 | 2,435,883,856.99 | 4,070,116,889.87 | |||||
| III. Increase and decrease for the period ("-" for decrease) | 7,427,600.00 | 264,155,071.53 | 176,034,120.00 | 2,036,137.10 | 23,782,260.32 | 780,795,222.92 | 902,162,171.87 | ||||
| (I) Total comprehensive income | 2,036,137.10 | 1,172,577,483.24 | 1,174,613,620.34 | ||||||||
| (II) Owner's contribution and capital reduction | 7,427,600.00 | 264,155,071.53 | 176,034,120.00 | 95,548,551.53 | |||||||
| 1. Ordinary shares contributed by the owners | 7,427,600.00 | 168,606,520.00 | 176,034,120.00 | ||||||||
| 2. Capital contributions by other equity instrument holders | |||||||||||
| 3. Amount of share-based payments credited to owners' equity | 82,199,024.88 | 82,199,024.88 | |||||||||
| 4. Others | 13,349,526.65 | 13,349,526.65 | |||||||||
| (III) Profit distribution | 23,782,260.32 | -391,782,260.32 | -368,000,000.00 | ||||||||
| 1. Withdrawal of surplus reserve | 23,782,260.32 | -23,782,260.32 | |||||||||
| 2. Distribution to owners (or shareholders) | -368,000,000.00 | -368,000,000.00 | |||||||||
| 3. Others | |||||||||||
| (IV) Internal carry-forward of owners' equity | |||||||||||
| 1. Transfer of capital reserve to capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserve to capital (or share capital) | |||||||||||
| 3. Surplus reserve to cover loss | |||||||||||
| 4. Changes in defined benefit scheme carried forward to retained earnings | |||||||||||
| 5. Carry-forward of other comprehensive income to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Balance at the end of the period | 927,427,600.00 | 538,163,670.62 | 176,034,120.00 | 2,329,031.21 | 463,713,800.00 | 3,216,679,079.91 | 4,972,279,061.74 |
The chairman of the Company: Chen Huwen CFO of the Company: Quan Qiang Person in charge of Accounting Department: Zhai Yu
III. General Information about the Company
1. Company profile
√ Applicable □ Not applicable
Shanghai M&G Stationery Inc. (hereinafter referred to as "Company" or the "Company") is a limitedcompany that was approved by the Approval for the Initial Public Offering of Shanghai M&G StationeryInc. in [2015] No. 15 securities regulatory license of China Securities Regulatory Commission in January2015. The Company's business license No.: 91310000677833266F. In January 2015, the Company waslisted on Shanghai Stock Exchange. The industry where the Company operates is manufacturing industryin products for stationery, arts, sports and entertainment.As of 31 December 2021, the Company issued a total of 927,455,590 shares accumulatively,including 5,735,210 restricted shares, and its registered capital amounted to RMB927,455,590. Theregistered address of the Company is Building 3, No. 3469 Jinqian Road, Fengxian District, Shanghai.The principal operations of the Company include:
Permitted items: Food operation; printing of packaging and decoration printing products; printing ofdocuments, materials and other printing products; publication operation. (For items subject to approval,operation activities are conducted after getting the approval from relevant departments. For specificoperation items, the approval documents or permits of relevant departments shall prevail)
General items: Manufacturing and sales of stationery products; wholesale and retail of digitalproducts, security equipment, instruments and apparatus, protective equipment in work, furniture,decorations, cosmetics, accessories, office supplies, craft gifts (except ivory and its products), rubber andplastic products, electronic products, household appliances, toys, molds, hardware and electric material,communication equipment, computer software and auxiliary equipment, daily necessities, textiles,clothing and footwear, household goods, sporting goods and equipment, disinfectants (excludinghazardous chemicals), kitchen utensils, sanitary ware and daily sundries, daily chemical products, first-class medical equipment, second-class medical equipment, machinery equipment, office equipment andconsumables, photographic equipment, audio equipment, decorative materials, fire-fighting equipment,hotel supplies, glass products, power and electronic components, lubricants, plumbing pipes andaccessories, ceramic pipes and accessories, automotive supplies, sanitary products, and mother and babysupplies; import and export of goods and technology; e-commerce and enterprise management consulting.(Except for items subject to approval according to law, operation activities are carried out independentlywith business license according to law)
The parent company of the Company is M&G Holdings (Group) Co., Ltd., and the beneficialcontrollers are Chen Huwen, Chen Huxiong, and Chen Xueling.
The financial statements were approved for submission by the Board of Directors on 25 March 2022.
2. Scope of consolidated financial statements
√ Applicable □ Not applicable
Details of the scope of the consolidated financial statements for the current period and its changesare set out in Notes "VIII. Changes in the Consolidation Scope" and "IX. Equity in Other Entities".
IV. Preparation Basis of Financial Statements
1. Preparation basis
The Company prepared financial statements in accordance with the Accounting Standards forBusiness Enterprises - Basic Standards, and various specific account standards, application guidance foraccounting standards for business enterprises, interpretations of the accounting standards for businessenterprises and other relevant regulations (hereinafter collectively referred to as "Accounting Standardsfor Business Enterprises") promulgated by the Ministry of Finance, and the disclosure requirements in thePreparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15- General Provisions on Financial Report issued by China Securities Regulatory Commission.
2. Going concern
√ Applicable □ Not applicable
The Company has the ability to continue as a going concern within the 12 months after the end of theReporting Period and there are no material events that may affect its ability to continue as a going concern.
V. Significant Accounting Policies and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
√ Applicable □ Not applicable
The following disclosures cover the specific accounting policies and accounting estimates formulatedby the Company according to the characteristics of its production and operation. For details, please referto Notes "V (10) Financial Instruments", "V (23) Fixed Assets", "V (29) Intangible Assets", "V (31) Long-term Deferred Expenses", "V (38) Income", and "V (40) Government Subsidies".
1. Statement of compliance of accounting standards for business enterprises
The financial statements are in compliance with the Accounting Standards for Business Enterprisespromulgated by the Ministry of Finance, and truly and completely present the consolidated and parentcompany's financial position of the Company as at 31 December 2021, as well as the consolidated andparent company's operating results and cash flows for the year then ended.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
√ Applicable □ Not applicable
The Company's operating cycle is 12 months.
4. Reporting currency
RMB is adopted by the Company as the bookkeeping currency.
5. Accounting treatments for business combination under or not under common control
√ Applicable □ Not applicable
Business combination under common control: the assets and liabilities acquired by the Company inbusiness combination (including goodwill incurred in the acquisition of the acquiree by ultimatecontrolling party) shall be measured at the carrying amount of the assets and liabilities of the acquiree inthe consolidated financial statements of the ultimate controlling party at the date of combination. Thedifference between the carrying amount of the net assets obtained and the carrying amount of theconsideration paid for the merger (or total nominal value of the issued shares) is adjusted to capitalpremium in capital reserve. If the capital premium in capital reserve is not sufficient to offset the difference,the remaining balance is adjusted against retained earnings.Business combination not under common control: the cost of business combination is the fair valueof the assets paid by the acquirer to obtain the control right of the acquiree, the liabilities incurred orassumed, and the equity securities issued at the date of purchase. Where the cost of business combinationis higher than the fair value of the identifiable net assets acquired from the acquiree in businesscombination, the Company shall recognize such difference as goodwill; where the cost of businesscombination is less than the fair value of the identifiable net assets acquired from the acquiree in businesscombination, such difference shall be included in the current profit or loss. The identifiable assets,liabilities and contingent liabilities of the acquiree obtained in the business combination that meet therecognition conditions are measured at their fair values at the date of purchase.The direct expenses incurred in business combination shall be included the current profit or loss;transaction costs associated with the issue of equity or debt securities for the business combination shallbe included in the initially recognized amounts of the equity or debt securities.
6. Preparation of consolidated financial statements
√ Applicable □ Not applicable
(1) Scope of consolidation
The consolidation scope of consolidated financial statements is determined on the basis of control,including the Company and all of its subsidiaries. The term "control" refers to the power held by theCompany over the invested enterprise, through which the Company is capable of enjoying variable returnby participating in relevant activities of the invested enterprise, and having the ability to influence theamount of return via such control.
(2) Consolidation procedure
The Company regards the entire enterprise group as an accounting entity and prepares theconsolidated financial statements in accordance with unified accounting policies to reflect the overallfinancial status, operating results and cash flow of the enterprise group. The influence of internaltransactions between the Company and its subsidiaries and among the subsidiaries shall be offset. Ifinternal transactions indicate that the relevant assets have suffered impairment losses, the losses shall befully recognized. In preparing the consolidated financial statements, where the accounting policies and theaccounting periods are inconsistent between the Company and its subsidiaries, the financial statements ofthe subsidiaries are adjusted in accordance with the accounting policies and accounting period of theCompany.
The owners' equity, the net profit or loss and the comprehensive income attributable to minorityshareholders of a subsidiary of the current period are presented separately under the owners' equity in theconsolidated balance sheet, the net profit and the total comprehensive income in the consolidated incomestatement respectively. Where losses attributable to the minority shareholders of a subsidiary exceed the
minority shareholders' interest entitled in the shareholders' equity of the subsidiary at the beginning of theperiod, the excess is allocated against the minority equity.
① Addition of subsidiary or business
During the Reporting Period, if there is an addition of subsidiary or business due to businesscombination under common control, the operating results and cash flows of the subsidiary or businesscombination from the beginning of the current period to the end of the Reporting Period are included intothe consolidated financial statements, and at the same time, the amount at the end of the period of theconsolidated financial statements and the relevant items in the comparative statements are adjusted as ifthe reporting entity after combination had been existing since the control of the ultimate controlling partystarted.
Where control over the investee under common control is obtained due to reasons such as increasein investments, for equity investment held before the control over the acquiree is obtained, profit or loss,other comprehensive income and other changes in net assets recognized from the later of the acquisitionof the original equity interest and the date when the acquirer and the acquiree were placed under commoncontrol until the date of combination are offset against the retained profit at the beginning of the period ofthe comparative statements or the profit or loss of the current period respectively.
During the Reporting Period, if there is an addition of subsidiary or business due to businesscombination not under common control, it shall be included in the consolidated financial statements onthe basis of the fair value of the identifiable assets, liabilities and contingent liabilities determined at thedate of purchase.
Where control over the investee not under common control is obtained due to reasons such as increasein investments, for the equity interest of the acquiree held before the date of purchase, the Companyremeasures the equity interest at its fair value as at the date of purchase, and any difference between thefair value and its book value will be accounted for as investment gains of the current period. Where equityinterest of the acquiree held before the date of purchase is related to other comprehensive income that canbe reclassified into profit and loss in the future and other changes in owners’ equity under the equitymethod, such equity interest is transferred to investment gains of the period to which the date of purchasebelongs.
② Disposal of subsidiaries
A. General treatment for disposal
When control over the investee is lost due to the disposal of part of the equity investment or otherreasons, the Company remeasures the remaining equity investment at fair value as at the date on whichcontrol is lost. The difference between the sum of the consideration received from equity disposal and thefair value of the remaining equity interest and the sum of the net assets of the subsidiary proportionate tothe original shareholding accumulated from the date of purchase or combination and goodwill is includedin investment gains of the period during which the control is lost. Other comprehensive income that isrelated to the equity investment in the original subsidiary and can be reclassified into profit and loss in thefuture and other changes in owners’ equity under the equity method, are transferred to investment gainsof the period during which the control is lost.
B. Stepwise disposal of subsidiary
In respect of stepwise disposal of equity investment in a subsidiary through multiple transactionsuntil control is lost, if the terms, conditions and economic effects of the transactions of equity investmentin the subsidiary satisfy one or more of the following conditions, the transactions are normally accountedfor as a basket of transactions:
i. these transactions were entered into simultaneously or after considering the effects of each other;ii. these transactions constituted a complete commercial result as a whole;iii. one transaction was conditional upon at least one of the other transaction;iv. one transaction was not economical on its own but was economical when considering togetherwith other transactions.
Where the transactions constitute a basket of transactions, the Company accounts for the transactionsas a transaction of disposal of a subsidiary until control is lost; the difference between the amount receivedeach time for disposal before control is lost and the net assets of such subsidiary corresponding to thedisposal of investment is recognized as other comprehensive income in the consolidated financialstatements, and is transferred to profit or loss of the period during which control is lost upon loss of control.
Where the transactions do not constitute a basket of transactions, before the loss of control, thetransactions are accounted for using the policies related to partial disposal of equity investment in asubsidiary where no control is lost; when control is lost, they are accounted for using the general methodfor disposal of subsidiaries.
③ Purchase of minority interests in subsidiary
For the difference between the long-term equity investment newly acquired due to the purchase ofminority interests by the Company and the share of net assets of the subsidiary calculated according to thenew shareholding accumulated from the date of purchase (or date of combination), share premium of thecapital reserve in the consolidated balance sheet will be adjusted; where share premium of the capitalreserve is insufficient for the write-down, retained profit will be adjusted.
④ Partial disposal of equity investment in subsidiaries without losing control
For the difference between the disposal consideration and the net assets of the subsidiarycorresponding to the disposal of long-term equity investment accumulated from the date of purchase ordate of combination, share premium of the capital reserve in the consolidated balance sheet will beadjusted; where share premium of the capital reserve is insufficient for the write-down, retained profit willbe adjusted.
7. Classification of joint arrangements and accounting treatment of joint operations
□ Applicable √ Not applicable
8. Determination of cash and cash equivalents
Cash refers to the cash on hand and deposits that are available for payment of the Company. Cashequivalents refer to investments held by the Company that are short-term, highly liquid, readily convertibleto known amounts of cash and subject to an insignificant risk of changes in value.
9. Foreign currency transactions and translation of foreign currency financial statements
√ Applicable □ Not applicable
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day whenthe transactions occur.
Balance of monetary items in foreign currency as at the balance sheet date is translated at the spotrates prevailing at the balance sheet date, and any translation difference arising therefrom is included inprofit or loss of the period except for the translation difference arising from dedicated borrowings in
foreign currency related to the construction of assets qualified for capitalisation which is accounted forunder the principle of capitalisation of borrowing expenses.
(2) Translation of foreign currency financial statements
Asset and liability items in the balance sheet are translated at the spot rates prevailing at the balancesheet date. Owners' equity items other than "undistributed profit" are translated at the spot rates on thedates when they are incurred. Income and expense items in the income statement are translated at the spotrates prevailing at the transaction dates.On disposal of a foreign operation, the exchange differences in the financial statements in foreigncurrency relating to that foreign operation are transferred from owners' equity to profit or loss of the periodduring which the disposal occurs.
10. Financial instruments
√ Applicable □ Not applicable
(1) Classification of the financial instruments
According to the business model of the Company’s management of financial assets and thecontractual cash flow characteristics of financial assets, financial assets are classified at the initialrecognition as: financial assets at amortized cost, financial assets at fair value through profit or loss, andother financial assets at fair value through current profit or loss.
The Company classifies financial assets that simultaneously meet the following conditions and arenot designated as financial assets at fair value through current profit or loss as financial assets measuredat amortized cost:
- the business model aims at collecting contractual cash flows; and
- contractual cash flows are only the payment made based on the principal and the interest of theoutstanding principal amount.
The Company classifies financial assets that simultaneously meet the following conditions and arenot designated as financial assets at fair value through current profit or loss as financial assets (debtinstruments) at fair value through other comprehensive income:
- the business model aims at both collecting contractual cash flows and selling the financial assets;and
- contractual cash flows are only the payment made based on the principal and the interest of theoutstanding principal amount.
For non-trading equity instrument investments, the Company irrevocably designates them asfinancial assets (equity instruments) at fair value through other comprehensive income at the time of initialrecognition. The designation is made on the basis of a single investment, and the related investment meetsthe definition of an equity instrument from the issuer's perspective.
Except for the above-mentioned financial assets measured at amortized cost and at fair value throughother comprehensive income, the Company classifies all other financial assets as financial assets at fairvalue through current profit or loss. At the time of initial recognition, if accounting mismatches can beeliminated or significantly reduced, the Company can irrevocably designate financial assets that shouldbe classified as financial assets measured at amortized cost or at fair value through other comprehensiveincome as financial assets at fair value through current profit or loss.
Financial liabilities at the initial recognition are classified into financial liabilities at fair value throughcurrent profit or loss, and financial liabilities at amortized cost.Financial liabilities at the initial recognition can be designated as financial liabilities at fair valuethrough current profit or loss if one of the following conditions can be met:
① Such designation can eliminate or significantly reduce accounting mismatches.
② According to the enterprise risk management or investment strategy stated in the official writtendocument, management and evaluation of the financial liabilities portfolio or financial assets and financialliabilities portfolio are based on fair value which will be used as the basis for reporting to the keymanagement personnel.
③ The financial liabilities include embedded derivatives that need to be split separately.
(2) Recognition and measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables,long-term receivables and debt investment, which are initially measured at fair value, and relatedtransaction costs are included in the initial recognition amount. The accounts receivable of major financingcomponents and the accounts receivable of the Company's decision not to consider the financingcomponent with the term less than one year are initially measured at the contract transaction price.
Interest calculated by the effective interest method during the period of holding is included in thecurrent profit or loss.
Upon recovery or disposal, the difference between the acquisition price and the carrying amount ofthe financial asset shall be included in the current profit or loss.
② Financial assets at fair value through other comprehensive income (debt instruments)
Financial assets (debt instruments) at fair value through other comprehensive income, includingreceivables financing and other debt investments, are initially measured at fair value, and relatedtransaction costs are included in the initial recognition amount. The financial assets are subsequentlymeasured at fair value. Changes in fair value are included in other comprehensive income, except forinterest, impairment losses or gains and exchange gain or loss calculated using the effective interestmethod.
When the recognition is terminated, the accumulated gain or loss previously included in othercomprehensive income is transferred from other comprehensive income and included in the current profitor loss.
③ Financial assets (equity instruments) at fair value through other comprehensive income
Financial assets (equity instruments) at fair value through other comprehensive income, includingother equity instruments, are initially measured at fair value, and related transaction costs are included inthe initial recognition amount. The financial assets are subsequently measured at fair value, and changesin fair value are included in other comprehensive income. The dividends obtained are included in thecurrent profit and loss.
When the recognition is terminated, the accumulated gain or loss previously included in othercomprehensive income is transferred from other comprehensive income and included in retained earnings.
④ Financial assets at fair value through the current profit or loss
Financial assets at fair value through the current profit or loss, including held-for-trading financialassets, derivative financial assets and other non-current financial assets, are initially measured at fair value,
and related transaction costs are included in the current profit or loss. The financial assets are subsequentlymeasured at fair value, and changes in fair value are included in the current profit or loss.
⑤ Financial liabilities at fair value through current profit or loss
Financial liabilities at fair value through current profit or loss, including held-for-trading financialliabilities, and derivative financial liabilities, are initially measured at fair value, and related transactioncosts are included in the current profit or loss. The financial liabilities are subsequently measured at fairvalue, and changes in fair value are included in the current profit or loss.When the recognition is terminated, the difference between the carrying amount and considerationpaid is included in the current profit and loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost, including short-term borrowings, bills payable and accountspayable, other payables, long-term borrowings, bonds payable, long-term payables, are initially measuredat fair value, and related transaction costs are included in the initial recognition amount.
Interest calculated by the effective interest method during the period of holding is included in thecurrent profit or loss.
When the recognition is terminated, the difference between consideration paid and the carryingamount of the financial liabilities is included in the current profit and loss.
(3) Derecognition of financial assets and transfer of financial assets
The Company derecognizes financial assets when one of the following conditions is met:
- the contractual rights to collect the cash flows from the financial assets expire;
- the financial assets have been transferred and nearly all the risks and rewards related to theownership of the financial assets have been transferred to the transferee; or
- the financial assets have been transferred, and the Company have neither transferred nor retainedalmost all risks and rewards related to the ownership of the financial assets, but did not retain control overthe financial assets.
Where a financial asset is transferred, it shall not be derecognized if the Company has retained nearlyall the risks and rewards related to the ownerships of the financial asset.
The substance-over-form principle shall be adopted while making a judgment on whether the transferof financial assets satisfies the above conditions for derecognition.
The transfer of financial assets could be classified into entire transfer and partial transfer. If thetransfer of an entire financial asset satisfies the conditions for derecognition, the difference between thetwo amounts below shall be included in the current profit or loss:
① The carrying amount of the financial assets transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of the changein fair value previously included into the owners’ equity (in cases where the transferred financial assetsare financial assets (debt instruments) at fair value through other comprehensive income).
If the partial transfer of financial assets satisfies the conditions for derecognition, the overall carryingamount of the transferred financial assets shall be apportioned according to their respective relative fairvalue between the portion of derecognized part and the remaining part, and the difference between the twoamounts below shall be included in the current profit or loss:
① The carrying amount of the derecognized portion;
② The consideration of the derecognized portion, plus the corresponding derecognized portion ofaccumulated change in fair value previously included in owners’ equity (in cases where the transferredfinancial assets are financial assets (debt instruments) at fair value through other comprehensive income).If the transfer of financial assets does not meet the conditions for derecognition, the financial assetscontinue to be recognized and the consideration received is recognized as a financial liability.
(4) Derecognition of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the wholeor relevant portion of the liability is derecognized; if an agreement is entered into between the Companyand a creditor to replace the original financial liabilities with new financial liabilities with substantiallydifferent terms, the original financial liabilities will be derecognized and the new financial liabilities willbe recognized.
If the contract terms of the original financial liabilities are substantially amended in part or in full,the original financial liabilities will be derecognized in full or in part, and the financial liabilities whoseterms have been amended will be recognized as a new financial liability.
When financial liabilities are derecognized in full or in part, the difference between the carryingamount of the financial liabilities derecognized and the consideration paid (including transferred non-cash assets or new financial liability) will be included in the current profit or loss.
Where the Company repurchases part of its financial liabilities, the carrying amount of such financialliabilities will be allocated according to the relative fair value between the continuously recognized partand derecognized part on the repurchase date. The difference between the carrying amount of thederecognized portion of financial liabilities and the consideration paid (including transferred non-cashassets or new financial liability) will be included in the current profit or loss.
(5) Method of determining the fair values of financial assets and liabilities
A financial instrument with an active market determines its fair value by quoted prices in an activemarket. Financial instruments that do not exist in an active market shall use valuation techniques todetermine their fair value. During the valuation process, the Company uses valuation techniquesappropriate to the prevailing circumstances with the support of sufficient data and other informationavailable, selects inputs consistent with the characteristics of the assets or liabilities considered in thetransactions of relevant assets or liabilities by market participants, and gives priority to relevant observableinputs. Unobservable inputs are used only when the relevant observable inputs are not accessible or theaccess to which is impracticable.
(6) Impairment test method and accounting treatment for impairment of financial assets
The Company estimates the anticipated credit loss on a single or combination of financial assetsmeasured at amortized cost, financial assets (debt instruments) at fair value through other comprehensiveincome and financial guarantee contracts.
The Company considers reasonable and evidence-based information about past events, currentconditions, and forecasts of future economic conditions, and uses the risk of default as the weight tocalculate the probability-weighted amount of the present value of the difference between the contractualcash flow receivable and the expected cash flow, and recognizes the expected credit loss.
If the credit risk of the financial instruments has increased significantly since the initial recognition,the Company will measure its loss provision based on the amount of anticipated credit loss for the lifetime
of the financial instruments; if the credit risk of the financial instruments has not significantly increasedsince the initial recognition, the Company will measure its loss provision based on the amount ofanticipated credit loss for the financial instruments in the next 12 months. The increase or reversal of theloss provision resulting therefrom is included in the current profit and loss as an impairment loss or gain.The Company compares the risk of default on the balance sheet date of a financial instrument withthe risk of default on the date of initial recognition to determine the relative change in the risk of defaultduring the expected life of the financial instrument so as to assess whether the credit risk of the financialinstrument has increased significantly since the initial recognition. Usually, after an overdue for more than30 days, the Company believes that the credit risk of the financial instrument has increased significantlyunless there is conclusive evidence that the credit risk of the financial instrument has not increasedsignificantly since the initial recognition.If the credit risk of financial instrument at the balance sheet date is low, the Company will believethat the credit risk of the financial instrument has not increased significantly since the initial recognition.If there is any objective evidence indicating that some financial assets have incurred creditimpairment, the Company will make provision for impairment for the financial asset in a single financialasset manner.Regarding the receivables and contract assets formed from transactions regulated by the AccountingStandards for Business Enterprises No. 14 - Revenue (2017), regardless of whether they contain significantfinancing components or not, the Company always measures their loss reserves in accordance with theamount of anticipated credit losses for the entire lifetime.For lease receivables, the Company always measures their loss reserves in accordance with theamount of anticipated credit losses for the entire lifetime.If the Company no longer reasonably expects that the contractual cash flow of a financial asset canbe recovered in whole or in part, it will directly write down the book balance of the financial asset.
11. Bills receivable
Determination and accounting treatment of the anticipated credit loss of notes receivable
√ Applicable □ Not applicable
For details, please refer to Note V (10) Financial Instruments.
12. Accounts receivable
Determination and accounting treatment of the anticipated credit loss of accounts receivable
√ Applicable □ Not applicable
For details, please refer to Note V (10) Financial Instruments.
13. Receivables financing
√ Applicable □ Not applicable
For details, please refer to Note V (10) Financial Instruments.
14. Other receivables
Determination and accounting treatment of the anticipated credit loss of other receivables
√ Applicable □ Not applicable
For details, please refer to Note V (10) Financial Instruments.
15. Inventories
√ Applicable □ Not applicable
(1) Classification and cost of inventories
Inventories are classified into materials in transit, raw materials, turnover materials, goods-in-stock,goods in production, goods in transit, commissioned processing materials and so forth.
Inventories are initially measured at cost. The cost of inventories includes purchase cost, processingcost and other expenditures incurred to bring inventory to its current location and state.
(2) Valuation of inventory COGS
Inventory COGS is valued using the weighted average method.
(3) Basis for determining net realizable value for different types of inventories
At the balance sheet date, the inventories are measured according to the cost or the net realizablevalue, whichever is lower. If the cost of inventories is higher than the net realizable value, the provisionfor decline in value of inventories is made. The net realizable value refers, in the ordinary course ofbusiness, to the amount after deducting the estimated cost of completion, estimated sale expense andrelevant taxes from the estimated sale price of inventories.
Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, andheld-for-sale raw materials, during the normal course of production and operation, shall be determined bytheir estimated selling price less the related selling expenses and taxes; the net realizable value of materialinventories, which need to be processed, during the normal course of production and operation, shall bedetermined by the amount after deducting the estimated cost of completion, estimated selling expensesand relevant taxes from the estimated selling price of finished goods; the net realizable value of inventoriesheld for execution of sales contracts or labor contracts shall be calculated on the ground of the contractedprice. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the netrealizable value of the exceeding part shall be calculated on the ground of general selling price.
If the factors, which cause any value write-down of the inventories, have disappeared, thus causingthe inventories’ net realizable value to be higher than their carrying amount, the amount of write-down isreversed from the provision for the loss on decline in value of inventories which has been made. Thereversed amount is included in the profits and losses of the current period.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method
② Packaging materials are amortized using the immediate write-off method
16. Contract assets
(1). Recognition methods and standards of contract assets
√ Applicable □ Not applicable
The Company presents contract assets or contract liabilities in the balance sheet based on therelationship between performance obligations and customer payments. The Company presents the right toreceive consideration for the transfer of goods or services rendered to customers (and the right depends onother factors other than the passage of time) as contract assets. Contract assets and contract liabilities under
the same contract are presented in net amounts. The Company's unconditional (only depending on thepassage of time) right to collect consideration from customers is separately presented as receivables.
(2). Determination and accounting treatment of the anticipated credit loss of contract assets
√ Applicable □ Not applicable
Details of determination and accounting treatment of the anticipated credit loss of contract assets areset out in Note "10. (6) Impairment test method and accounting treatment for impairment of financialassets".
17. Held for sale assets
□ Applicable √ Not applicable
18. Debt investment
(1). Determination and accounting treatment of the anticipated credit loss of debt investments
□ Applicable √ Not applicable
19. Other debt investment
(1). Determination and accounting treatment of the anticipated credit loss of other debt investments
□ Applicable √ Not applicable
20. Long-term receivables
(1). Determination and accounting treatment of the anticipated credit loss of long-term receivables
√ Applicable □ Not applicable
For details, please refer to Note V (10) Financial Instruments.
21. Long-term equity investments
√ Applicable □ Not applicable
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement, and exists only whendecisions about the relevant activities of the arrangement require the unanimous consent of the partiessharing control. The Company together with the other joint venture parties can jointly control over theinvestee, and are entitled to the right of the net assets of the investee who is joint venture of the Company.
The term "significant influences" refers to the power to participate in making decisions on thefinancial and operating policies of the invested enterprise, but not to control or do joint control togetherwith other parties over the formulation of these policies. Where the investor can exercise significantinfluence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entities
For long-term equity investments in subsidiaries formed by business combination under commoncontrol, the initial investment cost of long-term equity investments shall be determined based on share ofthe book value of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate
controlling party at the date of combination. The difference between the initial investment cost of the long-term equity investment and the carrying value of the consideration paid is adjusted to the equity premiumin the capital reserve. If the capital premium in capital reserve is not sufficient to offset the difference, theremaining balance is adjusted against retained earnings. In connection with imposing control over theinvestee under joint control as a result of additional investment and other reasons, the difference betweenthe initial investment cost of the long-term equity investment recognized in accordance with the aboveprinciples and the carrying amount of the long term equity investment before the combination and the sumof carrying amount of newly paid consideration for additional shares acquired on the date of combinationis adjusted to equity premium. If the capital premium in capital reserve is not sufficient to offset thedifference, the remaining balance is adjusted against retained earnings.
For long-term equity investment in subsidiaries formed by business combination not under commoncontrol, the cost of the combination ascertained on the date of acquisition shall be taken as the initialinvestment cost of the long-term equity investments. In connection with imposing control over the investeenot under joint control as a result of additional investment and other reasons, the initial investment cost isthe sum of the carrying amount of the equity investment originally held and the newly increased initialinvestment cost.
② Long-term equity investments acquired by means other than business combination
The initial investment cost of a long-term equity investment obtained by the Company by cashpayment shall be the purchase cost paid actually.
The initial investment cost of a long-term equity investment obtained by the Company by means ofissuance of equity securities shall be the fair value of the equity securities issued.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment accounted for by cost method
Long-term equity investment in subsidiaries of the Company is accounted for by cost method, unlessthe investment meets the conditions for holding for sale. except for the actual consideration paid for theacquisition of investment or the declared but not yet distributed cash dividends or profits which areincluded in the consideration, investment gains are recognized as the Company’s shares of cash dividendsor profits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and joint ventures are accounted for by equity method.Where the initial investment cost of a long-term equity investment exceeds the investor’s interest in thefair value of the investee’s identifiable net assets at the date of acquisition, no adjustment is made to theinitial investment cost of long-term equity investments; where the initial investment cost is less than theinvestor’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, thedifference is included in the profits or losses of the current period, and the cost of the long-term equityinvestment is adjusted simultaneously.
The Company recognizes the investment income and other comprehensive income according to theshares of net profit or loss and other comprehensive income realized by the investee which it shall beentitled or shared respectively, and simultaneously makes adjustment to the carrying amount of long-termequity investments; the carrying amount of long-term equity investments shall be reduced by attributableshare of the profit or cash dividends for distribution declared by the investee. In relation to other changesof owners’ equity except for net profit and loss, other comprehensive income and profit distributions of
the investee (hereinafter referred to as "other changes in owners’ equity"), the carrying amount of long-term equity investments shall be adjusted and included in the owners’ equity.When determining the amount of proportion of net profit or loss, other comprehensive income andother changes in owners’ equity in the investee which it entitles, fair value of each identifiable assets ofthe investee at the time when the investment is obtained shall be used as the basis, and adjustment shallbe made to the net profit and other comprehensive income of the investee according to the accountingpolicies and accounting period of the Company.The unrealized profit or loss resulting from transactions between the Company and its associates orjoint ventures shall be offset in proportion to the investor’s equity interest of investee, based on whichinvestment income or loss shall be recognized. However, the situation that the assets invested or soldconstitute business is excluded. Any losses resulting from internal transactions, which are attributable toimpairment of assets, shall be fully recognized.The Company shall recognize the net losses of the joint ventures or associates until the book valueof the long-term equity investment and other long-term rights and interests which substantially form thenet investment made to the invested entity are reduced to zero, unless the joint ventures or associates havethe obligation to undertake extra losses. If the joint ventures or associates realize net profits in the future,the Company resumes recognizing its share of profits after the share of profits makes up for the share ofunrecognized losses.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the carrying amount and theconsideration actually received shall be included in the current profit or loss.For partial disposal of long-term equity investments accounted for by the equity method, if theremaining equity is still accounted for by the equity method, the other comprehensive income calculatedand recognized by the original equity method shall be carried forward in corresponding proportion byusing the same basis as the investee used for direct disposal of relevant assets or liabilities. Other changesin owners’ equity shall be carried forward to the profits or losses of the current period on a pro rata basis.When the joint control or material influence over the investee is lost due to disposal of equityinvestment and other reasons, other comprehensive income recognized in the original equity investmentdue to the use of the equity method shall, when it is no longer calculated by the equity method, be subjectto the accounting treatment on the same basis as the investee used for direct disposal of relevant assets orliabilities. Other changes in owners’ equity shall be all transferred into the profits or losses of the currentperiod when they are no longer calculated by the equity method.When the control over the investee is lost due to partial disposal of equity investment and otherreasons, the remaining equities after disposal shall be accounted for by equity method in preparingindividual financial statements provided that joint control or material influence over the investee can beimposed, and shall be adjusted as if such remaining equities has been accounted for by the equity methodsince they are obtained. The other comprehensive income recognized before the control over the investeeis obtained shall be carried forward in proportion by using the same basis as the investee used for directdisposal of relevant assets or liabilities, and the other changes in owners’ equity calculated and recognizedusing the equity method shall be carried forward to the profits or losses of the current period on a pro ratabasis. Where the remaining equities after disposal cannot impose joint control or material influence overthe investee, they shall be recognized as financial assets, and the difference between fair value and thecarrying amount on the date when control is lost shall be included in the profits or losses of the current
period. All other comprehensive income and other changes in owners’ equity recognized before the controlover the investee is obtained shall be carried forward.In respect of stepwise disposal of equity investment in a subsidiary through multiple transactionsuntil control is lost, where the transactions constitute a basket of transactions, the Company accounts forthe transactions as a transaction of disposal of a subsidiary until control is lost; however, the differencebetween the amount received each time for disposal before control is lost and the carrying amount of long-term equity investments corresponding to the disposal of equity is recognized as other comprehensiveincome in the individual financial statements, and is transferred to the profits or losses of the current periodduring which control is lost upon loss of control. Where the transactions do not constitute a basket oftransactions, each transaction shall be accounted for separately.
22. Investment real estate
Not applicable
23. Fixed assets
(1). Recognition conditions
√ Applicable □ Not applicable
Fixed assets are tangible assets that are held for use in the production or supply of goods or services,for rental to others, or for administrative purposes; and have a useful life of more than one accounting year.Fixed assets are recognized when they meet the following conditions:
① It is probable that the economic benefits associated with the fixed assets will flow to the enterprise;
② The cost of fixed assets can be reliably measured.
A fixed asset is initially measured at its cost (and considering the impact of expected abandonmentcost factors).
Subsequent expenditures related to fixed assets are included in the cost of fixed assets when theirrelated economic benefits are likely to flow in to the Company and their costs can be reliably measured;the book value of the replaced part is derecognized; all other subsequent expenditures are included in theprofits or losses of the current period at the time of occurrence.
(2). Method for depreciation
√ Applicable □ Not applicable
| Category | Method for depreciation | Useful lives of depreciation (year) | Residual value | Annual depreciation rate |
| Property and buildings | Straight-line method | 20% | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 10% | 5-10% | 9.5-9% |
| Transportation vehicles | Straight-line method | 4-10% | 0-10% | 25-9% |
| Other equipment | Straight-line method | 2-10% | 0-10% | 47.5-9.5% |
Fixed assets are depreciated by categories using the straight-line method, and the depreciation ratesare determined by categories based upon their estimated useful lives and their estimated residual value.For fixed assets with provision for impairment accrued, the depreciation amount shall be determinedaccording to the book value after deduction of the impairment provision and the remaining useful life in
the future period. Where the parts of a fixed asset have different useful lives or cause economic benefitsfor the enterprise in different ways, different depreciation rates or depreciation methods shall be applied,and each part shall be depreciated separately.Note: physical assets newly acquired through the increase of capital by M&G Holdings (Group) Co.,Ltd. to the Company in 2010 are stated at valuation, and depreciated at the remaining useful life.
(3). Recognition basis and valuation and depreciation of fixed assets under finance lease
√ Applicable □ Not applicable
Assets acquired under finance leases: At the commencement of the lease term, assets acquired underfinance leases shall be recorded at the lower of their fair values and the present values of the minimumlease payments, and the Company shall recognize the long-term payables at amounts equal to the minimumlease payments, and shall record the differences between book value of the leased assets and the long-termpayables as unrecognized financing expenses. The Company adopts the effective interest rate method forunrecognized financing expenses, which shall be amortized over the lease terms and included in financialexpenses. Initial direct expenses incurred to the Company shall be included in the value of the leased assets.For the finance leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to recognize the unrecognized financing expenses as the current financing expensesat the same discount rate as before the concessions, and continues to accrue the depreciation of assetsunder finance lease using the same method as before the concessions. In case of any rent reduction andexemption, the Company will regard the reduced and exempted rent as contingent rent. When a concessionagreement is reached to release the original obligation to pay the rent, the Company will include thereduced and exempted rent in the current profit and loss and adjust the long-term payables accordingly, ordiscount the reduced and exempted rent at the discount rate before the concessions, include it in the currentprofit and loss, and adjust the unrecognized financing expenses. In case of any deferred rent payment, theCompany will offset the long-term payables recognized in the previous period when the rent is actuallypaid.
24. Construction in progress
√ Applicable □ Not applicable
Construction in progress is measured at the actual cost incurred. Actual cost includes constructioncost, installation cost, borrowing expense qualified for capitalization, and other necessary expendituresincurred before the construction in progress reaches its intended use status. When the construction inprogress reaches the intended use status, it shall be transferred to fixed assets and its depreciation shall beaccrued from the next month.
25. Borrowing costs
√ Applicable □ Not applicable
(1) Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition,construction or production of assets qualified for capitalization, the costs will be capitalized and includedin the costs of the related assets. Other borrowing costs shall be recognized as expense in the period inwhich they incur and are included in the current profit or loss.
Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.) thatnecessarily take a substantial period of time for acquisition, construction or production to get ready fortheir intended use or sale.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation ofcapitalization of borrowing costs, excluding the period in which capitalization of borrowing costs istemporarily suspended.
Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or expenditurefor holding debt liability for the acquisition, construction or production of assets qualified forcapitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intendedusable or saleable condition have commenced.
Capitalization of borrowing costs shall be suspended during periods in which the qualifying assetunder acquisition and construction or production ready for the intended use or sale.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally, when the interruption is for acontinuous period of more than 3 months; if the interruption is a necessary step for making the qualifyingasset under acquisition and construction or production ready for the intended use or sale, the capitalizationof the borrowing costs shall continue. The borrowing costs incurred during such suspension period shallbe recognized as the current profit or loss. When the acquisition and construction or production of theasset resumes, the capitalization of borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
For specific borrowings for the acquisition, construction or production of assets qualified forcapitalization, the amount of borrowing costs for capitalization is determined through borrowing costs ofthe specific borrowings actually incurred in the current period minus the interest income earned on theunused borrowing loans as a deposit in the bank or as investment income earned from temporaryinvestment.
For general borrowings for the acquisition, construction or production of assets qualified forcapitalization, the to-be-capitalized amount of interests on the general borrowings shall be calculated anddetermined by multiplying the weighted average asset disbursement of the part of the accumulative assetdisbursements minus the specifically borrowed loans by the capitalization rate of the general borrowingsused. The capitalization rate shall be calculated and determined according to the weighted average actualinterest rate of the general borrowings.
During the capitalization period, the exchange difference between the principal and interest ofdedicated borrowings in foreign currency is capitalized and included in the cost of the assets qualified forcapitalization. Exchange differences arising from the principal and interest of borrowings in foreigncurrency other than dedicated borrowings in foreign currency are included in the profits or losses of thecurrent period.
26. Biological assets
□ Applicable √ Not applicable
27. Oil and gas assets
□ Applicable √ Not applicable
28. Right-of-use assets
□ Applicable √ Not applicable
29. Intangible assets
(1). Valuation method, useful life and impairment test
√ Applicable □ Not applicable
① Valuation method of intangible assets
A. Intangible assets are initially measured at cost upon acquisition by the Company;The costs of externally purchased intangible assets include the purchase price, relevant taxes andexpenses paid, and other expenditures directly attributable to putting the asset into condition for itsintended use.B. Subsequent measurementThe useful life of intangible assets shall be analyze and judged upon acquisition.As for intangible assets with finite useful life, they are amortized over the term in which economicbenefits are brought to the enterprise; if the term in which economic benefits are brought to the enterpriseby intangible assets cannot be estimated, the intangible assets shall be regarded as intangible assets withindefinite useful life, and shall not be amortized.
② Estimated useful lives for the intangible assets with finite useful life
| Item | Estimated useful lives | Basis |
| Land use rights | 50 | Certificate of land use rights |
| Image identification rights | 12 months to 64 months | License contract |
| Software | 3 to 10 years | Expected years of benefit |
| Patent right | 10 | Patent right certificate |
| Others | 19 months to 120 months | Expected years of benefit |
Note: land use rights newly acquired through the increase of capital by M&G Holdings (Group) Co.,Ltd. to the Company in 2010 are stated at valuation, and amortized at the remaining useful life.
(2). Accounting policy regarding the expenditure on the internal research and development
√ Applicable □ Not applicable
① Specific criteria for the division of research phase and development phase
The expenses for internal research and development projects of the Company are divided intoexpenses in the research phase and expenses in the development phase.
Research phase: scheduled, innovative investigations and research activities to obtain and understandscientific or technological knowledge.
Development phase: apply the research outcomes or other knowledge to a plan or design prior to acommercial production or use in order to produce new or essentially-improved materials, devices, products,etc.
② Specific criteria for capitalization at development phase
Expenditure in the research phase is included in the profit or loss for the current period at the time ofoccurrence. Expenses in the development phase are recognized as an intangible asset when all of thefollowing conditions are satisfied, otherwise are included in the current profit or loss:
A. it is technically feasible to complete the intangible asset so that it will be available for use or sale;
B. there is an intention to complete the intangible asset for use or sale;
C. the intangible asset can produce economic benefits, including there is evidence that the productsproduced using the intangible asset has a market or the intangible asset itself has a market; if the intangibleasset is for internal use, there is evidence that there exists usage for the intangible asset;
D. there is sufficient support in terms of technology, financial resources and other resources in orderto complete the development of the intangible asset, and there is capability to use or sell the intangibleasset;
E. the expenses attributable to the development stage of the intangible asset can be measured reliably.
If it is impossible to distinguish the expenses in the research phase from the expenses in thedevelopment phase, all the incurred research and development expenses shall be included in the currentprofit or loss.
30. Impairment of long-term assets
√ Applicable □ Not applicable
Long-term assets, such as long-term equity investment, fixed assets, construction in progress, right-of-use assets, intangible assets with finite useful life, and oil and gas assets are tested for impairment ifthere is any indication that an asset may be impaired at the balance sheet date. If the result of theimpairment test indicates that the recoverable amount of the asset is less than its carrying amount, thedifference shall be used to make impairment provision and an impairment loss are recognized. Therecoverable amount is the higher of the net amount of asset’s fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset. Provision for asset impairment isdetermined and recognized on the individual asset basis. If it is not possible to estimate the recoverableamount of an individual asset, the recoverable amount of a group of assets to which the asset belongs to isdetermined. An assets group is the smallest group of assets that is able to generate cash inflowindependently.
Impairment test to goodwill formed by business combination, intangible assets with indefinite usefullife and intangible assets not ready to use shall be carried out at least at the end of each year, regardless ofwhether there are any indications of impairment.
When the Company carries out impairment test to goodwill, the Company shall, as of the purchasingday, allocate on a reasonable basis the carrying amount of the goodwill formed by enterprise merger tothe relevant asset groups, or if there is a difficulty in allocation, the Company shall allocate it to theportfolio of asset groups. Relevant asset groups or portfolio of asset groups refer to the asset groups orportfolio of asset groups that can benefit from the synergistic effect of business combination.
For the purpose of impairment test to the relevant asset groups or portfolio of asset groups containinggoodwill, if any evidence shows that the impairment of asset groups or portfolio of asset groups related togoodwill exists, an impairment test will be made firstly on the asset groups or portfolio of asset groups not
containing goodwill, thus calculating the recoverable amount and comparing it with the relevant carryingamount so as to recognize the corresponding impairment loss. Then the Company will make an impairmenttest to the asset groups or portfolio of asset groups containing goodwill, and compare their carrying valuewith their recoverable amount. Where the recoverable amount is lower than the carrying value thereof, theamount of impairment loss is first deducted and allocated to the carrying value of goodwill in the assetgroups or portfolio of asset groups, and then the carrying value of other assets other than goodwill in theasset groups or portfolio of asset groups is deducted according to the percentages of the carrying value ofsuch other assets.Once the above asset impairment loss is recognized, it will not be reversed in the subsequentaccounting periods.
31. Long-term prepaid expenses
√ Applicable □ Not applicable
Long-term prepaid expenses are expenses which have occurred with amortization period over 1 yearand shall be borne by the current period and subsequent periods.Amortization periods and amortization methods of various expenses are as follows:
| Item | Estimated useful lives | Basis |
| Decoration fee | 3 to 5 years | Expected years of benefit |
| Others | 2 | Expected years of benefit |
32. Contract liabilities
(1). Recognition of contract liabilities
√ Applicable □ Not applicable
The Company presents contract assets or contract liabilities in the balance sheet based on therelationship between performance obligations and customer payments. The Company's obligation totransfer goods or provide services to customers for consideration received or receivable from customersis presented as contract liabilities. Contract assets and contract liabilities under the same contract arepresented in net amounts.
33. Employee benefits
(1). Accounting treatment of short-term benefits
√ Applicable □ Not applicable
During the accounting period when employees provide service, the Company will recognize theshort-term benefits actually incurred as liabilities, and the liabilities will be included in the current profitor loss or relevant costs of assets.
The Company will pay social insurance and housing funds for the employees, and will makeprovision of trade union funds and employee education costs in accordance with the requirements. Duringthe accounting period when employees provide service, the Company will determine relevant amount ofemployee benefits in accordance with the required provision basis and provision ratios.
The employee welfare expenses incurred by the Company are included in the current profit or loss orrelated asset costs based on the actual amounts when they actually occur. Among them, non-monetarybenefits are measured at fair value.
(2). Accounting treatment of post-employment benefits
√ Applicable □ Not applicable
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance with therelevant provisions of the local government for the employees. During the accounting period whenemployees provide service, the Company will calculate the amount payable which will be recognized asliabilities in accordance with the local stipulated basis and proportions, and the liabilities will be includedin the current profit or loss or costs of related assets.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula determinedby projected unit credit method will be vested to the service period of employees and included into thecurrent profit or costs of related assets.
The deficit or surplus generated from the present value of obligations of the defined benefit schememinus the fair value of the assets of defined benefit scheme is recognized as net liabilities or net assets.When the defined benefit scheme has surplus, the Company will measure the net assets of the definedbenefit scheme at the lower of the surplus of defined benefit scheme and the upper limit of the assets.
All obligations of the defined benefit plan, including the expected duty of payment within 12 monthsafter the end of annual reporting period during which employees provide service, shall be discounted basedon the bond market yield of sovereign bond matching the term of obligations of the defined benefit planand currency or corporate bonds of high quality in the active market on the balance sheet date.
The service cost incurred by defined benefit scheme and the net interest of the net liabilities and netassets of the defined benefit scheme will be included in the current profit or loss or costs of relevant assets.The changes as a result of re-measurement of the net defined benefit liabilities or assets shall be recognizedin other comprehensive income and shall not be reversed to profit or loss at subsequent accounting period.When the original defined benefit plan is terminated, amount originally included in other comprehensiveincome shall be transferred to undistributed profit in the scope of equity.
When the defined benefit scheme is settled, the gain or loss is confirmed based on the differencebetween the present value of obligations and the settlement price of the defined benefit scheme as at thebalance sheet date.
(3). Accounting treatment of termination benefits
√ Applicable □ Not applicable
Where the Company provides termination benefits to its employees, the employee benefits liabilitiesresulting from termination benefits are recognized on the following date (whichever is earlier) and areincluded in the current profit or loss: when the Company cannot unilaterally withdraw the terminationbenefits provided due to the cancellation of the labor relationship with the employees or the layoff proposal;or when the Company recognizes the costs or expenses of reorganization relating to payment oftermination benefits.
(4). Accounting treatment of other long-term employees' benefits
□ Applicable √ Not applicable
34. Lease liabilities
□ Applicable √ Not applicable
35. Estimated liabilities
√ Applicable □ Not applicable
The Company shall recognize the obligations related to contingencies when all of the followingconditions are satisfied:
(1) obligation is a present obligation of the Company;
(2) it is probable that an outflow of economic benefits of the Company will be required to settle theobligation; and
(3) the amount of the obligation can be measured reliably.
Estimated liabilities shall be initially measured at the best estimate of the expenses required to settlethe related present obligation.
Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be takeninto account as a whole in getting the best estimate. Where the effect of the time value of money is material,the best estimate shall be determined by discounting the related future cash outflow.
Where the expenses required have a successive range and the possibilities of occurrence of each resultare the same in the range, the best estimate shall be determined according to the median value within therange; in other cases, the best estimate shall be determined as below:
? If contingencies involve a single item, the best estimate shall be determined according to the mostpossible occurrence amount.
? If contingencies involve multiple items, the best estimate shall be calculated and determined inaccordance with various possible outcomes and related possibilities.
Where some or all of the expenses required to settle an estimated liability are expected to bereimbursed by a third party, the reimbursement is separately recognized as an asset when it is virtuallycertain that the reimbursement will be received. The amount recognized for the reimbursement is limitedto the carrying amount of the liability recognized.
The Company reviews the carrying value of the estimated liabilities at the balance sheet date. If thereis any exact evidence indicating that the carrying value cannot really reflect the current best estimate, thecarrying value shall be adjusted in accordance with the current best estimate.
36. Share-based payments
√ Applicable □ Not applicable
Share-based payments are transactions that grant equity instruments or assume equity-instrumentbased liabilities for receiving services rendered by employees or other parties. The Company’s share-basedpayments included equity-settled share-based payments and cash-settled share-based payments.
(1) Equity-settled share-based payments and equity instruments
Equity-settled share-based payments made in exchange for services rendered by employees aremeasured at the fair value of equity instruments granted to employees. Share-based payment transactionsvested immediately after the date of grant shall be included in the relevant cost or expense based on thefair value of equity instruments at the date of grant, and the capital reserve shall be increased accordingly.
For share-based payment transactions vested only when the services during the waiting period arecompleted or the specified performance conditions are satisfied after the grant, the Company shall, at eachbalance sheet date during the waiting period, include the services obtained during the period in relevantcost or expense at the fair value of the date of grant, according to the best estimate of the number of vestedequity instruments, and the capital reserve shall be increased accordingly.If the terms of the equity-settled share-based payments are amended, the Company shall recognizethe services received at least based on the situation before the amendment is made. In addition, anyamendment resulting in the increase of the fair value of the equity instrument granted or changes that arebeneficial to employees on the amendment date, will be recognized as an increase in the service received.During the waiting period, if the granted equity instrument is cancelled, the Company will acceleratethe vesting thereof, immediately include the remaining amount that should be recognized in the waitingperiod in the current profit or loss, and recognize the capital reserve. However, if new equity instruments arevested and they are verified at the vesting date of new equity instrument as alternatives vested to canceledequity instruments, the treatment on the new equity instrument is in conformity with the modified treatmenton disposal of equity instrument.
(2) Cash-settled share-based payments and equity instruments
Cash-settled share-based payments are measured at the fair value of the liabilities calculated anddetermined on the basis of shares or other equity instruments undertaken by the Company. Share-basedpayment transactions vested immediately after the date of grant shall be included in the relevant cost orexpense based on the fair value of liabilities undertook at the date of grant, and the liabilities shall beincreased accordingly. For share-based payment transactions vested only when the services during thewaiting period are completed or the specified performance conditions are satisfied after the grant, theCompany shall include the services obtained during the period in relevant cost or expense at the fair valueof the liabilities undertook by the Company based on the best estimate of the vesting situation, and theliabilities shall be included accordingly. At each balance sheet date before the settlement and the settlementdate of relevant liabilities, the fair value of the liabilities is remeasured, and its changes are included in thecurrent profit or loss.
37. Preference shares, perpetual bonds and other financial instruments
□ Applicable √ Not applicable
38. Revenue
(1). Accounting policies used in recognition and measurement of revenue
√ Applicable □ Not applicable
The Company recognizes revenue when its performance obligations in the contract are fulfilled, thatis, the control over the relevant goods or services is obtained by the customer. Obtaining control overrelated goods or services means being able to lead the use of the goods or services and obtain almost allof the economic benefits from the goods or services.
If the contract contains two or more performance obligations, the Company will, at the date of thecontract, allocate the transaction price to each individual performance obligation in accordance with therelative proportion of the stand-alone selling price of the goods or services promised by each individual
performance obligation. The Company measures revenue based on the transaction price allocated to eachindividual performance obligation.Transaction price refers to the amount of consideration that the Company expects to be entitled toreceive due to the transfer of goods or services to customers, excluding amounts collected on behalf ofthird parties and amounts expected to be returned to customers. The Company determines the transactionprice in accordance with the terms of the contract and combined with its past customary practices. Whendetermining the transaction price, the Company considers the impact of variable consideration, majorfinancing components in the contract, non-cash consideration, consideration payable to customers andother factors. The Company determines the transaction price that includes variable consideration at anamount that does not exceed the amount of accumulated recognized revenue that is unlikely to besignificantly reversed when the relevant uncertainty is eliminated. If there is a major financing componentin the contract, the Company determines the transaction price based on the amount payable in cash whenthe customer obtains control over the goods or services, and amortizes the difference between thetransaction price and the contract consideration with the actual interest rate method during the contractperiod.
The performance obligation is fulfilled during a certain period of time if one of the followingconditions is satisfied, otherwise, the performance obligation is fulfilled at a certain point in time:
? the customer obtains and consumes the economic benefits brought by the Company's performanceat the same time as the Company's performance.
? the customer can control the products under construction during the Company's performance.
? the goods produced during the Company's performance have irreplaceable uses, and the Companyhas the right to collect payment for the cumulative performance part that has been completed so far duringthe entire contract period.
For performance obligations performed within a certain period of time, the Company recognizesrevenue in accordance with the performance progress during that period, except where the performanceprogress cannot be reasonably determined. The Company considers the nature of the goods or servicesand adopts the output method or the input method to determine the performance progress. When theperformance progress cannot be reasonably determined, and the cost incurred is expected to becompensated, the Company recognizes the revenue according to the amount of the cost incurred until theperformance progress can be reasonably determined.
For performance obligations performed at a certain point in time, the Company recognizes revenueat the point when the customer obtains control over the relevant goods or services. When judging whetherthe customer has obtained control over goods or services, the Company considers the following signs:
? the Company has the current right to receive payment for the goods or services, that is, the customerhas the current payment obligation for the goods or services;
? the Company has transferred the legal ownership of the goods to the customer, that is, the customerhas the legal ownership of the goods;
? the company has transferred the goods to the customer in kind, that is, the customer has takenpossession of the goods in kind;
? the company has transferred the main risks and rewards of the ownership of the goods to thecustomer, that is, the customer has obtained the main risks and rewards of the ownership of the goods;
? the customer has accepted the goods or services.
(2). Differences in accounting policies for revenue recognition caused by the adoption of different
operation models for similar businesses
□ Applicable √ Not applicable
39. Contract cost
√ Applicable □ Not applicable
Contract cost includes contract performance cost and contract acquisition cost.If the cost incurred by the Company for the performance of the contract does not fall within the scope ofrelevant standards and regulations for inventories, fixed assets or intangible assets, it shall be recognizedas an asset as the contract performance cost when the following conditions are met:
? the cost is directly related to a current or expected contract;? the cost increases the Company's future resources for fulfilling its performance obligations;? the cost is expected to be recovered.If the incremental cost incurred by the Company to obtain the contract is expected to be recovered, it willbe recognized as an asset as the cost of obtaining the contract.Assets related to contract costs are amortized on the same basis as the revenue recognition of goods orservices related to the assets; however, if the amortization period of cost of obtaining the contract does notexceed one year, the Company will include it in the current profit or loss when it occurs.If the carrying value of the assets related to the contract cost is higher than the difference between thefollowing two items, the Company will make provision for impairment of the excess part and recognize itas an asset impairment loss:
(1) the remaining consideration expected to be obtained due to the transfer of goods or services related tothe assets; and
(2) the costs expected to be incurred due to the transfer of the related goods or services.If the depreciation factors in the previous period change later, causing the aforementioned difference tobe higher than the carrying value of the assets, the Company will reverse the previously-made provisionfor impairment and include it in the current profit or loss, but the carrying value of the assets after thereversal cannot exceed the carrying value of the assets at the date of reversal under the assumption that noprovision is made for the impairment.
40. Government subsidies
√ Applicable □ Not applicable
(1) Types
Government subsidies are monetary or non-monetary assets obtained by the Company from thegovernment free of charge. They are divided into government subsidies related to assets and governmentsubsidies related to income.Government subsidies related to assets refer to government subsidies obtained by the Company thatare used to purchase or construct or otherwise form long-term assets. Government subsidies related toincome refer to the government subsidies other than government subsidies related to assets.
The specific standards for the Company to classify government subsidies into government subsidiesrelated to assets are as follows:
If obtained subsidies are used to purchase, construct or otherwise form fixed assets, intangible assetsand other long-term assets as expressly stipulated in government documents, then such subsidies aredeemed as asset-related government subsidies.The specific standards for the Company to classify government subsidies into income-relatedgovernment subsidies are as follows:
If the government subsidies (excluding asset-related subsidies) are used to compensate relevant costsor losses of the Company that have been already incurred or to be incurred in subsequent periods, thensuch subsidies are deemed as income-related government subsidies.
Where there is no express regulation on the object of subsidies in government documents, then theCompany will classify the government subsidies as assets-related or income-related depending on thespecific purpose that the subsidies are used for.
(2) Timing of recognition
Government subsidies are recognized when the Company can meet the conditions attached and canreceive them.
(3) Accounting treatment
Government subsidies related to assets shall offset the carrying amount of relevant assets or berecognized as deferred income. If it is recognized as deferred income, it shall be included in the currentprofit and loss in a reasonable and systematic way within the useful life of the relevant assets (if it isrelated to the daily activities of the Company, it shall be included in other income; otherwise, it shall beincluded in the non-operating income);
Government subsidies related to income that are used for compensation for the relevant costs or lossesof the Company in subsequent periods are recognized as deferred income and are included in the currentprofit or loss in the period in which the relevant costs, expenses or losses are recognized (if they are relatedto the daily activities of the Company, they shall be included in other income; otherwise, they shall beincluded in the non-operating income) or offset the relevant costs or losses; Government subsidies relatedto income that are used for compensation for the relevant costs or losses that the Company has alreadyincurred shall be directly included in the current profit or loss (if they are related to the daily activities ofthe Company, they shall be included in other income; otherwise, they shall be included in the non-operating income) or offset the relevant costs or losses.
The Company's policy-based concessional loans are classified into the following two conditions andare accounted for respectively:
① If the lending bank provides loans to the Company at a policy-based preferential interest rate afterthe Ministry of Finance allocates the interest-grant funds to the lending bank, the actual borrowing amountreceived is recognized as the entry value of the borrowing and the relevant borrowing expenses aremeasured in accordance with the principal amount of the borrowing and policy-based preferential interestrate.
② When the government directly distributes the interest-grant funds to the Company, thecorresponding discount will offset the relevant borrowing costs.
41. Deferred income tax assets and liabilities
√ Applicable □ Not applicable
Income taxes include current income tax and deferred income tax. Except for income tax arising frombusiness combination and transactions or events that are directly included in owners' equity (includingother comprehensive income), the Company includes current income tax and deferred income tax in thecurrent profit or loss.Deferred income tax assets and deferred income tax liabilities are calculated and recognized basedon the difference (temporary difference) between the tax base of assets and liabilities and their carryingvalue.Deferred tax assets are recognized to the extent that it is probable that future taxable profits will beavailable against which deductible temporary differences can be offset. For deductible losses and taxcredits that can be reversed in the future period, deferred tax assets shall be recognized to the extent thatit is probable that taxable profit will be available in the future to offset the deductible losses and tax credits.
Save as the exceptions, deferred tax liabilities shall be recognized for the taxable temporarydifference.
The exceptions for not recognizing deferred tax assets and liabilities include:
? the initial recognition of the goodwill;
? other transactions or matters other than enterprise merger in which neither profit nor taxable income(or deductible loss) will be affected when transactions occur.
Deferred income tax liabilities are recognized for all taxable temporary differences arising from theinvestments in subsidiaries, joint ventures and associates, except to the extent that both of the followingconditions are satisfied: the Company is able to control the timing of the reversal of the temporarydifferences; and it is likely that the temporary difference will not reverse in the foreseeable future. Deferredincome tax assets are recognized for all deductible temporary differences associated with investments insubsidiaries, joint ventures and associates if all of the following conditions are satisfied: It is likely thatthe deductible temporary difference will reverse in the foreseeable future and it is likely that taxable profitin the future will be available against which the deductible temporary difference can be offset.
At the balance sheet date, deferred income tax assets and liabilities are measured at tax rates expectedto be applied to the period when the assets are recovered or the liabilities are settled according to the taxlaw.
At the balance sheet date, the Company reviews the carrying value of deferred income tax assets. Thecarrying value of the deferred income tax assets are reduced if it is unlikely to obtain sufficient taxableincome to offset the benefit of the deferred income tax assets in the future. When it is likely that sufficienttaxable income will be available, the amount of write-down is reversed.
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis orto realize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilitiesare offset and presented on a net basis.
At the balance sheet date, the deferred income tax assets and the deferred income tax liabilities areoffset and presented on a net basis when all of the following conditions are satisfied:
? the taxable entity has a legal right to settle current income tax assets and liabilities on a net basis;and
? deferred income tax assets and deferred income tax liabilities relate to income taxes levied by thesame taxation authority on either the same taxable entity or different taxable entities which intend eitherto settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously,in each future period in which significant amounts of deferred tax assets or liabilities are expected to bereversed.
42. Lease
(1). Accounting treatment of operating leases
√ Applicable □ Not applicable
① The Company's rental expenses paid for leased assets shall be amortized at straight-line method overthe whole lease period (including rent-free period) and will be included in the current expenses. Initialdirect expenses related to lease transactions paid by the Company shall be included in current expenses.When the lessor of assets bears expenses related to the lease which shall be borne by the Company, theCompany shall deduct the part of expenses from the total rents and amortize the rents after deduction overthe lease term and include them in current expenses.For the operating leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to include the original contract rent in the relevant asset costs or expenses using thesame method as before the concessions. In case of any rent reduction and exemption, the Company willregard the reduced and exempted rent as contingent rent and include it in the current profit and loss duringthe period of rent reduction and exemption. In case of any deferred rent payment, the Company willrecognize the rent payable as payable in the original payment period, and offset the payable recognized inthe previous period when the rent is actually paid.
② The Company's rental expenses collected for leased assets shall be amortized at straight-line methodover the whole lease period (including rent-free period) and recognized as the relevant rental income.Initial direct costs related to lease transactions and paid by the Company are included in current expenses;in case of a large amount, such costs shall be capitalized and then included in the current revenue by stagesat the same base as the recognition of rental income over the whole lease term.When the Company bears expenses related to the lease which shall be borne by the lessee, the Companyshall deduct the part of expenses from the total rental income and amortize the rents after deduction overthe lease term.For the operating leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to recognize the original contract rent as rental income with the same method as beforethe concessions. In case of any rent reduction and exemption, the Company will regard the reduced andexempted rent as contingent rent and offset the rental income during the period of rent reduction andexemption. In case of any deferred rent collection, the Company will recognize the rent that should becollected as receivable during the original collection period, and offset the receivable recognized in theprevious period when the rent is actually received.
(2). Accounting treatment of finance leases
√ Applicable □ Not applicable
① Assets acquired under finance leases: At the commencement of the lease term, assets acquiredunder finance leases shall be recorded at the lower of their fair values and the present values of theminimum lease payments, and the Company shall recognize the long-term payables at amounts equal tothe minimum lease payments, and shall record the differences between book value of the leased assets andthe long-term payables as unrecognized financing expenses. The Company adopts the effective interestrate method for unrecognized financing expenses, which shall be amortized over the lease terms andincluded in financial expenses. Initial direct expenses incurred to the Company shall be included in thevalue of the leased assets.
For the finance leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to recognize the unrecognized financing expenses as the current financing expensesat the same discount rate as before the concessions, and continues to accrue the depreciation of assetsunder finance lease using the same method as before the concessions. In case of any rent reduction andexemption, the Company will regard the reduced and exempted rent as contingent rent. When a concessionagreement is reached to release the original obligation to pay the rent, the Company will include thereduced and exempted rent in the current profit and loss and adjust the long-term payables accordingly, ordiscount the reduced and exempted rent at the discount rate before the concessions, include it in the currentprofit and loss, and adjust the unrecognized financing expenses. In case of any deferred rent payment, theCompany will offset the long-term payables recognized in the previous period when the rent is actuallypaid.
② Assets leased out under finance leases: On the lease beginning date, the Company recognizes thedifference between the sum of finance lease receivable and the unguaranteed residual value, and thepresent value thereof as unrealized financing income, and recognizes them as rental income over theperiods when the rents are received in the future. Initial direct expenses related to the rental transactionsincurred to the Company shall be included in the initial measurement of the finance lease receivables andthe amount of income recognized in the lease term will be reduced.
For the finance leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to recognize unrealized financing income as rental income at the same interest rateimplicit in lease as before the concessions. In case of any rent reduction and exemption, the Company willregard the reduced and exempted rent as contingent rent. When a concession agreement is reached to giveup the original right to collect the rent, the Company will offset the originally recognized rental income,include the portion insufficient for offset in the investment income, and adjust the long-term receivablesaccordingly, or discount the reduced and exempted rent at the discount rate before the concessions, includeit in the current profit and loss, and adjust the unrealized financing income. In case of any deferred rentcollection, the Company will offset the long-term payable recognized in the previous period when the rentis actually received.
(3). Determination method and accounting treatment method of lease under new lease standards
√ Applicable □ Not applicable
Accounting policies from 1 January 2021
A lease is a contract whereby the lessor conveys to the lessee the right to use an asset in exchange forconsideration. On the commencement date of the contract, the Company assesses whether the contract isor contains a lease. A contract is, or contains, a lease if one party to the contract gives the right to controlthe use of an identified asset or identified assets for a period of time in exchange for consideration.
If the contract contains multiple separate leases simultaneously, the Company will split the contractand conduct separate accounting treatment for each separate lease. If the contract contains leasecomponents and non-lease components simultaneously, the lessee and the lessor will split the leasecomponents and the non-lease components.
For rent concessions, including rent reduction and exemption, and deferred rent payment, directlycaused by COVID-19 and reached on existing lease contracts, if the following conditions are satisfiedsimultaneously, the Company adopts the simplified accounting for all leases. If not all of the leases aresubject to the simplified accounting, the Company shall disclose the nature of the lease contract subject tothe simplified accounting. However, the simplified accounting choice shall be consistently applied to
similar lease contracts that meet the conditions before and after the adjustment of the scope of applicationof the Provisions on the Accounting Treatment of COVID-19-related Rent Concessions, namely theCompany will not assess whether a lease change has occurred and will not reassess the lease classification:
? The lease consideration after the concessions is reduced or basically unchanged from that beforethe concessions, and the lease consideration can be undiscounted or discounted at the discount rate beforethe concessions;? The concessions are only for lease payments payable before 30 June 2022, an increase in leasepayments payable after 30 June 2022 does not affect the satisfaction of this condition, and a decrease inlease payments payable after 30 June 2022 does not satisfy this condition; and
? It is determined that there are no significant changes in other terms and conditions of the lease aftercomprehensive consideration of qualitative and quantitative factors.
① The Company as the lessee
A. Right-of-use assets
At the commencement date of the lease term, the Company recognizes right-of-use assets for leasesother than short-term leases and low-value asset leases. Right-of-use assets are initially measured at cost.The cost comprises:
? the amount of the initial measurement of the lease liability;
? any lease payments made at or before the commencement date of the lease term, less any leaseincentives received;
? any initial direct costs incurred by the Company; and
? an estimate of costs to be incurred by the Company in dismantling and removing the leased asset,restoring the site on which it is located or restoring the leased asset to the condition required by the termsand conditions of the lease, unless those costs are incurred to produce inventories.
The Company subsequently adopts the straight-line method to depreciate the right-of-use assets. If itcan be reasonably determined that the ownership of the leased asset can be acquired upon the expiry ofthe lease term, depreciation will be prepared during the remaining useful life of the leased asset; otherwise,depreciation will be prepared during the lease term or the remaining useful life of the leased assetwhichever is shorter.
The Company determines whether the right-of-use asset has been impaired in accordance with theprinciples described in Note "V (30) Impairment of long-term assets", and performs accounting treatmentfor the identified impairment losses.
B. Lease liabilities
At the commencement date of the lease term, the Company recognizes lease liabilities for leases otherthan short-term leases and low-value asset leases. Lease liabilities are initially measured at the presentvalue of the lease payments that are not paid. Lease payments comprise:
? fixed payments (including substantial fixed payments), less any lease incentives received;
? variable lease payments that depend on an index or a rate;
? amounts expected to be payable by the lessee under residual value guarantees provided by theCompany;
? the exercise price of a purchase option if the Company is reasonably certain to exercise that option;and
? Payments for exercising an option to terminate the lease if the lease term reflects the lesseeexercising an option to terminate the lease.
The Company uses the interest rate implicit in lease as the discount rate, but if the interest rate implicitin lease cannot be reasonably determined, the Company's incremental borrowing rate is used as thediscount rate.
The Company calculates the interest expense of the lease liability in each period of the lease termaccording to the fixed periodic interest rate, and includes it in the current profit and loss or the related assetcosts.
Variable lease payments excluded in the measurement of lease liabilities are included in the currentprofit and loss or the related asset costs when they are actually incurred.
After the commencement date of the lease term, the Company re-measures the lease liabilities andadjusts the corresponding right-of-use assets under the following circumstances. If the carrying amount ofthe right-of-use assets is reduced to zero, but the lease liabilities still need to be further reduced, thedifference is included in the current profit and loss:
? when there is a change in the assessment result of an option to purchase, renew or terminate thelease, or the actual exercise of the aforementioned options is inconsistent with the original assessmentresult, the Company remeasures the lease liabilities at the present value calculated according to thechanged lease payments and the revised discount rate; and
? When there is a change in the substantial fixed payments, a change in the amounts expected to bepayable under a residual value guarantee, or a change in an index or a rate used to determine the leasepayments, the Company remeasures the lease liabilities at the present value calculated according to thechanged lease payments and the unchanged discount rate. However, the present value is calculatedaccording to the revised discount rate if the change in lease payments is caused by a change in floatinginterest rates.
C. Short-term leases and low-value asset leases
The Company chooses not to recognize right-of-use assets and lease liabilities for short-term leasesand low-value asset leases, and includes relevant lease payments in the current profit and loss or relatedasset costs over the lease term on straight-line basis. A short-term lease is a lease that, at thecommencement date, has a lease term of 12 months or less and does not contain a purchase option. A low-value asset lease is a lease with a lower value when a single leased asset is a brand-new asset. If theCompany subleases or expects to sublease a leased asset, the original lease is not a low-value asset lease.
D. Lease modifications
The Company accounts for a lease modification as a separate lease if the following conditions aresatisfied simultaneously:
? the lease modification increases the lease scope by adding the right to use one or more lease assets;and
? the consideration for the lease increases by an amount commensurate with the stand-alone price forthe increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstancesof the particular contract.
When a lease modification is not treated as a separate lease, at the effective date of the leasemodification, the Company re-allocates the consideration of the contract after the change, re-determines
the lease term, and remeasures the lease liability at the present value calculated according to the changedlease payments and the revised discount rate.When a lease modification decreases the lease scope or shortens the lease term, the Company reducesthe carrying value of the right-of-use asset and includes the relevant gain or loss resulting from partial offull termination of the lease in the current profit and loss. When other lease modifications result in re-measurement of the lease liability, the Company adjusts the carrying value of the right-of-use assetaccordingly.
E. COVID-19-related rent concessionsFor the leases subject to simplified accounting of COVID-19-related rent concessions, the Companydoes not assess whether there is a lease modification, but continues to calculate the interest expense of thelease liability at the same discount rate as before the concessions and include it in the current profit andloss, and also continues to depreciate the right-of-use asset using the same method as before theconcessions. In case of any rent reduction and exemption, the Company will regard the reduced andexempted rent as variable lease payment. When a concession agreement is reached to release the originalobligation to pay the rent, the Company will offset the relevant asset costs or expenses at the undiscountedamount or the amount discounted at the discount rate before the concessions, and adjust the lease liabilitiesaccordingly. In case of any deferred rent payment, the Company will offset the lease liability recognizedin the previous period when the rent is actually paid.For short-term leases and low-value asset leases, the Company continues to include the originalcontract rent in the relevant asset costs or expenses using the same method as before the concessions. Incase of any rent reduction and exemption, the Company will regard the reduced and exempted rent asvariable lease payment, and offset the relevant asset costs or expenses during the period of rent reductionand exemption. In case of any deferred rent payment, the Company will recognize the rent payable aspayable in the original payment period, and offset the payable recognized in the previous period when therent is actually paid.
② The Company as the lessor
At the commencement date of the lease term, the Company classifies lease into finance lease andoperating lease. Finance lease refers to a lease that has transferred in substance all the risks and rewardsrelated to the ownership of an asset, regardless of whether the ownership is ultimately transferred.Operating lease refers to a lease other than a finance lease. When the Company acts as a sublease lessor,it classifies the sublease based on the right-of-use asset arising from the original lease.
A. Accounting treatment of operating leases
Lease receipts from operating leases are recognized as rental income over the lease term on straight-line basis. The Company capitalizes the initial direct expenses incurred in relation to operating leases, andamortizes and includes them in the current profit and loss on the same basis as the rental income isrecognized during the lease term. Variable lease payments excluded in lease receipts are included in thecurrent profit and loss when they are actually incurred. In case of any operating lease modification, theCompany will account for it as a new lease from the effective date of the modification, and regard thelease advance or lease receivable related to the lease before the modification as the receipt from the newlease.
B. Accounting treatment of finance leasesAt the commencement of the lease, the Company recognizes a finance lease receivable for a financelease, and derecognizes finance lease assets. At the initial measurement of the finance lease receivable,the Company regards the net investment in the lease as the entry value of the finance lease receivable. Netinvestment in the lease is the sum of the following items discounted at the interest rate implicit in lease:
any unguaranteed residual value; and any lease receipt which is received at the commencement of thelease.The Company calculates and recognizes the interest income over the lease term at the fixed periodicinterest rate. Derecognition and impairment of finance lease receivables are subject to the accountingtreatment in accordance with Note "V (10) Financial Instruments".Variable lease payments excluded in net investment in the lease are included in measurement thecurrent profit and loss when they are actually incurred.The Company accounts for a finance lease modification as a separate lease if the following conditionsare satisfied simultaneously:
? the modification increases the lease scope by adding the right to use one or more lease assets; and? the consideration for the lease increases by an amount commensurate with the stand-alone price forthe increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstancesof the particular contract.When a finance lease modification is not treated as a separate lease, the Company accounts for themodified lease as follows:
? if the lease would have been classified as an operating lease had the modification been in effect atthe commencement date, the Company accounts for the lease modification as a new lease from theeffective date of the modification, and measures the carrying value of the lease asset as the net investmentin the lease immediately before the effective date of the lease modification.? if the lease would have been classified as an finance lease had the modification been in effect at thecommencement date, the Company accounts for the lease modification according to the policies formodification or renegotiation of contracts in Note "V (10) Financial Instruments".
C. COVID-19-related rent concessions
For the operating leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to recognize the original contract rent as rental income with the same method as beforethe concessions. In case of any rent reduction and exemption, the Company will regard the reduced andexempted rent as the variable lease payment and offset the rental income during the period of rent reductionand exemption. In case of any deferred rent collection, the Company will recognize the rent that shouldbe collected as receivable during the original collection period, and offset the receivable recognized in theprevious period when the rent is actually received.
? For the finance leases subject to simplified accounting of COVID-19-related rent concessions, theCompany continues to calculate the interest at the same discount rate as before the concessions andrecognize it as rental income. In case of any rent reduction and exemption, the Company will regard thereduced and exempted rent as variable lease payment. When a concession agreement is reached to give upthe original right to collect the rent, the Company will offset the originally recognized rental income at theundiscounted amount or the amount discounted at the discount rate before the concessions, include theportion insufficient for offset in the investment income, and adjust the finance lease receivable accordingly.
In case of any deferred rent collection, the Company will offset the finance lease receivable recognized inthe previous period when the rent is actually received.
③ Sale and leaseback transactions
The Company assesses and determines whether the transfer of the asset in the sale and leasebacktransactions is a sale according to Note "V (38) Income".A. The Company as the lesseeWhen the transfer of the asset in the sale and leaseback transactions is a sale, the Company as thelessor measures the right-of-use asset arising from the sale and leaseback at the proportion of the previouscarrying amount of the asset that relates to the right of use retained through leaseback, and recognizes therelevant gain or loss at the amount that relates to the rights transferred to the lessor. When the transfer ofthe asset in the sale and leaseback transactions is not a sale, the Company as the lessor continues torecognize the transferred assets and also recognizes a financial liability equal to the transfer income.Details of accounting treatment of financial liabilities are set out in Note "V (10) Financial Instruments".B. The Company as a lessorWhen the transfer of the asset in the sale and leaseback transactions is a sale, the Company as thelessor accounts for the purchase of the asset, and accounts for the lease of the asset in accordance with theaforementioned policy of "② The Company as the lessor"; When the transfer of the asset in the sale andleaseback transactions is not a sale, the Company as the lessor does not recognize the transferred asset,but recognizes a financial asset equal to the transfer income. Details of accounting treatment of financialassets are set out in Note "V (10) Financial Instruments".
Accounting policies before 1 January 2021
Lease is classified into finance lease and operating lease. Finance lease refers to a lease that hastransferred in substance all the risks and rewards related to the ownership of an asset. Operating leaserefers to a lease other than a finance lease.
For rent concessions, including rent reduction and exemption, and deferred rent payment, directlycaused by COVID-19 and reached on existing lease contracts, if the following conditions are satisfiedsimultaneously, the Company adopts the simplified accounting for all leases, without assessing whether alease change has occurred and reassessing the lease classification:
? The lease consideration after the concessions is reduced or basically unchanged from that beforethe concessions, and the lease consideration can be undiscounted or discounted at the discount rate beforethe concessions;
? The concessions are only for lease payments payable before 30 June 2021, an increase in leasepayments payable after 30 June 2021 does not affect the satisfaction of this condition, and a decrease inlease payments payable after 30 June 2021 does not satisfy this condition; and
? It is determined that there are no significant changes in other terms and conditions of the lease aftercomprehensive consideration of qualitative and quantitative factors.
43. Other significant accounting policies and accounting estimates
√ Applicable □ Not applicable
Discontinued operation is a component that satisfies one of the following conditions and is separatelyidentifiable, and has been disposed of by the Company or is classified by the Company as held for sale:
(1) It represents a separate major line of business or geographical area of operations;
(2) It is part of a single coordinated plan to dispose of a separate major line of business or geographicalarea of operations; or
(3) It is a subsidiary acquired exclusively with a view to resale.
The profit and loss from continuing operations and the profit and loss from discontinued operationsare separately presented in the income statement. Operational gains and losses such as impairment lossesand reversal amounts and disposal gains and losses from discontinued operations are reported as gains andlosses from discontinued operations. For the discontinued operations reported in the current period, theCompany re-reports the information previously reported as profits and losses from continuing operationsas the profits and losses from discontinued operations for the comparable accounting period in the currentfinancial statements.
44. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
√ Applicable □ Not applicable
| Contents and reasons of changes in accounting policies | Review and approval procedure | Remarks (name and amount of report items affected materially) |
| Implementation of the Notice of the Ministry of Finance on Revising and Issuing the Accounting Standards for Business Enterprises No. 21 - Leases (Cai Kuai [2018] No.35) | The 5th meeting of the 5th session of Board of Directors | See other descriptions l |
Other descriptions
1. Implementation of the Accounting Standards for Business Enterprises No. 21 - Leases (revised in2018)
The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 21 - Leases(hereinafter referred to as "New Lease Standards") in 2018. The Company implements the new leasestandards from 1 January 2021. In accordance with the revised standards, the Company has chosen not toreassess whether a contract executed prior to the first implementation date is a lease contract or containsa lease at the first implementation date.
(1) The Company as the lessee
According to the cumulative effects of first implementation of the New Lease Standards, theCompany chose to adjust the current retained earnings at the beginning of the period for firstimplementation of the New Lease Standards as well as the amount of other related items in the financialstatements, without adjustment to the information for the comparable period.
For operating leases prior to the first implementation date, the Company measured the lease liabilityat the date of initial implementation based on the present value of the remaining lease payments discountedat the Company's incremental borrowing rate on the date of initial implementation and chose one of thefollowing two methods to measure the right-of-use assets by each lease:
-Assuming that the carrying amount under the New Lease Standards prevails from thecommencement date of the lease term, the Company's incremental borrowing rate as of the firstimplementation date is deemed as the discount rate.
-A necessary adjustment is made to an amount equal to the lease liability according to prepaid rents.
By each lease, a company may choose to measure the right-of-use assets with either of the above twomethods.
For operating leases prior to the first implementation date, the Company conducted one or more ofthe following simplified treatments by each lease option, while applying the above method:
① Leases that are completed within 12 months after the first implementation date are deemed asshort-term leases;
② The same discount rate is used for leases with similar characteristics when measuring the leaseliability;
③ The measurement of right-to-use assets does not include initial direct costs;
④ Where a renewal option or terminal option exists, the lease term is determined based on the actualexercise of the option prior to the first implementation date and other recent circumstances;
⑤ As an alternative for impairment test on right-of-use assets, the Company assessed whether thecontract containing the lease is an onerous contract prior to the first implementation date at estimatedliabilities, and adjusted the right-of-use asset by the amount of the provision for losses recorded in thebalance sheet prior to the first implementation date.
⑥ Lease changes before the first implementation are not retroactively adjusted and are accounted forin accordance with final arrangements for lease changes and New Lease Standards.
When measuring a lease liability, the Company discounts the lease payment using the lessee'sincremental borrowing rate at 1 January 2021.
Outstanding minimum lease payments for significant operating leasesdisclosed in the consolidated financial statements as of 31 December 2020
| Discounted present value at the Company's incremental borrowing rate as of 1 January 2021 | 307,325,185.80 |
| Lease liabilities under the New Lease Standards as of 1 January 2021 | 176,620,358.65 |
| Non-current liabilities due within one year under the New Lease Standards as of 1 January 2021 | 130,704,827.15 |
| Difference between the above discounted present value and the lease liability |
(2) The Company as the lessor
For subleases classified as operating leases prior to the first implementation date and still in existenceafter the first implementation date, the Company reassessed these leases based on the remainingcontractual term and conditions of the original lease and sublease on the first implementation date andclassifies them in accordance with the provisions of the new lease standards. If reclassified as a financelease, the Company will treat it as a new financial lease.
Except for subleases, the Company is not required to adjust leases as the lessor in accordance withthe New Lease Standards. The Company accounted for leases in accordance with the New Lease Standardsfrom the first implementation date.
(3) The major impact of the Company's implementation of the New Lease Standards on the financialstatements is as follows:
| Contents and reasons of changes in accounting policies | Review and approval procedure | Affected item in statement | Effect on balance on 1 January 2021 | |
| Consolidation | Parent company | |||
| (1) Adjustments made by the Company as a lessee to the existing operating leases before the date of initial implementation | The 5th meeting of the 5th session of Board of Directors | Right-of-use assets | 327,386,662.94 | 7,470,972.21 |
| Lease liabilities | 176,620,358.65 | 1,264,270.31 | ||
| Non-current liabilities due within one year | 130,704,827.15 | 3,648,655.35 | ||
| Prepayments | -20,061,477.14 | -2,558,046.55 | ||
2. Implementation of the Interpretation of Accounting Standards for Business Enterprises No. 14The Ministry of Finance issued the Interpretation of Accounting Standards for Business EnterprisesNo. 14 (CK [2021] No. 1, hereinafter referred to as "Interpretation No. 14") on 2 February 2021, whichcomes into force as of the date of promulgation. The relevant businesses increased from 1 January 2021to the implementation date were adjusted as required by Interpretation No. 14.
① Public-Private Partnership (PPP) project contract
Interpretation No. 14 is applicable to PPP project contracts that meet both the "dual characteristics"and "dual control" described in such Interpretation. Retrospective adjustments should be made to relevantPPP project contracts that were implemented before 31 December 2020 and have not been completed bythe implementation date. In the event that retrospective adjustment is not feasible, such Interpretation shallbe applied from the beginning of the initial stage at which the retrospective adjustment is feasible. Theretained earnings at the beginning of the current year and other relevant items in the financial statementson the effective date of the adjustment of cumulative impact other than those in the comparable periodsshall be adjusted. The Company's implementation of this Provision has no impact.
② Reform of benchmark interest rate
Interpretation No. 14 provides a simplified accounting treatment for cases where the benchmark ratereform results in a change in the basis for determining cash flows related to financial instrument contractsand lease contracts.
According to the provisions of such Interpretation, the business pertaining to the benchmark interestrate reform before 31 December 2020 should be adjusted retrospectively, except where retrospectiveadjustment is not feasible, and there is no need to adjust the data in the comparative financial statementsof the previous period. On the implementation date of such Interpretation, the difference between theoriginal carrying amount and the new carrying amount of financial assets and financial liabilities, shall beincluded in the beginning retained earnings or other comprehensive income of the Reporting Period inwhich such Interpretation is implemented. The implementation of this provision has not had a materialimpact on the financial position and operating results of the Company.
3. Implementation of the Circular on Adjusting the Scope of Application of the Provisions on theAccounting Treatment of COVID-19-related Rent Concessions
On 19 June 2020, the Ministry of Finance issued the Provisions on the Accounting Treatment ofCOVID-19-related Rent Concessions (CK (2020) No. 10), allowing companies to resort to a simplifiedmethod for accounting treatment for rental reductions, deferred rent payment and other rental concessionsrelated to COVID-19 pandemic that meet the stipulations of the Provisions.
On 26 May 2021, the Ministry of Finance issued the Circular on Adjusting the Scope of Applicationof the Provisions on the Accounting Treatment of COVID-19-related Rent Concessions (CK [2021] No.
9), which was implemented on 26 May 2021. According to such Circular, the scope of application of"using simplified method for rental reductions related to COVID-19 pandemic" is changed from"concession is only applicable to lease payments payable before 30 June 2021" to "concession is onlyapplicable to lease payments payable before 30 June 2022", with other applicable conditions unchanged.
The Company has adopted simplified accounting methods for all lease contracts that meet therequirements before the adjustment of scope of application, and also adopted the simplified method foraccounting treatment of all similar lease contracts that meet the requirements after the adjustment of thescope of application. Retrospective adjustments have been made to the relevant lease contracts which havebeen subjected to accounting treatment by lease change before the issuance of the Circular, but the
comparative financial statements of the previous period have not been adjusted; the relevant rentalconcessions that occurred between 1 January 2021 and the effective date of the Circular and were notsubjected to accounting treatment as required by such provisions shall be adjusted according to theCircular.
4. Implementation of presentation of the centralized management of funds set forth in InterpretationNo. 15 of the Accounting Standards for Business EnterprisesOn 30 December 2021, the Ministry of Finance issued the Interpretation No. 15 of AccountingStandards for Business Enterprises (CK [2021] No. 35, hereinafter referred to as "Interpretation No. 15").The "presentation of centralized management of funds" was implemented as of the date of publication andthe financial statements in comparable periods were adjusted accordingly.Interpretation No. 15 clearly stipulates how the balance involved in the centralized and unifiedmanagement of the funds of the parent company and members through internal settlement centers andfinancial companies, should be presented and disclosed in the balance sheet. The implementation of thisprovision has not had a material impact on the financial position and operating results of the Company.
(2). Changes in significant accounting estimates
□ Applicable √ Not applicable
(3). Particulars on adjustment to relevant items of the financial statements for the year of the first
implementation due to the first implementation of new lease standards from 2021
√ Applicable □ Not applicable
Consolidated Balance Sheet
Unit: RMB Currency: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjustment amount |
| Current assets: | |||
| Cash and equivalents | 2,562,158,926.11 | 2,562,158,926.11 | |
| Transaction settlement funds | |||
| Lending funds | |||
| Held-for-trading financial assets | 1,428,277,848.33 | 1,428,277,848.33 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 1,561,211,468.90 | 1,561,211,468.90 | |
| Receivables financing | 61,412,976.46 | 61,412,976.46 | |
| Prepayment | 131,596,384.76 | 111534907.62 | -20,061,477.14 |
| Premium receivable | |||
| Reinsurance premium receivable | |||
| Reserves for reinsurance contract receivable | |||
| Other receivables | 141,753,102.00 | 141,753,102.00 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under agreements to resell | |||
| Inventories | 1,322,812,846.83 | 1,322,812,846.83 | |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | 4,637,213.00 | 4,637,213.00 | |
| Other current assets | 27,286,607.30 | 27,286,607.30 | |
| Total current assets | 7,241,147,373.69 | 7,221,085,896.55 | -20,061,477.14 |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | 34,722,395.67 | 34,722,395.67 | |
| Investments in other equity instruments | 5,476,577.42 | 5,476,577.42 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 1,847,635,724.45 | 1,847,635,724.45 | |
| Construction in progress | 54,946,300.66 | 54,946,300.66 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 327,386,662.94 | 327,386,662.94 | |
| Intangible assets | 320,746,328.60 | 320,746,328.60 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 99,035,852.78 | 99,035,852.78 | |
| Deferred income tax assets | 99,939,414.58 | 99,939,414.58 | |
| Other non-current assets | 6,258,468.47 | 6,258,468.47 | |
| Total non-current assets | 2,468,761,062.63 | 2,796,147,725.57 | 327,386,662.94 |
| Total assets | 9,709,908,436.32 | 10,017,233,622.12 | 307,325,185.80 |
| Current liabilities: | |||
| Short-term borrowings | 180,176,000.00 | 180,176,000.00 | |
| Borrowings from central bank | |||
| Placements from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 2,602,020,507.99 | 2,602,020,507.99 | |
| Accounts received in advance | |||
| Contract liabilities | 114,100,035.35 | 114,100,035.35 | |
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and other banks | |||
| Brokerage for trading securities | |||
| Brokerage for underwriting securities | |||
| Employee benefits payable | 152,625,106.89 | 152,625,106.89 | |
| Taxes payable | 477,240,219.10 | 477,240,219.10 | |
| Other payables | 625,468,675.97 | 625,468,675.97 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Reinsured accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | 130,704,827.15 | 130,704,827.15 | |
| Other current liabilities | 13,746,089.97 | 13,746,089.97 | |
| Total current liabilities | 4,165,376,635.27 | 4,296,081,462.42 | 130,704,827.15 |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 176,620,358.65 | 176,620,358.65 | |
| Long-term payable | 8,420,000.00 | 8,420,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | 12,211,357.80 | 12,211,357.80 | |
| Deferred income | 46,132,513.40 | 46,132,513.40 | |
| Deferred income tax liabilities | 36,781,069.25 | 36,781,069.25 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 103,544,940.45 | 280,165,299.10 | 176,620,358.65 |
| Total liabilities | 4,268,921,575.72 | 4,576,246,761.52 | 307,325,185.80 |
| Owner's equity (or shareholders' equity): | |||
| Share capital | 927,427,600.00 | 927,427,600.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 533,384,131.66 | 533,384,131.66 | |
| Less: Treasury shares | 176,034,120.00 | 176,034,120.00 | |
| Other comprehensive income | 2,141,402.48 | 2,141,402.48 | |
| Special reserve | |||
| Surplus reserve | 464,042,659.91 | 464,042,659.91 | |
| General risk provision | |||
| Undistributed profit | 3,442,607,038.00 | 3,442,607,038.00 | |
| Total equity attributable to the owners of the parent company | 5,193,568,712.05 | 5,193,568,712.05 | |
| Minority equity | 247,418,148.55 | 247,418,148.55 | |
| Total owners' equity (or shareholders' equity) | 5,440,986,860.60 | 5,440,986,860.60 | |
| Total liabilities and owner's equity (or shareholders' equity) | 9,709,908,436.32 | 10,017,233,622.12 | 307,325,185.80 |
Description on adjustment to relevant items:
□ Applicable √ Not applicable
Parent Company's Balance Sheet
Unit: RMB Currency: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjustment amount |
| Current assets: | |||
| Cash and equivalents | 1,887,003,379.89 | 1,887,003,379.89 | |
| Held-for-trading financial assets | 1,272,219,811.46 | 1,272,219,811.46 | |
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 177,648,799.65 | 177,648,799.65 | |
| Receivables financing | |||
| Prepayment | 36,987,935.22 | 34,429,888.67 | -2,558,046.55 |
| Other receivables | 399,678,347.22 | 399,678,347.22 | |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Inventories | 332,755,309.92 | 332,755,309.92 | |
| Contract assets | |||
| Held for sale assets | |||
| Non-current assets due within one year | 4,637,213.00 | 4,637,213.00 | |
| Other current assets | 150,000,000.00 | 150,000,000.00 | |
| Total current assets | 4,260,930,796.36 | 4,258,372,749.81 | -2,558,046.55 |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | 1,098,535,037.00 | 1,098,535,037.00 | |
| Investments in other equity instruments | 5,476,577.42 | 5,476,577.42 | |
| Other non-current financial assets | |||
| Investment real estate | |||
| Fixed assets | 1,471,196,714.32 | 1,471,196,714.32 | |
| Construction in progress | 50,603,926.95 | 50,603,926.95 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 7,470,972.21 | 7,470,972.21 | |
| Intangible assets | 177,722,510.27 | 177,722,510.27 | |
| Development expenses | |||
| Goodwill | |||
| Long-term prepaid expenses | 5,417,965.45 | 5,417,965.45 | |
| Deferred income tax assets | 29,239,636.35 | 29,239,636.35 | |
| Other non-current assets | 5,829,768.47 | 5,829,768.47 | |
| Total non-current assets | 2,844,022,136.23 | 2,851,493,108.44 | 7,470,972.21 |
| Total assets | 7,104,952,932.59 | 7,109,865,858.25 | 4,912,925.66 |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 320,744,916.72 | 320,744,916.72 | |
| Accounts received in advance | |||
| Contract liabilities | 76,291,447.04 | 76,291,447.04 | |
| Employee benefits payable | 84,898,291.78 | 84,898,291.78 | |
| Taxes payable | 263,690,993.11 | 263,690,993.11 | |
| Other payables | 1,089,678,737.94 | 1,089,678,737.94 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | 3,648,655.35 | 3,648,655.35 | |
| Other current liabilities | 9,917,888.11 | 9,917,888.11 | |
| Total current liabilities | 1,845,222,274.70 | 1,848,870,930.05 | 3,648,655.35 |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | 1,264,270.31 | 1,264,270.31 | |
| Long-term payable | 260,420,000.00 | 260,420,000.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | 23,417,137.82 | 23,417,137.82 | |
| Deferred income tax liabilities | 3,614,458.33 | 3,614,458.33 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 287,451,596.15 | 288,715,866.46 | 1,264,270.31 |
| Total liabilities | 2,132,673,870.85 | 2,137,586,796.51 | 4,912,925.66 |
| Owner's equity (or shareholders' equity): | |||
| Share capital | 927,427,600.00 | 927,427,600.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 538,163,670.62 | 538,163,670.62 | |
| Less: Treasury shares | 176,034,120.00 | 176,034,120.00 | |
| Other comprehensive income | 2,329,031.21 | 2,329,031.21 | |
| Special reserve | |||
| Surplus reserve | 463,713,800.00 | 463,713,800.00 | |
| Undistributed profit | 3,216,679,079.91 | 3,216,679,079.91 | |
| Total owners' equity (or shareholders' equity) | 4,972,279,061.74 | 4,972,279,061.74 | |
| Total liabilities and owner's equity (or shareholders' equity) | 7,104,952,932.59 | 7,109,865,858.25 | 4,912,925.66 |
Description on adjustment to relevant items:
□ Applicable √ Not applicable
(4). Description on retrospective adjustment to previous comparative data due to the first
implementation of new lease standards from 2021
□ Applicable √ Not applicable
45. Others
√ Applicable □ Not applicable
Hedge accounting
(1) Classification of hedging
① Fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset orliability or an unrecognized firm commitment (except for foreign exchange risk).
② Cash flow hedge is a hedge of the exposure to changes in cash flows. Such changes in cashflows mainly come from a specific type of risk related to a recognized asset or liability or an expectedtransaction that is likely to occur, or the foreign exchange risk included in an unrecognized firmcommitment.
② Hedge of net investment in an overseas operation is a hedge of the foreign exchange exposurearising from net investment in an overseas operation. Net investment in an overseas operation refers toan enterprise's equity proportion in the net assets in an overseas operation.
(2) Designation of hedging relationship and confirmation of hedging effectiveness
At the commencement of the hedging relationship, the Company shall specify the hedgingrelationship formally and prepare a formal written document on the hedging relationship, risk managementobjectives and the strategies of hedging. This document shall at least specify the contents and number ofthe hedging instruments, the nature and number of the hedged items, the nature of the hedged risk, thetype of hedge and the evaluation of the Company on the effectiveness of the hedging instruments. Hedgingeffectiveness refers to the extent that the changes in the fair value or cash flow of a hedging instrumentmay offset the changes resulted from the hedging risks in the fair value or cash flow of a hedged item.
The Company shall continuously evaluate the hedging effectiveness to determine whether thehedging meets the requirements on effectiveness for using hedging accounting within the accountingperiod when the hedging relationship is specified. If the hedging fails to meet the requirements, the use ofhedging relationship shall be terminated.
The use of hedge accounting shall meet the following requirements for the hedging effectiveness:
① There is an economic relationship between the hedged item and the hedging instrument.
② In the value change caused by the economic relationship between the hedged item and the hedginginstrument, the influence of credit risk is not dominant.
③ An appropriate hedging ratio is adopted, and this ratio will not form an imbalance in the relativeweight of the hedged item and the hedging instrument, thereby generating accounting results that areinconsistent with the hedge accounting objectives. If the hedging ratio is no longer appropriate, but thehedging risk management objectives have not changed, the number of hedged items or hedginginstruments shall be adjusted so that the hedging ratio meets the requirements on effectiveness again.
(3) Accounting treatment method of hedge
① Fair value hedge
Changes in the fair value of hedging derivatives are included in the current profit and loss. Changesin the fair value of a hedged item due to hedging risk are included in the current profit and loss, whileadjusting the book value of the hedged item.For fair value hedges related to financial instruments measured at amortized cost, adjustments to thecarrying value of the hedged item are amortized in the remaining period between the adjustment date andthe maturity date and are included in the current profit and loss. Amortization carried out in accordancewith the effective interest rate method can begin immediately after the adjustment of the carrying value,and shall not be later than the adjustment made due to the changes in the fair values caused by the hedgingrisk after the hedged item is terminated.If the hedged item is derecognized, the un-amortized fair value is recognized as current profit or loss.If the hedged item is a unrecognized firm commitment, the accumulated changes in the fair value ofthe firm commitment caused due to the hedged risk is recognized as an asset or liability, and the relatedgains or losses are included in the current profit and loss. Changes in the fair value of hedging instrumentsare also included in the current profit and loss.
② Cash flow hedge
The portion of the gains or losses from hedging instruments, which belongs to the effective hedge,shall be directly recognized as other comprehensive income, and the portion which belongs to theineffective hedge shall be included in the current profit and loss.
If the hedged transaction affects the current profit or loss, for example, when the hedged financialincome or financial expense is confirmed or the expected sale occurs, the amount recognized in othercomprehensive income will be transferred to the current profit and loss. If the hedged item is the cost of anon-financial asset or liability, the amount originally recognized in other comprehensive income istransferred out and included in the initial recognition amount of the non-financial asset or liability (or theamount originally recognized in other comprehensive income is transferred out in the same period in whichthe non-financial asset or liability affects the profit and loss, and included in the current profit and loss).
If the expected transaction or firm commitment is not expected to occur, the cumulative gains orlosses of hedging instruments previously included in other comprehensive income are transferred out andincluded in the current profit or loss. If the hedging instrument expires, is sold, terminated or exercised(but has not been replaced or extended), or the designation of the hedging relationship is revoked, theamount previously included in other comprehensive income will not be transferred out until the expectedtransaction or firm commitment affects the current profit and loss.
③ Hedge of net investment in an overseas operation
Hedge of net investment in an overseas operation, including hedge of monetary items as part of netinvestment, is handled similarly to cash flow hedge. The portion of the gains or losses from hedginginstruments, which is recognized as effective hedge, shall be recorded in other comprehensive income,and the portion which is recognized as ineffective hedge shall be included in the current profit and loss.When disposing of overseas operations, any accumulated gains or losses included in other comprehensiveincome are transferred out and included in the current profit or loss.
Repurchase of the Company's shares
The Company manages the repurchased shares as treasury shares before cancellation or transfer, andtransfers all the expenses for the repurchase to the costs of treasury shares. The consideration andtransaction costs paid for the repurchase reduce the owner's equity, and no gain or loss is recognized whenthe Company's shares are repurchased, transferred or cancelled.
(1) Where the Company's shares are acquired for reasons such as reduction of registered capital orreward to employees, they will be treated as treasury shares based on the amount actually paid for therepurchase and also be registered for future reference. If the repurchased shares are cancelled, thedifference between the total nominal value of the shares calculated based on the nominal value and numberof the cancelled shares and the amount actually paid for the repurchase will be offset against the capitalreserve, and if the capital reserve is insufficient to offset, the remaining difference will be offset againstthe retained earnings. If the repurchased shares are awarded to employees of the Company as equity-settledshare-based payment, when receiving the price from the exercise by the employees of the option topurchase the Company's shares, the Company resells and delivers the cost of employees' treasury sharesand the accumulated amount of capital reserves (other capital reserves) during the waiting period, andadjusts the capital reserve (share premium) based on the difference between them.
(2) For the shares repurchased in accordance with the equity incentive plan, the Company willrepurchase and cancel the restricted stocks that fail to meet the unlocking conditions. For the stocksrequired to be repurchased due to failure to unlocking conditions for restricted stocks, the Company debitsthem to "Other payables - Repurchase obligations of restricted stocks" and other subjects and credits themto "Bank deposits" and other subjects. At the same time, the Company debits the amount of share capitalcorresponding to the number of cancelled restricted stocks in the subject of "Share capital", credits thecarrying value of the treasury stocks corresponding to the number of cancelled restricted stocks in thesubject of "Treasury shares", and debits the difference of them to the subject of "Capital Reserve - Sharepremium".
Segment reporting
The Company determines the operating segment based on the internal organizational structure,management requirements, and internal reporting system, and determines the reporting segment based onthe operating segment and discloses segment information.
Operating segment refers to the component of the Company that meets the following conditionssimultaneously: (1) the component can generate income and incur expenses in daily activities; (2) themanagement of the Company can regularly evaluate the operating results of the component to decide toallocate resources to it and evaluate its performance; and (3) the Company can obtain relevant accountinginformation such as the financial status, operating results and cash flow of the component. If two or moreoperating segments have similar economic characteristics and meet certain conditions, they can becombined into one operating segment.
VI. Taxes
1. Major tax types and tax rates
Particulars on major tax types and tax rates
√ Applicable □ Not applicable
| Tax type | Taxing basis | Tax rate |
| Value added tax ("VAT") | The output tax is calculated on the basis of the income from sales of products and taxable income from rendering of services calculated according to the provisions of the tax law. The difference between the output tax and the input tax | 13%, 10%, 9%, 6%, 5% |
| which is allowed to be deductible in the current period is the payable VAT | ||
| Consumption tax | ||
| Business tax | ||
| Urban maintenance and construction tax | Calculated and paid according to the actually-paid VAT and consumption tax | 7%, 1% |
| Enterprise income tax | Calculated and paid according to the taxable income | 15%, 20%, 25%, 22%, 31%, 17%, 16.5% |
Particulars on disclosure of taxpayers with different enterprise income tax rates
√ Applicable □ Not applicable
| Name of taxpayer | Income tax rate (%) |
| Shanghai M&G Stationery Inc. | 15 |
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | 25 |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 25 |
| Lianyungang Colipu Office Supplies Co., Ltd.（连云港市科力普办公用品有限公司） | 20 |
| Shenyang M&G Colipu Office Supplies Co., Ltd.（沈阳晨光科力普办公用品有限公司） | 25 |
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | 25 |
| Shanghai M&G Stationery Sales Co., Ltd.（上海晨光文具销售有限公司） | 25 |
| Guangzhou M&G Stationery&Gifts Sales Co., Ltd.（广州晨光文具礼品销售有限公司） | 25 |
| Yiwu Chenxing Stationery Co., Ltd.（义乌市晨兴文具用品有限公司） | 25 |
| Harbin M&G Sanmei Stationery Co., Ltd.（哈尔滨晨光三美文具有限公司） | 25 |
| Zhengzhou M&G Stationery&Gifts Co., Ltd.（郑州晨光文具礼品有限责任公司） | 25 |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | 25 |
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | 20 |
| Jiangsu M&G Life Enterprise Management Co., Ltd.（江苏晨光生活馆企业管理有限公司） | 25 |
| Zhejiang New M&G Life Enterprise Management Co., Ltd.（浙江新晨光生活馆企业管理有限公司） | 25 |
| Jiumu M&G Store Enterprise Management Co., Ltd.（九木杂物社企业管理有限公司） | 25 |
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | 25 |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 25 |
| Shanghai M&G Office Stationery Co., Ltd. | 25 |
| Luoyang M&G Stationery Sales Co., Ltd.（洛阳晨光文具销售有限公司） | 20 |
| Hangzhou Sanmei M&G Stationery Co., Ltd.（杭州三美晨光文具有限公司） | 25 |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | 25 |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | 20 |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） | 25 |
| Axus Stationery (Shanghai) Company Ltd. | 15 |
| Jiangsu Marco Pen Co., Ltd.（江苏马可笔业有限公司） | 25 |
| Changchun Macro Stationery Co., Ltd.（长春马可文教用品有限公司） | 25 |
| Yili Senlai Wood Co., Ltd.（伊犁森徕木业有限公司） | 25 |
| Axus Stationery (Hong Kong) Company Ltd. | 16.5 |
| International stationery company | 20 |
| Shanghai Meixin Stationery Co., Ltd. (上海美新文具有限公司) | 25 |
| SHANGHAI M&G STATIONERY (SINGAPORE) PTE.LTD. | 17 |
| Back to School Holding AS | 22 |
| Beckmann AS | 22 |
| Beckmann Norway GmbH | 31 |
2. Tax preference
√ Applicable □ Not applicable
On 28 October 2019, the Company obtained the High- and New-tech Enterprise Certificate(certificate number GR201931001046, valid for 3 years) issued jointly by Shanghai Municipal Scienceand Technology Commission, Shanghai Finance Bureau and Shanghai Municipal Tax Service, StateTaxation Administration.On 24 September, 2021, the subsidiary Axus Stationery (Shanghai) Company Ltd. ("AxusStationery") obtained the High- and New-tech Enterprise Certificate (certificate numberGR201831003575, valid for 3 years) issued jointly by Shanghai Municipal Science and TechnologyCommission, Shanghai Finance Bureau and Shanghai Municipal Tax Service, State TaxationAdministration.The Company and the subsidiary Axus Stationery paid the enterprise income tax at the rate of 15%this year.According to the Enterprise Income Tax Law of the People's Republic of China and the Notice of theMinistry of Finance and the State Taxation Administration on Implementing the Inclusive Tax Deductionand Exemption Policies for Micro and Small Enterprises (Cai Shui [2019] No. 13), starting from 1 January2019 to 31 December 2021, for the part of small low-profit enterprises' annual taxable income notexceeding RMB1,000,000, the enterprise income tax at 20% shall apply based on 25% of the taxableincome; for the part of small low-profit enterprises' annual taxable income between RMB1 million andRMB3 million, the enterprise income tax at 20% shall apply based on 50% of the taxable income.
According to the Enterprise Income Tax Law of the People's Republic of China and theAnnouncement of the Ministry of Finance and the State Taxation Administration on the Implementation
of Preferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial andCommercial Households ([2021] No. 12), for the part of small low-profit enterprises' annual taxableincome not exceeding RMB1,000,000, the enterprise income tax shall be further half-reduced on the basisof the preferential policy stipulated in Article 2 of the Notice of the Ministry of Finance and the StateTaxation Administration on Implementing the Inclusive Tax Deduction and Exemption Policies for Microand Small Enterprises (Cai Shui [2019] No. 13). The enterprise income tax at 20% shall apply. ThisAnnouncement shall be executed from 1 January 2021 to 31 December 2022. The subsidiaries includingLuoyang M&G Stationery Sales Co., Ltd.（洛阳晨光文具销售有限公司）, Lianyungang Colipu OfficeSupplies Co., Ltd.（连云港市科力普办公用品有限公司）, Shanghai Chenxun Enterprise ManagementCo., Ltd.（上海晨讯企业管理有限公司） and Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司）meet the tax declaration requirements for micro and small enterprises, and declarethe enterprise income tax at the tax rate of 20%.In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation onValue-Added Tax Policies for Software Products (Cai Shui [2011] No. 100), the subsidiary ShanghaiColipu Information Technology Co., Ltd. (Hereinafter referred to as "Colipu Information Technology")was granted the tax incentive regarding the refund upon payment of VAT by Shanghai Xuhui District TaxService, State Taxation Administration on software products on 9 June 2020, with a valid period from 1April 2020 to 31 March 2070.
According to the Notice of the Ministry of Finance and the State Administration of Taxation onEnterprise Income Tax Policies for Further Encouraging the Development of Software Industry andIntegrated Circuit Industry (Cai Shui [2012] No.27), the subsidiary Shanghai Colipu InformationTechnology Co., Ltd. as an eligible software company shall be exempted from enterprise income tax forthe first 2 years as of the first profit-making year and shall pay enterprise income tax at reduced half ofthe statutory tax rate of 25% for the third to the fifth years until the expiry of the preferential period.
3. Others
□ Applicable √ Not applicable
VII. Notes to the Items in Consolidated Financial Statements
1. Cash and equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 404,622.49 | 1,134,204.63 |
| Cash at bank | 2,987,373,347.19 | 2,551,360,452.36 |
| Other cash and equivalents | 22,874,220.96 | 9,664,269.12 |
| Total | 3,010,652,190.64 | 2,562,158,926.11 |
| Including: Total cash deposited outside China | 28,133,966.57 | 3,490,810.78 |
Other descriptions
Details of the cash and equivalents that are restricted for use due to mortgage, pledge or freeze, thatare restricted for withdrawal due to centralized management of funds, and that are deposited overseas andrestricted for repatriation were as follows:
| Item | Closing balance | Balance at the end of the year |
| Letter of credit ("L/C") deposit | 5,103,951.53 | 2,137,865.56 |
| Performance bond | 8,647,682.18 | 2,674,925.30 |
| Time deposits over three months | 1,457,000,000.00 | 1,180,000,000.00 |
| Others | 415,942.24 | |
| Total | 1,471,167,575.95 | 1,184,812,790.86 |
2. Held-for-trading financial assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss | 1,609,123,552.86 | 1,428,277,848.33 |
| Including: | ||
| Debt instrument investment | ||
| Equity instrument investment | ||
| Derivative financial assets | ||
| Others | 1,609,123,552.86 | 1,428,277,848.33 |
| Financial asset designated as at fair value through profit or loss | ||
| Including: | ||
| Debt instrument investment | ||
| Others | ||
| Total | 1,609,123,552.86 | 1,428,277,848.33 |
Other descriptions:
√ Applicable □ Not applicable
Other bank wealth management products purchased for the Company.
3. Derivative financial assets
□ Applicable √ Not applicable
4. Bills receivable
(1). Notes receivable presented by category
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance bills | 30,467,161.11 | |
| Commercial acceptance bills | 9,963,379.64 | |
| Less: Bad debt provisions of notes receivable | -718,394.03 | |
| Total | 39,712,146.72 |
(2). Notes receivable pledged by the Company at the end of the period
□ Applicable √ Not applicable
(3). Notes receivable endorsed or discounted by the Company at the end of the period but not due
yet at the balance sheet date
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Bank acceptance bills | 8,673,121.72 | |
| Commercial acceptance bills | 5,410,568.51 | |
| Total | 14,083,690.23 |
(4). Notes transferred by the Company into accounts receivable at the end of the period due to thenote issuer's failure of performance
□ Applicable √ Not applicable
(5). Disclosure by accruing method for bad debt provisions
□ Applicable √ Not applicable
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debtprovisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
(6). Particulars on bad debt provisions
□ Applicable √ Not applicable
(7). Particulars on notes receivable actually written-off in the current period
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
5. Accounts receivable
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 1,724,642,750.64 |
| 1 to 2 years | 31,054,414.49 |
| 2 to 3 years | 3,556,445.00 |
| Above 3 years | 1,880,681.95 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Total | 1,761,134,292.08 |
(2). Disclosure by accruing method for bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | 8,457,530.82 | 0.48 | 8,457,530.82 | 100.00 | 8,442,002.81 | 0.53 | 8,442,002.81 | 100.00 | ||
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 1,752,676,761.26 | 99.52 | 31,808,345.83 | 1.81 | 1,720,868,415.43 | 1,589,593,697.43 | 99.47 | 28,382,228.53 | 1.79 | 1,561,211,468.90 |
| Including: | ||||||||||
| Combination 1: Account age analysis combination | 1,752,676,761.26 | 99.52 | 31,808,345.83 | 1.81 | 1,720,868,415.43 | 1,589,593,697.43 | 99.47 | 28,382,228.53 | 1.79 | 1,561,211,468.90 |
| Total | 1,761,134,292.08 | / | 40,265,876.65 | / | 1,720,868,415.43 | 1,598,035,700.24 | / | 36,824,231.34 | / | 1,561,211,468.90 |
Bad debt provisions accrued separately:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name | Closing balance | |||
| Carrying balance | Bad debt provisions | Accruing percentage (%) | Accruing reason | |
| Shenzhen Diboyuan Industrial Co., Ltd. (深圳市地博源实业有限公司) | 2,378,521.60 | 2,378,521.60 | 100.00 | Not expected to be recovered |
| OneSmart International Education Group Limited | 2,164,805.00 | 2,164,805.00 | 100.00 | Not expected to be recovered |
| Shanghai Jing Xue Rui Information Technology Co., Ltd. | 705,639.93 | 705,639.93 | 100.00 | Not expected to be recovered |
| Rongchuang Real Estate Group Co., Ltd. | 339,469.90 | 339,469.90 | 100.00 | Not expected to be recovered |
| KAISA HOLDINGS LIMITED | 246,800.00 | 246,800.00 | 100.00 | Not expected to be recovered |
| Zhengzhou Houqing Culture Communication Co., Ltd. | 103,405.87 | 103,405.87 | 100.00 | Not expected to be recovered |
| Other customers | 2,518,888.52 | 2,518,888.52 | 100.00 | Not expected to be recovered |
| Total | 8,457,530.82 | 8,457,530.82 | 100.00 | / |
Description on bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debtprovisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
(3). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Accrued separately | 8,442,002.81 | 1,085,770.12 | 1,070,242.11 | 8,457,530.82 | ||
| Combination 1: Account age analysis combination | 28,382,228.53 | 3,426,117.30 | 31,808,345.83 | |||
| Total | 36,824,231.34 | 4,511,887.42 | 1,070,242.11 | 40,265,876.65 | ||
Other descriptions:
The bad debt provisions accrued this year include the impact of RMB-24,055.59 of the foreigncurrency statement exchange rate translation difference and the bad debt provisions of RMB208,861.71incorporated at the time of acquisition not under common control, so the actually accrued bad debtprovisions are RMB4,327,081.30.
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
(4). Particulars on accounts receivable actually written-off in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Written-off amount |
| Accounts receivable actually written-off | 1,070,242.11 |
Writing-off of significant accounts receivable
□ Applicable √ Not applicable
Description on writing-off of accounts receivable:
□ Applicable √ Not applicable
(5). Particulars on top 5 accounts receivable in terms of the balance at the end of the period based
on debtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Closing balance | Percentage (%) in the total balance at the end of the period of accounts receivable | Balance of bad debt provisions at the end of the period |
| First | 272,548,567.20 | 15.48 | 1,550,149.43 |
| Second | 219,870,817.81 | 12.48 | 1,569,808.91 |
| Third | 84,272,909.19 | 4.79 | 785,114.66 |
| Fourth | 72,722,870.13 | 4.13 | 572,983.93 |
| Fifth | 43,387,776.09 | 2.46 | 216,938.88 |
| Total | 692,802,940.42 | 39.34 | 4,694,995.81 |
Other descriptionsNo
(6). Accounts receivable derecognized due to the transfer of financial assets
□ Applicable √ Not applicable
(7). Assets and liabilities formed due to the transfer and continuous involvement of accounts
receivable
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
6. Receivables financing
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Bills receivable | 22,824,707.62 | 61,412,976.46 |
| Factoring of accounts receivable | ||
| Accounts receivable | ||
| Total | 22,824,707.62 | 61,412,976.46 |
Changes in receivables financing during the current period and changes in fair value:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Balance at the end of the year | Increase of the current period | Derecognition of the current period | Other changes | Closing balance | Accumulated loss provisions recognized in other comprehensive income |
| Bills receivable | 61,412,976.46 | 282,003,344.85 | 320,591,613.69 | 22,824,707.62 | ||
| Total | 61,412,976.46 | 282,003,344.85 | 320,591,613.69 | 22,824,707.62 |
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debtprovisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
7. Prepayment
(1). Advance payment presented by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Closing balance | Opening balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 88,311,966.56 | 97.23 | 150,881,413.40 | 99.53 |
| 1 to 2 years | 2,134,130.82 | 2.35 | 443,712.70 | 0.29 |
| 2 to 3 years | 370,376.56 | 0.41 | 271,258.66 | 0.18 |
| Above 3 years | 9,820.00 | 0.01 | ||
| Less: Bad debt provisions | -20,000,000.00 | |||
| Total | 90,826,293.94 | 100.00 | 131,596,384.76 | 100.00 |
Description on the reasons for failure to settle the advance payment with an account age over one year anda significant amount:
No
(2). Particulars on top 5 advance payments in terms of the balance at the end of the periodaccording to the concentration of parties to which the advance payments are made
√ Applicable □ Not applicable
| Company name | Closing balance | Percentage (%) in the total balance at the end of the period of advance payment |
| First | 7,174,735.64 | 7.90 |
| Second | 2,202,152.19 | 2.42 |
| Third | 1,817,600.00 | 2.00 |
| Fourth | 1,548,482.32 | 1.70 |
| Fifth | 1,406,426.62 | 1.55 |
| Total | 14,149,396.77 | 15.57 |
Other descriptionsNo
Other descriptions
□ Applicable √ Not applicable
8. Other receivables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 163,987,201.97 | 141,753,102.00 |
| Total | 163,987,201.97 | 141,753,102.00 |
Other descriptions:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
□ Applicable √ Not applicable
(2). Important overdue interest
□ Applicable √ Not applicable
(3). Particulars on accruing of bad debt provisions
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not applicable
(2). Important dividend receivable with the account age over one year
□ Applicable √ Not applicable
(3). Particulars on accruing of bad debt provisions
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Other receivables
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 143,565,228.56 |
| 1 to 2 years | 39,824,525.23 |
| 2 to 3 years | 16,434,310.48 |
| Above 3 years | 23,005,299.25 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -58,842,161.55 |
| Total | 163,987,201.97 |
(2). Particulars on classification by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Amount nature | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Personal loans and petty cash | 7,301,627.23 | 7,619,165.29 |
| Amount paid for materials | 43,118,667.97 | 33,583,639.24 |
| Consolidated balance of related-parties current accounts - provisional input tax | 45,097,081.97 | 36,427,271.95 |
| Margin and deposit | 101,987,147.00 | 82,608,805.20 |
| Others | 25,324,839.35 | 18,606,946.07 |
| Total | 222,829,363.52 | 178,845,827.75 |
(3). Particulars on accruing of bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2021 | 37,092,725.75 | 37,092,725.75 | ||
| Balance as at 1 January 2021 in the current period | ||||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | ||||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Accrued in the current period | 8,968,239.20 | 13,000,000.00 | 21,968,239.20 | |
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | 208,620.00 | 208,620.00 | ||
| Other changes | 10,183.40 | 10,183.40 | ||
| Balance as at 31 December 2021 | 45,842,161.55 | 13,000,000.00 | 58,842,161.55 |
Particulars on significant changes in the carrying balance of other receivables with changes in the lossprovisions occurring in the current period:
√ Applicable □ Not applicable
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2021 | 178,845,827.75 | 178,845,827.75 | ||
| Balance as at 1 January 2021 in the current period | ||||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | ||||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Increase of the current period | 1,085,261,052.12 | 13,000,000.00 | 1,098,261,052.12 | |
| Derecognition of the current period | 1,054,277,516.35 | 1,054,277,516.35 | ||
| Balance as at 31 December 2021 | 209,829,363.52 | 13,000,000.00 | 222,829,363.52 |
Amount of bad debt provisions accrued for the current period and the basis for assessing whether the creditrisk of financial instruments has increased significantly:
□ Applicable √ Not applicable
(4). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Bad debt provisions accrued separately | 13,000,000.00 | 13,000,000.00 | ||||
| Combination 1: Account age analysis combination | 37,092,725.75 | 8,958,055.80 | 208,620.00 | 45,842,161.55 | ||
| Total | 37,092,725.75 | 21,958,055.80 | 208,620.00 | 58,842,161.55 | ||
Other descriptions:
The bad debt provisions accrued this year include the adjustment of RMB-25,724.12 to foreignexchange gains and losses in foreign-currency statements and the bad debt provisions of RMB15,540.72incorporated at the time of acquisition not under common control, so the actually accrued bad debtprovisions are RMB21,968,239.20.
Significant bad debt provision amounts reversed or recovered in the current period:
□ Applicable √ Not applicable
(5). Particulars on other receivables actually written-off in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Written-off amount |
| Other receivables actually written-off | 208,620.00 |
Significant writing-off of other receivables:
□ Applicable √ Not applicable
Description on writing-off of other receivables:
□ Applicable √ Not applicable
(6). Particulars on top 5 other receivables in terms of the balance at the end of the period based ondebtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Amount nature | Closing balance | Account age | Percentage (%) in the total balance at the end of the period of other receivables | Bad debt provisions Closing balance |
| First | Consolidated related parties - provisional input tax | 45,097,081.97 | Within 1 year | 20.24 | |
| Second | Others | 13,000,000.00 | 1-2 years | 5.83 | 13,000,000.00 |
| Third | Margin and deposit | 5500000.00 | RMB4 million within one year, RMB1.5 million for 1-2 years | 2.47 | 650000.00 |
| Fourth | Others | 5,057,976.56 | Within 1 year | 2.27 | 252,898.83 |
| Fifth | Others | 2,000,491.76 | Within 1 year | 0.90 | 100,024.59 |
| Total | / | 70,655,550.29 | / | 31.71 | 14,002,923.42 |
(7). Receivables involving government subsidies
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Name of government subsidy-related items | Closing balance | Account age at the end of the period | Estimated time, amount and basis of receipt |
| Shanghai Xuhui District Tax Service, State Taxation Administration | Refund upon payment of VAT on software enterprises | 5,057,976.56 | Within 1 year | Refund upon payment of VAT on software enterprises |
| Total | 5,057,976.56 |
Other descriptionsNo
(8). Other receivables derecognized due to the transfer of financial assets
□ Applicable √ Not applicable
(9). Assets and liabilities formed due to the transfer and continuous involvement of otherreceivables
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
9. Inventories
(1). Classification of inventories
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Provision for the loss on decline in value of inventories/ provision for the impairment of contract performance cost | Carrying value | Carrying balance | Provision for the loss on decline in value of inventories/ provision for the impairment of contract performance cost | Carrying value | |
| Raw materials | 185,915,415.87 | 488,371.55 | 185,427,044.32 | 171,682,717.53 | 503,028.26 | 171,179,689.27 |
| Work-in-process | 42,444,915.33 | 213,729.51 | 42,231,185.82 | 67,576,697.07 | 90,168.22 | 67,486,528.85 |
| Finished products | 1,328,007,263.14 | 64,967,133.27 | 1,263,040,129.87 | 1,065,016,694.84 | 45,926,598.58 | 1,019,090,096.26 |
| Revolving materials | 13,074,916.91 | 317,390.33 | 12,757,526.58 | 16,274,211.14 | 1,514,799.76 | 14,759,411.38 |
| Expendable biological assets | 12,380,801.73 | 12,380,801.73 | 14,814,590.65 | 14,814,590.65 | ||
| Contract performance cost | ||||||
| Materials in transit | 2,263,735.49 | 7,997.87 | 2,255,737.62 | 4,146,657.42 | 39,054.79 | 4,107,602.63 |
| Consigned processing materials | 9,560,511.34 | 9,560,511.34 | 13,713,637.94 | 13,713,637.94 | ||
| Shipped goods | 19,000,362.02 | 19,000,362.02 | 17,661,289.85 | 17,661,289.85 | ||
| Total | 1,612,647,921.83 | 65,994,622.53 | 1,546,653,299.30 | 1,370,886,496.44 | 48,073,649.61 | 1,322,812,846.83 |
(2). Devaluation provisions of inventories and impairment provisions of contract performance cost
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase amount of the current period | Decrease amount of the current period | Closing balance | ||
| Accrued | Others | Reversed or resold | Others | |||
| Raw materials | 503,028.26 | -14,656.71 | 488,371.55 | |||
| Work-in-process | 90,168.22 | 123,561.29 | 213,729.51 | |||
| Finished products | 45,926,598.58 | 18,179,871.30 | 1,566,462.78 | 663,113.79 | 42,685.60 | 64,967,133.27 |
| Revolving materials | 1,514,799.76 | -1,197,409.43 | 317,390.33 | |||
| Expendable biological assets | ||||||
| Contract performance cost | ||||||
| Materials in transit | 39,054.79 | 31,056.92 | 7,997.87 | |||
| Consigned processing materials | ||||||
| Total | 48,073,649.61 | 17,091,366.45 | 1,566,462.78 | 694,170.71 | 42,685.60 | 65,994,622.53 |
Other descriptions:
Increase amount of the current period - others were caused by the business combination not undercommon control, while decrease amount of the current period - others were caused by the translationdifference of foreign-currency statements.
(3). Description on the capitalization amount of the borrowing expenses included in the balance of
inventories at the end of the period
□ Applicable √ Not applicable
(4). Description on amortization amount of the current period of contract performance cost
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
10. Contract assets
(1). Particulars on contract assets
□ Applicable √ Not applicable
(2). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
(3). Particulars on impairment provisions accrued for contract assets in the current period
□ Applicable √ Not applicable
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debtprovisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
11. Held for sale assets
□ Applicable √ Not applicable
12. Non-current assets due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Debt investment due within one year | ||
| Other debt investments due within one year | ||
| Long-term receivables due within one year | 3,312,295.00 | 4,637,213.00 |
| Total | 3,312,295.00 | 4,637,213.00 |
Important debt investments at the end of the period and other debt investments:
□ Applicable √ Not applicable
Other descriptionsNo
13. Other current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Contract acquisition cost | ||
| Receivable return cost | 54,709,110.46 | 10,541,165.83 |
| VAT input tax to be deducted | 5,154,242.22 | 8,685,801.62 |
| Pre-paid enterprise income tax | 6,598,599.26 | 549,155.49 |
| Others | 12,691.98 | |
| Pre-paid value added tax | 19,323,089.61 | 7,510,484.36 |
| Total | 85,797,733.53 | 27,286,607.30 |
Other descriptionsNo
14. Debt investment
(1). Particulars on debt investment
□ Applicable √ Not applicable
(2). Important debt investment at the end of the period
□ Applicable √ Not applicable
(3). Particulars on accruing of impairment provisions
□ Applicable √ Not applicable
The basis for adopting the amount of impairment provisions accrued for the current period and theassessment on whether the credit risk of financial instruments increased significantly
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
15. Other debt investment
(1). Particulars on other debt investments
□ Applicable √ Not applicable
(2). Important other debt investments at the end of the period
□ Applicable √ Not applicable
(3). Particulars on accruing of impairment provisions
□ Applicable √ Not applicable
The basis for adopting the amount of impairment provisions accrued for the current period and theassessment on whether the credit risk of financial instruments increased significantly
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
16. Long-term receivables
(1). Long-term receivables
□ Applicable √ Not applicable
(2). Particulars on accruing of bad debt provisions
□ Applicable √ Not applicable
Amount of bad debt provisions accrued for the current period and the basis for assessing whether the creditrisk of financial instruments has increased significantly
□ Applicable √ Not applicable
(3). Long-term receivables derecognized due to the transfer of financial assets
□ Applicable √ Not applicable
(4). Assets and liabilities formed due to the transfer and continuous involvement of long-termreceivables
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
17. Long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Invested company | At the beginning of the period Balance | Change of the current period | At the end of the period Balance | Balance of impairment provisions at the end of the period | |||||||
| Additional investment | Withdrawn investment | Investment gains and losses recognized under the equity method | Adjustment to other comprehensive income | Other equity changes | Declaration on distribution of cash dividends or profits | Accruing of impairment provisions | Others | ||||
| I. Joint venture | |||||||||||
| Subtotal | |||||||||||
| II. Associate | |||||||||||
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | 29,693,097.54 | 1,634,406.40 | 418,198.53 | 31,745,702.47 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd. | 5,029,298.13 | -262,298.80 | 4,766,999.33 | ||||||||
| Subtotal | 34,722,395.67 | 1,372,107.60 | 418,198.53 | 36,512,701.80 | |||||||
| Total | 34,722,395.67 | 1,372,107.60 | 418,198.53 | 36,512,701.80 | |||||||
Other descriptionsNo
18. Investments in other equity instruments
(1). Particulars on other equity instrument investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Shanghai M&G Culture and Creativity Co., Ltd. | 6,745,402.14 | 5,476,577.42 |
| Total | 6,745,402.14 | 5,476,577.42 |
(2). Particulars on non-trading equity instrument investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Dividend income recognized in the current period | Accumulated gains | Accumulated losses | Amount transferred from other comprehensive income into retained earnings | Reason for designation as at fair value through other comprehensive income | Reason for transfer from other comprehensive income into retained earnings |
| Shanghai M&G Culture and Creativity Co., Ltd. | 3,145,402.14 | The Company held the investment for non-trading purposes |
Other descriptions:
□ Applicable √ Not applicable
19. Other non-current financial assets
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
20. Investment real estate
Measurement model of investment real estateNot applicable
21. Fixed assets
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 1,840,104,394.34 | 1,847,635,724.45 |
| Disposal of fixed assets | ||
| Total | 1,840,104,394.34 | 1,847,635,724.45 |
Other descriptions:
□ Applicable √ Not applicable
Fixed assets
(1). Particulars on fixed assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Property and buildings | Machinery and equipment | Means of transportation | Other equipment | Total |
| I. Original carrying value: | |||||
| 1. Balance at the beginning of the period | 1,714,483,793.25 | 773,301,296.04 | 57,554,746.98 | 323,093,772.94 | 2,868,433,609.21 |
| 2. Increase amount of the current period | 5,454,469.93 | 127,265,122.56 | 10,495,391.78 | 71,083,380.68 | 214,298,364.95 |
| (1) Acquisition | 601,124.39 | 2,442,596.04 | 8,582,658.82 | 7,872,949.49 | 19,499,328.74 |
| (2) Transfer-in from construction in progress | 3,669,724.80 | 121,967,662.67 | 1,436,220.49 | 62,250,395.95 | 189,324,003.91 |
| (3) Increase for business combination | 1,183,620.74 | 2,854,863.85 | 476,512.47 | 960,035.24 | 5,475,032.30 |
| 3. Decrease amount of the current period | 315,467.65 | 27,335,972.83 | 4,737,911.48 | 27,742,158.37 | 60,131,510.33 |
| (1) Disposal or scraping | 26,346,729.17 | 4,716,311.32 | 27,597,443.78 | 58,660,484.27 | |
| (2) Translation difference of foreign-currency statements | 315,467.65 | 989,243.66 | 21,600.16 | 144,714.59 | 1,471,026.06 |
| 4. Balance at the end of the period | 1,719,622,795.53 | 873,230,445.77 | 63,312,227.28 | 366,434,995.25 | 3,022,600,463.83 |
| II. Accumulated depreciation | |||||
| 1. Balance at the beginning of the period | 309,918,625.82 | 404,668,124.50 | 46,671,047.39 | 259,305,938.35 | 1,020,563,736.06 |
| 2. Increase amount of the current period | 88,705,982.93 | 75,322,784.30 | 4,859,361.11 | 43,703,427.39 | 212,591,555.73 |
| (1) Accruing | 87,764,950.90 | 74,292,517.76 | 4,382,848.64 | 42,955,198.62 | 209,395,515.92 |
| (2) Increase for business combination | 941,032.03 | 1,030,266.54 | 476,512.47 | 748,228.77 | 3,196,039.81 |
| 3. Decrease amount of the current period | 78,047.66 | 20,277,441.13 | 4,477,151.75 | 26,060,730.46 | 50,893,371.00 |
| (1) Disposal or scraping | 19,521,522.10 | 4,458,866.17 | 25,962,157.74 | 49,942,546.01 | |
| (2) Translation difference of foreign-currency statements | 78,047.66 | 755,919.03 | 18,285.58 | 98,572.72 | 950,824.99 |
| 4. Balance at the end of the period | 398,546,561.09 | 459,713,467.67 | 47,053,256.75 | 276,948,635.28 | 1,182,261,920.79 |
| III. Impairment provisions | |||||
| 1. Balance at the beginning of the period | 234,148.70 | 234,148.70 | |||
| 2. Increase amount of the current period | |||||
| (1) Accruing | |||||
| (2) Increase for business combination | |||||
| 3. Decrease amount of the current period | |||||
| (1) Disposal or scraping | |||||
| 4. Balance at the end of the period | 234,148.70 | 234,148.70 | |||
| IV. Carrying value | |||||
| 1. Carrying value at the end of the period | 1,321,076,234.44 | 413,282,829.40 | 16,258,970.53 | 89,486,359.97 | 1,840,104,394.34 |
| 2. Carrying value at the beginning of the period | 1,404,565,167.43 | 368,399,022.84 | 10,883,699.59 | 63,787,834.59 | 1,847,635,724.45 |
(2). Particulars on temporary idle fixed assets
□ Applicable √ Not applicable
(3). Particulars on fixed assets leased in under finance leases
□ Applicable √ Not applicable
(4). Fixed assets leased out under operating leases
□ Applicable √ Not applicable
(5). Particulars on fixed assets of which the property ownership certificates have not been obtained
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Disposal of fixed assets
□ Applicable √ Not applicable
22. Construction in progress
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 66,743,168.66 | 54,946,300.66 |
| Engineering materials | ||
| Total | 66,743,168.66 | 54,946,300.66 |
Other descriptions:
□ Applicable √ Not applicable
Construction in progress
(1). Particulars on construction in progress
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Fixed assets not yet installed and put into use | 38,399,450.39 | 38,399,450.39 | 23,771,536.87 | 23,771,536.87 | ||
| Others | 28,343,718.27 | 28,343,718.27 | 31,174,763.79 | 31,174,763.79 | ||
| Total | 66,743,168.66 | 66,743,168.66 | 54,946,300.66 | 54,946,300.66 | ||
(2). Changes in important construction in progress projects in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Items | Budget | At the beginning of the period Balance | Increase amount of the current period | Amount of fixed assets transferred in the current period | Other decrease amounts in the current period | At the end of the period Balance | Proportion of cumulative investment in the project to the budget (%) | Progress of works | Accumulated amount of interest capitalization | Including: Amount of interest capitalization in the current period | Interest capitalization rate (%) in the current period | Source of fund |
| Fixed assets not yet installed and put into use | 23,771,536.87 | 132,578,134.28 | 117,718,027.07 | 232,193.69 | 38,399,450.39 | Self-owned capital | ||||||
| Others | 31,174,763.79 | 129,476,402.11 | 71,605,976.84 | 60,701,470.79 | 28,343,718.27 | Self-owned capital | ||||||
| Total | 54,946,300.66 | 262,054,536.39 | 189,324,003.91 | 60,933,664.48 | 66,743,168.66 | / | / | / | / |
Other descriptions:
Other decreases were mainly caused by the transfer of the renovation project of the office buildingof Rafael Cloud Gallery from the construction in progress into the long-term deferred expenses this year.
(3). Particulars on impairment provisions accrued for construction in progress in the current
period
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
Engineering materials
(1). Particulars on engineering materials
□ Applicable √ Not applicable
23. Productive biological assets
(1). Productive biological assets using cost measurement model
□ Applicable √ Not applicable
(2). Productive biological assets using fair value measurement model
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
24. Oil and gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Property and buildings | Transportation vehicles | Total |
| I. Original carrying value | |||
| 1. Balance at the beginning of the period | 327,386,662.94 | 327,386,662.94 | |
| 2. Increase amount of the current period | 219,326,092.81 | 1,515,510.36 | 220,841,603.17 |
| (1) New leases | 194,417,049.77 | 194,417,049.77 | |
| (2) Increase for business combination | 17,868,814.10 | 1,562,651.03 | 19,431,465.13 |
| (3) Revaluation adjustment | 7,579,279.47 | 7,579,279.47 | |
| (4) Translation difference of foreign-currency statements | -539,050.53 | -47,140.67 | -586,191.20 |
| 3. Decrease amount of the current period | 7,725,998.46 | 7,725,998.46 | |
| (1) Transfer out to fixed assets | |||
| (2) Disposal | 7,725,998.46 | 7,725,998.46 | |
| 4. Balance at the end of the period | 538,986,757.29 | 1,515,510.36 | 540,502,267.65 |
| II. Accumulated depreciation | |||
| 1. Balance at the beginning of the period | |||
| 2. Increase amount of the current period | 184,342,982.85 | 899,358.68 | 185,242,341.53 |
| (1) Accrual | 175,459,658.67 | 134,244.98 | 175,593,903.65 |
| (2) Increase for business combination | 9,159,644.20 | 788,912.92 | 9,948,557.12 |
| (3) Translation difference of foreign-currency statements | -276,320.02 | -23,799.22 | -300,119.24 |
| 3. Decrease amount of the current period | 2,280,187.22 | 2,280,187.22 | |
| (1) Disposal | 2,280,187.22 | 2,280,187.22 | |
| (2) Transfer out to fixed assets | |||
| 4. Balance at the end of the period | 182,062,795.63 | 899,358.68 | 182,962,154.31 |
| III. Impairment provisions | |||
| 1. Balance at the beginning of the period | |||
| 2. Increase amount of the current period | |||
| (1) Accrual | |||
| (2) Increase for business combination | |||
| 3. Decrease amount of the current period | |||
| (1) Disposal | |||
| (2) Transfer out to fixed assets | |||
| 4. Balance at the end of the period | |||
| IV. Carrying value | |||
| 1. Carrying value at the end of the period | 356,923,961.66 | 616,151.68 | 357,540,113.34 |
| 2. Carrying value at the beginning of the period | 327,386,662.94 | 327,386,662.94 | |
Other descriptions:
No
26. Intangible assets
(1). Particulars on intangible assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Land use rights | Patent right | Unpatented technology | Image identification rights | Trademark use rights | Software | Others | Total |
| I. Original carrying value | ||||||||
| 1. Balance at the beginning of the period | 338,919,937.61 | 13,175,147.06 | 93,989.00 | 36,189,394.22 | 2,090,716.14 | 390,469,184.03 | ||
| 2. Increase amount of the current period | 1,745,520.70 | 102,215,584.37 | 6,668,633.60 | 33,567,059.53 | 144,196,798.20 | |||
| (1) Acquisition | 1,745,520.70 | 34,095.91 | 3,472,469.42 | 5,252,086.03 | ||||
| (2) Internal R&D | ||||||||
| (3) Transfer-in from construction in progress | 1,077,742.55 | 1,077,742.55 | ||||||
| (4) Increase for business combination | 102,181,488.46 | 2,118,421.63 | 33,567,059.53 | 137,866,969.62 | ||||
| 3. Decrease amount of the current period | 2,870,522.26 | 2,630,588.81 | 5,211,427.95 | 10,712,539.02 | ||||
| (1) Disposal | 2,424,213.17 | 5,147,521.29 | 7,571,734.46 | |||||
| (2) Invalid and derecognized portion | ||||||||
| (3) Translation difference of foreign-currency statements | 446,309.09 | 2,630,588.81 | 63,906.66 | 3,140,804.56 | ||||
| 4. Balance at the end of the period | 336,049,415.35 | 14,920,667.76 | 93,989.00 | 99,584,995.56 | 37,646,599.87 | 35,657,775.67 | 523,953,443.21 | |
| II. Accumulative amortization | ||||||||
| 1. Balance at the beginning of the period | 43,068,683.59 | 4,132,625.91 | 93,989.00 | 20,906,939.22 | 1,520,617.71 | 69,722,855.43 | ||
| 2. Increase amount of the current period | 7,273,080.92 | 884,670.16 | 7,636,173.77 | 5,446,581.71 | 2,589,994.12 | 23,830,500.68 | ||
| (1) Accruing | 7,273,080.92 | 884,670.16 | - | 786,748.54 | 4,520,797.86 | 2,589,994.12 | 16,055,291.60 | |
| (2) Increase for business combination | - | 7,062,479.85 | 954,580.77 | 8,017,060.62 | ||||
| (3) Translation difference of foreign-currency statements | - | -213,054.62 | -28,796.92 | -241,851.54 | ||||
| 3. Decrease amount of the current period | 580,542.42 | 3,867,509.17 | 4,448,051.59 | |||||
| (1) Disposal | 580,542.42 | 3,867,509.17 | 4,448,051.59 | |||||
| 4. Balance at the end of the period | 49,761,222.09 | 5,017,296.07 | 93,989.00 | 7,636,173.77 | 22,486,011.76 | 4,110,611.83 | 89,105,304.52 | |
| III. Impairment provisions | ||||||||
| 1. Balance at the beginning of the period | ||||||||
| 2. Increase amount of the current period | ||||||||
| (1) Accruing | ||||||||
| 3. Decrease amount of the current period | ||||||||
| (1) Disposal | ||||||||
| 4. Balance at the end of the period | ||||||||
| IV. Carrying value | ||||||||
| 1. Carrying value at the end of the period | 286,288,193.27 | 9,903,371.69 | 91,948,821.79 | 15,160,588.11 | 31,547,163.84 | 434,848,138.70 | ||
| 2. Carrying value at the beginning of the period | 295,851,254.02 | 9,042,521.15 | 15,282,455.00 | 570,098.43 | 320,746,328.60 | |||
The proportion of intangible assets formed by the Company's internal R&D at the end of the current periodin the balance of intangible assets was 0
(2). Particulars on use rights of land of which the property ownership certificates have not been
obtained
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
27. Development expenses
□ Applicable √ Not applicable
28. Goodwill
(1). Original carrying value of goodwill
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of invested company or event forming goodwill | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | ||
| Formed due to business combination | Others | Disposal | Others | |||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 131,001.23 | 131,001.23 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 30,175,537.19 | ||||
| Beckmann Holding AS | 63,529,740.20 | 63,529,740.20 | ||||
| Total | 30,306,538.42 | 63,529,740.20 | 93,836,278.62 | |||
(2). Impairment provisions of goodwill
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of invested company or event forming goodwill | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | ||
| Accrued | Others | Disposal | Others | |||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 131,001.23 | 131,001.23 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 30,175,537.19 | ||||
| Total | 30,306,538.42 | 30,306,538.42 | ||||
(3). Information regarding the asset group or the combination of asset groups to which goodwillbelongs
√ Applicable □ Not applicable
| Name of asset group | Carrying value of goodwill attributable to shareholders of the parent company | Carrying value of goodwill attributable to minority shareholders | Total carrying value of goodwill | Carrying value of other assets in the asset group or the combination of asset groups | Carrying value of the asset group or the combination of asset groups including goodwill | Whether the asset group has changed |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 131,001.23 | 125,863.93 | 256,865.16 | 603,635.03 | 860,500.19 | No |
| Axus Stationery (Shanghai) Company Ltd. | 30,175,537.19 | 23,709,350.65 | 53,884,887.84 | 360,477,156.53 | 414,362,044.37 | No |
| Beckmann Holding AS | 63,529,740.20 | 5,977,634.20 | 69,507,374.40 | 116,203,844.26 | 185,711,218.66 | No |
(4). Describe the goodwill impairment test process, key parameters (such as growth rate in theforecast period, growth rate in the stable period, profit margin, discount rate, forecast period,etc. when estimating the present value of the estimated future cash flow, if applicable) and therecognition of impairment losses of goodwill
√ Applicable □ Not applicable
Unit: RMB 0'000
| Name of asset group | Key parameter | Present value of estimated future cash flow | Amount of goodwill impairment provisions | |||
| Forecast period | Growth rate in the steady period | Profit margin | Discount rate (weighted average cost of capital WACC) | |||
| Beckmann Holding AS | 2022-2025 | 1.5% | Calculated according to predicted income, costs, expenses, etc. | 10% after tax | 26,043.55 | |
(5). Effect of goodwill impairment test
√ Applicable □ Not applicable
For the current year, the Company hired KPMG Asset Appraisal (Shanghai) Co., Ltd. to issue theAsset Appraisal Report on the Recoverable Amount of Goodwill Asset Groups of Back to School HoldingAS (Beckmann) Involved in the Goodwill Impairment Test Carried out by Shanghai M&G Stationery Inc.for the Purpose of Financial Reporting with the report number of KPMG Ping Bao Zi [2022] No.005 on25 March 2022. According to the appraisal results, as of 31 December 2021, the carrying value of the asstgroup or the combination of asset groups including goodwill of Beckmann acquired by the Company wasRMB185,711,200, and the recoverable amount was RMB260,435,500; after the test, there was noimpairment risk in the goodwill formed by the Company's acquisition of Beckmann.
Other descriptions
□ Applicable √ Not applicable
29. Long-term prepaid expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase amount of the current period | Amortization amount of the current period | Other decrease amounts | Closing balance |
| Decoration fee | 97,168,999.11 | 110,534,370.70 | 59,115,340.02 | 398,773.20 | 148,189,256.59 |
| Others | 1,866,853.67 | 14,227,274.45 | 2,075,603.87 | 953.38 | 14,017,570.87 |
| Total | 99,035,852.78 | 124,761,645.15 | 61,190,943.89 | 399,726.58 | 162,206,827.46 |
Other descriptions:
No
30. Deferred income tax assets/Deferred income tax liabilities
(1). Unoffset deferred income tax assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax Assets | Deductible temporary differences | Deferred income tax Assets | |
| Impairment provisions of assets | 85,392,119.05 | 20,785,685.43 | 62,830,410.42 | 15,736,764.19 |
| Unrealized profits from internal transactions | 145,744,676.94 | 24,173,424.79 | 128,331,275.32 | 19,493,583.59 |
| Deductible losses | 15,475,765.74 | 3,868,941.44 | ||
| Cash flow hedging | 147,570.52 | 32,465.51 | ||
| Deferred income | 46,648,325.34 | 9,004,394.46 | 43,408,616.60 | 8,510,440.37 |
| Depreciation or amortization difference | 161,342,324.44 | 40,345,663.12 | 88,272,113.20 | 22,068,028.30 |
| Time difference in revenue recognition | 58,634,241.79 | 14,658,560.45 | 1,591,710.76 | 397,927.68 |
| New lease standards | 82,821,125.87 | 19,804,926.97 | ||
| Difference between the expected pre-tax deductible amount of equity incentive expenses during the waiting period and the fair value of the stock at the date of grant | 39,095,966.44 | 6,354,110.72 | 101,643,345.93 | 16,511,152.05 |
| Equity incentive | 114,806,434.60 | 18,697,069.05 | 82,199,024.88 | 13,352,576.96 |
| Total | 734,632,785.00 | 153,856,300.50 | 523,752,262.85 | 99,939,414.58 |
(2). Unoffset deferred income tax liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax Liabilities | Taxable temporary differences | Deferred income tax Liabilities | |
| Assets appreciation for business combination not under the common control | 207,741,970.29 | 38,990,035.12 | 175,784,995.89 | 31,652,101.70 |
| Changes in fair value of other debt investments | ||||
| Changes in fair value of other equity instrument investments | 3,145,402.14 | 471,810.32 | 1,876,577.42 | 281,486.61 |
| Depreciation or amortization difference | 76,696,943.59 | 16,873,327.59 | ||
| Time difference in cost recognition | 52,613,962.26 | 13,223,117.61 | ||
| Changes in right-of-use assets | 90,676,436.99 | 21,672,861.34 | ||
| Changes in fair value of trading financial assets | 9,123,552.86 | 1,434,785.40 | 28,277,848.33 | 4,847,480.94 |
| Total | 439,998,268.13 | 92,665,937.38 | 205,939,421.64 | 36,781,069.25 |
(3). Deferred income tax assets or liabilities presented on a net basis after offsetting
□ Applicable √ Not applicable
(4). Details of unrecognized deferred income tax assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 359,740,315.61 | 62,196,722.99 |
| Deductible losses | 424,942,206.24 | 351,596,864.50 |
| Total | 784,682,521.85 | 413,793,587.49 |
(5). The deductible losses of unrecognized deferred income tax assets will expire in the followingyears
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Year | Amount at the end of the period | Amount at the beginning of the period | Note |
| 2026 | 119,865,224.32 | ||
| 2025 | 136,486,913.76 | 118,026,277.48 | |
| 2024 | 55,928,624.13 | 61,116,333.17 | |
| 2023 | 96,680,220.71 | 110,708,628.54 | |
| 2022 | 15,981,223.32 | 35,828,658.63 | |
| 2021 | 25,916,966.68 | ||
| Total | 424,942,206.24 | 351,596,864.50 | / |
Other descriptions:
□ Applicable √ Not applicable
31. Other non-current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Contract acquisition cost | ||||||
| Contract performance cost | ||||||
| Receivable return cost | ||||||
| Contract assets | ||||||
| Prepayments for real estate, engineering, equipment, etc. | 8,543,306.18 | 8,543,306.18 | 6,258,468.47 | 6,258,468.47 | ||
| Total | 8,543,306.18 | 8,543,306.18 | 6,258,468.47 | 6,258,468.47 | ||
Other descriptions:
No
32. Short-term borrowings
(1). Classification of short-term borrowings
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Pledged borrowings | 166,063,550.00 | 180,000,000.00 |
| Mortgaged borrowings | ||
| Guaranteed borrowings | ||
| Credit borrowings | 10,676,127.66 | |
| Borrowing interest expenses | 3,185,892.63 | 176,000.00 |
| Total | 179,925,570.29 | 180,176,000.00 |
Description on classification of short-term borrowings:
See 1. Important commitments under Note XIV. Commitments and Contingencies.
(2). Particulars on overdue but yet unrepaid short-term borrowings
□ Applicable √ Not applicable
Particulars of important overdue but yet unrepaid short-term borrowings:
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
33. Held-for-trading financial liabilities
□ Applicable √ Not applicable
34. Derivative financial liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Foreign exchange derivatives - Cash flow hedging | 147,570.52 | |
| Total | 147,570.52 |
Other descriptions:
No
35. Bills payable
(1). Presentation of notes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Type | Closing balance | Opening balance |
| Commercial acceptance bills | ||
| Bank acceptance bills | 172,167.42 | |
| Total | 172,167.42 |
At the end of the period, the total amount of expired but unpaid bills payable was RMB0.
36. Accounts payable
(1). Presentation of accounts payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Within 1 year | 2,780,630,084.87 | 2,552,911,388.83 |
| 1 to 2 years | 27,551,065.81 | 46,850,996.73 |
| 2 to 3 years | 1,215,988.70 | 1,389,918.08 |
| Above 3 years | 196,302.04 | 868,204.35 |
| Total | 2,809,593,441.42 | 2,602,020,507.99 |
(2). Accounts payable with the account age over one year
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
37. Accounts received in advance
(1). Presentation of advance received from customers
□ Applicable √ Not applicable
(2). Significant advance received from customers with the account age over one year
□ Applicable √ Not applicable
Other descriptions
□ Applicable √ Not applicable
38. Contract liabilities
(1). Particulars on contract liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Loans | 118,419,358.01 | 107,856,804.87 |
| Membership points | 14,057,291.44 | 2,701,304.36 |
| Vouchers | 14,108,591.36 | 3,541,926.12 |
| Total | 146,585,240.81 | 114,100,035.35 |
(2). Amount of and reason for significant changes in carrying value during the Reporting Period
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
39. Employee benefits payable
(1). Presentation of employee benefits payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| I. Short-term benefits | 145,779,153.22 | 909,800,804.26 | 872,883,888.11 | 182,696,069.37 |
| II. Post-employment benefits - Defined contribution plans | 6,248,465.67 | 94,056,554.96 | 91,865,706.74 | 8,439,313.89 |
| III. Termination benefits | 597,488.00 | 3,194,307.07 | 3,623,795.07 | 168,000.00 |
| IV. Other benefits due within one year | ||||
| Total | 152,625,106.89 | 1,007,051,666.29 | 968,373,389.92 | 191,303,383.26 |
(2). Presentation of short-term benefits
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| I. Salary, bonus, allowance and subsidy | 137,387,024.38 | 789,636,241.79 | 754,079,338.19 | 172,943,927.98 |
| II. Employee benefits | 32,733.33 | 26,520,750.27 | 26,553,483.60 | |
| III. Social insurance | 3,740,523.10 | 60,327,424.07 | 59,641,487.13 | 4,426,460.04 |
| Including: Medical insurance | 3,618,360.04 | 57,728,721.67 | 57,087,339.18 | 4,259,742.53 |
| Work-related injury insurance | 112,453.87 | 2,115,772.34 | 2,061,880.60 | 166,345.61 |
| Maternity insurance | 9,709.19 | 482,930.06 | 492,267.35 | 371.90 |
| IV. Housing provident fund | 2,762,792.89 | 28,298,583.39 | 27,921,933.39 | 3,139,442.89 |
| V. Labor union and employee education funds | 1,853,920.06 | 342,864.78 | 1,648,367.98 | 548,416.86 |
| VI. Short-term compensated absences | 3,602,981.96 | 2,446,795.85 | 1,156,186.11 | |
| VII. Short-term profit sharing plan | ||||
| VIII. Other short-term benefits | 2,159.46 | 1,071,958.01 | 592,481.98 | 481,635.49 |
| Total | 145,779,153.22 | 909,800,804.26 | 872,883,888.11 | 182,696,069.37 |
(3). Presentation of defined contribution plans
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| 1. Basic pension | 6,114,341.66 | 91,166,091.60 | 89,040,778.59 | 8,239,654.67 |
| 2. Unemployment insurance | 134,124.01 | 2,890,463.36 | 2,824,928.15 | 199,659.22 |
| 3. Enterprise annuity payment | ||||
| Total | 6,248,465.67 | 94,056,554.96 | 91,865,706.74 | 8,439,313.89 |
Other descriptions:
□ Applicable √ Not applicable
40. Taxes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Value added tax ("VAT") | 167,980,268.23 | 223,026,940.44 |
| Consumption tax | ||
| Business tax | ||
| Enterprise income tax | 140,981,979.46 | 217,311,562.20 |
| Personnel income tax | 12,603,584.91 | 9,161,957.00 |
| Urban maintenance and construction tax | 9,921,562.52 | 7,416,779.26 |
| Property tax | 1,098,726.57 | 290,044.29 |
| Education surcharge | 8,657,921.31 | 10,972,177.74 |
| Land use tax | 1,531,862.63 | 1,539,806.37 |
| Stamp duty | 10,420,464.12 | 7,505,424.40 |
| Others | 32,557.82 | 15,527.40 |
| Total | 353,228,927.57 | 477,240,219.10 |
Other descriptions:
No
41. Other payables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest payable | ||
| Dividend payable | ||
| Other payables | 593,242,385.96 | 625,468,675.97 |
| Total | 593,242,385.96 | 625,468,675.97 |
Other descriptions:
□ Applicable √ Not applicable
Interest payable
(1). Presentation by category
□ Applicable √ Not applicable
Dividend payable
(1). Presentation by category
□ Applicable √ Not applicable
Other payables
(1). Other payables presented by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Margin and deposit | 175,505,357.38 | 161,138,624.45 |
| Repurchase obligations of restricted stocks | 146,656,903.00 | 176,034,120.00 |
| Product license fee | 1,199,000.00 | 1,860,000.00 |
| Estimated fees | 206,667,320.59 | 189,127,390.60 |
| Engineering and decoration fund | 21,964,400.63 | 75,577,971.07 |
| Others | 41,249,404.36 | 21,730,569.85 |
| Total | 593,242,385.96 | 625,468,675.97 |
(2). Other payables with the account age over one year
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
42. Held-for-sale liabilities
□ Applicable √ Not applicable
43. Non-current liabilities due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year | 10,128,047.46 | |
| Bonds payable due within one year | ||
| Long-term payables due within one year | ||
| Lease liabilities due within one year | 168,483,555.19 | 130,704,827.15 |
| Total | 178,611,602.65 | 130,704,827.15 |
Other descriptions:
For details of the classification of long-term borrowings due within one year, see 1. Importantcommitments under Note XIV. Commitments and Contingencies.
44. Other current liabilities
Particulars on other current liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Short-term bonds payable | ||
| Return amount payable | 61,407,275.43 | |
| Output tax to be written off | 14,095,441.07 | 13,746,089.97 |
| Receivables that cannot be derecognized | 15,372,805.47 | |
| Total | 90,875,521.97 | 13,746,089.97 |
Changes in short-term bonds payable:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
45. Long-term borrowings
(1). Classification of long-term borrowings
□ Applicable √ Not applicable
Other descriptions, including interest rate ranges:
□ Applicable √ Not applicable
46. Bonds payable
(1). Bonds payable
□ Applicable √ Not applicable
(2). Changes in bonds payable: (excluding other financial instruments such as preferred sharesclassified as financial liabilities and perpetual bonds)
□ Applicable √ Not applicable
(3). Description on the conversion conditions and conversion time of convertible corporate bonds
□ Applicable √ Not applicable
(4). Description on other financial instruments classified as financial liabilitiesBasic information on other financial instruments such as outstanding preferred shares and perpetual bondsat the end of the period
□ Applicable √ Not applicable
Form of changes in financial instruments such as outstanding preferred shares and perpetual bonds at theend of the period
□ Applicable √ Not applicable
Description on the basis for classification of other financial instruments as financial liabilities:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
47. Lease liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Long-term lease liabilities | 341,407,721.40 | 307,325,185.80 |
| Less: Lease liabilities due within one year | -168,483,555.19 | -130,704,827.15 |
| Total | 172,924,166.21 | 176,620,358.65 |
Other descriptions:
No
48. Long-term payables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Long-term payable | ||
| Special payables | 8,420,000.00 | 8,420,000.00 |
| Total | 8,420,000.00 | 8,420,000.00 |
Other descriptions:
□ Applicable √ Not applicable
Long-term payable
(1). Long-term payables presented by amount nature
□ Applicable √ Not applicable
Special payables
(1). Special payables presented by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | Cause of formation |
| New environment-friendly pen-making material project belonging to key special projects for improvement and industrialization of key basic materials under the national key R&D plan | 8,420,000.00 | 8,420,000.00 | |||
| Total | 8,420,000.00 | 8,420,000.00 | / |
Other descriptions:
No
49. Long-term employee benefits payable
□ Applicable √ Not applicable
50. Estimated liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Closing balance | Cause of formation |
| External guarantee | |||
| Pending litigation | |||
| Product quality assurance | |||
| Restructuring obligations | |||
| Onerous contract to be implemented | |||
| Return amount payable | 12,211,357.80 | ||
| Others | |||
| Repurchase obligations | 35,311,258.55 | ||
| Total | 12,211,357.80 | 35,311,258.55 | / |
Other descriptions, including descriptions on important assumptions and estimates related to importantestimated liabilities:
The Company acquired a 91.4% stake in Back to School Holding AS on 1 September 2021. Pursuantto the Shareholder Agreement signed by and between the Company and the Minority Shareholders, afterthe date of approval of the 2023 financial report by Back to School Holding AS or 31 March 2024,whichever is earlier (the "Exercise Date"), the Company shall have the option to purchase the shares heldby the minority shareholders, and the minority shareholders shall have the option to sell the shares heldby them to the Company or Back to School Holding AS.
51. Deferred income
Particulars on deferred income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | Cause of formation |
| Government subsidies | 46,132,513.40 | 8,650,000.00 | 6,692,948.64 | 48,089,564.76 | |
| Total | 46,132,513.40 | 8,650,000.00 | 6,692,948.64 | 48,089,564.76 | / |
Items involving government subsidies:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Liability items | Opening balance | Subsidy amount increased in the current period | Amount included in non-operating income of the current period | Amount included in other income of the current period | Other changes | Closing balance | Related to assets/income |
| 2015 Informatization Development Project - Data Sharing-based VOS Enterprise Management Cloud Collaboration Platform | 1,400,581.20 | 259,709.40 | 1,140,871.80 | Pertinent to assets | |||
| 2015 Key Technical Transformation Project - Technical Transformation of M&G Stationery Automated Assembly Production Technology Application | 3,137,154.33 | 561,878.28 | 2,575,276.05 | Pertinent to assets | |||
| 2016 Industrial Transformation and Upgrading Development Project - Machine Vision-based Detection Technology Development and Its Application in Pen Industry - EIT2016 | 1,707,483.68 | 296,953.68 | 1,410,530.00 | Pertinent to assets | |||
| 2016 Cultural and Creative Project - M&G Youpin - High Value-Added Creative Product Development Project | 138,421.73 | 29,437.44 | 108,984.29 | Pertinent to assets | |||
| 2014 Service Industry Guiding Fund - M&G Life Project based on Intelligent Network Management and Control | 1,465,747.85 | 328,891.68 | 1,136,856.17 | Pertinent to assets | |||
| 2014 Special Fund to Encourage the Purchase of International Advanced R&D Instruments and Equipment - R&D of Key Materials and Preparation Technologies in the Pen-making Industry - Project of Introducing MIKRON Multistar LX-24 Station Combination Machine Tools | 435,000.00 | 174,000.00 | 261,000.00 | Pertinent to assets | |||
| 2015 Cultural and Creative Project - Inbound Marketing - Internet + Product Development Model Innovation Project | 472,408.64 | 107,310.24 | 365,098.40 | Pertinent to assets | |||
| Science & Technology Projects of the 12th Five-Year Plan | 477,316.57 | 244,646.88 | 232,669.69 | Pertinent to assets | |||
| Improvement of Capability of Shanghai Engineering Technology Research Center - EC2017 | 1,000,000.00 | 590,711.49 | 409,288.51 | Pertinent to assets | |||
| 2010-2011 Shanghai Characteristic Industry Small and Medium-Sized Enterprise Development Fund Project - R&D Technology Transformation of New Material Series for "Writing Creativity" Writing Instruments | 25,676.29 | 25,676.29 | Pertinent to assets | ||||
| 2012 Comprehensive Pilot of Modern Service Industry - Network Platform Expansion and Upgrade Project | 8,736,231.51 | 672,017.88 | 8,064,213.63 | Pertinent to assets | |||
| 2014 Absorption and Innovation Project - R&D and Industrialization Project of New Needle Spring Pen Tips | 439,330.47 | 90,443.52 | 348,886.95 | Pertinent to assets | |||
| Subsidies for injection molding machine intelligent equipment | 570,000.00 | 72,488.12 | 497,511.88 | Pertinent to assets | |||
| 2013 Special Fund for Key Technological Renovation | 1,611,785.55 | 586,104.12 | 1,025,681.43 | Pertinent to assets | |||
| Cultural and Creative Project | 700,000.00 | 700,000.00 | Pertinent to assets | ||||
| Academician Expert Workstation | 100,000.00 | 100,000.00 | Pertinent to assets | ||||
| Special Funds for Shanghai Writing Instrument Engineering Technology Research Center | 1,000,000.00 | 1,000,000.00 | Pertinent to assets | ||||
| Development of New Environmentally Friendly Materials and Intelligent Manufacturing Technology for Writing Instruments/TLP2021 | 400,000.00 | 400,000.00 | Pertinent to assets | ||||
| Special Funds for Shanghai Manufacturing Brand Project | 7,500,000.00 | 7,500,000.00 | Pertinent to assets | ||||
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of "Green Design - Innovative R&D" by Marco Colorful Painting Pen C1085 | 1,188,615.97 | 174,080.64 | 1,014,535.33 | Pertinent to assets | |||
| Special Fund Plan for Key Technological Renovation Projects in Qingpu District in 2012 | 280,333.26 | 116,000.04 | 164,333.22 | Pertinent to assets | |||
| Construction Project of "Marco-Color-Source" Creative Experience Center | 312,370.91 | 50,000.04 | 262,370.87 | Pertinent to assets |
| Special Funds for Central Foreign Economic and Trade Development | 662,576.66 | 662,576.66 | Pertinent to assets | ||||
| Subsidies for Boiler Retrofit | 280,000.00 | 280,000.00 | Pertinent to assets | ||||
| Special Funds for Development of SMEs in Shanghai in 2016 | 76,470.66 | 49,274.85 | 27,195.81 | Pertinent to assets | |||
| Subsidies for Internet Projects | 905,008.12 | 156,197.15 | 748,810.97 | Pertinent to assets | |||
| Special Funds for Development of Modern Service Industry | 750,000.00 | 750,000.00 | 464,550.24 | 1,035,449.76 | Pertinent to assets | ||
| Special Development Funds for Enterprises | 18,260,000.00 | 18,260,000.00 | Pertinent to assets | ||||
| Total | 46,132,513.40 | 8,650,000.00 | 6,692,948.64 | 48,089,564.76 |
Other descriptions:
□ Applicable √ Not applicable
52. Other non-current liabilities
□ Applicable √ Not applicable
53. Share capital
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Opening balance | Increase or decrease (+ or -) due to this change | Closing balance | |||||
| Issue New shares | Bonus shares | Provident funds Transferred shares | Others | Subtotal | |||
| Total shares | 927,427,600.00 | 689,400.00 | -371,410.00 | 317,990.00 | 927,745,590.00 | ||
Other descriptions:
(1) At the 7th meeting of the 5th session of the Board of Directors and the 6th meeting of the 5thsession of the Board of Supervisors held by the Company on 29 April 2021, the Proposal on GrantingReserved Restricted Stocks to Incentive Objects of the 2020 Restricted Stock Incentive Plan was consideredand approved. According to the Proposal, 6,894,000,000 shares were granted to 119 incentive objects, andthe grant price per share was RMB45.03; the capital increase actually received from the incentive objectswas RMB31,043,682.00, of which the share capital increased by RMB689,400 and the capital reserveincreased by RMB30,354,282.00;
(2) At the 5th meeting of the 5th session of Board of Directors and the 4th meeting of the 5th sessionof Board of Supervisors held on 26 March 2021, the Proposal on Repurchase and Cancellation of SomeRestricted Shares was considered and approved. The number of shares repurchased and cancelled was371,410 shares, and the repurchase price was RMB23.70.
54. Other equity instruments
(1). Basic information on other financial instruments such as outstanding preferred shares and
perpetual bonds at the end of the period
□ Applicable √ Not applicable
(2). Form of changes in financial instruments such as outstanding preferred shares and perpetual
bonds at the end of the period
□ Applicable √ Not applicable
Changes in other equity instruments of the current period, reasons for changes, and basis for relevantaccounting treatment:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
55. Capital reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Capital premium (Share premium) | 440,954,284.53 | 162,724,646.30 | 259,469,119.80 | 344,209,811.03 |
| Other capital reserve | 92,429,847.13 | 68,666,969.63 | 51,119,837.00 | 109,976,979.76 |
| Total | 533,384,131.66 | 231,391,615.93 | 310,588,956.80 | 454,186,790.79 |
Other descriptions, including descriptions on changes of the current period and reasons for changes:
1. Increase or decrease in capital premium for the current year:
(1) As stated in Note VII (53), the capital reserve was increased by RMB30,354,282.00 due to theissuance of restricted stocks;
(2) As stated in Note VII (53), the capital reserve was decreased by RMB8,278,752.00 due to therepurchase of shares;
(3) Due to the release of the restrictions on some restricted stocks, the equity incentive expenses forsuch stocks were adjusted from other capital reserves to the capital premium, resulting in an increase ofRMB51,119,837.00;
(4) The capital reserve increased by RMB6,583,260.99 due to the subsidiary's recognition of theequity incentive expenses for the waiting period for the Company's implementation of the restricted stockincentive plan in accordance with the relevant resolutions;
(5) The capital reserve decreased by RMB215,879,109.27 due to the further acquisition of minorityshareholders' equity of M&G Life Enterprise Management Co., Ltd. as a subsidiary;
(6) As stated in Note VII (50), due to the Company's obligation to repurchase equities in the processof acquiring Back to School Holding AS, the capital reserve of RMB35,311,258.55 was written off whenthe liabilities were recognized;
(7) The capital reserve increased by RMB73,704,828.72 due to the sale of part of the equity of JiumuM&G Store Enterprise Management Co., Ltd. by the Company's subsidiaries;
(8) The corresponding proportion of capital reserve increased by RMB962,437.59 due to changes inother capital reserves of the Company's subsidiaries.
2. Increase or decrease in other capital reserves for the current year:
(1) The capital reserve increased by RMB68,319,695.36 due to the Company's recognition of theequity incentive expenses for the waiting period for the Company's implementation of the restricted stockincentive plan in accordance with the relevant resolutions;
(2) Due to the release of the restrictions on some restricted stocks, the equity incentive expenses forsuch stocks were adjusted from other capital reserves to the capital premium, resulting in a decrease ofRMB51,119,837.00;
(3) The capital reserve increased by RMB347,274.27 due to the recognition of the difference betweenthe estimated pre-tax deductible amount of equity incentive expenses during the waiting period and thefair value of the stock on the date of grant as deferred income tax assets for the implementation of therestricted stock incentive plan in accordance with the relevant resolutions of the Company.
56. Treasury shares
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Repurchase of restricted stocks | 176,034,120.00 | 31,043,682.00 | 58,971,328.00 | 148,106,474.00 |
| Total | 176,034,120.00 | 31,043,682.00 | 58,971,328.00 | 148,106,474.00 |
Other descriptions, including descriptions on changes of the current period and reasons for changes:
(1) As stated in Note VII (53), the repurchase obligations increased by RMB31,043,682.00 due to theissuance of restricted stocks;
(2) The repurchase obligations decreased by RMB58,971,328.00 due to the release of the restrictionson and the repurchase of some restricted stocks issued by the Company.
57. Other comprehensive income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | At the beginning of the period Balance | Amount accounted for in the current period | At the end of the period Balance | |||||
| Amount incurred before income tax for the current period | Less: Included in other comprehensive income in the previous period and transferred to profit or loss in the current period | Less: Included in other comprehensive income in the previous period and transferred to retained earnings in the current period | Less: Income tax expenses | Attributable to the parent company after the tax | Attributable to minority shareholders after the tax | |||
| I. Other comprehensive income not to be reclassified into profit or loss | 2,333,242.35 | 1,686,645.00 | 190,323.71 | 1,496,321.29 | 3,829,563.64 | |||
| Including: Change in re-measurement of defined benefit plans | ||||||||
| Other comprehensive income that may not be reclassified to profit or loss under equity method | 738,151.54 | 417,820.28 | 417,820.28 | 1,155,971.82 | ||||
| Changes in fair value of other equity instrument investments | 1,595,090.81 | 1,268,824.72 | 190,323.71 | 1,078,501.01 | 2,673,591.82 | |||
| Change in fair value of enterprise's own credit risk | ||||||||
| II. Other comprehensive income to be reclassified into profit or loss | -191,839.87 | -3,786,554.68 | -3,373,681.63 | -412,873.05 | -3,565,521.50 | |||
| Including: Other comprehensive income that may be reclassified to profit or loss under equity method | -4,211.14 | 378.25 | 378.25 | -3,832.89 | ||||
| Changes in fair value of other debt investments | ||||||||
| Amount included in other comprehensive income on reclassification of financial assets | ||||||||
| Credit impairment provisions of other debt investments | ||||||||
| Cash flow hedging reserve | 118,924.18 | 108,696.70 | 10,227.48 | 108,696.70 | ||||
| Exchange differences from translation of financial statements | -187,628.73 | -3,905,857.11 | -3,482,756.58 | -423,100.53 | -3,670,385.31 | |||
| Total other comprehensive income | 2,141,402.48 | -2,099,909.68 | 190,323.71 | -1,877,360.34 | -412,873.05 | 264,042.14 | ||
Other descriptions, including the adjustment of the effective portion of cash flow hedging profit or losstransferred to the initial recognition amount of the hedged item:
No
58. Special reserve
□ Applicable √ Not applicable
59. Surplus reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Opening balance | Increase of the current period | Decrease of the current period | Closing balance |
| Statutory surplus reserve | 464,042,659.91 | 158,995.00 | 464,201,654.91 | |
| Arbitrary surplus reserve | ||||
| Reserve fund | ||||
| Enterprise development fund | ||||
| Others | ||||
| Total | 464,042,659.91 | 158,995.00 | 464,201,654.91 |
Descriptions on surplus reserve, including descriptions on changes of the current period and reasons forchanges:
The statutory surplus reserve is accrued at 10% of the parent company's net profits and is capped at50% of the share capital.
60. Undistributed profit
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Current period | Previous period |
| Pre-adjustment undistributed profits at the end of the previous period | 3,442,607,038.00 | 2,568,365,861.32 |
| Total adjustment amount of undistributed profits at the beginning of the period ("+" refers to increase by adjustment and "-" refers to decrease by adjustment) | 10,596,781.73 | |
| Post-adjustment amount of undistributed profits at the beginning of the period | 3,442,607,038.00 | 2,578,962,643.05 |
| Add: Net profit attributable to shareholders of the parent company in the current period | 1,517,866,131.16 | 1,255,426,655.27 |
| Less: Statutory surplus reserve accrued | 158,995.00 | 23,782,260.32 |
| Arbitrary surplus reserve accrued | ||
| Withdrawal of general risk provision | ||
| Dividends on common shares payable | 463,713,800.00 | 368,000,000.00 |
| Dividends on common shares converted to stock capital |
| Undistributed profit at the end of the period | 4,496,600,374.16 | 3,442,607,038.00 |
Details on adjustment of undistributed profits at the beginning of the period:
1. Due to the retrospective adjustment based on the Accounting Standards for Business Enterprisesand their related new regulations, the affected undistributed profit at the beginning of the period wasRMB0.
2. Due to changes in accounting policies, the affected undistributed profit at the beginning of theperiod was RMB0.
3. Due to correction of major accounting errors, the affected undistributed profit at the beginning ofthe period was RMB0.
4. Due to changes in the scope of the consolidated financial statements caused by the businesscombination under common control, the affected undistributed profit at the beginning of the period wasRMB0.
5. Due to other adjustments, the affected undistributed profit at the beginning of the period was RMB0.
61. Revenue and operating costs
(1). Particulars on revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| Revenue | Costs | Revenue | Costs | |
| Main operations | 17,602,085,153.48 | 13,516,552,134.55 | 13,133,546,117.73 | 9,806,354,519.82 |
| Other operations | 5,318,096.64 | 4,289,618.71 | 4,199,609.45 | 255,479.66 |
| Total | 17,607,403,250.12 | 13,520,841,753.26 | 13,137,745,727.18 | 9,806,609,999.48 |
(2). Particulars on revenue from contracts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Classification of contracts | Total |
| Types of goods | |
| 1. Sales of goods | 17,596,925,530.39 |
| 2. Management fee for franchising | 1,261,896.79 |
| 3. Hardware and software | 416,068.33 |
| 4. Material income | 605,898.50 |
| 5. Others | 8,193,856.11 |
| Classification by operation territory | |
| 1. China | 17,189,075,699.23 |
| 2. Other countries | 418,327,550.89 |
| Total | 17,607,403,250.12 |
Description on revenue from contracts
□ Applicable √ Not applicable
(3). Description on performance obligations
□ Applicable √ Not applicable
(4). Description on allocation to remaining performance obligations
□ Applicable √ Not applicable
Other descriptions:
Details on revenue:
| Item | Amount in the current period | Amount in the last period |
| Description on revenue from customer contracts | 17,607,403,250.12 | 13,137,129,583.33 |
| Rental income | 616,143.85 | |
| Total | 17,607,403,250.12 | 13,137,745,727.18 |
62. Taxes and surcharges
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Consumption tax | ||
| Business tax | ||
| Urban maintenance and construction tax | 20,504,490.77 | 15,541,751.43 |
| Education surcharge | 25,283,863.66 | 25,015,709.73 |
| Resource tax | ||
| Property tax | 2,997,316.08 | 1,535,728.76 |
| Land use tax | 1,285,952.84 | 1,045,803.55 |
| Vehicle usage tax | ||
| Stamp duty | 16,217,678.50 | 7,261,952.70 |
| Others | 218,656.47 | 294,018.54 |
| Total | 66,507,958.32 | 50,694,964.71 |
Other descriptions:
No
63. Selling expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 376,564,976.37 | 308,941,016.61 |
| Channel construction fee | 110,493,640.33 | 84,054,269.88 |
| Brand promotion fee | 75,686,376.61 | 68,021,855.27 |
| Transportation and handling charge | 19,246,491.43 | 18,558,875.62 |
| Business promotion fee | 113,832,914.47 | 87,880,339.63 |
| Others | 701,821,061.61 | 535,727,666.50 |
| Total | 1,397,645,460.82 | 1,103,184,023.51 |
Other descriptions:
No
64. Administrative expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 324,702,182.60 | 254,969,061.73 |
| Depreciation and amortization | 107,172,048.15 | 64,967,664.15 |
| Office expense | 19,493,369.38 | 21,420,634.26 |
| Share-based payments | 77,655,911.24 | 82,199,024.88 |
| Others | 216,001,226.91 | 179,070,750.39 |
| Total | 745,024,738.28 | 602,627,135.41 |
Other descriptions:
No
65. R&D expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Salaries and benefits | 80,430,192.57 | 66,828,400.15 |
| Inventory consumption | 65,953,582.78 | 54,757,593.65 |
| Others | 42,374,440.15 | 38,592,948.09 |
| Total | 188,758,215.50 | 160,178,941.89 |
Other descriptions:
No
66. Financial expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Interest expense | 22,849,307.31 | 6,948,206.51 |
| Less: Interest income | -31,800,258.52 | -13,415,173.15 |
| Exchange gains and losses | 9,478,383.76 | 12,089,237.27 |
| Others | 6,377,331.97 | 3,437,905.72 |
| Total | 6,904,764.52 | 9,060,176.35 |
Other descriptions:
No
67. Other income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Government subsidies | 72,246,185.12 | 44,472,282.85 |
| Handling charge on withholding personnel income tax | 501,542.81 | 1,193,126.92 |
| Total | 72,747,727.93 | 45,665,409.77 |
Other descriptions:
Government subsidies included in other income
| Subsidy projects | Amount in the current period | Amount in the last period | Related to assets/income |
| 2015 Informatization Development Project - Data Sharing-based VOS Enterprise Management Cloud Collaboration Platform | 259,709.40 | 194,331.20 | Pertinent to assets |
| 2015 Key Technical Transformation Project - Technical Transformation of M&G Stationery Automated Assembly Production Technology Application | 561,878.28 | 561,878.28 | Pertinent to assets |
| 2016 Industrial Transformation and Upgrading Development Project - Machine Vision-based Detection Technology Development and Its Application in Pen Industry - EIT2016 | 296,953.68 | 271,637.22 | Pertinent to assets |
| 2016 Cultural and Creative Project - M&G Youpin - High Value-Added Creative Product Development Project | 29,437.44 | 29,437.44 | Pertinent to assets |
| 2014 Service Industry Guiding Fund - M&G Life Project based on Intelligent Network Management and Control | 328,891.68 | 328,891.68 | Pertinent to assets |
| 2014 Special Fund to Encourage the Purchase of International Advanced R&D Instruments and Equipment - R&D of Key Materials and Preparation Technologies in the Pen-making Industry - Project of Introducing MIKRON Multistar LX-24 Station Combination Machine Tools | 174,000.00 | 174,000.00 | Pertinent to assets |
| 2015 Cultural and Creative Project - Inbound Marketing - Internet + Product Development Model Innovation Project | 107,310.24 | 107,310.24 | Pertinent to assets |
| Science & Technology Projects of the 12th Five-Year Plan | 244,646.88 | 244,646.88 | Pertinent to assets |
| Improvement of Capability of Shanghai Engineering Technology Research Center - EC2017 | 590,711.49 | Pertinent to assets | |
| 2010-2011 Shanghai Characteristic Industry Small and Medium-Sized Enterprise Development Fund Project - R&D Technology Transformation of New Material Series for "Writing Creativity" Writing Instruments | 25,676.29 | 105,943.09 | Pertinent to assets |
| 2012 Comprehensive Pilot of Modern Service Industry - Network Platform Expansion and Upgrade Project | 672,017.88 | 672,017.88 | Pertinent to assets |
| 2014 Absorption and Innovation Project - R&D and Industrialization Project of New Needle Spring Pen Tips | 90,443.52 | 90,443.52 | Pertinent to assets |
| Subsidies for injection molding machine intelligent equipment | 72,488.12 | Pertinent to assets | |
| 2013 Special Fund for Key Technological Renovation | 586,104.12 | 586,104.12 | Pertinent to assets |
| Cultural and Creative Project | 700,000.00 | Pertinent to assets | |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of "Green Design - Innovative R&D" by Marco Colorful Painting Pen C1085 | 174,080.64 | 174,080.64 | Pertinent to assets |
| Special Fund Plan for Key Technological Renovation Projects in Qingpu District in 2012 | 116,000.04 | 116,000.04 | Pertinent to assets |
| Construction Project of "Marco-Color-Source" Creative Experience Center | 50,000.04 | 50,000.04 | Pertinent to assets |
| Special Funds for Central Foreign Economic and Trade Development | 662,576.66 | 73,619.64 | Pertinent to assets |
| Subsidies for Boiler Retrofit | 280,000.00 | 70,000.00 | Pertinent to assets |
| Special Funds for Development of SMEs in Shanghai in 2016 | 49,274.85 | 78,831.89 | Pertinent to assets |
| Subsidies for Internet Projects | 156,197.15 | 1,684,991.88 | Pertinent to assets |
| Special Funds for Development of Modern Service Industry | 464,550.24 | Pertinent to assets | |
| Special Funds for Technological Transformation and Structural Adjustment of Enterprises | 888,000.00 | Related to income | |
| Financial support funds | 400,000.00 | Related to income | |
| Subsidies | 492,000.00 | Related to income | |
| Bonus awards | 813,191.80 | Related to income | |
| Disability benefit awards | 1,249.00 | 70,229.10 | Related to income |
| Taxes paid through the bank | 37,591.52 | Related to income | |
| Refund upon payment of VAT | 10,152,281.04 | 7,039,516.55 | Related to income |
| Rebate of import logistics tariff | 606,279.05 | Related to income | |
| Government support funds | 6,397,400.00 | Related to income | |
| Training fee subsidies | 1,729,192.00 | 3,305,599.20 | Related to income |
| Other subsidies | 406,846.25 | Related to income | |
| Special funds for development of enterprises | 41,141,500.00 | 18,400,000.00 | Related to income |
| Unemployment insurance subsidies | 600.00 | Related to income | |
| Post stability subsidies | 319,605.82 | 2,971,018.41 | Related to income |
| Inclusion subsidies for enterprises above designated size in total retail sales of social consumer goods | 2,000.00 | Related to income | |
| Notice of the General Office of the Zhengzhou Municipal People's Government on Further Strengthening the Inclusion of Industrial Enterprises Above Designated Size, Wholesale and Retail Catering Enterprises Above Designated Size, Qualified Construction Enterprises, and Service Enterprises Above Designated Size (Zheng Zhanjiang Ban Wen [2015] No. 43) | 80,000.00 | Related to income | |
| Subsidies for patents | 5,500.00 | 417,000.00 | Related to income |
| Special Subsidy of Qingcun Town for the Project Recognized by Trade-natured Headquarters in 2020 | 720,000.00 | Related to income | |
| Special Subsidy of Fengxian District for the Project Established by Trade-natured Headquarters in 2020 | 280,000.00 | Related to income | |
| Grants and Incentives of Fengxian District for the Fengxian District Standardization Project in 2021 | 112,000.00 | Related to income | |
| Grants and Incentives for the Shanghai Standardization Project in 2021 | 70,000.00 | Related to income | |
| Government Grants for the Cultural and Creative Project | 300,000.00 | Related to income | |
| Supporting Funds from the Propaganda Department of the CPC Shanghai Fengxian District Committee | 300,000.00 | Related to income | |
| Grants from Fengxian District for Overseas Trademark Registrations in 2021 | 10,000.00 | Related to income | |
| Grants and Incentives of Qingcun Town for the Fengxian District Standardization Project in 2021 | 288,000.00 | Related to income | |
| Special Certificate Safety Skills Training Subsidies | 3,180.00 | Related to income | |
| "Four-helping and Four-Sending" Sales Incentives | 20,000.00 | Related to income | |
| Incentives for Inclusion of Technology SMEs | 40,800.00 | Related to income | |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of "Green Design - Innovative R&D" by Marco Colorful Painting Pen C1085 | 370,000.00 | Related to income |
| Subsidies for Passing the Assessment by Shanghai Municipal Enterprise Technology Center | 100,000.00 | Related to income | |
| Subsidies from Shanghai Municipal Commission of Economic and Information Technology | 25,440.00 | Related to income | |
| Subsidies from Shanghai Municipal Commission of Commerce for Lawyer Fees in the Anti-dumping Case in Brazil | 53,008.00 | Related to income | |
| Shanghai Qingpu District Enterprise Supporting Funds | 255,800.00 | Related to income | |
| 2019 District Comprehensive Supporting Fund for Hangzhou Qiantang Smart City Industrial Construction Center | 450,000.00 | Related to income | |
| Anti-epidemic Special Rent Subsidies and Special Salary Supporting Funds | 83,651.00 | Related to income | |
| 2019 Central Import Discount Interest Funds (Direct Payment by Shanghai Municipal Finance Bureau) | 210,146.00 | Related to income | |
| Subsidies for the R&D and Innovation of the First Batch of "Three Hundreds" Enterprises (Payment by Shanghai Municipal Fengxian District Finance Bureau) | 439,500.00 | Related to income | |
| Special Funds for Scientific and Technological Innovation and Development | 90,000.00 | Related to income | |
| Epidemic-related Subsidies for Buildings | 100,000.00 | Related to income | |
| Talent Development Funds | 315,200.00 | Related to income | |
| Talent Subsidies from Shanghai Municipal Human Resources and Social Security Bureau | 252,400.00 | Related to income | |
| Subsidies for Coal-fired Boilers | 170,000.00 | Related to income | |
| Government Subsidies | 3,452,666.13 | Related to income | |
| Unemployment Insurance from Yiwu Municipal Employment Management Service Bureau | 163,362.78 | Related to income | |
| The Second Batch of Incentives for Epidemic Prevention Effects in 2020 from Industry and Information Technology Bureau of Longgang District, Shenzhen | 20,000.00 | Related to income | |
| Subsidies for Work-based Trainings | 39,600.00 | Related to income | |
| Total | 72,246,185.12 | 44,472,282.85 |
68. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Long-term equity investment income accounted for under the equity method | 1,372,107.60 | -1,610,614.02 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period | ||
| Interest income from debt investment during the holding period | ||
| Interest income from other debt investments during the holding period | ||
| Investment income from disposal of held-for-trading financial assets | 4,921,056.44 | 5,461,768.72 |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investment | ||
| Investment income from disposal of other debt investments | ||
| Gains from debt restructuring | ||
| Total | 6,293,164.04 | 3,851,154.70 |
Other descriptions:
No
69. Net gain on exposure hedging
□ Applicable √ Not applicable
70. Gain on change in fair value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Sources of income from changes in fair value | Amount accounted for in the current period | Amount accounted for in the previous period |
| Held-for-trading financial assets | 38,636,606.71 | 32,281,250.23 |
| Including: Income from changes in fair value of derivative financial instruments | ||
| Held-for-trading financial liabilities | ||
| Investment real estate measured at fair value | ||
| Total | 38,636,606.71 | 32,281,250.23 |
Other descriptions:
No
71. Credit impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Bad debt losses of notes receivable | 718,394.03 | |
| Bad debt losses of accounts receivable | 4,327,081.30 | 5,656,026.24 |
| Bad debt losses of other receivables | 21,968,239.20 | 12,569,875.88 |
| Impairment losses of debt investment | ||
| Impairment losses of other debt investments | ||
| Bad debt losses of long-term receivables | ||
| Impairment losses of contract assets | ||
| Bad debt losses of prepayments | -20,000,000.00 | 20,000,000.00 |
| Total | 7,013,714.54 | 38,225,902.12 |
Other descriptions:
No
72. Asset impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| 1. Bad debt losses | ||
| II. Loss for decline in value of inventories and loss for impairment of contract performance cost | 17,091,366.45 | 10,111,946.64 |
| III. Impairment losses of long-term equity investment | ||
| IV. Impairment losses of investment real estate | ||
| V. Impairment losses of fixed assets | ||
| VI. Impairment losses of engineering materials | ||
| VII. Impairment losses of construction in progress | ||
| VIII. Impairment losses of productive biological assets | ||
| IX. Impairment losses of oil and gas assets | ||
| X. Impairment losses of intangible assets | ||
| XI. Impairment losses of goodwill | 30,175,537.19 | |
| XII. Others | ||
| Total | 17,091,366.45 | 40,287,483.83 |
Other descriptions:
No
73. Gains from asset disposal
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Gaines or losses from disposal of fixed assets | 2,818,017.84 | 169,704.92 |
| Gaines or losses from disposal of right-of-use assets | 415,634.64 | |
| Gaines or losses from disposal of intangible assets | 2,864,437.74 | |
| Total | 6,098,090.22 | 169,704.92 |
Other descriptions:
No
74. Non-operating profits
Particulars on non-operating profits
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | Amount included in the current non-recurring gains and losses |
| Total gains from disposal of non-current assets | |||
| Including: Gains from disposal of fixed assets | |||
| Gains from disposal of intangible assets | |||
| Gains from exchange of non-currency assets | |||
| Government subsidies | 91,140,149.50 | 89,557,520.24 | 91,140,149.50 |
| Inventory profit | 36,601.59 | ||
| Brand maintenance | 34,156,820.50 | ||
| Liquidated damages and fine income | 1,603,515.51 | 1,790,210.19 | 1,603,515.51 |
| Others | 5,415,382.87 | 3,234,345.57 | 5,415,382.87 |
| Total | 98,159,047.88 | 128,775,498.09 | 98,159,047.88 |
Government subsidies included in current profit and loss
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Subsidy projects | Amount accounted for in the current period | Amount accounted for in the previous period | Related to assets/income |
| Financial support | 91,140,149.50 | 89,557,520.24 | Related to income |
| Total | 91,140,149.50 | 89,557,520.24 |
Other descriptions:
□ Applicable √ Not applicable
75. Non-operating expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | Amount included in the current non-recurring gains and losses |
| Total losses from disposal of non-current assets |
| Including: Losses from disposal of fixed assets | |||
| Losses from disposal of intangible assets | |||
| Losses from exchange of non-currency assets | |||
| Offering of donations | 6,116,822.44 | 8,044,041.60 | 6,116,822.44 |
| Inventory losses | 22,163.89 | 180,639.72 | 22,163.89 |
| Loss from damage and retirement of non-current assets | 5,328,149.21 | 2,596,461.69 | 5,328,149.21 |
| Fine late payment | 1,224,491.83 | 1,042,177.33 | 1,224,491.83 |
| Compensation expenses | 1,773,653.01 | 3,191,899.75 | 1,773,653.01 |
| Others | 3,681,527.82 | 5,416,086.34 | 3,681,527.82 |
| Total | 18,146,808.20 | 20,471,306.43 | 18,146,808.20 |
Other descriptions:
No
76. Income tax expenses
(1). Table of income tax expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Current income tax expenses | 363,970,383.16 | 326,704,216.12 |
| Deferred income tax expenses | -36,162,941.52 | -47,929,130.96 |
| Total | 327,807,441.64 | 278,775,085.16 |
(2). Adjustment process of accounting profits and income tax expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period |
| Total profits | 1,861,403,107.01 |
| Income tax expenses calculated at statutory/applicable rates | 279,210,466.05 |
| Effect of applying different tax rates to subsidiaries | 49,376,628.98 |
| Effect of adjusting income taxes of the previous periods | -4,842,197.84 |
| Effect of non-taxable income | -15,376,429.94 |
| Effect of non-deductible costs, expenses and losses | 5,073,121.58 |
| Effect of deductible losses of deferred income tax assets not recognized in the previous period | -17,787,596.08 |
| Effect of deductible temporary differences or deductible losses of deferred income tax assets not recognized in the current period | 32,153,448.89 |
| Income tax expenses | 327,807,441.64 |
Other descriptions:
□ Applicable √ Not applicable
77. Other comprehensive income
√ Applicable □ Not applicable
For details, refer to Note VII (57) Other Comprehensive Income.
78. Items of the cash flow statement
(1). Other cash received from operating activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Recovery of current amount and advances | 1,132,038,976.18 | 581,182,581.81 |
| Special allowances and subsidies | 165,844,928.79 | 148,419,247.78 |
| Interest income | 31,800,258.52 | 13,415,173.15 |
| Non-operating profits | 138,440.75 | 1,278,211.47 |
| Total | 1,329,822,604.24 | 744,295,214.21 |
Descriptions on other cash received from operating activities:
No
(2). Cash paid for other operating activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Inter-company business | 1,647,285,487.11 | 1,207,529,783.72 |
| Sales expenses | 843,998,839.58 | 641,492,275.98 |
| Administration expenses | 192,464,818.60 | 226,914,119.41 |
| Financial expenses | 6,683,537.49 | 3,754,024.37 |
| Non-operating expenses | 12,818,658.99 | 14,108,869.53 |
| R&D expenses | 42,799,220.62 | 86,459,958.29 |
| Total | 2,746,050,562.39 | 2,180,259,031.30 |
Descriptions on cash paid for other operating activities:
No
(3). Other cash received relating to investing activities
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Compensation for the acquisition of the original controlling shareholders of Axus Stationery | 1,324,918.00 | 1,987,377.00 |
| Total | 1,324,918.00 | 1,987,377.00 |
Description on other cash received relating to investing activities:
No
(4). Other cash paid relating to investing activities
□ Applicable √ Not applicable
(5). Other cash received related to financing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Sale of minority stake in subsidiary | 67,500,000.00 | |
| Total | 67,500,000.00 |
Description on other cash received relating to financing activities:
No
(6). Other cash paid for financing-related activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Repurchase payment of treasury shares | 8,694,108.00 | 1,585,530.00 |
| Lease payments related to the new lease standards | 168,163,726.03 | |
| Acquisition of minority stake in subsidiary | 180,000,000.00 | |
| Total | 356,857,834.03 | 1,585,530.00 |
Descriptions on other cash paid for financing-related activities:
No
79. Supplementary information for the cash flow statement
(1). Supplementary information for the cash flow statement
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Supplementary information | Amount in the current period | Amount in the last period |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 1,533,595,665.37 | 1,238,373,726.00 |
| Add: Impairment provisions of assets | 17,091,366.45 | 40,287,483.83 |
| Credit impairment losses | 7,013,714.54 | 38,225,902.12 |
| Depreciation of fixed assets, oil and gas assets, and productive biological assets | 209,395,515.92 | 179,248,165.03 |
| Amortization of right-of-use assets | 175,593,903.65 | |
| Amortization of intangible assets | 16,055,291.60 | 13,116,340.82 |
| Amortization of long-term prepaid expenses | 61,190,943.89 | 64,190,565.17 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets ("-" refers to gains) | -6,098,090.22 | -169,704.92 |
| Losses from retirement of fixed assets ("-" refers to gains) | 5,251,464.15 | 2,596,461.69 |
| Losses from changes in fair value ("-" refers to gains) | -38,636,606.71 | -32,281,250.23 |
| Financial expenses ("-" refers to income) | 40,967,714.66 | 13,239,741.30 |
| Investment losses ("-" refers to gains) | -6,293,164.04 | -3,851,154.70 |
| Decrease in deferred income tax assets ("-" refers to increase) | -53,307,857.66 | -48,643,095.04 |
| Increase in deferred income tax liabilities ("-" refers to decrease) | 27,525,823.89 | 204,324.70 |
| Decrease in inventories ("-" refers to increase) | -263,905,945.00 | 55,821,469.29 |
| Decrease in operating receivables ("-" refers to increase) | -252,274,754.20 | -638,589,375.17 |
| Increase in operating payables ("-" refers to decrease) | 88,031,434.48 | 349,928,292.39 |
| Others | ||
| Net cash flow generated from operating activities | 1,561,196,420.77 | 1,271,697,892.28 |
| 2. Major investing and financing activities not involving cash payment and receipts: | ||
| Debts converted to capital | ||
| Convertible company bonds due within one year | ||
| Fixed assets acquired under financing leases | ||
| 3. Particulars on net changes in cash and cash equivalents: | ||
| Closing balance of cash | 1,539,484,614.69 | 1,377,346,135.25 |
| Less: Opening balance of cash | 1,377,346,135.25 | 1,377,446,435.89 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 162,138,479.44 | -100,300.64 |
(2). Net cash amount paid for the acquisition of subsidiaries in the current period
□ Applicable √ Not applicable
(3). Net cash amount received from the disposal of subsidiaries in the current period
□ Applicable √ Not applicable
(4). Composition of cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 1,539,484,614.69 | 1,377,346,135.25 |
| Including: Cash on hand | 404,622.49 | 1,134,204.63 |
| Bank deposits readily available for payment | 1,530,373,347.19 | 1,371,360,452.36 |
| Other cash and equivalents readily available for payment at any time | 8,706,645.01 | 4,851,478.26 |
| Due from central bank available for payment | ||
| Due from placements with banks and other financial institutions | ||
| Call loan to banks and other financial institutions |
| II. Cash equivalents | ||
| Including: Bond investments due within three months | ||
| III. Closing balance of cash and cash equivalents | 1,539,484,614.69 | 1,377,346,135.25 |
| Including: Cash and cash equivalents of which the use is restricted for the parent company or subsidiaries within the group |
Other descriptions:
□ Applicable √ Not applicable
80. Notes to items of the statement of changes in owners' equity
Description on "other" item name and adjustment amount adjusted for balance at the end of the previousyear:
□ Applicable √ Not applicable
81. Assets with restricted ownership or use rights
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Carrying value at the end of the period | Reason for restriction |
| Cash and equivalents | 1,471,167,575.95 | Letter of credit deposit and fixed deposit with restricted use and over three months, etc. |
| Fixed assets | 79,314,986.42 | Loan mortgage |
| Total | 1,550,482,562.37 | / |
Other descriptions:
No
82. Foreign currency monetary items
(1). Foreign currency monetary items
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item | Foreign currency balance at the end of the period | Translation foreign exchange rate | RMB translated at the end of the period Balance |
| Cash and equivalents | - | - | 97,409,027.62 |
| Including: USD | 10,166,602.64 | 6.3757 | 64,819,208.45 |
| EURO | 1,226,972.33 | 7.2197 | 8,858,372.13 |
| JPY | 1,121.00 | 0.0554 | 62.12 |
| HKD | 12,405.85 | 0.8176 | 10,143.02 |
| GBP | 375.00 | 8.6064 | 3,227.40 |
| VND | 5,337,607,268.78 | 0.0003 | 1,470,340.00 |
| NOK | 30,439,465.66 | 0.7234 | 22,020,882.35 |
| DKK | 233,541.50 | 0.9711 | 226,792.15 |
| Accounts receivable | - | - | 124,704,379.99 |
| Including: USD | 17,910,742.33 | 6.3757 | 114,193,519.87 |
| EURO | 78,208.69 | 7.2197 | 564,643.28 |
| NOK | 13,748,655.53 | 0.7234 | 9,946,216.84 |
| Long-term borrowings | - | - |
| Including: USD | |||
| EURO | |||
| HKD | |||
| Accounts payable | - | - | 75,117,398.28 |
| Including: USD | 9,723,521.44 | 6.3757 | 61,994,255.65 |
| EURO | 8,296.92 | 7.2197 | 59,901.27 |
| VND | 6,718,066,848.50 | 0.0003 | 1,850,612.44 |
| NOK | 15,499,216.95 | 0.7234 | 11,212,628.92 |
| Other receivables | - | - | 559,693.13 |
| Including: VND | 1,665,497,696.12 | 0.0003 | 458,791.32 |
| NOK | 139,476.57 | 0.7234 | 100,901.81 |
| Other payables | - | - | 1,240,765.69 |
| Including: USD | 117,726.57 | 6.3757 | 750,589.29 |
| VND | 1,374,579,940.00 | 0.0003 | 378,652.79 |
| HKD | 16,480.00 | 0.8176 | 13,474.05 |
| NOK | 135,533.90 | 0.7234 | 98,049.56 |
| Long-term borrowings - Non-current liabilities due within one year | - | - | 10,128,047.46 |
| Including: USD | |||
| NOK | 14,000,000.00 | 0.7234 | 10,128,047.46 |
Other descriptions:
No
(2). Descriptions on overseas operating entities, including: for important overseas business entities,
their main overseas business locations, bookkeeping currency and selection basis shall bedisclosed; in case of any change in the bookkeeping currency, the reasons for such change shallbe also disclosed
□ Applicable √ Not applicable
83. Hedging
□ Applicable √ Not applicable
84. Government subsidies
(1). Basic information on government subsidies
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Type | Amount | Presentation item | Amount included in current profit and loss |
| 2015 Informatization Development Project - Data Sharing-based VOS Enterprise Management Cloud Collaboration Platform | 1,920,000.00 | Deferred income | 259,709.40 |
| 2015 Key Technical Transformation Project - Technical Transformation of M&G Stationery Automated Assembly Production Technology Application | 4,880,000.00 | Deferred income | 561,878.28 |
| 2016 Industrial Transformation and Upgrading Development Project - Machine Vision-based Detection Technology Development and Its Application in Pen Industry - | 2,100,000.00 | Deferred income | 296,953.68 |
| EIT2016 | |||
| 2016 Cultural and Creative Project - M&G Youpin - High Value-Added Creative Product Development Project | 378,588.24 | Deferred income | 29,437.44 |
| 2014 Service Industry Guiding Fund - M&G Life Project based on Intelligent Network Management and Control | 3,450,000.00 | Deferred income | 328,891.68 |
| 2014 Special Fund to Encourage the Purchase of International Advanced R&D Instruments and Equipment - R&D of Key Materials and Preparation Technologies in the Pen-making Industry - Project of Introducing MIKRON Multistar LX-24 Station Combination Machine Tools | 1,740,000.00 | Deferred income | 174,000.00 |
| 2015 Cultural and Creative Project - Inbound Marketing - Internet + Product Development Model Innovation Project | 1,000,000.00 | Deferred income | 107,310.24 |
| Science & Technology Projects of the 12th Five-Year Plan | 2,446,471.05 | Deferred income | 244,646.88 |
| Improvement of Capability of Shanghai Engineering Technology Research Center - EC2017 | 1,000,000.00 | Deferred income | 590,711.49 |
| 2010-2011 Shanghai Characteristic Industry Small and Medium-Sized Enterprise Development Fund Project - R&D Technology Transformation of New Material Series for "Writing Creativity" Writing Instruments | 786,219.51 | Deferred income | 25,676.29 |
| 2012 Comprehensive Pilot of Modern Service Industry - Network Platform Expansion and Upgrade Project | 13,131,632.13 | Deferred income | 672,017.88 |
| 2014 Absorption and Innovation Project - R&D and Industrialization Project of New Needle Spring Pen Tips | 789,748.58 | Deferred income | 90,443.52 |
| Subsidies for injection molding machine intelligent equipment | 570,000.00 | Deferred income | 72,488.12 |
| 2013 Special Fund for Key Technological Renovation | 5,328,614.61 | Deferred income | 586,104.12 |
| Cultural and Creative Project | 700,000.00 | Deferred income | 700,000.00 |
| Academician Expert Workstation | 100,000.00 | Deferred income | |
| Special Funds for Shanghai Writing Instrument Engineering Technology Research Center | 1,000,000.00 | Deferred income | |
| Development of New Environmentally Friendly Materials and Intelligent Manufacturing Technology for Writing Instruments/TLP2021 | 400,000.00 | Deferred income |
| Special Funds for Shanghai Manufacturing Brand Project | 7,500,000.00 | Deferred income | |
| Zhangjiang Special Development Fund in 2017 - Achievement Transformation of "Green Design - Innovative R&D" by Marco Colorful Painting Pen C1085 | 4,600,000.00 | Deferred income | 174,080.64 |
| Special Fund Plan for Key Technological Renovation Projects in Qingpu District in 2012 | 1,160,000.00 | Deferred income | 116,000.04 |
| Construction Project of "Marco-Color-Source" Creative Experience Center | 2,500,000.00 | Deferred income | 50,000.04 |
| Special Funds for Central Foreign Economic and Trade Development | 1,000,000.00 | Deferred income | 662,576.66 |
| Subsidies for Boiler Retrofit | 350,000.00 | Deferred income | 280,000.00 |
| Special Funds for Development of SMEs in Shanghai in 2016 | 465,108.77 | Deferred income | 49,274.85 |
| Subsidies for Internet Projects | 2,590,000.00 | Deferred income | 156,197.15 |
| Special Funds for Development of Modern Service Industry | 750,000.00 | Deferred income | 464,550.24 |
| Special Development Funds for Enterprises | 18,260,000.00 | Deferred income | |
| Financial support | 91,140,149.50 | Non-operating profits | 91,140,149.50 |
| Special Funds for Technological Transformation and Structural Adjustment of Enterprises | 888,000.00 | Other income | 888,000.00 |
| Financial support funds | 400,000.00 | Other income | 400,000.00 |
| Subsidies | 492,000.00 | Other income | 492,000.00 |
| Bonus awards | 813,191.80 | Other income | 813,191.80 |
| Disability benefit awards | 1,249.00 | Other income | 1,249.00 |
| Taxes paid through the bank | 37,591.52 | Other income | 37,591.52 |
| Refund upon payment of VAT | 10,152,281.04 | Other income | 10,152,281.04 |
| Rebate of import logistics tariff | 606,279.05 | Other income | 606,279.05 |
| Government support funds | 6,397,400.00 | Other income | 6,397,400.00 |
| Training fee subsidies | 1,729,192.00 | Other income | 1,729,192.00 |
| Other subsidies | 406,846.25 | Other income | 406,846.25 |
| Special funds for development of enterprises | 41,141,500.00 | Other income | 41,141,500.00 |
| Unemployment insurance subsidies | 600.00 | Other income | 600.00 |
| Post stability subsidies | 319,605.82 | Other income | 319,605.82 |
| Inclusion subsidies for enterprises above designated size in total retail sales of social consumer goods | 2,000.00 | Other income | 2,000.00 |
| Notice of the General Office of the Zhengzhou Municipal People's Government on Further Strengthening the Inclusion of Industrial Enterprises Above Designated Size, Wholesale and Retail Catering Enterprises Above Designated Size, Qualified Construction Enterprises, and Service Enterprises Above Designated Size (Zheng Longing Ban Wen [2015] No. 43) | 80,000.00 | Other income | 80,000.00 |
| Patent subsidies | 5,500.00 | Other income | 5,500.00 |
| Special Subsidy of Qingcun Town for the Project Recognized by Trade-natured Headquarters in 2020 | 720,000.00 | Other income | 720,000.00 |
| Special Subsidy of Fengxian District for the Project Established by Trade-natured Headquarters in 2020 | 280,000.00 | Other income | 280,000.00 |
| Grants and Incentives of Fengxian District for the Fengxian District Standardization Project in 2021 | 112,000.00 | Other income | 112,000.00 |
| Grants and Incentives for the Shanghai Standardization Project in 2021 | 70,000.00 | Other income | 70,000.00 |
| Government Grants for the Cultural and Creative Project | 300,000.00 | Other income | 300,000.00 |
| Supporting Funds from the Propaganda Department of the CPC Shanghai Fengxian District Committee | 300,000.00 | Other income | 300,000.00 |
| Grants from Fengxian District for Overseas Trademark Registrations in 2021 | 10,000.00 | Other income | 10,000.00 |
| Grants and Incentives of Qingcun Town for the Fengxian District Standardization Project in 2021 | 288,000.00 | Other income | 288,000.00 |
(2). Particulars on return of government subsidies
□ Applicable √ Not applicable
Other descriptions:
No
85. Others
□ Applicable √ Not applicable
VIII. Change in Consolidation Scope
1. Business combination not under common control
√ Applicable □ Not applicable
(1). Business combination not under common control occurring during the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of acquiree | Equity acquisition time | Equity acquisition cost | Equity acquisition percentage (%) | Equity acquisition type | Date of acquisition | Basis for determining the acquisition date | Income of acquiree from the acquisition date to the end of the period | Net profit of acquiree from the acquisition date to the end of the period |
| Back to School Holding AS | 1 September 2021 | 186,581,434.21 | 91.40 | Acquisition | 1 September 2021 | Equity delivery date | 21,046,674.22 | -6,454,094.30 |
Other descriptions:
No
(2). Business combination cost and goodwill
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Combination cost | Back to School Holding AS |
| --Cash | 186,581,434.21 |
| --Fair value of non-cash assets | |
| --Fair value of the debts issued or assumed | |
| --Fair value of the equity securities issued | |
| --Fair value of contingent consideration | |
| --Acquisition-date fair value of the equity held before the acquisition date | |
| --Others | |
| Total combination cost | 186,581,434.21 |
| Less: Fair value share of the identifiable net assets acquired | 123,051,694.01 |
| Goodwill/Amount of the combination cost below fair value share of the identifiable net assets acquired | 63,529,740.20 |
Description on determination method for fair value of combination cost, contingent consideration and itschange:
No
Main reason for the formation of large-amount goodwill:
No
Other descriptions:
No
(3). Identifiable assets and liabilities of acquiree on the acquisition date
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Back to School Holding AS | ||
| Fair value on the acquisition date | Carrying value on the acquisition date | |
| Assets: | 207,019,970.34 | 175,394,363.85 |
| Cash and equivalents | 31,328,427.08 | 31,328,427.08 |
| Receivables | 20,849,317.55 | 20,849,317.55 |
| Inventories | 8,759,368.47 | 8,759,368.47 |
| Fixed assets | 2,278,992.49 | 1,748,683.95 |
| Intangible assets | 129,849,909.00 | 81,301,910.39 |
| Goodwill | 17,452,700.66 | |
| Other assets | 13,953,955.75 | 13,953,955.75 |
| Liabilities: | 72,390,108.18 | 61,592,880.61 |
| Borrowings | 12,702,401.17 | 12,702,401.17 |
| Payables | 4,644,332.81 | 4,644,332.81 |
| Deferred income tax liabilities | 28,421,728.40 | 17,624,500.83 |
| Other liabilities | 26,621,645.80 | 26,621,645.80 |
| Net assets | 134,629,862.16 | 113,801,483.24 |
| Less: Minority equity | 11,578,168.15 | 9,786,927.56 |
| Net assets acquired | 123,051,694.01 | 104,014,555.68 |
Determination method for fair value of identifiable assets and liabilities:
NoContingent liabilities of acquiree assumed in the business combination:
NoOther descriptions:
No
(4). Gains or losses arising from the re-measurement of the equity held before the acquisition dateat fair valueWhether there is a transaction where a business combination is achieved stepwise through multipletransactions and the control is obtained within the Reporting Period
□ Applicable √ Not applicable
(5). Descriptions on the situation that it is unable to reasonably determine the combinationconsideration or the fair value of identifiable assets and liabilities of the acquiree at thecombination date or the end of the combination period
□ Applicable √ Not applicable
(6). Other descriptions
□ Applicable √ Not applicable
2. Business combination under common control
□ Applicable √ Not applicable
3. Reverse acquisition
□ Applicable √ Not applicable
4. Disposal of subsidiaries
Whether there is a loss of control upon a single disposal of investment to subsidiaries
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
5. Changes in scope of consolidated financial statements for other reasonsDescriptions on changes in the scope of consolidated financial statements for other reasons (e.g., establishing subsidiaries, clearing subsidiaries, etc.) and their relatedcircumstances:
√ Applicable □ Not applicable
(1) Three subsidiaries were established for the current year: Shanghai Meixin Stationery Co., Ltd., SHANGHAI M&G STATIONERY (SINGAPORE) PTE.LTD.,and M&G Jiumu Enterprise Management (Beijing) Co., Ltd.
(2) One subsidiary was deregistered for the current year: M&G Life Enterprise Management (Shanghai) Co., Ltd.（晨光生活馆企业管理（上海）有限公司）
6. Others
□ Applicable √ Not applicable
IX. Equity in Other Entities
1. Equity in subsidiaries
(1). Composition of the corporate group
√ Applicable □ Not applicable
| Subsidiary name Name | Main place of business | Registered address | Nature of the business | Shareholding ratio (%) | Acquisition way | |
| Direct | Indirect | |||||
| Shanghai M&G Colipu Office Supplies Co., Ltd. | Shanghai | Shanghai | Retail, wholesale, etc. | 70.00 | Establishment | |
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | Shanghai | Shanghai | Production, sale and so forth | 100.00 | Establishment | |
| Shanghai M&G Stationery Sales Co., Ltd.（上海晨光文具销售有限公司） | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Guangzhou M&G Stationery&Gifts Sales Co., Ltd.（广州晨光文具礼品销售有限公司） | Guangzhou | Guangzhou | Retail, wholesale, etc. | 100.00 | Establishment | |
| Yiwu Chenxing Stationery Co., Ltd.（义乌市晨兴文具用品有限公司） | Yiwu | Yiwu | Retail, wholesale, etc. | 100.00 | Establishment | |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | Shanghai | Shanghai | Production, sale and so forth | 100.00 | Establishment | |
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | Shanghai | Shanghai | E-commerce business, etc. | 55.00 | Establishment | |
| Jiangsu M&G Life Enterprise Management Co., Ltd.（江苏晨光生活馆企业管理有限公司） | Nanjing | Nanjing | Retail, wholesale, etc. | 100.00 | Establishment | |
| Zhejiang New M&G Life Enterprise Management Co., Ltd.（浙江新晨光生活馆企业管理有限公司） | Hangzhou | Hangzhou | Retail, wholesale, etc. | 100.00 | Establishment | |
| Jiumu M&G Store Enterprise Management Co., Ltd.（九木杂物社企业管理有限公司） | Shanghai | Shanghai | Retail, wholesale, etc. | 85.00 | Establishment | |
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Acquired by business combination under common control | |
| Harbin M&G Sanmei Stationery Co., Ltd.（哈尔滨晨光三美文具有限公司） | Harbin | Harbin | Retail, wholesale, etc. | 100.00 | Acquired by business combination under common control | |
| Zhengzhou M&G Stationery&Gifts Co., Ltd.（郑州晨光文具礼品有限责任公司） | Zhengzhou | Zhengzhou | Retail, wholesale, etc. | 100.00 | Acquired by business combination under common control | |
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | Shenzhen | Shenzhen | Design and so forth | 51.00 | Acquired by business combination not under common control | |
| Shanghai M&G Office Stationery Co., Ltd. | Shanghai | Shanghai | Retail, wholesale, etc. | 100.00 | Establishment | |
| Lianyungang Colipu Office Supplies Co., Ltd.（连云港市科力普办公用品有限公司） | Lianyungang | Lianyungang | Retail, wholesale, etc. | 100.00 | Establishment | |
| Shenyang M&G Colipu Office Supplies Co., Ltd.（沈阳晨光科力普办公用品有限公司） | Shenyang | Shenyang | Retail, wholesale, etc. | 100.00 | Establishment | |
| Hangzhou Sanmei M&G Stationery Co., Ltd.（杭州三美晨光文具有限公司） | Hangzhou | Hangzhou | Retail, wholesale, etc. | 100.00 | Establishment | |
| Luoyang M&G Stationery Sales Co., Ltd.（洛阳晨光文具销售有限公司） | Luoyang | Luoyang | Retail, wholesale, etc. | 100.00 | Establishment | |
| Axus Stationery (Shanghai) Company Ltd. | Shanghai | Shanghai | Production, sale and so forth | 56.00 | Acquired by business combination not under common control | |
| Jiangsu Marco Pen Co., Ltd.（江苏马可笔业有限公司） | Jiangsu | Jiangsu | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Changchun Macro Stationery Co., Ltd.（长春马可文教用品有限公司） | Jilin | Jilin | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Yili Senlai Wood Co., Ltd.（伊犁森徕木业有限公司） | Xinjiang | Xinjiang | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Axus Stationery (Hong Kong) Company Ltd. | Hong Kong | Hong Kong | Retail, wholesale, etc. | 100.00 | Acquired by business combination not under common control | |
| International stationery company | Vietnam | Vietnam | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | Shanghai | Shanghai | Creative service | 57.00 | Establishment | |
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | Shanghai | Shanghai | Enterprise management | 100.00 | Establishment | |
| Shanghai Colipu Information Technology Co., Ltd.（上海科力普信息科技有限公司） | Shanghai | Shanghai | Software development | 100.00 | Establishment | |
| Shanghai Meixin Stationery Co., Ltd. (上海美新文具有限公司) | Shanghai | Shanghai | Wholesale and retail | 100.00 | Establishment | |
| SHANGHAI M&G STATIONERY (SINGAPORE) PTE.LTD. | Singapore | Singapore | Enterprise management | 100.00 | Establishment | |
| M&G Jiumu Enterprise Management (Beijing) Co., Ltd.（晨光九木企业管理（北京）有限公司） | Beijing | Beijing | Wholesale and retail | 100.00 | Establishment | |
| Back to School Holding AS | Norway | Norway | Holding company | 91.40 | Acquired by business combination not |
| under common control | ||||||
| Beckmann AS | Norway | Norway | Production, sale and so forth | 100.00 | Acquired by business combination not under common control | |
| Beckmann Norway GmbH | Germany | Germany | Retail, wholesale, etc. | 100.00 | Acquired by business combination not under common control |
Descriptions on the situation that the shareholding ratio in the subsidiary is different from the share of thevoting rights:
No
Basis for holding half or less of the voting rights of the investee but still controlling the investee andholding more than half of the voting rights but not controlling the investee:
No
Basis for controlling important structured entities included in the scope of consolidated financialstatements:
No
Basis for determining whether the Company is an agent or a principal:
No
Other descriptions:
No
(2). Important non-wholly owned subsidiaries
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Name of subsidiaries | Minority shareholding ratio | Profits and losses attributable to minority shareholders in the current period | Dividends declared and distributed to minority shareholders in the current period | Minority equity balance at the end of the period |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 30.00% | 43,148,587.48 | 170,638,348.86 |
Descriptions on the situation that the shareholding ratio of minority shareholders in the subsidiary isdifferent from that of the voting rights:
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
(3). Major financial information of important non-wholly owned subsidiaries
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Name of subsidiaries | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 296,293.71 | 13,242.50 | 309,536.21 | 222,998.54 | 4,519.22 | 227,517.76 | 237,271.61 | 6,474.92 | 243,746.53 | 184,145.14 | 2,721.93 | 186,867.07 |
| Name of subsidiaries | Amount accounted for in the current period | Amount accounted for in the previous period | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 776,565.05 | 24,198.53 | 24,198.53 | 3,762.50 | 500,027.59 | 14,382.86 | 14,382.86 | 22,586.95 |
Other descriptions:
No
(4). Significant restrictions on the use of corporate group assets and the liquidation of corporategroup debts
□ Applicable √ Not applicable
(5). Financial support or other support provided to structured entities included in the scope ofconsolidated financial statements
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
2. Transactions which result in a change in the share of owners' equity in the subsidiary but theCompany still controls the subsidiary
□ Applicable √ Not applicable
3. Equity in joint ventures or associates
√ Applicable □ Not applicable
(1). Important joint ventures or associates
□ Applicable √ Not applicable
(2). Major financial information of important joint ventures
□ Applicable √ Not applicable
(3). Major financial information of important associates
□ Applicable √ Not applicable
(4). Summary financial information of unimportant joint ventures and associates
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Balance at the end of the period/Amount accounted for in the current period | Balance at the beginning of the period/Amount accounted for in the previous period | |
| Joint ventures: | ||
| Total carrying value of investments | ||
| Total of the following items calculated according to the shareholding ratio | ||
| --Net profits | ||
| --Other comprehensive income | ||
| --Total comprehensive income | ||
| Associates: | ||
| Total carrying value of investments | 36,512,701.80 | 34,722,395.67 |
| Total of the following items calculated according to the shareholding ratio | ||
| --Net profits | 1,372,107.60 | -1,610,614.02 |
| --Other comprehensive income | 418,198.53 | 750,226.22 |
| --Total comprehensive income | 1,790,306.13 | -860,387.80 |
Other descriptionsNo
(5). Descriptions on significant limitation of the ability of a joint venture or associate to transferfunds to the Company
□ Applicable √ Not applicable
(6). Excess losses incurred by a joint venture or associate
□ Applicable √ Not applicable
(7). Unrecognized commitments related to joint venture investment
□ Applicable √ Not applicable
(8). Contingent liabilities related to joint venture or associate investment
□ Applicable √ Not applicable
4. Important joint operations
□ Applicable √ Not applicable
5. Equity in structured entities not included in the consolidated financial statementsDescriptions on structured entities not included in the consolidated financial statements:
□ Applicable √ Not applicable
6. Others
□ Applicable √ Not applicable
X. Risks Associated with Financial Instruments
√ Applicable □ Not applicable
The Company faces various financial risks in its business operations: credit risk, liquidity risk andmarket risk (including exchange rate risk, interest rate risk and other price risk). The above financial risksand the risk management policies adopted by the Company to reduce these risks are as follows:
The Board of Directors is responsible for planning and establishing the Company's risk managementstructure, formulating the Company's risk management policies and related guidelines, and supervisingthe implementation of risk management measures. The Company has formulated risk management policiesto identify and analyze the risks faced by the Company. These risk management policies clearly stipulatespecific risks, covering many aspects in the management of market risk, credit risk and liquidity risk. TheCompany regularly evaluates the market environment and changes in the Company's business activities todetermine whether to update the risk management policies and systems. The Company's risk managementis carried out by the Risk Management Committee in accordance with the policies approved by the Boardof Directors. The Risk Management Committee works closely with other business departments of theCompany to identify, evaluate and avoid related risks. The Internal Audit Department of the Companyconducts regular audits on risk management control and procedures, and reports the audit results to theAudit Committee of the Company.
The Company diversifies the risk of financial instruments through appropriate diversified investmentand business portfolios, and reduces the risks relating to concentration in a single industry, specific regionor specific counterparty through formulation of corresponding risk management policies.
(I) Credit risk
Credit risk refers to the risk of the Company's financial losses due to the failure of the counterpartyto perform its contractual obligations.
The Company's monetary funds are mainly bank deposits deposited in reputable state-owned banksand other large and medium-sized listed banks with high credit ratings, thus the Company believes thatthere are no significant credit risks and almost no major losses caused by bank defaults.
In addition, for notes receivable, accounts receivable, financing receivables and other receivables,the Company sets relevant policies to control credit risk exposure. The Company evaluates the customer'scredit qualifications and sets the corresponding credit period based on the customer's financial status,possibility of obtaining guarantees from a third party, credit history and other factors such as currentmarket conditions. The Company regularly monitors customer credit records. For customers with poorcredit records, the Company uses written dunning and shortens or cancels the credit period, etc., to ensurethat the Company's overall credit risk is within the controllable range.
(II) Liquidity risk
Liquidity risk is the risk of a shortage of funds of the Company when the Company is performing itsobligation to settle in the form of delivery of cash or other financial assets.
The Company's policy is to ensure that there is sufficient cash to pay off the debts due. Liquidity riskis centrally controlled by the Company's Finance Department. Finance Department ensures that theCompany has sufficient funds to repay debts under all reasonable forecasts by monitoring cash balances,marketable securities at any time, and rolling forecasts of the cash flows in the coming 12 months. FinanceDepartment also continuously monitors whether the Company complies with the provisions of the loanagreement and obtains commitments from major financial institutions to provide sufficient reserve fundsso as to meet short- and long-term funding needs.
Financial liabilities of the Company are presented as unrealized contractual cash flows on thematurity date as follows:
| Item | Closing balance | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2--5 years | Above 5 years | Total | |
| Short-term borrowings | 23,425,570.29 | 156,500,000.00 | 179,925,570.29 | |||
| Non-current liabilities due within one year | 10,128,047.46 | 10,128,047.46 | ||||
| Total | 23,425,570.29 | 166,628,047.46 | 190,053,617.75 | |||
| Item | Balance at the end of the year | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2--5 years | Above 5 years | Total | |
| Short-term borrowings | 176,000.00 | 180,000,000.00 | 180,176,000.00 | |||
| Total | 176,000.00 | 180,000,000.00 | 180,176,000.00 | |||
(III) Market risk
Market risk of financial instruments is the risk that the fair value or future cash flows of financialinstruments will fluctuate due to changes in market prices including exchange rate risk, interest rate riskand other price risks.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate due to changes in market rates.
Interest-bearing financial instruments with fixed and floating rates expose the Company to fair valueinterest rate risk and cash flow interest rate risk, respectively. The Company determines the percentagesof fixed interest rate instruments and floating interest rate instruments according to the market environment,and maintains an appropriate combination of fixed interest rate instruments and floating interest rate
instruments through regular review and monitoring. When necessary, the Company adopts interest rateswap instruments to hedge the interest rate risk.
2. Exchange rate risk
Exchange rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate due to changes in foreign exchange rates.
The Company continuously monitors the scale of foreign-currency transactions and foreign-currencyassets and liabilities to minimize foreign exchange risks. In addition, the Company may also sign forwardforeign exchange contracts or currency swap contracts to avoid exchange rate risk. During the currentperiod and the previous period, the Company did not sign any forward foreign exchange contracts orcurrency swap contracts.
Foreign exchange risk faced by the Company mainly comes from financial assets and liabilitiesdenominated in USD, and the amounts of foreign currency financial assets and liabilities converted intoRMB are shown below:
| Item | Closing balance | Balance at the end of the year | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Cash and equivalents | 64,819,208.45 | 32,589,819.17 | 97,409,027.62 | 82,557,145.55 | 2,607,950.11 | 85,165,095.66 |
| Accounts receivable | 114,193,519.87 | 10,510,860.12 | 124,704,379.99 | 31,500,641.44 | 186,699.84 | 31,687,341.28 |
| Other receivables | 559,693.13 | 559,693.13 | 427,463.91 | 427,463.91 | ||
| Total foreign currency financial assets | 179,012,728.32 | 43,660,372.42 | 222,673,100.74 | 114,057,786.99 | 3,222,113.86 | 117,279,900.85 |
| Short-term borrowings | 9,583,416.04 | 9,583,416.04 | ||||
| Non-current liabilities due within one year | 10,128,047.46 | 10,128,047.46 | ||||
| Accounts payable | 61,994,255.65 | 13,123,142.63 | 75,117,398.28 | 3,968,191.47 | 1,778,217.76 | 5,746,409.23 |
| Other payables | 750,589.29 | 490,176.40 | 1,240,765.69 | 282,014.95 | 282,014.95 | |
| Total | 72,328,260.98 | 23,741,366.49 | 96,069,627.47 | 3,968,191.47 | 2,060,232.71 | 6,028,424.18 |
XI. Disclosure of Fair Value
1. Closing fair value of assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Item | Closing fair value | |||
| Level-1 fair value measurement | Level-2 fair value measurement | Level-3 fair value measurement | Total | |
| I. Continuous fair value measurement | ||||
| (I) Trading financial assets | ||||
| 1. Financial assets at fair value through profit or loss | ||||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (3) Derivative financial assets | ||||
| (4) Others | 1,609,123,552.86 | 1,609,123,552.86 | ||
| 2. Financial assets designated as at fair value through profit or loss | ||||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (II) Other debt investments | ||||
| (III) Other equity instrument investments | 6,745,402.14 | 6,745,402.14 | ||
| (IV) Investment real estate | ||||
| 1. Land use rights used for rent | ||||
| 2. Rental buildings | ||||
| 3. Land use rights held and ready to be transferred after appreciation | ||||
| (V) Biological assets | ||||
| 1. Consumable biological assets | ||||
| 2. Productive biological assets | ||||
| (VI) Receivables financing | 22,824,707.62 | 22,824,707.62 | ||
| Total assets continuously measured at fair value | 1,609,123,552.86 | 29,570,109.76 | 1,638,693,662.62 | |
| (VI) Trading financial liabilities | ||||
| 1. Financial liabilities at fair value through profit or loss | ||||
| Including: Trading bonds issued | ||||
| Derivative financial liabilities | 147,570.52 | 147,570.52 | ||
| Others | ||||
| 2. Financial liabilities designated as at fair value through profit or loss | ||||
| Total liabilities continuously measured at fair value | 147,570.52 | 147,570.52 | ||
| II. Non-continuous fair value measurement | ||||
| (I) Assets held for sale | ||||
| Total assets not continuously measured at fair value | ||||
| Total liabilities not continuously |
measured at fairvalue
2. Basis for determining market prices of items continuously and not continuously measured atthe first-level fair value
√ Applicable □ Not applicable
The input value of the first level is the unadjusted quotation of the same asset or liability that can beobtained on the measurement date in the active market.
3. Qualitative and quantitative information on valuation techniques and important parameters
adopted by items continuously and not continuously measured at the second-level fair value
√ Applicable □ Not applicable
The input value of the second level is the directly or indirectly observable input value of related assetsor liabilities except the input value of the first level.
4. Qualitative and quantitative information on valuation techniques and important parameters
adopted by items continuously and not continuously measured at the third-level fair value
√ Applicable □ Not applicable
The input value of the third level is the unobservable input value of the related asset or liability.
5. Information on adjustment between the beginning carrying value and the closing carrying
value of items continuously measured at the third-level fair value and sensitivity analysis on
unobservable parameters
□ Applicable √ Not applicable
6. For items continuously measured at fair value, in case of any conversion between various levels
during the period, reasons for the conversion and policies to determine the conversion time
should be provided
□ Applicable √ Not applicable
7. Changes in valuation techniques and reasons for changes during the period
□ Applicable √ Not applicable
8. Particulars on fair value of financial assets and liabilities which are not measured at fair value
□ Applicable √ Not applicable
9. Others
□ Applicable √ Not applicable
XII. Related Parties and Related-Party Transactions
1. Particulars on the parent company of the Company
√ Applicable □ Not applicable
Unit: 0'000 Currency: RMB
| Name of the parent company | Registered address | Nature of the business | Registered capital | The parent company's shareholding ratio in the Company (%) | The parent company's voting right ratio in the Company (%) |
| M&G Holdings (Group) Co., Ltd. | Shanghai | Industrial Investment | RMB300 million | 57.77 | 57.77 |
Descriptions on the parent company of the CompanyNo
The ultimate controlling party of the Company is Chen Huwen, Chen Huxiong and Chen XuelingOther descriptions:
No
2. Particulars on subsidiaries of the Company
Particulars on subsidiaries of the Company are shown in the relevant notes
√ Applicable □ Not applicable
For particulars on subsidiaries of the Company, see Note IX. Equity in Other Entities for details.
3. Particulars on joint ventures and associates of the Company
For important joint ventures and associates of the Company, see the Notes for details
√ Applicable □ Not applicable
For important joint ventures and associates of the Company, see Note IX. "Equity in Other Entities"for details.
Particulars on other joint ventures and associates which have related-party transactions with the Companyin the current period or had related-party transactions with the Company in the previous period and formbalances are as follows
√ Applicable □ Not applicable
| Name of joint venture and associate | Relationship with the Company |
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | Associates |
| Shanghai Pen-making Technology Services Co., Ltd. | Associates |
Other descriptions
□ Applicable √ Not applicable
4. Particulars on other related parties
√ Applicable □ Not applicable
| Name of other related parties | Relationship between other related parties and the Company |
| Shanghai Jiekui Investment Management Firm (L.P.) | Share-participation shareholders |
| Shanghai Keying Investment Management Office (L.P.) | Share-participation shareholders |
| PELEG DESIGN Ltd | Others |
| Shanghai M&G Charity Foundation | Others |
| Shanghai KACO Industrial Co., Ltd. | Others |
| Guo Weilong | Others |
| Nanjing Zhaochen Stationery Sales Co., Ltd. | Others |
| Nanjing Chenri Stationery Sales Co., Ltd. | Others |
| Nanjing Youchen Stationery Sales Co., Ltd. | Others |
| Huaian Youpin Chenguang Trading Co., Ltd. (淮安优品晨光贸易有限公司) | Others |
Other descriptionsNo
5. Particulars on related-party transactions
(1). Related-party transactions for the purchase and sales of goods and the rendering and receipt
of servicesTable of information on the purchase of goods/the receipt of services
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Related party | Related-party transaction content | Amount accounted for in the current period | Amount accounted for in the previous period |
| PELEG DESIGN Ltd | Purchase of goods | 2,363,756.97 | 702,355.15 |
| Shanghai KACO Industrial Co., Ltd. | Purchase of goods | 177,706.19 |
Table of information on the sale of goods/the rendering of services
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Related party | Related-party transaction content | Amount accounted for in the current period | Amount accounted for in the previous period |
| Sales entities controlled by Guo Weilong | Sale of goods | 421,648,593.59 | 439,535,408.86 |
| PELEG DESIGN Ltd | Sale of goods | 360,972.26 | |
| Shanghai M&G Charity Foundation | Sale of goods | 119,375.53 |
Particulars on related-party transactions for the purchase and sales of goods and the rendering andreceipt of services
□ Applicable √ Not applicable
(2). Particulars on related-party entrusted management/contracting and entrustingmanagement/outsourcingTable of information on the Company's entrusted management/contracting:
□ Applicable √ Not applicable
Particulars on related-party entrusting/contracting
□ Applicable √ Not applicable
Table of information on the Company's entrusting management/outsourcing
□ Applicable √ Not applicable
Particulars on related-party management/outsourcing
□ Applicable √ Not applicable
(3). Particulars on related-party leases
The Company as the lessor:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of lessee | Types of leased assets | Rental income recognized in the current period | Rental income recognized in the previous period |
| Shanghai Jiekui Investment Management Firm (L.P.) | Self-owned office building | ||
| Shanghai Keying Investment Management Office (L.P.) | Self-owned office building |
The Company as the lessee:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Name of lessor | Types of leased assets | Rental fee recognized in the current period | Rental fee recognized in the previous period |
| M&G Holdings (Group) Co., Ltd. | Self-owned houses (including office | 4,620,952.60 | 4,620,952.38 |
| buildings, workshops, parking spaces, warehouses, dormitory buildings, etc.) | |||
| M&G Holdings (Group) Co., Ltd. | Self-owned office buildings and parking spaces | 19,222,690.29 | 18,693,105.31 |
| M&G Holdings (Group) Co., Ltd. | Utilities | 5,819,952.08 | 5,164,795.80 |
Descriptions on related-party leases
□ Applicable √ Not applicable
(4). Particulars on related-party guarantees
The Company as a guarantor
□ Applicable √ Not applicable
The Company as a guaranteed party
□ Applicable √ Not applicable
Descriptions on related-party guarantees
□ Applicable √ Not applicable
(5). Related-party fund lending
□ Applicable √ Not applicable
(6). Related-party asset transfer and debt restructuring
□ Applicable √ Not applicable
(7). Compensation of key management personnel
□ Applicable √ Not applicable
(8). Other related-party transactions
□ Applicable √ Not applicable
6. Receivables from and payables to related parties
(1). Receivables
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Items | Related party | Closing balance | Opening balance | ||
| Carrying balance | Bad debt provisions | Carrying balance | Bad debt provisions | ||
| Prepayment | M&G Holdings (Group) Co., Ltd. | 5,301,834.70 | |||
(2). Payables
√ Applicable □ Not applicable
Unit: RMB Currency: RMB
| Items | Related party | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Accounts payable | Sales entities controlled by Guo Weilong | 7,772.17 | 87,891.05 |
| Accounts payable | Shanghai KACO Industrial Co., Ltd. | 17,175.23 | |
| Accounts payable | PELEG DESIGN Ltd | 660,345.39 | |
| Other payables | Sales entities controlled by Guo Weilong | 585,000.00 | 1,485,000.00 |
| Other payables | M&G Holdings (Group) Co., Ltd. | 480,028.03 | 1,144,105.84 |
| Contract liabilities | Sales entities controlled by Guo Weilong | 19,432,606.22 | 21,037,129.41 |
| Non-current liabilities due within one year | M&G Holdings (Group) Co., Ltd. | 13,243,573.62 |
7. Related-party commitments
□ Applicable √ Not applicable
8. Others
□ Applicable √ Not applicable
XIII. Share-based Payments
1. Overall situation of share-based payment
√ Applicable □ Not applicable
Unit: Share Currency: RMB
| Total amount of equity instruments granted by the Company in the current period | 689,400 |
| Total amount of equity instruments vested by the Company in the current period | 2,010,380 |
| Total amount of equity instruments of the Company expired in the current period | 371,410 |
| Scope of the vesting price of the outstanding stock options of the Company at the end of the period and the remaining period of the contract | 2020 Restricted Stock Incentive Plan: Restricted stocks are granted at a price of RMB23.7/share and are valid for 3 years from the date of grant; the remaining validity period is 1.33 years. 2021 Restricted Stock Incentive Plan: Restricted stocks are granted at a price of RMB45.03/share and are valid for 2 years from the date of grant; the remaining validity period is 1.33 years. |
| Scope of the vesting price of other outstanding equity instruments of the Company at the end of the period and the remaining period of the contract |
Other descriptionsNo
2. Particulars on equity-settled share-based payment
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Determination of the fair value of equity instruments at the date of grant | 2020 Restricted Stock Incentive Plan: The closing price of the stocks on the date of grant is RMB52.70/share 2021 Restricted Stock Incentive Plan: The closing price of the stocks on the date of grant was RMB91.75/share |
| Determination basis for the number of vesting equity instruments | At each balance sheet date during the waiting period, the Company will make the best estimate based on the latest obtained follow-up information such as changes in the number of vesting employees, and revise the expected number of vesting equity instruments |
| Reasons for the significant difference between the current estimate and the previous estimate | No |
| Cumulative amount of equity-settled share-based payments included in the capital reserve | 159,854,936.12 |
| Total amount of expenses recognized by equity-settled share-based payments in the current period | 77,655,911.24 |
Other descriptions
(1) Description on 2020 Restricted Stock Incentive Plan:
According to the 2020 Restricted Stock Incentive Plan of Shanghai M&G Stationery Inc. (Draft)considered and approved at the 20th meeting of the fourth Board of Directors of the Company on 10 April2020, for the first grant, the Company intended to grant a total of 9,180,600 restricted stocks to 343incentive objects at a price of RMB24.1/share.
On 8 May 2020, the Company held the 2019 Annual General Meeting of Shareholders, whichconsidered and approved the Proposal on the Company's 2020 Restricted Stock Incentive Plan (Draft) andIts Summary, the Proposal on the Management Measures for the Implementation of the Company's 2020Restricted Stock Incentive Plan, and the Proposal on Requesting the General Meeting of Shareholders toAuthorize the Board of Directors to Deal with Matters Related to Restricted Stock Incentives.
On 8 May 2020, the Company held the 1st meeting of the 5th session of Board of Directors and the1st meeting of the 5th session of Board of Supervisors, which considered and approved the Proposal onAdjusting the 2020 Restricted Stock Incentive Plan and the Proposal on Granting Restricted Stocks toIncentive Objects in 2020. Pursuant to the proposals, the Company intended to grant 7,441,200 restrictedstocks to 335 incentive objects at a price of RMB23.70/share.
According to the Proposal on Adjusting the 2020 Restricted Stock Incentive Plan considered andapproved at the 1st meeting of the 5th session of Board of Directors and the 1st meeting of the 5th sessionof Board of Supervisors held by the Company on 8 May 2020, the first grant price of restricted stocks wasadjusted from RMB24.1/share to RMB23.7/share, the first grant number of incentive objects from 343 to335, and the first grant number of restricted stocks from 7,583,000 to 7,441,200, while the total numberof restricted stocks to be granted according to this equity incentive plan was adjusted from 9,180,600 to9,038,700.
After the date of grant of the restricted stock incentive plan was determined, 6 incentive objectsresigned and abandoned the equity incentive plan. As of 31 December 2020, the number of incentiveobjects actually granted by the stock incentive plan was 329, and the number of restricted stocks actuallygranted was 7,289,000 shares.
The incentive plan evaluates the Company's operating performance annually, and takes theachievement of the performance evaluation target as one of the conditions for releasing the salesrestrictions for the incentive objects in the current year. The performance evaluation objectives of theincentive plan are shown in the following table:
| Date of releasing the sales restrictions | Performance evaluation objective |
| The first period of releasing the sales restrictions | Based on 2019, the growth rate of revenue in 2020 will not be less than 15%, and the growth rate of net profit in 2020 will not be less than 10%; |
| The second period of releasing the sales restrictions | Based on 2019, the growth rate of revenue in 2021 will not be less than 45%, and the growth rate of net profit in 2021 will not be less than 34%; |
| The third period of releasing the sales restrictions | Based on 2019, the growth rate of revenue in 2022 will not be less than 75%, and the growth rate of net profit in 2022 will not be less than 66%. |
Note: the above-mentioned "net profit" refers to the audited net profit attributable to shareholders ofthe parent company.
During the period of releasing the sales restrictions, the Company handles the matter related toreleasing the sales restrictions for the incentive objects that meet the conditions for releasing the salesrestrictions. If the Company's current performance level fails to meet the performance evaluation targetconditions during each period of releasing the sales restrictions, the restricted stocks of all the incentiveobjects that meet conditions for release during the corresponding year, cannot be released from salesrestrictions, but shall be repurchased and cancelled by the Company at the grant price.For the current year, the Company repurchased and cancelled a total of 371,410 restricted stocks; thenumber of restricted stocks that can be released by the Company from sales restrictions was 2,010,380.
(2) Description on 2021 Restricted Stock Incentive Plan:
At the 7th meeting of the 5th session of the Board of Directors and the 6th meeting of the 5th sessionof the Board of Supervisors held by the Company on 29 April 2021, the Proposal on Granting ReservedRestricted Stocks to Incentive Objects of the 2020 Restricted Stock Incentive Plan was considered andapproved. It was determined that 29 April 2021 was the date of grant of the incentive plan, the number ofincentive objects granted was 120, the number of restricted stocks granted was 705,500, and the grantprice was RMB45.03 per share. The independent directors of the Company expressed their independentopinions on such determination. After the date of grant of the restricted stock incentive plan wasdetermined, one incentive object voluntarily abandoned the stocks incentive plan due to personal reasons.The number of incentive objects actually granted by the stock incentive plan was 119, the number ofrestricted stocks actually granted was 689,400 shares, and the actual receivables for subscription ofrestricted shares amounted to RMB31,043,682.00.
The incentive plan evaluates the Company's operating performance annually, and takes theachievement of the performance evaluation target as one of the conditions for releasing the salesrestrictions for the incentive objects in the current year. The performance evaluation objectives of theincentive plan are shown in the following table:
| Date of releasing the sales restrictions | Performance evaluation objective |
| The first period of releasing the sales restrictions | Based on 2019, the growth rate of revenue in 2021 will not be less than 45%, and the growth rate of net profit in 2021 will not be less than 34%; |
| The second period of releasing the sales restrictions | Based on 2019, the growth rate of revenue in 2022 will not be less than 75%, and the growth rate of net profit in 2022 will not be less than 66%. |
Note: the above-mentioned "net profit" refers to the audited net profit attributable to shareholders ofthe parent company.
During the period of releasing the sales restrictions, the Company handles the matter related toreleasing the sales restrictions for the incentive objects that meet the conditions for releasing the salesrestrictions. If the Company's current performance level fails to meet the performance evaluation targetconditions during each period of releasing the sales restrictions, the restricted stocks of all the incentiveobjects that meet conditions for release during the corresponding year, cannot be released from salesrestrictions, but shall be repurchased and cancelled by the Company at the grant price.
3. Particulars on cash-settled share-based payment
□ Applicable √ Not applicable
4. Particulars on modification and termination of share-based payment
□ Applicable √ Not applicable
5. Others
□ Applicable √ Not applicable
XIV. Commitments and Contingencies
1. Important commitments
√ Applicable □ Not applicable
Important external commitments, nature, and amount existing on the balance sheet date
(1) On 16 September 2021, the subsidiary Axus Stationery (Shanghai) Company Ltd. ("AxusStationery") and China Merchants Bank Co., Ltd. Shanghai Branch ("CMB Shanghai Branch") enteredinto the Credit Agreement numbered 121XY2021031380 with the credit line of RMB180,000,000.00 for36 months from 16 September 2021 to 15 September 2024. The specific types of line business include,but are not limited to, working capital loans, bank notes, and letters of credit.On 16 September 2021, Axus Stationery and CMB Shanghai Branch entered into the MaximumMortgage Contract numbered 121XY2021031380, which is a sub-contract of the Credit Agreement. Themaximum principal limit of the mortgage under this contract is RMB180,000,000.00, and the mortgagelimit is valid from 16 September 2021 to 15 September 2024.The mortgage term runs from the effective date of the mortgage contract to the expiration of theperiod of the creditor's rights claims under the Credit Agreement. The collaterals for mortgage include:
| Name of collateral | Ownership No. | Original value | Accumulated depreciation | Net value |
| No. 111, Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 015437 | 47,061,453.52 | 27,468,676.83 | 19,592,776.69 |
| No. 233, Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2013) No. 013396 | 32,156,238.78 | 14,464,816.47 | 17,691,422.31 |
| No. 333, Xuezi South Road, Xianghuaqiao Street, Qingpu District | HFDQ Zi (2015) No. 015718 | 60,230,210.97 | 18,199,423.55 | 42,030,787.42 |
| Total | 139,447,903.27 | 60,132,916.85 | 79,314,986.42 | |
As of 31 December 2021, the outstanding loan of Axus Stationery was RMB156,500,000.00 andUSD1,500,000.00.
(2) On 7 August 2017, the subsidiary, Back to School Holding AS, borrowed a long-term loan froma local bank in Norway with all the shares held by the Group's subsidiary, Beckmann AS, as pledge. Asof 31 December 2021, the balance of the loan was NOK14 million and was presented in the non-currentliabilities due within one year in the statements.
(3) As of the end of the Reporting Period, the Company had restricted monetary funds ofRMB1,471,167,575.95, mainly including letter of credit deposit, performance bond, and fixed depositover 3 months.
2. Contingencies
(1). Important contingencies on the balance sheet date
□ Applicable √ Not applicable
(2). If the Company has no important contingent issues that need to be disclosed, it should also be
explained:
□ Applicable √ Not applicable
3. Others
□ Applicable √ Not applicable
XV. Post-balance Sheet Date Events
1. Important non-adjustment matters
□ Applicable √ Not applicable
2. Profit distribution
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Profits or dividends proposed to be distributed | 556,647,354 |
| Profits or dividends reviewed and approved to be declared for distribution |
According to the Profit Distribution Plan for 2021 reviewed and approved at the 12th meeting of the5th session of Board of Directors held by the Company on 25 March 2022, based on the total stock capitalregistered on the registration date for the implementation of the equity distribution, the Company intendsto distribute the dividend in cash at RMB6 every 10 shares (tax inclusive) to all shareholders. Theremaining distributable profits in 2021 will be carried forward to the following year.
3. Sales return
□ Applicable √ Not applicable
4. Particulars on other post-balance-sheet-date events
□ Applicable √ Not applicable
XVI. Other Important Issues
1. Correction of previous-period accounting errors
(1). Retrospective restatement method
□ Applicable √ Not applicable
(2). Future application method
□ Applicable √ Not applicable
2. Debt restructuring
□ Applicable √ Not applicable
3. Asset replacement
(1). Non-monetary asset exchange
□ Applicable √ Not applicable
(2). Other asset replacement
□ Applicable √ Not applicable
4. Annuity plan
□ Applicable √ Not applicable
5. Discontinued operations
□ Applicable √ Not applicable
6. Segment information
(1). Basis for determining reporting segments and accounting policies
√ Applicable □ Not applicable
According to the Company's internal organizational structure, management requirements and internalreporting system, two reporting segments are identified, namely: direct office supplies business and coretraditional business. The Company's reporting segments provide different services. Since each segmentrequires different technical or marketing strategies, the management of the Company separately managesthe operating activities of each reporting segment and regularly evaluates the operating results of thesereporting segments to determine the allocation of resources to them and the evaluation of theirperformance.
The transfer price between segments is determined on the basis of the actual transaction price, andthe expenses indirectly attributable to each segment are grouped according to the actual share of eachsegment. Assets are allocated according to the operation of the segment and the location of the asset.
Segment liabilities include liabilities that can be attributed to the segment formed by the segment'soperating activities. If the expenses associated with liabilities shared by multiple operating segments areallocated to these operating segments, the jointly assumed liabilities are also allocated to these operatingsegments.
(2). Financial information of reporting segments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Direct office supplies business | Core traditional business | Inter-segment elimination | Total |
| Revenue from foreign transactions | 7,749,228,480.18 | 9,858,174,769.94 | 17,607,403,250.12 | |
| Revenue from inter-segment transactions | 16,421,999.56 | 76,300,858.12 | 92,722,857.68 | |
| Income from investments in associates and joint ventures | 1,372,107.60 | 1,372,107.60 | ||
| Credit impairment losses | 2,649,450.85 | -9,663,165.39 | -7,013,714.54 | |
| Asset impairment loss | -982,839.16 | -16,108,527.29 | -17,091,366.45 | |
| Depreciation and amortization charges | 35,886,532.84 | 426,349,122.22 | 462,235,655.06 | |
| Total profits (total losses) | 296,666,617.92 | 1,565,145,973.86 | 409,484.77 | 1,861,403,107.01 |
| Income tax expenses | 54,681,349.46 | 273,023,720.99 | -102,371.19 | 327,807,441.64 |
| Net profits (net losses) | 241,985,268.46 | 1,291,917,510.49 | 307,113.58 | 1,533,595,665.37 |
| Total assets | 3,095,362,065.39 | 8,350,067,519.96 | 21,041,655.02 | 11,424,387,930.33 |
| Total liabilities | 2,275,177,642.17 | 2,646,653,638.04 | 20,734,541.44 | 4,901,096,738.77 |
(3). If the Company does not have a reporting segment, or if it cannot disclose the total assets andtotal liabilities of each reporting segment, the reason should be explained
□ Applicable √ Not applicable
(4). Other descriptions
□ Applicable √ Not applicable
7. Other important transactions and matters that have an impact on investors' decisions
□ Applicable √ Not applicable
8. Others
□ Applicable √ Not applicable
XVII. Notes on the Main Items of the Parent Company's Financial Statements
1. Accounts receivable
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 129,551,588.15 |
| 1 to 2 years | 2,709,211.72 |
| 2 to 3 years | |
| Above 3 years | |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Total | 132,260,799.87 |
(2). Disclosure by accruing method for bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provisions | Carrying value | Carrying balance | Bad debt provisions | Carrying value | |||||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | Amount | Percentage (%) | Amount | Accruing percentage (%) | |||
| Bad debt provisions accrued separately | ||||||||||
| Including: | ||||||||||
| Bad debt provisions accrued according to the combination | 132,260,799.87 | 100.00 | 4,466,584.10 | 3.38 | 127,794,215.77 | 181,133,866.23 | 100.00 | 3,485,066.58 | 1.92 | 177,648,799.65 |
| Including: | ||||||||||
| Combination 1: Account age analysis combination | 75,785,623.81 | 57.30 | 4,466,584.10 | 5.89 | 71,319,039.71 | 69,701,331.66 | 38.48 | 3,485,066.58 | 5.00 | 66,216,265.08 |
| Combination III: Related parties in the scope of the consolidated financial statements | 56,475,176.06 | 42.70 | 56,475,176.06 | 111,432,534.57 | 61.52 | 111,432,534.57 | ||||
| Total | 132,260,799.87 | / | 4,466,584.10 | / | 127,794,215.77 | 181,133,866.23 | / | 3,485,066.58 | / | 177,648,799.65 |
Bad debt provisions accrued separately:
□ Applicable √ Not applicable
Bad debt provisions accrued according to the combination:
□ Applicable √ Not applicable
Disclosure to be made in accordance with the disclosure way of other receivables in case of bad debtprovisions accrued according to the general model of expected credit losses:
□ Applicable √ Not applicable
(3). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Combination 1: Account age analysis combination | 3,485,066.58 | 981,517.52 | 4,466,584.10 | |||
| Total | 3,485,066.58 | 981,517.52 | 4,466,584.10 | |||
Significant bad debt provision amounts recovered or reversed in the current period:
□ Applicable √ Not applicable
(4). Particulars on accounts receivable actually written-off in the current period
□ Applicable √ Not applicable
Writing-off of significant accounts receivable
□ Applicable √ Not applicable
(5). Particulars on top 5 accounts receivable in terms of the balance at the end of the period based
on debtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Closing balance | Percentage (%) in the total balance at the end of the period of accounts receivable | Balance of bad debt provisions at the end of the period |
| First | 42,063,973.89 | 31.8 | |
| Second | 12,663,274.18 | 9.57 | 633,163.71 |
| Third | 6,835,241.86 | 5.17 | 341,762.09 |
| Fourth | 6,364,489.64 | 4.81 | 318,224.48 |
| Fifth | 5,465,480.41 | 4.13 | 273,274.02 |
| Total | 73,392,459.98 | 55.48 | 1,566,424.30 |
Other descriptionsNo
(6). Accounts receivable derecognized due to the transfer of financial assets
□ Applicable √ Not applicable
(7). Assets and liabilities formed due to the transfer and continuous involvement of accountsreceivable
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
2. Other receivables
Presented by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Interest receivable | 35,000.00 | |
| Dividend receivable | ||
| Other receivables | 600,504,253.91 | 399,643,347.22 |
| Total | 600,504,253.91 | 399,678,347.22 |
Other descriptions:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Time deposits | ||
| Entrusted loans | 35,000.00 | |
| Bond investment | ||
| Total | 35,000.00 |
(2). Important overdue interest
□ Applicable √ Not applicable
(3). Particulars on accruing of bad debt provisions
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not applicable
(2). Important dividend receivable with the account age over one year
□ Applicable √ Not applicable
(3). Particulars on accruing of bad debt provisions
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
Other receivables
(1). Disclosure by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Account age | Carrying balance at the end of the period |
| Within 1 year | |
| Including: Sub-item within 1 year | |
| Sub-total within 1 year | 216,245,192.96 |
| 1 to 2 years | 121,411,432.11 |
| 2 to 3 years | 92,280,776.87 |
| Above 3 years | 172,055,312.40 |
| 3 to 4 years | |
| 4 to 5 years | |
| Above 5 years | |
| Less: Bad debt provisions | -1,488,460.43 |
| Total | 600,504,253.91 |
(2). Particulars on classification by amount nature
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Amount nature | Carrying balance at the end of the period | Carrying balance at the beginning of the period |
| Personal loans and petty cash | 1,883,898.16 | 1,680,200.77 |
| Consolidated balance of related-parties current accounts | 590,726,479.67 | 391,720,050.07 |
| Amount paid for materials | 843,752.96 | 174,142.29 |
| Consolidated balance of related-parties current accounts - provisional input tax | 1,766,952.16 | 1,937,167.34 |
| Margin and deposit | 1,855,862.39 | 5,383,734.67 |
| Others | 4,915,769.00 | 3,345,941.78 |
| Total | 601,992,714.34 | 404,241,236.92 |
(3). Particulars on accruing of bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2021 | 4,597,889.70 | 4,597,889.70 | ||
| Balance as at 1 January 2021 in the current period | ||||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | ||||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Accrued in the current period | -3,109,429.27 | -3,109,429.27 | ||
| Reserved in the current period | ||||
| Resold in the current period | ||||
| Written-off in the current period | ||||
| Other changes | ||||
| Balance as at 31 December 2021 | 1,488,460.43 | 1,488,460.43 |
Particulars on significant changes in the carrying balance of other receivables with changes in the lossprovisions occurring in the current period:
√ Applicable □ Not applicable
| Bad debt provisions | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January 2021 | 404,241,236.92 | 404,241,236.92 |
| Balance as at 1 January 2021 in the current period | ||||
| -- Transferred into Phase 2 | ||||
| -- Transferred into Phase 3 | ||||
| -- Reversed into Phase 2 | ||||
| -- Reversed into Phase 1 | ||||
| Increase of the current period | 403,158,817.53 | 403,158,817.53 | ||
| Derecognition of the current period | 205,407,340.11 | 205,407,340.11 | ||
| Other changes | ||||
| Balance as at 31 December 2021 | 601,992,714.34 | 601,992,714.34 |
Amount of bad debt provisions accrued for the current period and the basis for assessing whether the creditrisk of financial instruments has increased significantly:
□ Applicable √ Not applicable
(4). Particulars on bad debt provisions
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Category | Opening balance | Change of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Resold or written-off | Other changes | |||
| Combination 1: Account age analysis combination | 4,597,889.70 | -3,109,429.27 | 1,488,460.43 | |||
| Total | 4,597,889.70 | -3,109,429.27 | 1,488,460.43 | |||
Significant bad debt provision amounts reversed or recovered in the current period:
□ Applicable √ Not applicable
(5). Particulars on other receivables actually written-off in the current period
□ Applicable √ Not applicable
(6). Particulars on top 5 other receivables in terms of the balance at the end of the period based ondebtors
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Company name | Amount nature | Closing balance | Account age | Percentage (%) in the total balance at the end of the period of other receivables | Bad debt provisions Closing balance |
| First | Consolidated balance of related-parties current accounts | 236,033,960.10 | Within 1 year: RMB48,658,500 Above 1 year: RMB187,375,500 | 39.21 |
| Second | Consolidated balance of related-parties current accounts | 119,222,002.29 | Within 1 year: RMB2,048,500 Above 1 year: RMB117,373,500 | 19.80 | |
| Third | Consolidated balance of related-parties current accounts | 107,458,390.94 | Within 1 year: RMB50,459,600 Above 1 year: RMB56,998,800 | 17.85 | |
| Fourth | Consolidated balance of related-parties current accounts | 40,000,000.00 | Within 1 year | 6.64 | |
| Fifth | Consolidated balance of related-parties current accounts | 22,000,000.00 | Within 1 year | 3.65 | |
| Total | / | 524,714,353.33 | / | 87.15 |
(7). Receivables involving government subsidies
□ Applicable √ Not applicable
(8). Other receivables derecognized due to the transfer of financial assets
□ Applicable √ Not applicable
(9). Assets and liabilities formed due to the transfer and continuous involvement of other receivables
□ Applicable √ Not applicable
Other descriptions:
□ Applicable √ Not applicable
3. Long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying balance | Impairment provisions | Carrying value | Carrying balance | Impairment provisions | Carrying value | |
| Investment to subsidiaries | 1,501,648,897.21 | 1,501,648,897.21 | 1,063,812,641.33 | 1,063,812,641.33 | ||
| Investments to associates and joint ventures | 36,512,701.80 | 36,512,701.80 | 34,722,395.67 | 34,722,395.67 | ||
| Total | 1,538,161,599.01 | 1,538,161,599.01 | 1,098,535,037.00 | 1,098,535,037.00 | ||
(1). Investment to subsidiaries
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Invested company | Opening balance | Increase of the current period | Decrease of the current period | Closing balance | Impairment provisions accrued in the current period | Balance of impairment provisions at the end of the period |
| Shanghai M&G Colipu Office Supplies Co., Ltd. | 500,227,232.24 | 9,336,255.88 | 509,563,488.12 | |||
| Shanghai M&G Zhenmei Stationery Co., Ltd.（上海晨光珍美文具有限公司） | 13,288,599.09 | 13,288,599.09 | ||||
| Shanghai M&G Stationery & Gift Co., Ltd.（上海晨光文具礼品有限公司） | 199,419,400.00 | 199,419,400.00 |
| M&G Life Enterprise Management Co., Ltd.（晨光生活馆企业管理有限公司） | 60,000,000.00 | 180,000,000.00 | 240,000,000.00 | |||
| Shanghai M&G Jiamei Stationery Co., Ltd.（上海晨光佳美文具有限公司） | 30,000,000.00 | 30,000,000.00 | ||||
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | 27,500,000.00 | 27,500,000.00 | ||||
| Shenzhen Erya Creative and Cultural Development Co., Ltd.（深圳尔雅文化创意发展有限公司） | 6,339,300.00 | 6,339,300.00 | ||||
| Shanghai M&G Information Technology Co., Ltd.（上海晨光信息科技有限公司） | 50,000,000.00 | 50,000,000.00 | ||||
| Axus Stationery (Shanghai) Company Ltd. | 177,038,110.00 | 177,038,110.00 | ||||
| Shanghai Qizhihaowan Culture and Creativity Co., Ltd.（上海奇只好玩文化创意有限公司） | 28,500,000.00 | 28,500,000.00 | ||||
| Shanghai Chenxun Enterprise Management Co., Ltd.（上海晨讯企业管理有限公司） | 220,000,000.00 | 220,000,000.00 | ||||
| Total | 1,063,812,641.33 | 437,836,255.88 | 1,501,648,897.21 |
(2). Investments to associates and joint ventures
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Investment Unit | At the beginning of the period Balance | Change of the current period | At the end of the period Balance | Balance of impairment provisions at the end of the period | |||||||
| Additional investment | Withdrawn investment | Investment gains and losses recognized under the equity method | Adjustment to other comprehensive income | Other equity changes | Declaration on distribution of cash dividends or profits | Accruing of impairment provisions | Others | ||||
| I. Joint venture | |||||||||||
| Subtotal | |||||||||||
| II. Associate | |||||||||||
| Ningbo Zhongchen Equity Investment Partnership (Limited Partnership) | 29,693,097.54 | 1,634,406.40 | 418,198.53 | 31,745,702.47 | |||||||
| Shanghai Pen-making Technology Services Co., Ltd. | 5,029,298.13 | -262,298.80 | 4,766,999.33 | ||||||||
| Subtotal | 34,722,395.67 | 1,372,107.60 | 418,198.53 | 36,512,701.80 | |||||||
| Total | 34,722,395.67 | 1,372,107.60 | 418,198.53 | 36,512,701.80 | |||||||
Other descriptions:
No
4. Revenue and operating costs
(1). Particulars on revenue and operating costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period | ||
| Revenue | Costs | Revenue | Costs | |
| Main operations | 4,692,104,398.60 | 2,568,183,955.45 | 4,130,671,233.32 | 2,164,311,904.18 |
| Other operations | 83,787,431.99 | 866.69 | 65,240,228.87 | |
| Total | 4,775,891,830.59 | 2,568,184,822.14 | 4,195,911,462.19 | 2,164,311,904.18 |
(2). Particulars on revenue from contracts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Classification of contracts | Total |
| Types of goods | |
| 1. Sales of goods | 4,692,104,398.60 |
| 2. Others | 74,881,124.89 |
| Classification by operation territory | |
| 1. China | 4,612,272,861.13 |
| 2. Other countries | 154,712,662.36 |
| Total | 4,766,985,523.49 |
Description on revenue from contracts
□ Applicable √ Not applicable
(3). Description on performance obligations
□ Applicable √ Not applicable
(4). Description on allocation to remaining performance obligations
□ Applicable √ Not applicable
Other descriptions:
Details on revenue:
| Item | Amount in the current period | Amount in the last period |
| Description on revenue from customer contracts | 4,766,985,523.49 | 4,190,349,929.22 |
| Rental income | 8,906,307.10 | 5,561,532.97 |
| Total | 4,775,891,830.59 | 4,195,911,462.19 |
5. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount accounted for in the current period | Amount accounted for in the previous period |
| Long-term equity investment income calculated by cost method | ||
| Long-term equity investment income accounted for under the equity method | 1,372,107.60 | -1,610,614.02 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period |
| Interest income from debt investment during the holding period | ||
| Interest income from other debt investments during the holding period | ||
| Investment income from disposal of held-for-trading financial assets | 4,067,412.24 | 4,763,925.06 |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investment | ||
| Investment income from disposal of other debt investments | ||
| Gains from debt restructuring | ||
| Total | 5,439,519.84 | 3,153,311.04 |
Other descriptions:
No
6. Others
□ Applicable √ Not applicable
XVIII. Supplementary Information
1. Table on details of non-recurring gains and losses of the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
| Item | Amount | the situation |
| Gains or losses on disposal of non-current assets | 6,098,090.22 | Compensation for land expropriation by the Government |
| Government subsidies included in the profits and losses of the current period (except those closely related to the Company's business and of fixed amount or fixed quantity granted in accordance with national uniform standards) | 163,887,877.43 | Mainly including government subsidies received during the Reporting Period and government subsidies transferred from deferred income |
| Investment income arising from changes in fair values held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities, and investment gains on the disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investment, except the Company normal operations related to effective hedging business | 43,557,663.15 | Revenue generated from purchase of wealth management products |
| Reversal of provision for impairment of receivables and contractual assets which are individually tested for impairment. | 20,000,000.00 | Mainly due to the provision reversal of bad debts on individual receivables of M&G Colipu |
| Other net non-operating income and expenses, other than the above items | -11,127,909.82 | Mainly including the expenditure of charity donations and the loss generated by scrapping part of the old equipment |
| Minus: Effect of income tax | 33,537,580.85 | |
| Effect of minority equity | 20,550,381.69 | |
| Total | 168,327,758.44 |
For non-recurring profit and loss items defined by the Company according to the ExplanatoryAnnouncement of Information Disclosure by Companies Offering Securities to the Public No. 1 - Non-recurring Gains and Losses, and non-recurring profit and loss items listed in the ExplanatoryAnnouncement of Information Disclosure by Companies Offering Securities to the Public No. 1 - Non-recurring Gains and Losses defined as recurring profit and loss items, the reasons shall be explained.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
√ Applicable □ Not applicable
| Profits during the Reporting Period | Weighted average ROE (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the company | 26.82 | 1.6450 | 1.6425 |
| Net profit attributable to ordinary shareholders of the company after deducting non-recurring gains and losses | 23.84 | 1.4623 | 1.4603 |
3. Difference in the Accounting Information under the PRC Accounting Standards for BusinessEnterprise ("PRC GAAP") and Overseas Accounting Standards
□ Applicable √ Not applicable
4. Others
□ Applicable √ Not applicable
Chairman: Chen HuwenDate of report and submission approved by the Board of Directors: 25 March 2022
Revision information
□ Applicable √ Not applicable