OFFCN EDUCATION TECHNOLOGY CO., LTD.
2019 Annual Report
Stock Code: 002607Stock Abbr.: OFFCN EDU
March, 2020
Chapter I. Important Notes, Contents and DefinitionsThe board of directors, the supervisor committee, the directors, supervisors, and senior management of thecompany shall hereby guarantee the authenticity, accuracy and completeness of the annual report also withoutmisrepresentations, misleading statements, or material omissions, and bear individual and joint legal liabilities.Wang Zhendong, the Company’s legal representative, Shi Lei, the person in charge of accounting work, and LuoXue, the person in charge of the accounting department, hereby declare that the financial report in this AnnualReport is authentic, accurate and complete.All directors attended the board meeting approving this Annual Report.Non-standard audit report
□Applicable √ Not applicable
Major deficiencies of internal control
□Applicable √ Not applicable
The forward-looking descriptions of future plans and development strategies involved in this Annual Report donot constitute a substantial commitment to investors. The possible risks have been detailed in Section IX “Forecastof the Future Development of the Company” of Chapter IV “Discussion and Analysis of Corporate Operating”.Please pay attention to the potential investment risks.According to the arrangement of the major assets restructuring in 2018, the net profits attributable to shareholders
of the parent company after deducting non-recurring profits and losses from the restructuring counterparty, BeijingOffcn Education Technology Co., Ltd. shall be no less than RMB 930 million, RMB 1.3 billion and RMB 1.65
billion in years of 2018, 2019 and 2020 respectively. Beijing Offcn Education Technology Co., Ltd. has achievedthe net profits after deducting non-recurring profits and losses amounted to RMB 1,122,779,085.16 and RMB1,719,196,366.83 in 2018 and 2019, with a completion rate of 120.73% and 132.25% respectively.According to the profit distribution proposal reviewed and approved by the Company’s Board of Directors onMarch 9, 2020, based on the total share capital of 6,167,399,389 shares as of December 31, 2019, a cash dividendof RMB 2.40 (including tax) will be distributed for every 10 shares to all shareholders in a total of RMB1,480,175,853.36. No equity dividends will be distributed and the equity reserves will not be converted to sharecapital.
Note: The Company’s 2019 Annual Report is prepared and published in Chinese version, and theEnglish version is for reference only. Should there be any inconsistency between the Chinese version andEnglish version, the Chinese version shall prevail.
Contents
Chapter I. Important Notes, Contents and Definitions ...............................................................................................2
Chapter II. Corporate Profile & Key Financial Indicators ..........................................................................................7
Chapter III. Corporate Business Summary ...............................................................................................................15
Chapter IV. Discussion and Analysis of Corporate Operating ..................................................................................22
Chapter V. Significant Events ...................................................................................................................................48
Chapter VI. Changes in Shares and Information about Shareholders .......................................................................89
Chapter VII. Information about Preferred Shares ................................................................................................... 101
Chapter VIII. Convertible Corporate Bonds ........................................................................................................... 102
Chapter IX. Information about Directors, Supervisors, Senior Management and Employees ............................... 103
Chapter X. Corporate Governance.......................................................................................................................... 118
Chapter XI. Corporate Bonds ................................................................................................................................. 127
Chapter XII. Financial Report ................................................................................................................................ 128
Chapter XIII. Documents Available for Reference ................................................................................................. 275
Definitions
| Term(s) | Definition |
| The listed Company , The Company, Offcn Edu | Offcn Education Technology Co., Ltd. |
| Yaxia Auto | Yaxia Automobile Co., Ltd. (predecessor of the listed Company) |
| The Counterparty, Li Yongxin and other 10 Counterparties, All Shareholders of Offcn Ltd. | Lu Zhongfang, Li Yongxin, Wang Zhendong, Aerospace Industry, Guangyin Venture, Kerui Technology Innovation, Guo Shihong, Liu Bin, Zhang Yongsheng, Yang Shaofeng, Zhang Zhian |
| This major assets restructuring, This transaction, This restructuring | Base on the assessment, Yaxia Auto takes all assets and liabilities other than retained assets as the exchange-out assets to swap the equivalent portion of 100% equity of Offcn which held by Li Yongxin and other 10 counterparties, and the swapping deficiency is settled by issuance of Yaxia Auto shares according to the proportion of shareholding. At the same time, Yaxia Industrial transfers 80,000,000 and 72,696,561 Yaxia Auto shares to Offcn Partnership and Li Yongxin respectively. All shareholders of Offcn entrust Yaxia Auto to directly deliver the exchange-out assets to Yaxia Industrial or its designated third party as the consideration for the transfer of 80,000,000 shares to Offcn Partnership, and Li Yongxin offers RMB1 billion in cash as the consideration for the transfer of 72,696,561 shares. |
| Retained Assets | In this transaction, the retained assets of the listed Company as of the evaluation base date, including: 1) 18% shares of Shanghai Zuighuibao Network Technology Co., Ltd. 2) 7.81% shares of Anhui Ningguo Rural Commercial Bank Co., Ltd.; 3) 12 cases of state-owned land using rights and attached properties and construction in process on the land. |
| Exchang-out Assets | All assets and liabilities of Yaxia Auto except retained assets |
| Yaxia Industry | Anhui Yaxia Industry Co., Ltd. Formerly ultimate controlling company of the Company |
| Phase I Employee Stock Ownership Plan | Phase I employee stock ownership plan of Yaxia Auto Co., Ltd. |
| Yaxia Industry and Persons Acting in | Yaxia Industry, Zhou Xiayun, Zhou Hui, Zhou Li, Phase I employee stock ownership plan |
| Term(s) | Definition |
| Concert | |
| Aerospace Industry | Beijing Aerospace Industry Investment Fund (Limited Partnership) |
| Guangyin Venture | Beijing Guangyin Venture Capital Center (Limited Partnership) |
| Kerui Technology Innovation | Beijing Kerui Technology Innovation Investment Center (Limited Partnership) |
| Offcn Partnership | Beijing Offcn Future Information Consulting Center (Limited Partnership), established by all shareholders of Offcn Ltd. in accordance with the shareholdings ratio, which is used to undertake 80,000,000 shares of the listed Company transferred by Yaxia Industry |
| Offcn Online | Beijing Offcn Online Education Technology Co., Ltd. |
| Performance Compensation Obligor, Performance Commitment Person | Lu Zhongfang, Li Yongxin, Wang Zhendong, Guo Shihong, Liu Bin, Zhang,Yongsheng, Yang,Shaofeng, Zhang Zhian |
| Committed net profit |
| Actual net profits | The actual net profits attributable to shareholders of the parent company after deducting non-recurring profits and losses under the consolidated statements of any of the three fiscal years of Offcn Edu. |
| Net profits after deducting non-recurring profits and losses | The net profits attributable to the owner of the parent company after deducting non-recurring profits and losses under the consolidated statement. |
| Offcn Ltd. Beijing Offcn | Beijing Offcn Education Technology Co., Ltd. (predecessor:Beijing Offcn Education Technology Stock Co., Ltd.) |
| Offcn Online | Beijing Offcn Online Education Technology Co., Ltd. |
| Profit Compensation Commitment | Profit Compensation Commitment signed by Yaxia Auto and Lu Zhongfang, Li Yongxin, Wang Zhendong, Guo Shihong, Liu Bin, Zhang Yongsheng, Yang Shaofeng, Zhang Zhian. |
| CSRC | China Securities Regulatory Commission |
| SZSE | Shenzhen Stock Exchange |
| Term(s) | Definition |
| Company Law | Company Law of the People's Republic of China |
| Securities Law | Securities Law of the People's Republic of China |
| the Articles of Association | Articles of Association of Offcn Education Technology Co., Ltd. |
| RMB | Chinese yuan |
| The Live Program | Students can watch real-time online teaching (not limited to video, voice, PPT, animation, etc.) through the Internet in a fixed time. During the teaching process, interaction between teachers and students can be realized through voice or text. |
Chapter II. Corporate Profile & Key Financial Indicators
Section I. Corporate profile
| Stock Abbreviation | OFFCN EDU (Yaxia Auto has been renamed as OFFCN EDU on February 21, 2019) | Stock Code | 002607 |
| Stock Abbreviation after Changed | OFFCN EDU | ||
| Stock Exchange | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | 中公教育科技股份有限公司 | ||
| Abbreviation of the Company’s Name in Chinese | 中公教育 | ||
| Name of the Company in English | Offcn Education Technology Co., Ltd. | ||
| Abbreviation of the Company’s Name in English | OFFCN EDU | ||
| Legal Representative of the Company | Wang Zhendong | ||
| Registered Address | Yaxia Auto City, Yijiang North Road, Jiujiang District,Wuhu City, Anhui Province, China | ||
| Postal Code for Registered Address | 241000 | ||
| Office Address | Block B, Hanhua Century Mansion, No.23 Xueqing Road, Haidian District, Beijing, China | ||
| Postal Code for Office Address. | 100089 | ||
| Company Website | http://www.offcn.com | ||
| ir@offcn.com | |||
Section II. Contact information
| Secretary of the Board | Representative of Securities Affairs | |
| Name | Gui Hongzhi | Gu Pan |
| Address | Block B, Hanhua Century Mansion, No.23 Xueqing Road, Haidian District, Beijing, China | Block B, Hanhua Century Mansion, No.23 Xueqing Road, Haidian District, Beijing, China |
| Tel. | 010-83433677 | 010-83433677 |
| Fax | 010-83433666 | 010-83433666 |
| ir@offcn.com | ir@offcn.com |
| Media Designated by the Company for Information Disclosure | Securities Times, Shanghai Securities News and China Securities Journal |
| Website Designated by the China Securities Regulatory Commission (CSRC) for the Publication of the Annual Report | http://www.cninfo.com.cn |
| Place Where the Annual Report is Available for Inspection | Office of Secretary of the Board |
| Organization Code | 91340200711040703A |
| Changes of Core Business Activities Since the Company was Listed | The core business has transformed from automotive filed（Brand car distribution, maintenance, decoration, car beauty, car rental, auto finance, auto insurance brokerage, second-hand car brokerage and distribution, driving training, etc.) into technology development, service, promotion, transfer, consultation, and education training (branches only) in the field of educational technology. It undertakes exhibition services, organizes cultural and artistic exchange activities (excluding performances), conference services and business management consulting. (For projects subject to approval according to law, business activities can be carried out only after approval by relevant departments). |
Section V. Other relevant information
Accounting firm hired by the Company:
| Name of the Accounting Firm | Baker Tilly China Certified Public Accountants (LLP) |
| Business Address of the Accounting Firm | No.12 Building, Foreign Cultural and Creative Garden, No.19 Chegongzhuang West Road, Haidian District, Beijing, China |
| Signing Accountants’ Names | Zhou Baiming, Shen Xu |
| Financial Adviser Name | Office Address | Financial Adviser Sponsors | Continuous Supervision period |
| Huatai Securities Co., Ltd. | 26th Floor, CTS Building, NO.4011 Shennan Avenue, Futian District, Shenzhen, Guangdong, China | Cui Binbin, Cui Li | Nov. 28, 2018-Dec.31, 2021 |
| 2019 | 2018 | Increase/Decrease Over Previous Year End | 2017 | |
| Revenue (RMB) | 9,176,129,995.89 | 6,236,987,812.57 | 47.12% | 4,031,257,331.70 |
| Changes of Controlling Shareholder of the Company | The controlling shareholder was changed from Anhui Yaxia Industry Co., Ltd. to Lu Zhongfang and Li Yongxin during the reporting period. |
| Net profit attributable to shareholders of the parent company (RMB) | 1,804,548,688.01 | 1,152,887,416.22 | 56.52% | 524,837,228.26 |
| Net profit after deducting non-recurring profit or loss attributable to shareholders of the parent company (RMB) | 1,700,369,663.16 | 1,112,879,085.16 | 52.79% | 495,080,555.61 |
| Net cash flow from operating activities (RMB) | 2,473,986,085.19 | 1,407,946,376.93 | 75.72% | 999,410,591.54 |
| Basic earnings per share (RMB/share) | 0.29 | 0.22 | 31.82% | 0.10 |
| Diluted earnings per share (RMB/share) | 0.29 | 0.22 | 31.82% | 0.10 |
| Weighted average return on net assets | 60.71% | 71.89% | -11.18% | 66.93% |
| Year End 2019 | Year End 2018 | Increase/Decrease Over Previous Year End | Year End 2017 | |
| Total assets (RMB) | 9,960,705,427.94 | 7,202,071,521.23 | 38.30% | 3,234,754,509.88 |
| Total equity attributable to shareholders of the parent company (RMB) | 3,431,545,903.82 | 2,953,951,905.00 | 16.17% | 1,000,314,049.84 |
| The total share capital of the company as of the previous trading day before disclosure（share） | 6,167,399,389 |
| Dividend paid for preferred shares | 0.00 |
| Fully diluted earnings per share using latest equity (RMB/share) | 0.2926 |
Section VII. Differences of accounting data under domestic and overseas accountingstandards
1. Differences between net profits and net assets disclosed in the financial reports under Chinese accounting standards andinternational accounting standards :
□ Applicable √ Not applicable
There is no difference between the net profits and net assets disclosed in the financial reports of the Company under Chineseaccounting standards and international accounting standards during the reporting period.
2. Differences between net profits and net assets disclosed in the financial reports under Chinese accounting standards andoverseas Accounting Standards:
□ Applicable √ Not applicable
There is no difference between the net profits and net assets disclosed in financial reports of the Company under Chinese accountingstandards and overseas accounting standards during the reporting period.
3. Reasons for the differences between accounting data under domestic and foreign accounting standards
□ Applicable √ Not applicable
Section VIII. Quarterly key Financial Indicators
Unit: RMB
| The First Quarter | The Second Quarter | The Third Quarter | The Fourth Quarter | |
| Revenue | 1,311,632,662.04 | 2,325,786,853.44 | 2,521,688,418.01 | 3,017,022,062.40 |
| Net profit attributable to shareholders of the parent company | 106,193,482.28 | 386,831,982.87 | 465,837,656.14 | 845,685,566.72 |
| Net profit after deducting non-recurring profit or loss attributable to shareholders of the parent company | 107,644,815.54 | 364,790,101.80 | 416,140,588.66 | 811,794,157.16 |
| Net cash flow from operating activities | 2,422,743,973.91 | 1,932,022,824.62 | -1,312,107,088.75 | -568,673,624.59 |
Do the above financial indicators differ significantly from those disclosed in the Company’s quarterly and semi-annual reports
□ Yes √ No
Section IX. Non-Recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
| Item | 2019 | 2018 | 2017 | Note |
| Profit and loss on disposal of non current assets (including offsetting amount for the provision of impairment of assets) | 182,904.69 | 2,424,436.19 | 34,731.89 | |
| Tax refunds, reductions or exemptions without approval or without formal approval documents | ||||
| Government subsidies included in the current profit and loss (closely related to the business of the enterprise, except for government subsidies that are fixed or quantified in accordance with national unified standards) | 472,098.91 | 591,586.30 | ||
| Capital occupation fees charged to non-financial enterprises included in the current profit and loss | ||||
| The company can obtain the differences when the investment cost of an enterprise's acquisition of subsidiaries, associates and joint ventures is less than the income derived from the fair value of the identifiable net assets of the investee | ||||
| Non-monetary asset exchange gains and losses | ||||
| Profit or loss from entrusting others to invest or manage assets | 184,130,073.02 | 105,926,458.77 | 94,651,221.63 | |
| Impairments for assets due to force majeure factors, such as natural disasters | ||||
| Debt restructuring gains and losses |
| Enterprise restructuring costs, such as expenses for relocating employees, integration costs, etc. | ||||
| Gains and losses in excess of fair value resulting from transactions where the transaction price was significantly unfair | ||||
| Net profit or loss for the period from the beginning of the subsidiary to the business combination date resulting from a business combination under the same control | ||||
| Gains and losses from contingencies unrelated to the company's normal business operations | ||||
| In addition to the effective hedging business related to the company's normal business operations, the holding of financial assets held for trading, derivative financial assets, financial liabilities held for trading, and changes in fair value arising from derivative financial liabilities, and disposal of financial assets held for trading, derivative finance investment income from assets, financial liabilities held for trading, derivative financial liabilities and other debt investments | 1,712,787.50 | |||
| Receivables and contract asset impairment reserves that are individually tested for impairment are reversed | ||||
| Gains and losses from external entrusted loans | ||||
| Gains and losses from changes in the fair value of investment real estate that are subsequently measured at the fair value model | ||||
| The impact on the current profit and loss should be adjusted in one time in accordance with the requirements of tax and accounting laws | ||||
| Custody fee income from entrusted operations | 411,320.75 | 2,697,559.29 | ||
| Non-operating income and expenses other than the above | -1,341,412.25 | -489,475.49 | -6,555,041.66 |
| Other profit and loss items that meet the definition of non-recurring profit and loss | -53,800,000.00 | -53,800,000.00 | -53,800,000.00 | |
| Less：Amount of income tax impact | 27,588,747.77 | 16,750,647.70 | 5,165,825.51 | |
| Profit or loss attributable to minority shareholders (after tax) | ||||
| Non-recurring profit and loss attributable to owners of the parent company | 104,179,024.85 | 40,008,331.06 | 29,756,672.65 | -- |
Chapter III. Corporate Business Summary
Section I. The Company’s main business during the reporting period
1. The main business, products and business model of the Company during the reporting periodOffcn Education is a leading full-category vocational education institution in China, and it is also the pioneer andleader in the field of enrollment examination training. The company bravely undertakes the mission of the times,continues to create new markets, and serves the society with kindness and altruism.For hundreds of millions of knowledge-based people, the Company's main business covers three major sectorsincluding enrollment examination training, academic qualification preparation and vocational ability training, andit provides more than 100 categories of comprehensive vocational training services. The company operates inmore than 1,000 outlets across the country, covering more than 300 prefecture-level cities, and is rapidlyexpanding into thousands of counties and universities.Offcn Education mainly serves knowledge-based employment population including college students, universitygraduates, and various professionals. Their age is from 18 to 45. This huge group of hundreds of millions ofpeople is spread throughout the country, cities and towns at all levels and in all walks of life. Employment andvocational ability improvement are their two core demands.Vocational ability determines labor productivity which is the key to China's success in overcoming the “middleincome trap”. And employment is not only a barometer of economic growth, but also a fulcrum of the entirevocational education. It is also the ultimate arena for vocational education institutions.For this reason, the vocational education institutions that can get closer to the employment needs in the largestscope and to the greatest extent can get more opportunities to turn the flywheel of multi-category growth and canbecome a dominator in the overall vocational education.After a long term exploration and accumulation, Offcn Education has a large-scale full-time R&D team of morethan 2,000 people, a large-scale teacher team of more than 13,000 people, and a total staff of more than 35,000people. Relying on outstanding team execution and nationwide vertical integration and rapid response capabilities,the Company has developed into an innovation-driven high-growth enterprise platform.
2. Overview of the industry and business environment in 2019
(1) The acceleration of economic transformation and public service investment is creating robustmomentum both for the public recruitment test training and for the overall vocational education.Shortage of public services is a fundamental reality in our country. It forces families to spend more on publicconsumption by reducing personal consumption, which significantly limits the economies of scale in consumption,and brings a negative effect on economic growth. Therefore, it is a popular sentiment to expand public servicessuch as education, medical care, social service and other public services, so as to benefit both the country and thepeople.In the past several years, the demands for recruitment of teachers, civil servants and other public service divisionscontinuously remained at a high level. The long term trend of driving economic growth model transformation byexpanding public consumption is formed gradually. Such trend has been confirmed in the second half of 2019,when the state council and relevant department delivered policies to promote the employment. The outbreak ofnovel corona virus accelerates the involvement of the trend. Expanding both in recruitment of public services andenrollment of graduate schools has become a clear orientation of government policy.
(2) The industry of vocational education bids farewell to the state of dispersal and has entered into a newstage of the demand release led by the top players of large scale.From the beginning, the lack of cost-effective products and services with high quality has been the principalcontradiction for the industry. The scale of demand is depressed by the capability of supplying . Except the sectorof public service recruitment training, many sub-tracks of the two larger sectors of academic qualificationimprovement and vocational training have been in the small-sized and scattered state for a long time.There are two main aspects accounting for such situation. Firstly, these two sectors serve the existing labor forcemainly as a part-time learner. The working population is not as concentrated in colleges or universities as thosefresh graduates who have the graduation employment season and demand of employment is highly dispersed. And
it is not a direct employment service of colleges or universities, but only indirectly enhances their employmentcompetitiveness, so the demand is rigid but cannot be compared with the recruitment field. The external andinstitutional environment appears more mild and has not produced significant revolutionary forces.By contrast, the booming of the recruitment sector over the past two decades has been driven by the superpositionof the forces of economic and social change in urbanization and the expansion of universities. More importantly,It provides high-value-added services related to direct employment for the incremental labor force centered onfresh graduates of universities. There are profound market environment reasons behind the recruitment sectionthat can produce enterprises with billions of revenues. such as Offcn Education. .Therefore, without the accumulation and transferring of enterprise power formed by the employment market ofthe incremental labor population, it is difficult for the pioneers of the existing labor employment market to breakthe scale ceiling of 1 billion revenues, and it seems hard for a single track to break the 5 billion scale boundary. .The emergence of large scale enterprises will have a profound impact on the structure of the existing labor force.From the operation of the training market related to incremental labor employment to the creation of a trainingmarket related to the employment of existing labor, it will be a great leap forward, and the overall vocationaleducation industry will gain a geometric progression.The formation of large scale enterprises is an essential prerequisite for the leap. Only large companies can breakthrough the difficult obstacles brought by the extreme fragmentation of the market. Through full investment in thecore areas of management such as R&D, channels, and management, we can create cost-effective products anddetonate the huge demand in order to rotate the high-growth flywheel to create a tens of billions of vocationaleducation tracks.
(3) Main industry characteristics and cyclical characteristics
The industry of vocational education distributes vastly all over the county and demonstrates a significantlong-tail effect. Different from both the K12 tutoring industry and English language training industry which areconcentrated in big cities, the demand of vocational education distributes vastly in every province and every city,especially in the prefecture-level cities and the counties. Almost every county has a vocational high school, everyprefecture-level city has vocational colleges. The recruitment demand of public employers from prefecture-levelcities and counties also occupies a large proportion, which stimulates lots of local small training institutions to getinto the market and provides a wide space for the large scale players to expand their network of channels.Meanwhile, the nation-wide operation adds more difficulties to management on one hand, and lifts the barriers tocompetition on the other hand.The training of public services recruitment test is seasonal. Students always take training classes within 1-2years before or after their graduations.The national civil servant test takes place once a year, and the provincial examinations for each province arebasically once a year and provinces form a common sense that in the first half of the year, there is a relativelyconcentrated large-scale entrance and a small-scale entrance examination in the second half of the year. Institutes
and teachers are recruited according to the needs of the provinces and cities, which are evenly distributedthroughout the year. It is obvious that the number of exams amounts to tens of thousands.This seasonal fluctuation has caused major growth bottlenecks for small and medium-sized training institutes andhas also provided large institutes with continuous motivation to constantly challenge the scale boundary. With therapid increase in examination categories, large institutes will increasingly enjoy the results of scale effects andobtain a more sound resource allocation structure. In recent years, the momentum of recruitment examinations hasbeen switched to new areas such as public institutes, teachers and comprehensive recruitment, which has led to therapid concentration of market share in leading enterprises.
Section II. Major Changes in Key Assets
1. Major Changes in Key Assets
| Key Assets | Description on major Changes |
| Equity assets | No major changes |
| Fixed assets | No major changes |
| Intangible assets | No major changes |
| Construction in progress | Mainly due to new construction projects in this period |
| Accounts Receivable | Mainly due to the collection of accounts receivable |
| Prepayments | Mainly due to the expansion of business scale |
| Other receivables | Mainly due to increased deposits and guarantees |
| Other non-current financial assets |
| Deferred tax assets | Mainly due to deductible losses and increase in unpaid employee compensation |
| Other non-current assets | Mainly due to payment of land payment and prepaid renovation costs |
Section III. Analysis of the Company's core competitivenessThe Company's core competitiveness is based on the formation of a enterprise platform which empowersrapid growth driven by the capability of vertically integrated quick response. The key driving factors are asfollows:
1. Outstanding execution fosters the fast-growth culture
The team built the Company with outstanding execution, and fostered the Company's fast-growth culture througha long period of endeavoring to grow in adversity and persistently pursuing to break the growth boundary. Withthis kind of culture, the team always maintains the firm will and belief to create the future, invests audaciously,achieves economies of scale in a highly fragmented and regionally isolated market, strives to be close to theoptimal output, captures opportunities, and confronts fluctuations. With constant self-revolution of creativedestruction, the team can always create new markets in inconspicuous places, making sustained rapid growthpossible.
2. Clustered professional R&D output continuously increases the momentum for innovationAt the beginning of the career, the Company took the lead in carrying out full-time and professional R&D, basedon which it created a brand-new market. Over the past decade, the Company has fostered a expert team with richpractical experience of R&D and R&D management through front-line teaching practice and adaption to marketupgrading. Under the joint lead of the founding team and the expert team, a full-time R&D team of more than2,000 people has formed. With the expansion of categories and the involvement of different sectors, theCompany's professional R&D not only achieves the continuous division of labor under the scale effect, but alsocontinuously creates R&D cluster effect of continuous collaboration between categories, which greatly improvesthe efficiency of R&D, especially the graft efficiency of stock R&D resources for new categories and newbusinesses.
3. Rapid response capability based on the vertical integrated system is the corporate structure and workingefficiency support for sustained and high growthThe high operation efficiency far beyond the general industries is a necessity to realize scale economy andestablish competitive barrier in the decentralized market. Therefore, vertical integrated rapid response system andcapability can best adapt to this kind of market environment. In each exam, ‘Business outlets- Headquarterscommand center-Teaching sites’ are giving responses and feedback with high frequency every day. Thus, theeffect of management and learning far above average can be realized.Vertical integrated corporate structure can not only realize the high efficiency of operation, but also be effectivelycompatible with the management impact brought by high growth and rapid business category expansion. Soinvestment in and innovation on this corporate structure has always been a central part of the management reform.At present, OFFCN EDU has established more than 1,000 business outlets covering 300 prefecture-level citieswith constantly accelerating expansion. Simultaneously, the headquarters command center continues to seek thescale effect of management with the help of management reform and digital operation. In recent years, OFFCNEDU has also continuously invested in the construction of large-scale one-stop bases for food, housing andlearning to promote the realization of large-scale factory operation on the teaching sites.
4. “The flywheel effect of multi-categories growth” magnifies the Company’s growth prospects step by stepInvestment capacities between multi-categories gets accumulated and superposed, and the flywheel effect ofmulti-categories growth constantly increases, and the development of new and old categories mutually amplifiesinvestment adequacy, thus a stronger ability of operating infrastructure is jointly promoted .The main business of the Company, whose customers include hundreds of millions of knowledge-based laborpopulation aged between 18 and 45 across the country, spans three sectors of training for enrollment examination,education improvement and professional competence, to provide comprehensive vocational training servicescovering more than 100 categories.At present, the flywheel effect of growth has expanded to involve the three sectors and magnified the Company’sgrowth prospects step by step. The sector of education improvement will become an important impetus for growthin 3 to 5 years while the sector of professional competence training will become the largest and the mostsignificant contributor to the growth of the Company in 5 to 10 years.
5. Digital operation forms the enterprise platform with “real-time situational awareness”The team’s exploration for digital operation has lasted for more than 15 years, and in recent years, the investmentscale for digital operation infrastructure has increased significantly. One reason is to meet the management needsfor fast growth and rapid expansion of categories. The other reason lies in the great adaptability of verticallyintegrated fast response system to the digitization. After the system was integrated with the digitization in depth, itgenerated higher operating efficiency and significantly improved the front and background response frequencyfrom units of days to a level close to “real-time situational awareness”, which greatly enhanced the Company’score competitiveness based on speed economy.
6. The values of Offcn: kindness and altruism exists everywhere and continues to flourishAs a knowledgeable staff-intensive vocational education institution, the company has established a concise andeffective corporate culture in the long journey of arduous entrepreneurship, with the core value of “Be Good & DoRight” and advocating altruism. Not only has it become a company system, but also the founding team has takenthe lead to set an example, driven it step by step, and unswervingly implemented it in the operation, making thevalues of Offcn ubiquitous and endless in the enterprise. This distinctive and tangible corporate culture allows thecompany to maintain strong organizational cohesion in high growth.
7. OFFCN EDU strives to strengthen the Party's construction to promote the healthy and vigorousdevelopment of the companyFrom the establishment of the Party committee in 2018 to the establishment of the first Party school ofnon-public-owned enterprise in 2019, the Party committee of Offcn has fully utilized the company’s advantages ofknowledge, theory, and technology and actively promotes and implements the Party’s political routes, principles,and policies to employees and students. Meanwhile, Offcn focuses on the integration of the Party building ofnon-public enterprises and corporate culture construction to promote the healthy and vigorous development of theenterprise.As of December 31, 2019, the company had 8,367 Party members, accounting for more than one-fifth of the totalnumber of employees.
Chapter IV. Discussion and Analysis of Corporate Operating
Section I. OverviewThe year of 2019 was the closing year for the reform of national governmental institutions. During the last year,the overall demand of civil servant recruitment was not meeting our forecast. However, with all your attention andsupports, and thanks to all the great efforts, courage, perseverance and excellent performance of the team, ourcompany’s performance realized a substantial growth. The amount of performance profits significantly exceededthe commitment we made for the last year at the time of the company’s major assets restructuring, as well as thehigh expectations in the capital market. We are even happier to see that after working wholeheartedly together inthe last year, the will of our team has become stronger, and the fast-response ability of the company’srapid-growing platform was again systematically improved. With our performance surpassing the line of RMB 10billion, it marked a new fast-growing era of the company under the scale economies effect.
1. Outstanding execution triggered the superposition of high-growth culture, and the performance of thecurrent period has been drastically improved.Under an overall bleak public services recruitment trend throughout the year, the company still achieved rapidgrowth against the trend , and laid a solid foundation for the business growth brought about by the 2020 nationalemployment stabilization policy. During the reporting period, the Company achieved a gross revenue of RMB9,176,129,995.89, representing an increase of 47.12% as compared with the same period of last year. Accordingly,the net profits attributable to shareholders of the parent company amounted to RMB 1,804,548,688.01, increasedby 56.52% as compared with the same period of last year; and net profits attributable to shareholders of the parentcompany after deducing non-recurring profits and losses amounted to RMB 1,700,369,663.16, increased by
52.79% as compared with the same period of last year.
To achieve such a significant growth in a short period of time with adversity, excellent execution of the teamwould be the most important factor, which is embedded in the high-growth culture accumulated and shaped in thelong-term exploration. the company could grow fast naturally when the business climate is good, while underunsound circumstances, the high-growth culture itself would trigger the superposition of high-growth culture itselfand refresh the team’s understanding of refined operations and actions and thus greatly increase the currentbusiness performance . Then the company can reverse the potential energy of falling and ultimately achieve highgrowth in performance. Furthermore, it can solidify this high level of current business performance.The key Operating Resources and Performance Indicators Shown in the Table Below：
| Item | Indicators | At the End of the Reporting Period | At the End of Last Year | Year-on-year Change (%) |
| Operating | Directly Operated Branches | 1,104 | 701 | 57.49% |
| Resources | Employees | 35,209 | 25,718 | 36.90% |
| R&D personnel | 2,051 | 1,350 | 51.93% | |
| Teachers | 13,475 | 9,424 | 42.99% | |
| Business | Face-to-face Training Students | 1,508,160 | 1,192,103 | 26.51% |
| Online Training Students | 1,779,196 | 1,115,779 | 59.46% | |
| Face-to-face Training Income (RMB) | 8,083,730,102.79 | 5,770,250,029.33 | 40.09% | |
| Online Training Students (RMB) | 1,035,595,638.64 | 443,502,944.37 | 133.50% | |
| Revenues & Profits | Revenue (RMB) | 9,176,129,995.89 | 6,236,987,812.57 | 47.12% |
| Net profits Attributable to Shareholders of the Company(RMB) | 1,804,548,688.01 | 1,152,887,416.22 | 56.52% |
Specifically, we, the company actively deploy and build a smart teaching platform based on AI and big datatechnology. An interactive live broadcast teaching platform of version 3.0, a private cloud platform for education,a new generation of intelligent learning analysis engine and a strong capability of online R&D and comprehensiveservice have enabled the company’s online education business to grow steadily, further consolidating thecompany’s industry-leading position of online education and online and offline integrated education.During the reporting period, the online training business exceeded RMB 1 billion and achieved revenue of RMB1,035,595,638.64, representing an increase of 133.50%, as compared with the same period of last year.
3. The scale economy effect of recruitment sector revenue broke the resistance line of RMB 10 billionsDuring the reporting period, despite the overall severe public services recruitment climate, the performance of thesector still grew rapidly against the headwind, which made decisive contribution to go beyond the annualperformance target. Among the four major categories of the sector, except the category of training for civil servanttest, all of the rest three categories held growth rate of more 50%.Such an achievement was not only a progress both in the total amount and in the incremental amount, but also acritical breakthrough in the magnitude of the scale economy effect of the sector revenue, which demonstrated thesize of sector’s annual revenue would step into a new level of 10 billions from the previous level of billions. Witha stronger stable employment policy, the sector has got into a new high-growth circle.Behind the breakthrough of growth level, there came significantly structural change in the momentum of growthwithin the sector. The other three categories had achieved a total annual revenue with the same size of civilservant category. Every category had an annual revenue of more than RMB 1billion on average, which showed anew well-balanced fast growth mode driven by multicategories.During the reporting period, the category of training for civil servant test achieved revenue of RMB4,171,091,369.87, an increase by 30.15%, from revenue of RMB 3,204,932,785.69 last year. Training for publicinstitution test achieved revenue of RMB 1,401,287,171.43, representing an increase of 58.44%, from revenue ofRMB 884,449,895.82 of the corresponding period of last year. The category of training for teachers’ recruitmenttest achieved revenue of RMB 1,932,698,035.79, representing an increase of 60.85%, from revenue of RMB1,201,551,528.55 of the corresponding period of last year. Besides, although the category of training for otherpublic service test hasn’t been separated from the item of new businesses statistically, it achieved nearly the samehigh growth rate with the category of training for public institution test and the category of training for teachers’recruitment test.Training for civil servant test seemed growing steadily in comparison with other categories, but if considered inthe latter period of the institutional reform, both the recruitment of national civil servant and recruitment of theprovincial civil servant declined sharply more than 30% on average, such growth might nominate differentmeaning. On the one hand, this was the combined achievement of business innovation and excellent execution.On the other hand, this also revealed significant progress both in training attendance rate and in the concentrationdegree of market share. The students orders of the category increased 27.09%, as compared to the corresponding
period of last year. In the meanwhile, the sharp drop in the recruitment put much pressure on the operation ofcontractual class, under such circumstance, the unit price of the category still got a positive growth rate, whichproved the leading edge effect of the company in this category again. All of the above also confirmed the earlyjudgement that there is still strong potential for the growth of the category.Training for public institution test achieved such a high growth rate out of our expectation. The student memberof the category increased 43.63%, and the unit price of the category increased by 10.31%, as compared to thecorresponding period of last year. At the beginning of last year, the company reinforced the management team ofthe category. So when the recruitment soared in Q3, the team had been well prepared and grasped this valuableopportunity. More importantly, the warm-up of the recruitment climate demonstrated that after the institutionalreform, public institutions revealed a much more nominating position to offer public services. Accordingly, thesize of recruitment would get into the new orbit of steady rebound. In such a highly fragmented marketdistributing mostly in the low-tie cities, the company’s competitiveness of owned channels, capability ofteaching and overall lean operational services could be optimized both in the penetration to the low-tier regionalmarket and in the expansion in market shares.Training for teachers’ recruitment test grew robustly. Because some provincial governments postponed theirroutine recruitment plan, it finally did not double the revenue. Even though, we still regarded this as short-termchange from outside, the fast-growth trend driven by expansion of recruitment and penetration of operation hasnever been changed. Given the upcoming peak of retirement and promotion in the investment of education, thelong-term shortage for K12 teachers would be more than 10 millions people. Expansion of teachers’ recruitmentwas a key sparkle in the recent employment stabilizing policy. Actually, it’s not a new situation coming upsuddenly, the high-growth trend has been forged long time ago. The outbreak of novel coronavirus onlyaccelerates the evolvement of the trend from outside. The category also reveal a trend of increase both in volumeand in price. During the reporting period, the student orders of the category increased 52.89%, and the unit priceof the category increased 5.21%, as compared to the corresponding period of last year respectively. In the firsthalf of the year, the company adjusted the management team forcefully, and invested in the business decisively.Such experience of expansion verify the truth that keeping a positive operation standing point would always bepaid off by the market.Training for other public service test kept fast growth with plenty of niche categories, and responded to thetendency of current policy. During the reporting period, military reform, the policies such as poverty reductionand medical care promotion create strong opportunity for growth. The team of the category monetized theopportunity quickly, not only realize the increase both in volume and in price, but also extend the scale of relevantniche categories, leading the category of small size and fragmented originally head to the milestone of 1 billionsin annual revenue. From the long-term perspective, this category would evolve into another category of trainingfor public institution test in the region of grass root, since it share the attributes of public services and thediversities of the recruiter. On the other hand, the incremental amount of recruitment might have more potential tosurpass those of the category of training for public institution test.
4. The leading-geese of the two emerging sectors have been confirmed again. The flock-of-geese of allcategories grew fast and will redefine the border of the industry for next ten years.After successfully replicating the model of the sector of training for public services recruitment test, training forgraduate school entrance examination and IT skills training enter a new fast-growth business. During thereporting period, training for graduate school entrance exam achieved a growth rate beyond 100%, and IT skillstraining even achieved a high growth rate of more than 300%. More importantly, there comes up a cluster ofactive categories with the revenue size of more than RMB 10 million, and more and more categories show theirpotential to grow into large scale players.For a long time, there seldom came up with large scale leading company that could generate a revenue of morethan RMB 1 billion per year in these two sectors. This might be the results of the capability of the operators, butmore importantly, the result lies in the inner developmental logic of the vocational education market. Amid thethree major sectors of vocational education oriented to the college students and graduates, only the training forpublic services recruitment test has the chance to cultivate large scale companies, while the other two sectors arenot able to gestate large nationwide companies with annual revenue of RMB billions through its own selfdevelopment. This can be explained by the current situation in this industry and its slow development process insuch a long time.This is decided by both the fragmented distribution of working personnel and the characteristic of low-pace fromthe demand end. To activate the potential demand within the two sectors, there must the participation of largescale companies from other industries, which have strong teaching and research capabilities as well as verticallyintegrated operation ability. With heavy investment in the long run, exploration the categories one by one,creating cost-effective products and aggressively cultivate both on the demand side and the supply side, thesecompanies can eventually trigger out the eruption of the growth potential hidden deeply under separate categoriesin the market.It takes this industry 5 years to layout its business resources and explore the developmental opportunities in morethan a hundred programs in these two sectors. Since more and more sectors have generated a revenue above 10millions and even 100 millions, the scale growth in the next 5-10 years can be expected. Given the large-scalegrowth brought by both single category and multi-categories development, the two new sectors will reshape thefuture of the company in the next ten years.
Section II. Core business analysis
1. Overview
Whether the content is the same as the information disclosed in the “Section I. Overview” of “Chapter IV.Discussion and Analysis of Corporate Operating”:
√ Yes □ No
See “Section I. Overview” of “ Chapter IV. Discussion and Analysis of Corporate Operating”
2. Revenues and costs
(1) Composition of revenue
Unit: RMB
| 2019 | 2018 | Increase/ Decrease over the previous year | |||
| Amount | Proportion of Revenue | Amount | Proportion of Revenue | ||
| Revenue | 9,176,129,995.89 | 100% | 6,236,987,812.57 | 100% | 47.12% |
| Categories of industry | |||||
| Education | 9,119,325,741.43 | 99.38% | 6,213,752,973.70 | 99.63% | 46.76% |
| Others | 56,804,254.46 | 0.62% | 23,234,838.87 | 0.37% | 144.48% |
| Categories of product | |||||
| Training for Civil Service Test | 4,171,091,369.87 | 45.46% | 3,204,932,785.69 | 51.39% | 30.15% |
| Training for Public Institution Test | 1,401,287,171.43 | 15.27% | 884,449,895.82 | 14.18% | 58.44% |
| Training for Teachers’ Recruitment Test | 1,932,698,035.79 | 21.06% | 1,201,551,528.55 | 19.26% | 60.85% |
| Training for other public services test and new businesses | 1,614,249,164.34 | 17.59% | 922,818,763.64 | 14.80% | 74.93% |
| Others | 56,804,254.46 | 0.62% | 23,234,838.87 | 0.37% | 144.48% |
| Categories of region | |||||
| Northeast region | 1,605,248,551.77 | 17.49% | 1,232,507,482.95 | 19.76% | 30.24% |
| North China | 1,507,996,401.11 | 16.43% | 960,122,484.18 | 15.39% | 57.06% |
| East China | 2,291,959,920.38 | 24.98% | 1,541,183,485.90 | 24.72% | 48.71% |
| Central China | 924,399,970.66 | 10.08% | 632,369,855.67 | 10.14% | 46.18% |
| South China | 752,986,319.63 | 8.21% | 475,130,088.75 | 7.62% | 58.48% |
| Southwest Region | 1,102,235,767.21 | 12.01% | 750,351,964.82 | 12.03% | 46.90% |
| Northwest China | 934,498,810.67 | 10.18% | 622,087,611.43 | 9.97% | 50.22% |
| Others | 56,804,254.46 | 0.62% | 23,234,838.87 | 0.37% | 144.48% |
| Industries | Items | 2019 | 2018 | Year-on-year Increase/ Decrease | ||
| Amount | Proportion of Cost of revenues | Amount | Proportion of Cost of revenue | |||
| Education | Cost of revenue | 3,765,351,141.48 | 98.76% | 2,533,243,137.03 | 99.25% | 48.64% |
| Others | Cost of revenue | 47,243,245.07 | 1.24% | 19,109,556.05 | 0.75% | 147.22% |
| The name of the subsidiary | Proportion of shareholding (%) | Reason for changes |
| Tonghua Offcn Co., Ltd. | 100.00 | New establishment |
| Hunan Lightsalt Offcn Co., Ltd. | 90.00 | New establishment |
| Tianjin Hexi Offcn Co., Ltd. | 100.00 | New establishment |
| Chengdu Offcn Co., Ltd. | 100.00 | New establishment |
| Shandong Zhuoda Business Management Co., Ltd. | 100.00 | New establishment |
| Liaoning Zhongcheng Real Estate Development Co., Ltd. | 100.00 | Acquisition |
| Total Revenue from the top five customer sales (RMB) | 460,714.00 |
| Total Revenue from the top five customers in proportion of total revenue | 0.01% |
| Total Revenue from related parties in the top five customers in proportion of total revenue | 0.00% |
| SN | Customer | Revenue (RMB) | Proportion of Total Revenue |
| 1 | Customer 1 | 116,536.61 | 0.00% |
| 2 | Customer 2 | 96,450.78 | 0.00% |
| 3 | Customer 3 | 89,852.54 | 0.00% |
| 4 | Customer 4 | 79,082.50 | 0.00% |
| 5 | Customer 5 | 78,791.57 | 0.00% |
| Total | -- | 460,714.00 | 0.01% |
□ Applicable √ Not applicable
Information about major suppliers
| Total purchase amount of the top five suppliers (RMB) | 240,862,094.00 |
| Total purchase amount of the top five suppliers in proportion of total annual purchase amount | 9.01% |
| Total purchase amount of related parties of the top five suppliers in proportion of total annual purchase amount | 0.00% |
| SN | Supplier | Purchase Amount (RMB) | Proportion of Total Annual Purchase Amount |
| 1 | Supplier 1 | 143,237,909.00 | 5.36% |
| 2 | Supplier 2 | 51,857,292.00 | 1.94% |
| 3 | Supplier 3 | 18,460,000.00 | 0.69% |
| 4 | Supplier 4 | 13,898,472.00 | 0.52% |
| 5 | Supplier 5 | 13,408,421.00 | 0.50% |
| Total | -- | 240,862,094.00 | 9.01% |
3. Expenses
Unit: RMB
| 2019 | 2018 | Year-on-year Increase/ Decrease | Description on major Changes | |
| Selling and marketing | 1,482,984,426.78 | 1,101,836,301.54 | 34.59% | As business activities increase, marketing expenses and new business development expenses increase |
| General and administrative expenses | 1,098,471,953.96 | 873,418,131.47 | 25.77% | Business scale expands, management staff and expenses increase |
| Expenses of finance | 204,308,516.41 | -2,527,969.02 | 8,181.92% | Mainly due to the increase in loan interest expenses and collection fees of financial institutions |
| Expenses of research and development | 697,940,218.36 | 454,784,360.70 | 53.47% | Due to increasing investment in curriculum research and development |
| 2019 | 2018 | Year-on-year Increase/ Decrease | |
| Numbers of R&D staff | 2,051 | 1,350 | 51.93% |
| Proportion of R&D staff | 5.83% | 5.25% | 0.58% |
| R&D investment amount (RMB) | 697,940,218.36 | 454,784,360.70 | 53.47% |
| R&D investment as a percentage of revenue | 7.61% | 7.29% | 0.32% |
| Amount of capitalized R&D investment (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investment as a percentage of R&D investment | 0.00% | 0.00% | 0.00% |
| Item | 2019 | 2018 | Year-on-year Increase/ Decrease |
| Sub-total of cash inflows from operating activities | 10,193,190,093.91 | 6,665,500,540.67 | 52.92% |
| Sub-total of cash outflows from operating activities | 7,719,204,008.72 | 5,257,554,163.74 | 46.82% |
| Net cash flows from operating activities | 2,473,986,085.19 | 1,407,946,376.93 | 75.72% |
| Sub-total of cash inflows from investing activities | 27,643,810,373.01 | 15,302,096,509.17 | 80.65% |
| Sub-total of cash outflows from investing activities | 27,774,917,283.47 | 17,662,316,569.38 | 57.26% |
| Net cash flows from investing activities | -131,106,910.46 | -2,360,220,060.21 | 94.45% |
| Sub-total of cash inflows from financing activities | 3,343,698,800.00 | 1,607,000,000.00 | 108.07% |
| Sub-total of cash outflows from financing activities | 3,610,954,518.47 | 195,061,231.25 | 1,751.19% |
| Net cash flows from financing activities | -267,255,718.47 | 1,411,938,768.75 | -118.93% |
| Net increase in cash and cash equivalents | 2,075,623,456.26 | 459,665,085.47 | 351.55% |
（1）Net cash flows from operating activities increased by RMB 1,066,039.71 thousands，a 75.72% year-on-year increase. It wasmainly due to the company's main business income growth.
（2）Net cash flows from investing activities increased by RMB 2,229,113.15 thousands，a 94.45% year-on-year increase. Mainlydue to the company's acquisition of Hunan Lightsalt Offcn Co., Ltd. and Liaoning Zhongcheng Real Estate Development Co., Ltd. inthis year.
（3）Net cash flows from financing activities decreased by RMB 1,679,194.49 thousands，a 118.93% year-on-year decrease. Mainlydue to the company's increase in bank borrowings.Explanation for significant differences between the net cash flow from operating activities and the net profit during the reportingperiod
□ Applicable √ Not applicable
Section III. Non-core Business Analysis
√ Applicable □ Not applicable
Unit: RMB
| Amount | Proportion of Total Profit | Reason | Whether Sustainable | |
| Investment income | 259,222,749.45 | 12.41% | Mainly including income from wealth management products, and interest on time deposits. | Yes |
| Gains and losses from changes in fair value | 1,712,787.50 | 0.08% | According to Financial Instruments Standards. | Uncertain |
| Impairment of assets | ||||
| Non-operating income | 2,000.00 | 0.00% | Formed during the business process. | Uncertain |
| Non-operating expenses | 1,343,412.25 | 0.06% | Formed during the business process. | Uncertain |
Section IV. Analysis of Assets and Liabilities
1. Major Changes in Asset Composition
Unit: RMB
| Year End of 2019 | Beginning of Year 2019 | Increase/ Decrease over the previous year | Major Changes | |||
| Amount | Proportion of Total Assets | Amount | Proportion of Total Assets | |||
| Cash and cash equivalents | 2,724,335,001.58 | 27.35% | 648,711,545.32 | 8.95% | 18.40% | Mainly due to the expansion of business scale and increase of operating income |
| Accounts receivable | 2,721,638.09 | 0.03% | 7,042,453.33 | 0.10% | -0.07% | Mainly due to the collection of accounts receivable |
| Inventories | 20,062.46 | 0.00% | 0.00% | |||
| Investment properties | 688,475,053.53 | 6.91% | 773,542,368.65 | 10.68% | -3.77% | Mainly due to a few projects are no longer rented out |
| Long-term equity investment | ||||||
| Fixed assets | 672,429,601.44 | 6.75% | 699,100,602.20 | 9.65% | -2.90% | Mainly due to the increase in accumulated depreciation in this period |
| Construction in progress | 653,580,160.32 | 6.56% | 91,371,160.15 | 1.26% | 5.30% | Mainly due to new construction projects in this period |
| Short-term borrowings | 2,867,000,000.00 | 28.78% | 1,607,000,000.00 | 22.18% | 6.60% | Due to increased short-term bank borrowings |
| Long-term borrowings | ||||||
| Financial assets held for trading | 1,754,396,227.54 | 17.61% | 2,252,670,000.00 | 31.09% | -13.48% | Due to the redemption of wealth management products |
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Item | Opening Balance | Changes in Fair Value Gains and Losses in Current Period | Accumulated Fair Value Changes Included in Equity | Provision for Impairment in Current Period | Amount of Purchase in the Current Period | Amount of Sales in Current Period | Others | Closing Balance |
| Financial assets | ||||||||
| 1. Transactional financial assets (excluding derivative financial assets) | 2,302,670,000.00 | 1,712,787.50 | 27,034,730,000.00 | 27,446,550,000.00 | 1,892,562,787.50 | |||
| 2. Derivative financial assets | ||||||||
| 3. Other debt investments | ||||||||
| 4.Investment in other equity instruments | 155,450,000.00 | 7,350,000.00 | 162,800,000.00 | |||||
| Sub-total of financial assets | 2,458,120,000.00 | 1,712,787.50 | 7,350,000.00 | 27,034,730,000.00 | 27,446,550,000.00 | 2,055,362,787.50 | ||
| Investment properties | ||||||||
| Productive biological assets | ||||||||
| Others | ||||||||
| Total | 2,458,120,000.00 | 1,712,787.50 | 7,350,000.00 | 27,034,730,000.00 | 27,446,550,000.00 | 2,055,362,787.50 | ||
| Financial liabilities | 0.00 | 0.00 |
| Item | Closing balance | Reason for restriction |
| Debt investment | 1,500,000,000.00 | Pledge for borrowings |
| Total | 1,500,000,000.00 |
| Investment Amount in 2019 (RMB) | Investment Amount in 2017 (RMB) | Change |
| 27,672,278,371.38 | 18,501,001,139.44 | 49.57% |
| Name of investee company | Liaoning Zhongcheng Real Estate Development Co.,Ltd. | Total |
| Principal business | Real estate | -- |
| Investment method | Acquisition | -- |
| Investment amount | 173,317,597.39 | 173,317,597.39 |
| Shareholding ratio | 100.00% | -- |
| Sources of funds | Self-owned funds | -- |
| Partner | None | -- |
| Investment period | Long term | -- |
| Product type | Not applicable | -- |
| Progress as of the balance sheet date | Not applicable | -- |
| Expected return | 0.00 | 0.00 |
| Investment profit/loss for current period | 0.00 | 0.00 |
| Whether involved in litigation | No | -- |
| Date of disclosure (if any) | -- | |
| Disclosure index (if any) | -- |
| Project | Offcn Shandong Building | Offcn Fushun Building | Total |
| Investment method | Others | Self-built | -- |
| Whether it is a fixed asset investment | Yes | Yes | -- |
| Industries involved in investment projects | Educational Technology Development, serving, Cultural consultation | Educational Technology Development, serving, Cultural consultation | -- |
| Increase in the Current Period | 182,917,951.44 | 21,649,065.22 | 204,567,016.66 |
| Cumulative investment as of the end of the reporting period | 182,917,951.44 | 113,020,225.37 | 295,938,176.81 |
| Sources of funds | Self-owned funds | Self-owned funds | -- |
| Project progress | 87.10% | 34.25% | -- |
| Estimated earning | 0.00 | 0.00 | 0.00 |
| Cumulative realized benefits as of the end of the reporting period | 0.00 | 0.00 | 0.00 |
| Reasons for not meeting planned progress and expected benefits | Not completed | Not completed | -- |
| Date of disclosure (if any) | -- | ||
| Disclosure index (if any) | -- |
| Asset Type | Initial Investment Cost | Changes in Fair Value Gains and Losses in Current Period | Accumulated Fair Value Changes Included in Equity | Amount of Purchase During the Reporting Period | Amount of Sales During The Reporting Period | Accumulated Investment Income | Closing Balance | Sources of funds |
| Trust products | 1,077,000,000.00 | 1,077,000,000.00 | 1,077,000,000.00 | Self-owned funds | ||||
| Others | 28,373,200,000.00 | 1,712,787.50 | 7,350,000.00 | 25,957,730,000.00 | 27,446,550,000.00 | 184,130,073.02 | 978,362,787.50 | Self-owned funds |
| Total | 29,450,200,000.00 | 1,712,787.50 | 7,350,000.00 | 27,034,730,000.00 | 27,446,550,000.00 | 184,130,073.02 | 2,055,362,787.50 | -- |
5. Use of Proceeds
□ Applicable √ Not applicable
No use of proceeds during the reporting period.
Section VI. Sale of Major Assets and Equity
1. Sale of major assets
□ Applicable √ Not applicable
The Company did not sell any major assets during the reporting period.
2. Sale of major equity
□ Applicable √ Not applicable
Section VII. Analysis of Major Holdings and Participating Companies
√ Applicable □ Not applicable
Major subsidiaries and equity participation companies that affect the Company’s net profit by more than 10%
Unit: RMB
| Company Name | Beijing Offcn Education Technology Co., Ltd. |
| Company Type | Subsidiary |
| Primary Business | Educational technology consulting, technology development, technical services, technology promotion, technology transfer; educational consulting; cultural consulting; corporate management consulting; corporate investment consulting; computer technology training (not for national admissions); public relations services; hosting exhibitions and exhibitions; organization Cultural and artistic exchange activities (excluding performances); conference services; human resources services; operating telecommunications services; retail publications; wholesale publications. (Enterprises independently select business projects and carry out business activities in accordance with the law; human resources services, telecommunications business, publication retail, publication wholesale, and projects that are subject to approval in accordance with the law shall be operated in accordance with approved content after approval by relevant departments; The city's industrial policy prohibits and restricts the operation of projects.) |
| Registered Capital | 90,000,000.00 |
| Total Assets | 9,053,831,004.26 |
| Net Assets | 844,294,045.75 |
| Revenue | 9,157,263,984.64 |
| Operating Profit | 2,120,283,214.92 |
| Net Profit | 1,823,345,409.41 |
| Company Name | Acquisition or Disposal of Subsidiaries During the Reporting Period | Impact on Overall Production Operations and Performance |
| Tonghua Offcn Co., Ltd. | New establishment | No major impact |
| Hunan Lightsalt Offcn Co., Ltd. | New establishment | No major impact |
| Tianjin Hexi Offcn Co., Ltd. | New establishment | No major impact |
| Chengdu Offcn Co., Ltd. | New establishment | No major impact |
| Shandong Zuoda Business Management Co., Ltd. | New establishment | No major impact |
| Liaoning Zhongcheng Real Eestate Development Co., Ltd. | Acquisition | No major impact |
accordance with the law shall be operated in accordance with approved content after approval by relevantdepartments; The city's industrial policy prohibits and restricts the operation of projects.)
Section VIII. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
Section IX. Forecast of the Company’s Future Development
1. Trends of the industry’s future development
(1) The status of vocational education in education system is increasing increasinglyFor a long time, China’s education system has been dominated by curricula education while the foundation ofvocational education is relatively weak. As there is serious shortage of high-end skilled talents, the marketdemands more “skilled craftsmen” and “national builders” remain urgent.In recent years, China’s industrial structure is undergoing transformation and upgrading. The government hasclearly proposed that great efforts will be made to promote the development of emerging industries with strategicimportance, and the proportion of modern service industry will be further increased. With rapid changes in theindustrial structure, the requirements from enterprises for the professional ability and comprehensive literacy oftechnical personnel have gradually increased. New requirements for their practical ability have also been putforward. And traditional academic education can’t fully equip them with all the new requirements.Besides, the government continues to increase the efforts to develop vocational education. In accordance withResolution of China State Council on Vocational Education Development published in 2005, National VocationalEducation Reform and Implementation Plan and China's Education Modernization 2035 Plan published in 2019,the status of vocational education in education system will be increasingly promoted from both the policy andinstitutional levels.
(2) The continuous increase in the number of college graduates is an important indicator of theemployment situation.The well-known empirical rule that shows the relationship between economic growth rate and the employmentrate is Okun’s law, which interprets that the faster the economic growth is, the higher the employment rate will be.In recent years, the economic growth rate has slowed down, but the number of university graduates has continuedto increase. It will reach 8.74 million this year, setting another historical record.Among more than 15 million newly-added employment demand each year, college graduates have alreadyaccounted for over half of the group. At the same time, domestic and foreign authoritative institutes and expertshave judged that China has reached the Lewis Turning point and the dividend period of cheap rural labor has
ended. The expansion of university enrollment has obviously and directly accelerated the arrival of the turningpoint. The labor shortage of farmer laborers coexists with the difficult employment of college graduates. Thedemand for training in recruitment exams continues to rise.In addition, aiming to maintain sustained economic growth, realize transformation and overcome the“middle-income trap”, it is urgently necessary to carry out industrial upgrading of middle and high-end vocationaleducation in order to improve the vocational skills and professional literacy of knowledge-based employees
(3) The serious shortage of high-quality supply is the main contradiction that restricts the development ofthe vocational education industryAt present, the foundation of vocational education is still relatively frail. Due to the extremely low concentrationof the industry and the limited number of large vocational education institutes and enterprises, the supply ofhigh-quality vocational education is seriously inadequate. With the improvement of industry concentration and thecontinuous development of leading vocational education companies, core business elements such as R&D,management and marketing of vocational education will gradually break through the original boundaries of theindustry, create high-quality and cost-effective supplies, drive demand-side volume with supply-side innovationand push the industry into a new track of rapid development.
(4) The urbanization wave will promote the continuous improvement of public service and the number ofemployees of the public service sector will continue to expand.The process of urbanization is a key driver of the long-term impact on China’s employment market growth. In thepast 5 years, the urbanization rate has increased from 54.77% to 60.60% bringing 75 million job opportunities and
66.6 million new urban jobs were added.
Urbanization will expand the public financial expenditure and the number of employees in the public servicesector, which can be proved by “Wagner’s Law” in economics. China’s urbanization rate remains in a high-speedgrowth range of 30% to 70%. It is likely to continue to develop for nearly 20 years to achieve an urbanization rateof more than 80% in developed countries. Meanwhile, continuous urbanization may also lead to more seriouslyinadequate public service supply in cities, which will also impose higher requirements on the quality of publicservices.Additionally, the urbanization rate of the registered population is much lower than tfhat of the resident population,which is only 43.37%, and the number of population separating from their household register in China reaches286 million. The problem of unequal public services between the registered population and migrants is common incities and the State Council has issued a plan on the equalization of basic public services.Equalization of basic public services is another huge impetus besides the expansion of public service consumption.Compared with public products such as infrastructure, public services are labor-intensive inputs, especially in thebasic public services of local governments. It hires a huge number of employees while improving public servicecapabilities. China's Thirteenth Five Year Plan for Promoting Equalization of Basic Public Services issued by theState Council also clearly strengthens the building of talented personnel as an important guarantee of the
equalization of public services. According to the research by the National Academy of Governance, the publicsector hires 10%~20% of the employed population in developed countries, which is even higher than 20% inCanada and Hong Kong. The current public sector employed population only accounts for 5% in China.With the deepening of urbanization, the proportion of employed population in China’s public sector will graduallyincrease, and the market of training for public service recruitment test will also maintain a long-term steadygrowth, which has been partially proved by the astonishing demands on the training for teacher recruitment testand recruitment test in medical treatment and public health.
2. Strategic Development Direction of the Company
(1) Maintain heavy R&D investment and strengthen the advantages of the leading vocational educationinnovation platformR&D shall always be regarded as the fundamental driving force for all undertakings. The Company will resolutelycarry out long term heavy investment in R&D and attract outstanding talents to participate in R&D. With R&D,the Company will drive innovation from bottom level, make systematic improvement, break industry boundaries,establish competition barriers, so as to perfect its current major business and expand its new business, and remainto be a leading vocational education innovation platform.
(2) Deep integration of technology and business for digital transformation of operationsYears of accumulation of independent IT development is the Company's valuable wealth, enabling the Companyto calmly cope with new opportunities and challenges brought by the development of science and technology. TheCompany is open to new technologies, but does not blindly follow them. The Company always respects theessential law of education and pursues the deep integration of technology and business.The Company will constantly increase investment in technology infrastructure and technical teams and enhanceresponsiveness of technology through technological middle platform and agile development to expanddevelopment output.On this basis, the Company will continue to accelerate digital transformation of operations and fully integrate theproductivity of technology with operation system to facilitate business innovation, improve the intelligent level ofoperation and teaching, thus supporting a wider and larger scale of vertically integrated quick response,continuously increasing the output of the Company’s platforms which empowers rapid growth and improving thesustainability of rapid growth.
(3) Accumulate comprehensive vocational training service capabilities and expand the market ofmulti-categories of vocational educationSmall and scattered vocational education cannot meet the needs of economic development and transformation, norcan it meet the career development needs of knowledge-based employment groups. It also confines the scale ofvocational education institutions and its ability to provide high-quality products and services.
After years of accumulation and recent breakthroughs, the Company has initially obtained the capacity to providemulti-categories of vocational education services, and achieved considerable revenue and rapid performancegrowth in many categories.The Company will continue to explore new service category, copy and export core capabilities, strive to enlargeone category once entering it, and expand the entire category of vocational education with greatest patience.
(4) Continue channel deepening and channel innovation
The Company started its business in response to the scattered needs in the national market. From initial period,it expanded its operations to the national market. For more than a decade, the channel network has continued togrow and deepen, and there is still broad space. Next, the company’s channel focus will further sink from theheadquarter and provincial cities to prefecture-level cities and counties. At the same time, channels to universitieswill be expanded and innovated.
(5) Undertake the mission of the time, help more employees develop, and earnestly fulfill corporate socialresponsibility"Be Kind and Do Right" is the Company's core value. The Company is committed to "becoming an educationenterprise that enables its employees to rapidly grow and contributes to human and social development." Efficientoperation and successful marketing are the foundation for this commitment. At the same time, the Company willcontinue its meticulous tradition of organizational construction, combined with the strong help from Partybuilding, continuously expand the social value of corporate services, especially in important people’s livelihoodand economic affairs including the employment of college graduates, and the improvement of the professionalability of knowledge-based groups in the central and western regions, and give play to the unique value of aleading vocational education enterprise.
3. Major business plan of the Company for 2020
(1) Grasp the opportunities in the recovery period of recruiting and tap into the lower tier markets toincrease the market share of the recruiting sectionDriven by the ending of institutional reform and the further implementation of employment stability policy, therecruiting situation developed into a new stage of recovery or even rebound. In recent years, the recruitingfluctuation and epidemic shock have accelerated the differentiation of the industry, and the Company has beenexpanding the production capacity against the trend and sinking into lower tier markets, which has paved the wayfor the Company to further tap into the markets in the third-tier cities and below. The Company will operate in fullswing in long tail market, such as the market for recruitment of public institutions, teachers and other publicservice staff, to go all out to increase the market share.
(2) Promote the new model, double the benefits brought by the expansion of postgraduate enrollment, andestablish the leadership in the market of training for postgraduate entrance test
The new model characterized by teaching face to face in small classes, professional R&D and a large amount offull-time teachers, has proved to be successful and become a new standard in the industry. When the number ofpostgraduate enrollment is about to exceed 1 million, the number of applicants will pass the 5 million mark inabout 3 years. A reserve of more than 1,000 full-time teachers, the largest in this market, will be the key for theCompany to double the benefits brought by such expansion.
(3) Scale up the key areas of vocational training, especially to strengthen the management of medical andIT projectsMulti-categories layout which has been followed for many years is accelerating the monetization. After thebenefits from scale economies effect of recruiting section crossed the 10 billion resistance level and business oftraining for postgraduate entrance test entered into the considerable and fast growth stage, the management teamwill start to attach more importance and give more support to the vocational training section, especially to seizethe important opportunities arising from soaring national short-term medical investment and increasing demandsfor IT talents driven by 5G.
(4) Facilitate the innovation in management, expand the capacity of the Company’s platform whichempowers rapid growth, and enhance the value of human resourcesSustained fast growth must be synchronized with effective innovation in management. Rapid increase of servicecategories, extensive distribution of branches, and considerable knowledge staff have constantly put forward newrequirements for management innovation. And the front-line business outlets and the command centers ofheadquarters are the critical sections of management innovation. In 2020, the Company will further integrate thedigital infrastructure and the excellent team execution with vertically integrated fast response system to expandthe enterprise platform’s capacity and reinforce the leading advantage offered by the multiple growth of onlinebusiness and the online-merge-offline business.In addition to improve the internal environment for talents, the Company will continue to introduce morehigh-level talents in a larger scope and optimize the structure of human resources, to meet the new requirements ofthe implementation of the Company’s strategies and the rotating development of all categories.
4. Possible Risks and Responses
(1) Risks of macroeconomic fluctuations
Vocational education，linked to macroeconomic conditions, is an important guarantee to high-quality economicand social development. As COVID-19 has not yet come to an end, social and economic development is stillfacing many uncertainties. The future macroeconomic fluctuations will have a certain impact on the overalldevelopment of China's vocational education industry including our company performance.Risk response: In the face of complex and volatile market risks, the Company has continuously enhanced itsvertical integration and response capability , improved the risk management and control system, closely monitoredthe market development and changes, made forward-looking plans , and timely adjusted the strategic directions
and work priorities, so as to minimize the impact of changes in the external market on the Company's businessand future development.
(2) Policy Risks
The prosperity of vocational education industry has a high correlation with policy environment, thus vulnerable tochanges of vocational education policy. In recent years, in order to support the development of vocationaleducation industry, China has issued a number of industrial supportive and inspiring policies. However, anysignificant change and adjustment in relevant laws and regulations or industrial policies may influence thedevelopment trend of the industry as well as the company's future business development and performance. Inaddition, considering the Company has a large number of branches and a wide distribution of training venues, wemay not rule out the possibility that the relevant regulatory authorities of provinces, autonomous regions andmunicipalities directly under the Central Government will introduce more stringent regulations for the localeducation and training industry, which may further affect the Company's operation in the region.Risk response: In response to the above risks, each division of the Company has set up a team to track and studypolicies that were in place. At the same time, the company's experienced and strong IT independent developmentcapability and operation digitalization guarantee the efficiency of information feedback. Through the upgrade andtransformation of basic systems such as ERP, CRM and teaching platform, it can timely obtain, perceive andpredict the direction and trend of relevant policy changes at the local level to plan and adjust preemptively toavoid relevant risks, In the end, the Company will make best use of industry policy to facilitate its businessdevelopment.
(3) Market Competition Risks
As education and training market is in large scale but low concentration, while the required initial investment issmall, there are a considerable number of enterprises flooding into the industry, especially in first-tier cities wherecompletion is fierce featuring concentrated educational resources, a large base of target customers and highincome. Moreover, given to the future increase of family income, we will see greater importance attached tohigh-quality educational resources and continued booming of the industry, which will result in higher capitalinflow into the industry and ever more intense competition. How to cope with competition within the industry andits impact on emerging institutions is a challenge faced by the Company for a wholesome development of thevocational education industry.Risk response: In response to the above risks, the Company will continue to invest heavily in research anddevelopment, technology infrastructure and technical team, as well as integrate the productivity of technology intothe business system to promote business innovation. At the same time, we will continue to explore new nichemarkets, pioneer a high-end vocational education market, and further enhance the company's core competitivenessin the industry. After more than 20 years of strenuous efforts, Offcn Education has established an innovativeteaching and research system, wide offline channels and online distribution, thus it acquired a competitive edge inthe future market competition.
(4) Management Risks
The company should address the risk of desynchronization between the continuous expansion of business andmanagement capability. First, there is a risk that the cost of venue rent and manpower is on the rise to achieveeconomies of scale, while the profit level and profit margin are declining; Second, there is a risk of perennial brainloss, especially the loss of core management, R & D team and backbone teachers, which may have a negativeimpact on the long-term stable development of the company.Risk response: In view of the above risks, on the one hand, the Company will continue to optimize its verticalintegration and response management system, enhance the coordination between large-scale knowledge workers,improve management and operation efficiency, upgrade human resources structure, and moderate the businessexpansion strategy of the Company; On the other hand, we should attach more importance to the implementationof the basic rights and interests of employees, improve a fair and transparent performance evaluation system, andprovide a diversified salary incentive mechanism, sustainable development and growth for them, as well as payattention to the personal growth, so as to reduce the risk of core talent loss.
Section X. Reception of Research, Communication Interviews and Other Activities
1. Registration form for reception of research, communication, interviews and other activities during the reporting period:
√ Applicable □ Not applicable
| Reception Date | Reception Mode | Reception Object | Disclosure Index |
| February 18, 2019 | Field Research | Organization | Investor Relations Activity Record on February 18th 2019 disclosed on CNINFO’s website, http://www.cninfo.com.cn. on the date of February 20, 2019. (No: 2019-001) |
Chapter V. Significant Events
Section I. Profit distribution to common shareholders and increase of share capital due toconversion of capital reserves
Status of formulation, execution, or adjustments made to profit distribution policy for common shareholders,especially the cash dividend policy, during the reporting period:
√ Applicable □ Not applicable
On April 29, 2019, the Company held the 2018 Annual Shareholders’ General Meeting and reviewed and approvedthe 2018 profit distribution plan. Based on the Company’s share capital of 6,167,399,389 shares, the Companydistributed a cash dividend of RMB 2.30 (including tax) for every 10 shares to all shareholders, amounting to a totalof RMB 1,418,501,859.47. No equity dividends were distributed and the equity reserves were not converted to sharecapital. The profit distribution plan was completed on May 14, 2019.
| Special Explanation of Cash Dividend Policy | |
| Does it comply with the requirements of the Company’s regulations or the resolutions of the shareholders’ general meeting? | Yes |
| Are the dividend standards and proportions specific and clear? | Yes |
| Are relevant decision-making procedures and mechanisms complete? | Yes |
| Do independent directors perform their duties and play their due role? | Yes |
| Do small and medium shareholders have the opportunity to fully express their opinions and appeals, and are their legitimate rights and interests fully protected? | Yes |
| When was the cash dividend policy adjusted or changed, and are the conditions and procedures legal and transparent? | N/A |
the Company’s 2019 Annual Shareholders’ General Meeting.
2. 2018 profit distribution plan of OFFCN EDU
Based on the Company’s total share capital of 6,167,399,389 shares, the Company distributed a cash dividend ofRMB 2.30 (including tax) for every 10 shares to all shareholders for a total of RMB 1,418,501,859.47. No equitydividends were distributed and the capital reserves were not transferred to share capital. The profit distribution planhas been implemented.
3. 2017 profit distribution plan of Yaxia Auto, the predecessor of the Company
(1) Based on the total share capital of 820,335,960 shares as of July 5, 2018, Yaxia Auto distributed a cashdividend of RMB 0.20 (including tax) for every 10 shares to all shareholders for a total of RMB 16,406,719.20.The capital reserves were not transferred to share capital. The profit distribution plan has been implemented.
(2) Based on the total share capital of 820,335,960 shares as of September 30, 2018, Yaxia Auto distributed a cashdividend of RMB 3.90 (including tax) for every 10 shares to all shareholders for a total of RMB 319,931,024.40. Noequity dividends were distributed and the capital reserves were not converted to share capital. The profit distributionplan has been implemented.
Cash dividends distributed to common shareholders in the most recent three years (including the reporting period)
Unit: RMB
| Dividend Year | Cash dividend (including tax) | Net profit attributable to common shareholders of the Company | The ratio of Cash dividend to the net profit attributable to Common shareholders of the Company | Cash dividend in other forms (such as share repurchase) | The ratio of cash dividend in other forms to net profit attributable to common shareholders of the Company | Total of Cash dividends (including other forms) | Total of cash dividend (including other forms) in proportion to net profit attributable to shareholders of the Company in consolidated statements (%) |
| 2019 | 1,480,175,853.36 | 1,804,548,688.01 | 82.02% | 0.00 | 0.00% | 1,480,175,853.36 | 82.02% |
| 2018 | 1,418,501,859.47 | 1,152,887,416.22 | 123.04% | 0.00 | 0.00% | 1,418,501,859.47 | 123.04% |
| 2017 | 336,337,743.60 | 73,453,482.76 | 457.89% | 0.00 | 0.00% | 336,337,743.60 | 457.89% |
| Numbers of equity dividend per 10 shares (share(s)) | 0 |
| Dividend distribution per 10 shares (RMB) (including tax) | 2.4 |
| Conversion of capital reserves into share capital per 10 shares (share(s)) | 0 |
| Share base of the distribution proposal (share(s)) | 6,167,399,389 |
| Cash dividend amount (RMB) (including tax) | 1,480,175,853.36 |
| Cash dividend amount (RMB) in other forms (such as repurchasing shares) | 0.00 |
| Total of cash dividends (RMB) (including other forms) | 1,480,175,853.36 |
| Distributable profits (RMB) | 1,527,629,604.14 |
| Total of cash dividends (including other forms) in proportion to total of distributed profits (%) | 100% |
| Cash dividend policy | |
| For profit distribution of companies with unclear stage of development but significant capital expenditure arrangement, the percentage of cash dividend shall represent at least 20% of the profits distribution for the current year. | |
| Particulars of profit distribution and conversion of capital reserves into share capital | |
Based on audit of Baker Tilly CPA Firm, the parent company achieved a net profit of RMB1,681,893,511.71 in 2019. Pursued to theCompany’s Articles, the Company appropriated 10% of its net profit, amounting to RMB168,189,351.17 for the year of 2019 to thestatutory surplus reserve, the company realized undistributed profits of RMB 1,513,704,160.54 in 2019. Incorporating retainedearnings of RMB1,432,427,303.07 at the beginning of the year and deducting the actual cash dividend of RMB1,418,501,859.47 onMay 14, 2019, profit of the parent company available for distribution to the shareholders was RMB1,527,629,604.14 as of December31, 2019. Base on the Company’s total share capital of 6,167,399,389 shares, the Company will distribute a cash dividend ofRMB2.40 (including tax) for every 10 shares to all shareholders, amounting to a total of RMB1,480,175,853.36. There will be noequity dividends or conversion of equity reserve into share capital of the Company.
Section III. Fulfillment of commitments
1. Commitments made by the Company’s actual controllers, shareholders, related parties, purchasers, andothers that were fulfilled during the reporting period and those uncompleted as of the end of the reportingperiod
√ Applicable □ Not applicable
Important commitments made by the parties involved in the major assets restructuring are as follows:
| Lu Zhongfang, Li Yongxin, Wang Zhendong, Guo Shihong, Liu Bin, Zhang Yongsheng, Yang Shaofeng, Zhang Zhian | Performance commitment and compensation arrangement | 1. The profit forecast and compensation periods are the years of 2018, 2019 and 2020. 2. Performance commitment: The compensation obligors confirm and promise that the net profits attributable to the shareholders of the parent company after deducting non-recurring profits and losses under the consolidated statements of Offcn Ltd. shall not be less than 930 million RMB, 1.3 billion RMB and 1.65 billion RMB in years of 2018, 2019 and 2020 respectively. 3. The parties agree that the certified public accountants employed by Yaxia Automobile shall review the actual net profits of Offcn Ltd. after the end of each of the three fiscal years. The difference between the actual net profits of Offcn Ltd. and the net profits committed by the compensation obligors shall be reviewed and a special audit report shall be issued. At the end of the third fiscal year, an auditing agency with qualifications for executing securities and futures engaged by Yaxia Automobile will conduct an impairment test on Offcn Ltd. and issue an impairment test report, within 90 days after the certified public accountant issues a special audit | May 4, 2018 | The years of 2018, 2019, 2020 | Performance commitments of the year 2018 and 2019 have been fulfilled. |
| the continuity of obligation of compensation, | |||||
| Yaxia Industry, Zhou Xiayun, Zhou Hui, Zhou Li, Phase Ⅰemployee stock ownership plan | Letter of commitment on lock-up period | After the completion of the transaction (starting from the date of the listing of shares issued in this transaction), the company/I/the plan shall not transfer the company's shares in Yaxia Automobile within 36 months . After the completion of the transaction, the shares held by the Company/I/the plan, derived from Yaxia Automobile shares due to the distribution of stock dividends and the transfer of the capital reserve to share capital shall also comply with the above-mentioned arrangement of restricted sale of shares. If the China Securities Regulatory Commission and/or Shenzhen Stock Exchange have/has other provisions for the above-mentioned lock-up period arrangement , the company/I/the plan will adjust and implement the above-mentioned lock-up period according to the latest regulations of the China Securities Regulatory Commission and/or Shenzhen Stock Exchange. If violating the above commitments, the company/I/the plan will bear all losses caused to Yaxia Automobile. | May 4, 2018 | January 31, 2022 | Under normal implementation |
| Li Yongxin | Letter of Commitment on lock-up period for subscription of shares | 1. The shares of the listed Company subscribed by myself in this transaction shall not be transferred or dealt with in any other forms within 36 months from the date of the listing of the shares. Within 6 months after the listing of the shares, if the closing price of the listed Company stock is lower than the issue price for consecutive 20 trading days , or the closing price of the stock at the end of the 6 months after the listing of the shares is lower than the issue price, the lock-up period of consideration shares acquired by myself is automatically extended for 6 months. (If dividend distribution, bonus shares, transfer of capital stock, or allotment to the listed Company occurred during the above period, the aforementioned issue price is calculated based on the price adjusted by factors as ex-dividend and | April 27, 2018 | January 31, 2022 | Under normal implementation |
| ex-rights, etc.) 2. As the transferee of 72,696,561 Yaxia Automobile shares held by Anhui Yaxia Industry Co., Ltd., I shall not transfer them within 36 months from the date of registration in my securities account. 3. The aforesaid arrangement of share lock-up does not affect the implementation of profit compensation for this transaction, that is, when I need to make profit compensation, the listed Company has the right to relieve the lock-up of shares in corresponding amount in advance for profit compensation. 4. I promise to abide by the following provision: if the transaction is investigated by judiciary authorities or the China Securities Regulatory Commission on suspicion of misrepresentations, misleading statements, or material omissions in regard to the information provided or disclosed, the shares of the listed Company acquired in this transaction shall not be transferred until the conclusion of the investigation is clarified. 5. After the completion of this transaction, my increased shares due to bonus shares and transfer of capital stock of the listed Company shall also comply with the foregoing requirements. 6. If the aforementioned lock-up period arrangement does not match the latest laws and regulations and the latest regulatory requirements of the securities regulatory institution, the enterprise agrees to implement the latest laws and regulations and the requirements of the regulatory agency. 7. After the lock-up period expires, it will be implemented in accordance with the relevant regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange. | |||||
| Lu Zhong Fang | Letter of commitment on lock-up period for | 1. The shares of the listed Company subscribed by myself in this transaction shall not be transferred or dealt with in any other forms within 36 months from the date of listing of the shares. Within 6 | April 27, 2018 | January 31, 2022 | Under normal implementation |
| subscription of shares | months after the listing of the shares, if the closing price of the listed Company stock is lower than the issue price for consecutive 20 trading days , or the closing price of the stock at the end of the 6 months after the listing of the shares is lower than the issue price, the lock-up period of consideration shares acquired in this transaction by myself is automatically extended for 6 months. (If dividend distribution, bonus shares, transfer of capital stock, or allotment to the listed Company occurred during the above period, the aforementioned issuance price is calculated based on the price adjusted by factors as ex-dividend and ex-rights, etc.) 2. The aforesaid share lock-up arrangement does not affect the implementation of profit compensation for this transaction, that is, when I need to make profit compensation, the listed Company has the right to relieve the lock-up of shares in corresponding amount in advance for profit compensation. 3. I promise to abide by the following provision: if the transaction is investigated by judiciary authorities or the China Securities Regulatory Commission on suspicion of misrepresentations, misleading statements, or material omissions in regard to the information provided or disclosed, the shares of the listed Company acquired in this transaction shall not be transferred until the conclusion of the investigation is clarified. 4. After the completion of this transaction, my increased shares due to bonus shares and transfer of capital stock of the listed Company shall also comply with the foregoing requirements. 5. If the aforementioned lock-up period arrangement does not match the latest laws and regulations and the latest regulatory requirements of the securities regulatory institution, I agree to implement the latest laws and regulations and the requirements of the regulatory agency. 6. After the lock-up period expires, it will be implemented in accordance with the relevant regulations of the China Securities Regulatory |
| Commission and the Shenzhen Stock Exchange. | |||||
| Kerui Technology Innovation | Letter of commitment on lock-up period for subscription of shares | 1. The shares of the listed Company subscribed by the enterprise in this transaction shall not be transferred or dealt with in any other forms within 36 months from the date of listing of the shares. Within 6 months after the listing of the shares, if the closing price of the listed Company stock is lower than the issue price for consecutive 20 trading days , or the closing price of the stock at the end of the 6 months after the listing of the stock is lower than the issue price, the lock-up period of consideration shares acquired in this transaction is automatically extended for 6 months. (If dividend distribution, bonus shares, transfer of capital stock, or allotment to the listed Company occurred during the above period, the aforementioned issue price is calculated based on the price adjusted by factors as ex-dividend and ex-rights, etc.) 2. The enterprise promises to abide by the following provision: if the transaction is investigated by judiciary authorities or the China Securities Regulatory Commission on suspicion of misrepresentations, misleading statements, or material omissions in regard to the information provided or disclosed, the shares of the listed Company acquired in this transaction shall not be transferred until the conclusion of the investigation is clarified. 3. After the completion of this transaction, the shares that the enterprise owns increased due to bonus shares and transfer of capital stock of the listed Company shall also comply with the foregoing requirements. 4. If the aforementioned lock-up period arrangement does not match the latest laws and regulations and the latest regulatory requirements of the securities regulatory institution, the enterprise agrees to implement the latest laws and regulations and the requirements of the regulatory agency. 5. After the lock-up period expires, it will be implemented in accordance with the relevant | July 27, 2018 | January 31, 2022 | Under normal implementation |
| regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange. | |||||
| Aerospace Industry, Guangyin Venture | Letter of commitment on lock-up period for subscription of shares | 1. The shares of the listed Company subscribed by the enterprise in this transaction shall not be transferred or dealt with in any other forms within 24 months from the date of listing of the shares. Within 6 months after the listing of the shares, if the closing price of the listed Company stock is lower than the issue price for 20 consecutive trading days , or the closing price of the stock at the end of the 6 months after the listing of the shares is lower than the issue price, the lock-up period of consideration shares acquired in this transaction is automatically extended for 6 months. (If dividend distribution, bonus shares, transfer of capital stock, or allotment to the listed Company occurred during the above period, the aforementioned issue price is calculated based on the price adjusted by factors as ex-dividend and ex-rights, etc.) 2. The enterprise promises to abide by the following provision: if the transaction is investigated by judiciary authorities or the China Securities Regulatory Commission on suspicion of misrepresentations, misleading statements, or material omissions in regard to the information provided or disclosed, the shares of the listed Company acquired in this transaction shall not be transferred until the conclusion of the investigation is clarified. 3. After the completion of this transaction, the shares that the enterprise owns increased due to bonus shares and transfer of capital stock of the listed Company shall also comply with the foregoing requirements. 4. If the aforementioned lock-up period arrangement does not match the latest laws and regulations and the latest regulatory requirements of the securities regulatory institution, the enterprise agrees to implement the latest laws and regulations and the requirements of the regulatory agency. 5. After the lock-up period expires, it will be | July 27, 2018 | January 31, 2021 | Under normal implementation |
| implemented in accordance with the relevant regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange. | |||||
| Wang Zhendong, Guo Shihong, Liu Bin, Zhang Yongsheng, Yang Shaofeng, Zhang Zhian | Letter of commitment on lock-up period for subscription of shares | 1. The shares of the listed Company subscribed by myself in this transaction shall not be transferred or dealt with in any other forms within 24 months from the date of listing of the shares. Within 6 months after the listing of the shares, if the closing price of the listed Company stock is lower than the issue price for consecutive 20 trading days , or the closing price of the stock at the end of the 6 months after the listing of the shares is lower than the issue price, the lock-up period of consideration shares acquired in this transaction by myself is automatically extended for 6 months. (If dividend distribution, bonus shares, transfer of capital stock, or allotment to the listed Company occurred during the above period, the aforementioned issuance price is calculated based on the price adjusted by factors as ex-dividend and ex-rights, etc.) If Offcn Ltd. fails to meet the committed net profits as stipulated in the Profit Forecast Compensation Agreement in either 2018 or 2019, the lock-up period of the shares of the listed Company I obtained in this transaction will be extended to 36 months. At the expiration of 36 months from the date when the aforementioned shares are registered to my securities account, if the performance compensation obligations under the Profit Forecast Compensation Agreement have not been fulfilled, the above lock-up period will be extended to the date when the compensation obligations are fulfilled. 2. The aforesaid share lock-up arrangement does not affect the implementation of profit compensation for this transaction, that is, when I need to make profit compensation, the listed Company has the right to relieve the shares in corresponding amount in advance for profit compensation. 3. I promise to abide by the following provision: if the transaction is investigated by judiciary authorities or the China Securities Regulatory | July 27, 2018 | January 31, 2021 | Under normal implementation |
| Commission on suspicion of misrepresentations, misleading statements, or material omissions in regard to the information provided or disclosed, the shares of the listed Company acquired in this transaction shall not be transferred until the conclusion of the investigation is clarified. 4. After the completion of this transaction, my increased shares due to bonus shares and transfer of capital stock of the listed Company shall also comply with the foregoing requirements. 5. If the aforementioned lock-up period arrangement does not match the latest laws and regulations and the latest regulatory requirements of the securities regulatory institution, I agree to implement the latest laws and regulations and the requirements of the regulatory agency. 6. After the lock-up period expires, it will be implemented in accordance with the relevant regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange. | |||||
| Offcn Partnership | Letter of commitment on the lock-up of shares | Within 36 months from the date of the transfer of 80,000,000 shares of Yaxia Automobile held by Anhui Yaxia Industry Co., Ltd. to the enterprise, the shares shall not be transferred. The lock-up period of the shares increased during the above period due to bonus shares, transfer of capital stock or allotment of shares by Yaxia Automobile, shall also comply with the foregoing requirements. If the company violates commitments listed above, it will bear all losses caused to Yaxia Automobile. | April 27, 2018 | January 31, 2022 | Under normal implementation |
| Li Yongxin and other 10 counterparties | Letter of commitment on the lock-up of Offcn Partnership’s contribution shares | Within 36 months from the date of the transfer of 80,000,000 shares of Yaxia Automobile held by Anhui Yaxia Industry Co.,Ltd. to Beijing Offcn Future Information Consulting Center (Limited Partnership), I or the company shall not in any way transfer the shares of Beijing Offcn Future Information Consulting Center (Limited Partnership) or withdraw from the partnership with Beijing Offcn Future Information Consulting Center (Limited Partnership), nor do we transfer, assign or | July 27, 2018 | January 31, 2022 | Under normal implementation |
| authorize other entities in any way to fully or partially have the rights and interests indirectly related to the shares of Yaxia Industry Co., Ltd. held by Beijing Offcn Future Information Consulting Center (Limited Partnership). | |||||
| Li Yongxin, Lu Zhongfang, Wang Zhendong, Offcn Partnership | Letter of commitment on maintaining independence of the listed Company | 1. Guarantee the independence of the listed Company’s personnel (1) It is guaranteed that after the completion of transaction, the labor, personnel and salary management of the listed Company shall completely independent from myself/Offcn Partnership, and from other related parties, such as companies, enterprises or economic organizations, controlled by myself/Offcn Partnership. (2) Ii is guaranteed that after the completion of transaction, senior executives shall work as full-time employees and receive remuneration in the listed Company. They shall not hold any positions other than directors or supervisors in other companies, enterprises, or economic organizations controlled by myself/Offcn Partnership. (3) It is guaranteed that after the completion of transaction, the official powers of the shareholders’ meeting and board of director on personnel appointments and dismissals shall not be interfered. 2. Guarantee the independence of institutes of the listed Company (1) It is guaranteed that after the completion of transaction, the listed Company shall build a sound structure of corporate governance and develop an independent and complete organizational structure. (2) It is guaranteed that after the completion of transaction, the shareholders’ meeting, the board of directors, and the board of supervisors shall independently exercise their powers in accordance with laws, regulations and company’s articles. 3. Guarantee the independence and completeness of the assets of the listed Company. (1) It is guaranteed that after the transaction, the | April 27, 2018 | Long term | Under normal implementation |
| disclosure obligations in accordance with relevant laws, regulations and regulatory documents. 5. Guarantee the financial independence of the listed Company. (1) Itis guaranteed that after the completion of transaction, the listed Company shall establish an independent financial department with independent financial accounting systems and standardized and independent financial accounting rules. (2)It is guaranteed that after the completion of transaction, the listed Company shall open bank accounts independently and shall not share bank accounts with myself/Offcn Partnership/other related parties, such as companies, enterprises or other economic organizations controlled by myself or Offcn Partnership. (3) It is guaranteed that after the completion of transaction, financial personnel hired by the listed Company shall not hold part-time positions in other related parties, such as companies, enterprises or other economic organizations controlled by myself or Offcn Partnership (4) It is guaranteed that after the completion of transaction, the listed Company can make financial decisions independently. I/Offcn Partnership shall not interfere with the use of funds by the listed Company. (5) It is guaranteed that after the completion of transaction, the listed Company will pay taxes independently according to laws. I/Offcn Partnership shall be liable for all losses caused to the listed Company and its subsidiaries due to my/Offcn Partnership’s failure in fulfilling the above commitments. | |||||
| Li Yongxin, Lu Zhongfang | Letter of Commitment on avoiding horizontal | 1. As of the date of signing this commitment letter, myself, my close relatives and other companies, enterprises or economic organizations controlled by myself, and my close relatives. Except for Beijing Offcn Online Education Technology Co., Ltd. (hereinafter referred to as Offcn Online), controlled | September 20, 2018 | 1. The transfer of Kairuier Training School in Haidian District of | As of the end of the reporting period, Kairuier Training School Haidian District of Beijing had |
| competition | by my relatives Xuhua and Lu Yan, and its affiliated schools which are involved in the same or similar businesses conducted by Offcn Ltd., other related parties are not involved in any same, similar or related businesses conducted by the listed Company, Offcn Ltd. and its affiliated companies and schools.. Except for serving as a director in Kunming Wuhua Offcn training school, which is affiliated to Offcn Online, Li Yongxin neither holds any full-time or part-time positions nor provides consultancy at any companies or enterprises, which conducts competitive businesses with the listed Company, Offcn Ltd. and their affiliates. I also hold directly or indirectly no any stock rights(shares) of companies or enterprises conducting the same, similar or related businesses as the listed Company, Offcn Ltd. and its affiliates. 2. As of the date of signing this commitment letter, Offcn Online and its two subordinate training schools’ disposals are as follow: Offcn Online conducts no education businesses(to be canceled after subordinate schools transferred). Kairuier Training School in Haidian District of Beijingis to be transferred to an unrelated third party and the transfer agreement has been signed. If the transfer is not completed within 24 months since the date of signing this commitment letter, I will urge Offcn Online to cancle the Kairuier Training School in Haidian District of Beijing. Kunming Wuhua Offcn Training School, associated with Offcn Online, has been closed and it will be transferred to an unrelated third party or will be cancelled within 12 months after the revised Regulations for the Implementation of the Law on the Promotion of Private Education of the People’s Republic of China (hereinafter referred to as Regulations of Implementation) is officially promulgated and implemented and supporting regulations formulated by relevant local education authorities in accordance with the revised Regulations of Implementation comes into effect. 3. As of the date of signing this commitment letter, Offcn Ltd. as the organizer intends to transfer its 100% of the rights of 33 private schools for | Beijing: within 24 months from the date of the signing of this letter of commitment 2. The transfer of Kunming Wuhua Offcn Training School : within 12 months after the revised Regulations of Implementation officially promulgated and implemented and supporting regulations formulated by relevant local education authorities in accordance with the revised Regulations of Implementation comes into effect. a | been transferred to an unrelated third party. Other commitments areunder implementaion normally. |
| be the actual controller of the listed Company. | |||||
| Wang Zhendong, Offcn Partnership | Letter of Commitment on avoiding horizontal competition | 1. As of the date of signing this letter of commitments, I, my close relatives, related parties, such as companies, enterprises or other economic organizations controlled by myself and my close relatives, Offcn Partnership and related parties, such as other enterprises or economic organizations controlled by Offcn Partnership, participate in no businesses which are the same, similar o or related to businesses competing with the listed Company, Offcn Ltd. and their affiliated companies and schools. Except for serving as a director at Beijing Haidian District Kairuier Training School, affiliated to Offcn Online ( Offcn Online tends to transfer the rights of Kairuier Training School to an unrelated third party and after this transfer, Wang Zhendong will not hold the post as a director.), I neither holds any full-time or part-time positions nor provides consultancy at any companies or enterprises which conducts competitive businesses with the listed Company, Offcn Ltd. and their affiliates.serve as a consultant or a part-time employee in other companies or enterprises that pose competitions against the listed Company, Offcn Ltd. and its affiliates. I do not directly or indirectly hold the equity of an company or entity that runs the same, similar or relevant business engaged by the listed Company, Offcn Ltd. and its affiliates. 2.. After the completion of transaction, I/Offcn Partnership promise that during the time of being shareholders of the listed Company, I, my close relatives and other related parties, such as companies, enterprises or other economic organizations, controlled by myself and my close relatives，Offcn Partnership and related parties, such as other enterprises or economic organizations controlled by Offcn Partnership, shall not in any way (including but not limited to self operated or with other parties to operate joint venture, cooperation, joint operation, investment, mergence, and trustee operation home and aboard) engage in the same, similar, related and competitive businesses with the listed Company, which includes | April 27, 2018 | Long-term | Under normal implementation |
| its affiliates. If I/Offcn Partnership shall be liable for all losses caused to the listed Company and its affiliates due to my/Offcn Partnership’s failure in fulfilling commitments. | |||||
| Li Yongxin, Lu Zhongfang | Letter of Commitment on regulation and reduction of related-party transactions | 1. After the transaction is completed, during the time of being the actual controller of the listed Company, I, my close relatives and other companies, enterprises or other economic organizations controlled by myself, my close relatives will try to avoid and reduce the related-party transactions with the listed Company and its affiliates; unless it is necessary for the business development of the listed Company, any related-party transactions with the listed Company and its affiliates will not be conducted. 2. After the transaction is completed, for the related-party transactions which are unavoidable or reasonable to happen with the listed Company and its affiliates, I, my close relatives and other companies, enterprises or economic organizations controlled by myself and my close relatives, will sign related transaction agreements with the listed Company and its affiliates in accordance with the relevant laws, regulations and regulatory documents and follow the general business principles of equality, willingness, equivalence and paid-use. The prices of related-party transactions shall be fair. Decision-making procedures, lawful information disclosure obligations and relevant reporting and approval procedures regarding the related-party transactions, shall be followed. The status of shareholders shall not be used to damage the legitimate rights and interests of the listed Company and other shareholders. 3. After the completion of the transaction, I will not use the shareholders’ rights of the listed Company to manipulate or instruct the listed Company or its directors, supervisors and senior executives to make the listed Company provide or accept funds, commodities, services or other assets under inequal conditions or engage in any behaviors that would | July 27, 2018 | Long-term | Under normal implementation |
| damage the interests of the listed companies. 4. I will urge my close relatives and other companies, enterprises and other economic organizations controlled by myself and my close relatives to abide by the aforementioned commitments. 5. If I, my close relatives and other companies, enterprises and other economic organizations controlled by myself and my close relatives violate the above commitments, the profits obtained by the violation of commitments belong to the listed Company, and I shall be liable for all losses caused to the listed Company and its affiliates. Within 30 working days since receiving the written notice from the listed Company, compensation will be made in cash. 6. The commitment is valid from the date when it is signed to the time when I cease to be the actual controller of Yaxia Automobile and there is no other related relationship with Yaxia Automobile. | |||||
| Wang Zhendong, Aerospace Industry, Offcn Partnership | Letter of Commitment on reduction and standardization of related-party transactions | 1. After the completion of transaction, during the period of being the actual controller/shareholder， I, my close relatives and other companies, enterprises or other economic organizations controlled by myself, my close relatives，Aerospace Industry or Offcn Partnership, will try to avoid and reduce the related-party transactions with the listed Company. 2. After the transaction is completed, for the related-party transactions which are unavoidable or reasonable to happen with the listed Company and its affiliates, myself, my close relatives and other companies, enterprises or economic organizations controlled by myself and my close relatives, Aerospace Industry or Offcn Partnership, will sign related transaction agreements with the listed Company and its affiliates in accordance with the relevant laws, regulations and regulatory documents and follow the general business principles of equality, willingness, equivalence and paid-use. The prices of related-party transactions shall be fair. Decision-making procedures, lawful information | April 27, 2018 | Long-term | Under normal implementation |
| disclosure obligations and relevant reporting and approval procedures regarding the related-party transactions, shall be followed. The status of shareholders shall not be used to damage the legitimate rights and interests of the listed Company and other shareholders. 3. After the completion of the transaction, I/Aerospace Industry/Offcn Partnership will not use the shareholders’ rights of the listed Company to manipulate or instruct the listed Company or the directors, supervisors and senior executives of the listed Company to make the listed Company provide or accept funds, commodities, services or other assets in different forms under inequal conditions or engage in any behaviors that would damage the interests of listed companies. I/Aerospace Industry/Offcn Partnership shall be liable for all losses caused to the listed company and its affiliates due to my/Aerospace Industry’s/Offcn Partnership’s failures in fulfilling commitments. | |||||
| Are the commitments fulfilled on time? | Yes |
2. Should there be any profit forecast for any of the Company’s assets or projects and the current reportingperiod is still within the forecast period, the Company shall explain whether the performance of the asset orproject matches with the profit forecast and why.
√ Applicable □ Not applicable
| Asset or Project Name in Profit Forecast | Forecast Start Time | Forecast End Time | Forecast Performance of the period (billions RMB) | Actual Performance (billions RMB) | Reasons for not meeting expectations (if applicable) | Original Forecast Disclosure Date | Original Forecast Disclosure Index |
| Profit forecast of the target company in this major assets restructuring, Beijing Offcn Education Technology Co., Ltd. ( the net profits after deducting non-recurring profits and losses under the consolidated statements) | January 1, 2018 | December 31, 2020 | 1.3 | 1.7191964 | Not applicable | May 5, 2018 | Report of Major Assets Replacement and Issuance of Shares for Purchasing Assets and Related-party Transaction (Draft) at http://www.cninfo.com.cn |
qualifications to issue a special audit report for Beijing Offcn on the actual net profits after deductingnon-recurring profits and losses in the current period. Should the amount of actual net profits (aggregate amount)realized by Beijing Offcn as of the end of each fiscal year during the profit compensation period fails to reach thecommitted net profits (aggregate amount), the performance compensation obligors shall assume the compensationobligation in accordance with the Profit Compensation Commitment.Fulfillment of performance commitments and their impact on goodwill impairment testing:
During the reporting period, the net profits attributable to shareholders of the parent company after deductingnon-recurring profits and losses under the consolidated statements of Offcn Ltd., which is the wholly-ownedsubsidiary of the Company, reached RMB 1,719,196,366.83. As the performance commitment of 2019 was RMB1,300,000,000, the performance commitment was realized at a completion rate of 132.25%.The total net profits attributable to shareholders of the parent company after deducting non-recurring profits andlosses under the consolidated statements of Offcn Ltd in 2018-2019 was RMB 2,841,975,451.99. Which wasrealized at a completion rate of 127.44% compared with the promised net profit of RMB 2,230,000,000 in2018-2019.
Section IV. Status of capital of the listed Company used for non-operational purposes by thecontrolling shareholder or its related parties:
□ Applicable √ Not applicable
In the reporting period, no controlling shareholder or its related parties used capital of the listed Company fornon-operational purposes.
Section V. Explanation given by the board of directors, supervisory committee andindependent directors (if applicable) regarding the “non-standard auditor’s report” issued bythe CPA firm for the current reporting period.
□ Applicable √ Not applicable
Section VI. Changes in accounting policy, estimation, and methods when compared to theprevious financial year
√ Applicable □ Not applicable
1.Since January 1, 2019, the company has adopted the relevant provisions of Notice on Revising and Issuing theFormat of General Enterprise Financial Statements for 2019 [Cai Kuai (2019) No. 6] and “Notice on Revision ofthe Consolidated Financial Statement format (2019 edition)”([Cai Kuai (2019) No.16] , hereinafter referred to as
"Amendment Notice").Accounting policy changes and the resulting effects are as follows：
Table 1
| Projects | Adjustment Item |
| Balance Sheet | (1) The item "Notes and accounts receivable" is divided into the item "Notes Receivable" and the item "Accounts Receivable"; (2) The item "Notes and accounts payable" is divided into the item "Notes Payable" and the item "Accounts Payable"； (3) A new "Financing receivables” item reflects notes and accounts receivable that are measured at fair value and their changes are included in other comprehensive income; (4) The new item of "Special reserve" reflects the book value at the end of the period of the safety production expenses drawn by enterprises in high-risk industries according to state regulations. (5) New "Right-of-use assets" and "Lease liabilities" items. |
| The Income Statement | (1) A new item entitled "Income generated from the derecognition of financial assets measured at amortized cost" shall be added to reflect the gains or losses incurred by an enterprise as a result of the termination of recognition of financial assets at amortized cost due to transfer or other circumstances; (2) The items of "Impairment losses of assets" and "Impairment losses of creditability " are moved to the position after "Gains from changes in fair value" ; (3) The Income Statement "MINUS: Impairment losses of assets" is adjusted to "PLUS: Impairment losses of assets(Losses are indicated by "-")" ; (4) Adjusting the "MINUS: Impairment losses of creditability" in the Income Statement to "PLUS: Impairment losses of creditability (Losses are indicated by "-") " ; (5) In the Income Statement, under the item "Investment income" , add the item " Income generated from the derecognition of financial assets measured at amortized cost (losses are represented by '-')" ; (6) The "Net increase in financial assets held for trading purposes" and "Cash received on issuance of bonds" were deleted from the Income Statement. |
| Statement of Cash Flow | The Statement of Cash Flows specifies the scope of the government subsidy, and the actual government subsidy received by the enterprise, whether related to assets or income, is listed |
| under the item " Cash received relating to other operating activities " . | |
| Statement of Changes in Owners' Equity | (1) Specifying the scope of the item "Other equity instrument owner's invested capital" and the item "Other equity instrument owner's invested capital" , the amount of capital invested by the holders of financial instruments classified as equity instruments other than common shares issued by the Enterprise; (2) Adding "Extraction and use of special reserve" items to the statement of changes in owners' equity. |
| The contents and reasons for the changes of accounting policies | Affected financial statements line items |
| Divide the “Notes receivable and Accounts receivable” into “Notes receivables” and “Accounts receivables” | As of December 31, 2019, the amount of notes receivables and accounts receivables presented in the statement of the consolidated financial position were RMB 0.00 and RMB 2,721,638,09; As of December 31, 2018, the amount of notes receivables and accounts receivables were RMB 0.00 and RMB 6,804,330.67. As of December 31, 2019, both of the notes receivables and accounts receivables are presented as RMB 0.00. As of December 31, 2018, both of the notes receivables and accounts receivables are also presented as RMB 0.00. |
| Divide the “Notes payable and Accounts payable” into “Notes payable” and “Accounts payable” | As of December 31, 2019, the amount of notes payable and accounts payable presented in the statement of the consolidated financial position were RMB 0.00 and RMB 236,481,990,86;As of December 31, 2018, the amount of notes payables and accounts receivables were RMB 0.00and RMB 144,564,705.50. As of December 31, 2019, the amount of notes payable and accounts payable presented in the statement of the parent financial position were RMB 0.00 and RMB 561,752,26 ;As of December 31, 2018, the amount of notes payables and accounts receivables were RMB 0.00 and RMB 19,854,802.89. |
2. Since January 1, 2019, the company has adopted the relevant regulations of the Accounting Standards forBusiness Enterprises No.22--Recognition and Measurement of Financial Instruments (Accounting [2017] No.7)and Accounting Standards for Business Enterprises No.23--Transfer of Financial Assets (Accounting [ 2017]No.8),、Accounting Standards for Business Enterprises No.24-- Hedging Accounting (Accounting [ 2017] No.9)(and Accounting Standards for Business Enterprises No.37-- Presentation of Financial Instruments (Accounting[ 2017] No.14),and based on the cumulative impact, the retained earnings at the beginning of the year and otherrelevant items in the financial statements are adjusted, and information for comparable periods is not adjusted.Changes in accounting policies resulted in an increase of RMB 247,170.28 in the undistributed profit of theconsolidated financial statements on January 1, 2019. The financial statements of the parent company on January1, 2019 had no impact.
3. The company has adopted the relevant provisions of the Accounting Standards for Business Enterprises No.7--Monetary Assets Exchange (Accounting [2019] No.8) from 10 June 2019. The company shall adjustnon-monetary asset exchanges between January 1, 2019 and the implementation date of this standard according tothe standards. The company does not need to make retrospective adjustments to non-monetary asset exchangesthat occurred before January 1, 2019. Changes in accounting policies have no impact on the company'sconsolidation and the parent company's financial statements.
4. The Company has adopted the relevant provisions of the Accounting Standards for Business EnterprisesNo.12-- Monetary Assets Exchange (Accounting [2019] No.9) since 17 June 2019. The company shall adjust thedebt restructuring that occurred between January 1, 2019 and the implementation date of this standard inaccordance with the standards. The company does not need to make retrospective adjustments to debtrestructurings that occurred before January 1, 2019. Changes in accounting policies have no impact on thecompany's consolidation and the parent company's financial statements.
Section VII. Retrospective restatement due to correction of material accounting errors in thereporting period
□ Applicable √ Not applicable
No such cases in the reporting period.
Section VIII. Changes in consolidation scope when compared to the previous financial year
√ Applicable □ Not applicable
| The name of the subsidiary | Proportion of shareholding (%) | Reason for changes |
| The name of the subsidiary | Proportion of shareholding (%) | Reason for changes |
| Tonghua Offcn Co., Ltd. | 100.00 | New establishment |
| Hunan Lightsalt Offcn Co., Ltd. | 90.00 | New establishment |
| Tianjin Hexi Offcn Co., Ltd. | 100.00 | New establishment |
| Chengdu Offcn Co., Ltd. | 100.00 | New establishment |
| Shandong Zuoda Business Management Co., Ltd. | 100.00 | New establishment |
| Liaoning Zhongcheng Real Eestate Development Co., Ltd. | 100.00 | Acquisition |
| Name of the CPA firm | Baker Tilly China Certified Public Accountants LLP |
| Remuneration for the CPA firm (millions RMB) | 1.8 |
| Consecutive years of the audit service provided by the c CPA firm | 2 |
| Name of the certified public accountants from the CPA firm | Zhou Baiming, Shen Xu |
| Consecutive years of the audit service provided by the certified public accountants from the CPA firm | 2 |
Section X. Possibility of listing suspension and/or termination after disclosure of this AnnualReport:
□ Applicable √ Not applicable
Section XI. Bankruptcy and reorganization:
□ Applicable √ Not applicable
Section XII. Significant lawsuit or arbitration:
□ Applicable √ Not applicable
There is no significant lawsuit or arbitration of the Company during the reporting period.Other legal cases of the Company and its subsidiaries during the reporting period were as follows:
1. The amount involved in legal cases resolved during the reporting period was RMB 14,264,893.11, and the actual documented,effective amount was about RMB 3,340,949.93. The results of the described legal proceedings do not have a material advert effect onthe Company's operations;
2. The amount involved in the pending legal cases as of the end of the reporting period was RMB 12,544,000.89, accounting for
0.37 % of the audited net assets attributable to the shareholders of the Company in 2019, which does not have a material advert effecton the Company's operations.
Section XIII. Punishment and rectification:
□ Applicable √ Not applicable
There is no punishment or rectification of the Company during the reporting period.
Section XIV. Integrity of the Company and its controlling shareholders and actualcontrollers:
□ Applicable √ Not applicable
Section XV. The implementation of stock incentive plan, Employee Stock Ownership Plan, orother employee incentive plans:
□ Applicable √ Not applicable
There is no stock incentive plan, employee stock ownership plan or other employee incentive plans during the reporting period.
Section XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operations
□ Applicable √ Not applicable
No such cases in the reporting period.
2. Related-party transactions relevant to purchases and sales of assets
□ Applicable √ Not applicable
No such cases in the reporting period.
3. Related-party transactions with joint foreign investments
□ Applicable √ Not applicable
No such cases in the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Not applicable
No such cases in the reporting period.
5. Other significant related-party transactions
√ Applicable □ Not applicable
On 12 December 2018, Li Yongxin signed an agreement with Huaxia Bank Co., Ltd. Beijing Sidaokou Sub-branch to provide amaximum personal guarantee of RMB 570,000,000.00 for Offcn Ltd. 's short-term loans with the contract number YYB76(maximumguarantee)20180023. The claim period is from 7 December 2018 to 7 December 2019.On 12 December 2018, Offcn Ltd. signed a loan contract of RMB 100,000,000.00 with Huaxia Bank Sidaokou Sub-branch, withthe contract number YYB7610120180011, and the loan period was from 13 December 2018 to 13 December 2019. The loan wassettled on 13 December 2019.On 26 December 2018, Offcn Ltd. signed a loan contract of RMB 110,000,000.00 with Huaxia Bank Sidaokou Sub-branch, withthe contract number YYB7610120180013, and the loan period was from 26 December 2018 to 26 December 2019. The loan wassettled on 13 December 2019.
On 9 January 2019, Offcn Ltd. and Huaxia Bank Sidaokou Sub-branch signed a loan contract of RMB 360,000,000.00 withcontract number YYB7610120180014. The loan period is from 9 January 2019 to 9 January 2020, as of December 2019,the loanbalance on the 31st was RMB 360,000,000.00.
Section XVII. Significant contracts and their execution
1. Trusteeships, Contracts, and Leases
(1) Trusteeships
√ Applicable □ Not applicable
Trusteeships descriptionOn September 20, 2018, Offcn Ltd. and Li Yongxin signed 《Agreement on Transfer of Rights of Private Schools Affiliated toBeijing Offcn Education Technology Co., Ltd.》, as of September 20, 2018, 100% of the rights of the organizers of all privatenon-enterprise units under Offcn Ltd. were transferred to Li Yongxin. At the same time, Li Yongxin and Offcn Ltd.signed《Trusteeship Agreement of Private Schools》. It is agreed that, Li Yongxin would entrust Offcn Ltd. to manage the privatenon-enterprise units, from the day Li Yongxin paid the entire transfer price to 100% of the units’ rights and interests of the organizer,transferred to an unrelated third party or cancelled (Note: Within 12 months of the promulgation and implementation of the revisedImplementation Regulations and the relevant regulations formulated by the relevant local education authorities based on the revisedImplementation Regulations, Li Yongxin transfer the private non-enterprise units 100% of the organizer's rights to an unrelated thirdparty or cancel them).Projects in which the profit or loss brought to the company reaches more than 10% of the company's total profit during the reportingperiod
□ Applicable √ Not applicable
No such cases in the reporting period.
(2) Contracts
□ Applicable √ Not applicable
No significant contracts in the reporting period.
(3) Leases
□ Applicable √ Not applicable
No significant leases in the reporting period.
2. Significant guarantees
□ Applicable √ Not applicable
No significant guarantees in the reporting period.
3. Cash assets managed under trust
(1) Wealth managed under trust
√ Applicable □ Not applicable
Entrusted finances during the reporting period
Unit: RMB10 thousands
| Type | Funding Source for Entrusted Funds | Entrusted Finance Amount | Unexpired Balance | Overdue Outstanding Amount |
| Bank wealth management products | Self-owned fund | 267,340.00 | 69,735.00 | 0.00 |
| Brokerage wealth management products | Self-owned fund | 8,000.00 | 8,000.00 | 0.00 |
| Trust wealth management products | Self-owned fund | 107,700.00 | 107,700.00 | 0.00 |
| Others | Self-owned fund | 194,350.00 | 0.00 | 0.00 |
| Total | 577,390.00 | 185,435.00 | 0.00 | |
| Contracting Party A | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. |
| Contracting Party B | Beijing Jingchenrunye Technology development Co., | Harbin Gloria Pharmaceuticals Co., Ltd. | Shenyang Lijing Pearl Hotel Management | Beijing Guangyuan huifeng construction engineering Co., Ltd. | Beijing Chuangsheng Architectural Decoration |
| Ltd. | Engineering Co. , Ltd | ||||
| Contract | Rent Unit A, Unit B, Unit A, Units 18, 19, 21 in Daokou Village East Courtyard, Wangsiying Town, Chaoyang District, Beijing | Rent West Tower of Hanhua Century Building, Building 1, No. 23 Xueqing Road, Haidian District, Beijing | Rent Building No. 129, Beishuncheng Road, Shenhe District, Shenyang | Renovation project（Building area of about 350 thousand square meters） | Renovation project（Building area of about150 thousand square meters） |
| Signing Date | July 01, 2014 | June 16, 2013 | July 01, 2016 | September 03, 2017 | August 07, 2019 |
| Evaluation Agency | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
| Pricing Principle | Market price | Market price | Market price | Market price | Market price |
| Price（RMB10 thousands） | 9,810.87 | 10,753.69 | 25,090.48 | 30,000.00 | 28,674.70 |
| Related Party Transaction | No | No | Yes | No | No |
| Related Party | No | No | Companies controlled by our executives and core employees | No | No |
| Implementation as of the end of the reporting period | In progress | In progress | In progress | Completed | In progress |
| Disclose Date | December 01, 2018 | December 01, 2018 | December 01, 2018 | December 01, 2018 | |
| Website | http://www.cninfo.com.cn | http://www.cninfo.com.cn | http://www.cninfo.com.cn | http://www.cninfo.com.cn |
| Contracting Party A | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. | Beijing Offcn Education Technology Co., Ltd. |
| Contracting Party B | Beijing Jingchenrunye Technology development Co., Ltd. | Harbin Gloria Pharmaceuticals Co., Ltd. | Shenyang Lijing Pearl Hotel Management | Beijing Guangyuan huifeng construction engineering Co., Ltd. | Beijing Chuangsheng Architectural Decoration Engineering Co. , Ltd |
| Contract | Rent Unit A, Unit B, Unit A, Units 18, 19, 21 in Daokou Village East Courtyard, Wangsiying Town, Chaoyang District, Beijing | Rent West Tower of Hanhua Century Building, Building 1, No. 23 Xueqing Road, Haidian District, Beijing | Rent Building No. 129, Beishuncheng Road, Shenhe District, Shenyang | Renovation project（Building area of about 350 thousand square meters） | Renovation project（Building area of about150 thousand square meters） |
| Signing Date | July 01, 2014 | June 16, 2013 | July 01, 2016 | September 03, 2017 | August 07, 2019 |
| Evaluation Agency | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
| Pricing Principle | Market price | Market price | Market price | Market price | Market price |
| Price（RMB10 thousands） | 9,810.87 | 10,753.69 | 25,090.48 | 30,000.00 | 28,674.70 |
| Related Party Transaction | No | No | Yes | No | No |
| Related Party | No | No | Companies controlled by our executives and core employees | No | No |
| Implementation as of the end of the reporting period | In progress | In progress | In progress | Completed | In progress |
| Disclose Date | December 01, 2018 | December 01, 2018 | December 01, 2018 | December 01, 2018 | |
| Website | http://www.cninfo.com.cn | http://www.cninfo.com.cn | http://www.cninfo.com.cn | http://www.cninfo.com.cn |
NoDuring the reporting period, the Company and its subsidiaries strictly implemented national laws and regulationson environmental protection, and were not subject to administrative penalties from the national environmentalprotection authorities for violating relevant laws and regulations. The Company has always practiced the greendevelopment concept put forward in the “13th Five-Year Plan”, conscientiously implemented variousenvironmental protection management systems, and continuously promoted energy conservation, emissionreduction and environmental protection. At the same time, the Company also integrates and implements theconcept of environmental protection in strategic decision-making and all aspects of business, operates in alow-carbon way, and encourages employees to conduct green voluntary activities, aiming to jointly contribute tothe harmonious development of society.
Section XIX. Other significant events
√ Applicable □ Not applicable
Major Assets Restructuring:
During the 55th conference of 2018 held by the Review Committee for Mergers, Acquisitions, and Restructuringsof Listed Companies of China Securities Regulatory Commission on November 2, 2018, the Company's majorassets restructuring was conditionally approved.On November 28, 2018, the Company acquired, from China Securities Regulatory Commission (CSRC), thedocument No. 1972[2018] of The Reply on Examining and Approving the Major Assets Restructuring of YaxiaAutomobile Co., Ltd. and the Issuance of Shares to Lu Zhongfang and others for Purchasing Assets. It marked theofficial approval of the major assets restructuring transaction by CSRC.In December 2018, the parties involved in this restructuring have officially completed the relevant industrial andcommercial procedure of equity change, and acquired the documents of approval issued by the Administration forIndustry and Commerce. In the same month, the parties involved in this restructuring signed a formalconfirmation letter of asset delivery.On January 21, 2019, Yaxia Industry transferred 80,000,000 shares and 72,696,561 shares respectively to OffcnPartnership and Li Yongxin, and the shares transfer registration was completed.On January 29, 2019, the Company released the Announcement on the Major Assets Replacement and theIssuance of Shares for Purchasing Assets, the Implementation of Related Transactions and the Listing of NewShares. On January 31, 2019, 5,347,063,429 new shares in this major assets restructuring were officially listed.The Company's total share capital was increased to 6,167,399,389 shares.With the examination and approval of the Administration for Industry and Commerce, the Company has adopted“Offcn Education Technology Co., Ltd” as its name since February 2, 2019. Examined and Approved by theShenzhen Stock Exchange, the Company's stock abbreviation has become “OFFCN EDU” as a replacement of the
former name “Yaxia Auto” since February 21, 2019.Announcements and index of other key disclosures are as follows:
| Title of Announcements | Disclosure Date | Disclosure Website |
| Announcement on the Adjustment of the Price and Quantity of New Issues after the Implementation of Dividend Plan for the First Three Quarters of 2018 | 2019/1/8 | http://www.cninfo.com.cn |
| Announcement on the Proposed Change of Company Name and Stock Short Name | 2019/1/16 | http://www.cninfo.com.cn |
| Announcement on the Entrusted Financial Management Business of the Company and its Subsidiaries | 2019/1/16 | http://www.cninfo.com.cn |
| Announcement on the Alteration of the Company's business scope and the Increase of the Registered Capital | 2019/1/16 | http://www.cninfo.com.cn |
| Announcement on the Alteration of Accounting Firm | 2019/1/16 | http://www.cninfo.com.cn |
| Announcement on the Agreement on the Transfer of Controlling Stockholders’ shares and the Completion of the Transfer Registration | 2019/1/22 | http://www.cninfo.com.cn |
| Announcement on the Commitments of the Parties concerned in the Replacement of Major Assets and the Issuance of Shares for Purchasing Assets | 2019/1/29 | http://www.cninfo.com.cn |
| Announcement on the Change of Company’s Name, Business Scope, the Increase of Registered Capital and the Completion of business registration of change | 2019/2/12 | http://www.cninfo.com.cn |
| Announcement on the Change of the Chinese and English Stock Short Name of the Company | 2019/2/21 | http://www.cninfo.com.cn |
| Announcement on the 2018 Profit Distribution Plan | 2019/4/9 | http://www.cninfo.com.cn |
| Special Explanation of the Alterations in Accounting Policies and Accounting Estimates | 2019/4/9 | http://www.cninfo.com.cn |
| Announcement on the Confirmation of the 2019 Annual Pay Schemes for Directors, Supervisors and Senior Managers of the Company | 2019/4/9 | http://www.cninfo.com.cn |
| Announcement on the Estimated Daily Connected Transaction Limits for 2019 | 2019/4/9 | http://www.cninfo.com.cn |
| Announcement on the Implementation of the 2018 Annual Equity Distribution | 2019/5/7 | http://www.cninfo.com.cn |
| Announcement on the Company and its Subsidiaries’ Application for a Comprehensive Credit Limit from the Bank | 2019/7/6 | http://www.cninfo.com.cn |
| Announcement on the Reappointment of the Accounting Firm | 2019/12/21 | http://www.cninfo.com.cn |
Chapter VI. Changes in Shares and Information about Shareholders
Section I. Changes in shares
1. Changes in shares
Unit: share(s)
| Before Change | Increase or Decrease (+ or -) | After Change | |||||||
| Number of shares | Proportion | New shares issued | Bonus shares | Conversion of equity reserves into share capital | Others | Subtotal | Number of shares | Proportion | |
| 1. Shares with sales restrictions | 114,933,519 | 14.01% | 5,347,063,429 | -114,933,519 | 5,232,129,910 | 5,347,063,429 | 86.70% | ||
| (1) Shares held by state | |||||||||
| (2) Shares held by state-owned legal person | |||||||||
| (3) Other shares held by domestic capital | 114,933,519 | 14.01% | 5,347,063,429 | -114,933,519 | 5,232,129,910 | 5,347,063,429 | 86.70% | ||
| Of which: held by domestic legal person | 534,706,341 | 534,706,341 | 534,706,341 | 8.67% | |||||
| held by domestic natural person | 114,933,519 | 14.01% | 4,812,357,088 | -114,933,519 | 4,697,423,569 | 4,812,357,088 | 78.03% | ||
| (4) Shares held by overseas capital | |||||||||
| Of which: shares held by overseas legal person | |||||||||
| shares held by overseas natural person | |||||||||
| 2. Shares without trading restrictions | 705,402,441 | 85.99% | 114,933,519 | 114,933,519 | 820,335,960 | 13.30% | |||
| (1) RMB common shares | 705,402,441 | 85.99% | 114,933,519 | 114,933,519 | 820,335,960 | 13.30% | |||
| (2) Domestic- listed shares for oversea investors | |||||||||
| (3) Foreign- listed shares for overseas investors | |||||||||
| (4) Others | |||||||||
| 3. Total number of shares | 820,335,960 | 100.00% | 5,347,063,429 | 5,347,063,429 | 6,167,399,389 | 100.00% | |||
Reasons of share changes:
√ Applicable □ Not applicable
According to the arrangement of the major assets restructuring, Yaxia Auto, the predecessor of the Company,issued 5,347,063,429 ordinary shares to all shareholders of Offcn Ltd. After the 5,347,063,429 new shares werelisted on January 31, 2019, the total share capital of the Company was increased to 6,167,399,389 shares.Approval of share changes:
√ Applicable □ Not applicable
The changes in shares during the reporting period were approved by Approval of Major Assets Restructuring ofYaxia Automobile Co., Ltd. and Purchase of Assets by Issuing Shares to Lu Zhongfang and Others (RegulatoryPermission [2018] No. 1972), issued by China Securities Regulatory Commission (CSRC).Transfer of share ownership:
√ Applicable □ Not applicable
According to the aforementioned major assets restructuring arrangement, the Company issued 5,347,063,429 RMB-denominated ordinary shares to all shareholders of Beijing Offcn Education Technology Co., Ltd. The newshares were listed on January 31, 2019, detailed in Listing Notice of Main Assets Replacement and Issuance ofShares for Purchasing Assets and Execution of Related-party Transaction and Additional Shares Listing issued onJanuary 29, 2019.Execution of share repurchases:
□ Applicable √ Not applicable
Execution of reduction in repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic EPS, diluted EPS, net asset per share attributable to commonshareholders of the Company, and other financial indexes over the last year and the last reporting period:
√ Applicable □ Not applicable
During the reporting period, the Company increased share capital by 5,347,063,429 shares, which diluted the basicearnings per share and diluted earnings per share for the current period, and the net asset per share attributable tocommon shareholders of the Company.Other contents that the Company considers necessary or is required by the securities regulatory authorities todisclose:
□ Applicable √ Not applicable
2. Changes in shares with sales restrictions
√ Applicable □ Not applicable
Unit: share(s)
| Name of shareholder | Number of shares with sales restrictions at the beginning of the period | Number of shares with sales restrictions increased in the period | Number of shares with sales restrictions released in the period | Number of shares with sales restrictions at the end of the period | Reasons for sales restrictions | Date of releasing restrictions on sales |
| Lu Zhongfang | 0 | 2,550,549,260 | 0 | 2,550,549,260 | Shares with sales restrictions increased by 2,550,549,260 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2022 |
| Li Yongxin | 0 | 1,058,718,560 | 0 | 1,058,718,560 | Shares with sales restrictions increased by 1,058,718,560 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2022 |
| Wang Zhendong | 0 | 962,471,418 | 0 | 962,471,418 | Shares with sales restrictions increased by 962,471,418 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
| Beijing Aerospace Industry Investment Fund (Limited Partnership) | 0 | 267,353,171 | 0 | 267,353,171 | Shares with sales restrictions increased by 267,353,171 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
| Beijing Guangyin Venture Capital Center (Limited Partnership) | 0 | 178,235,447 | 0 | 178,235,447 | Shares with sales restrictions increased by 178,235,447 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | 2021年01月31日 January 31, 2021 |
| Beijing Kerui Technology Innovation Investment Center (Limited Partnership) | 0 | 89,117,723 | 0 | 89,117,723 | Shares with sales restrictions increased by 89,117,723 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2022 |
| Yang Shaofeng | 0 | 48,123,570 | 0 | 48,123,570 | Shares with sales restrictions increased by 48,123,570 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
| Zhang Zhian | 0 | 48,123,570 | 0 | 48,123,570 | Shares with sales restrictions increased by 48,123,570 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
| Liu Bin | 0 | 48,123,570 | 0 | 48,123,570 | Shares with sales restrictions increased by 48,123,570 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
Section II. Issuance and listing of securities
1. Issuance of securities (excluding preferred shares) during the reporting period
√ Applicable □ Not applicable
| Shares and derivative securities | Date of Issuance | Issue price (or interest rate) | Number of issued shares | Listing date | Number of shares permitted for listed transactions | Transaction termination date |
| Shares | ||||||
| RMB common shares | January 23, 2019 | 3.27 RMB/share | 5,347,063,429 | January 31, 2019 | 5,347,063,429 | |
| Zhang Yongsheng | 0 | 48,123,570 | 0 | 48,123,570 | Shares with sales restrictions increased by 48,123,570 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
| Guo Shihong | 0 | 48,123,570 | 0 | 48,123,570 | Shares with sales restrictions increased by 48,123,570 shares due to commitment of major assets replacement and issuing shares with sales restrictions for purchasing assets. | January 31, 2021 |
| Others | 114,868,068 | 0 | 114,868,068 | 0 | Restriction released half a year later after the resignation of any senior executive | According to the policies on share-holding for senior executives. |
| Total | 114,868,068 | 5,347,063,429 | 114,868,068 | 5,347,063,429 | -- | -- |
issued 5,347,063,429 RMB common shares to all shareholders of Offcn Ltd. The new shares were listed onShenzhen Stock Exchange on January 31, 2019.
2. Particulars about changes in share capital, structure of shareholders, and structure of assets andliabilities:
√ Applicable □ Not applicable
This major assets restructuring transaction was approved by China Securities Regulatory Commission with TheReply on Approval of Major Assets Restructuring of Yaxia Automobile Co., Ltd. and Issuance of Shares forPurchasing Assets to Lu Zhongfang and Others (Regulatory Permission [2018] No. 1972). During the reportingperiod, the Company issued 5,347,063,429 RMB common shares to all shareholders of Offcn Ltd. for purchasingassets. The share capital of the Company increased from 5,347,063,429 shares to 6,167,399,389 shares.
3. Existing shares held by internal employees of the Company
□ Applicable √ Not applicable
Section III. Information about the shareholders and actual controllers
1. Total number of shareholders and their shareholdings
Unit: share(s)
| Total number of common shareholders at the end of reporting period | 31,629 | Total number of common shareholders at the end of last month before the disclosure date of the annual report | 26,733 | Total number of preferred shareholders with voting rights restored at the end of reporting period | 0 | Total number of preferred shareholders with voting rights restored at the end of last month before the disclosure date of the annual report | 0 | ||||||||
| Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them | |||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding Percentage (%) | Total shares held at the end of the reporting period | Increase/decrease of shares during the reporting period | Number of shares held with sales restrictions | Number of shares held without sales restrictions | Pledged or frozen | ||||||||
| Status of shares | Amount | ||||||||||||||
| Lu Zhongfang | Domestic natural person | 41.36% | 2,550,549,260 | 2,550,549,260 | 2,550,549,260 | 0 | Pledged | 400,000,000 |
| Li Yongxin | Domestic natural person | 18.35% | 1,131,415,121 | 1,131,415,121 | 1,058,718,560 | 72,696,561 | Pledged | 782,850,000 |
| Wang Zhendong | Domestic natural person | 15.61% | 962,471,418 | 962,471,418 | 962,471,418 | 0 | Pledged | 78,600,000 |
| Beijing Aerospace Industry Investment Fund (Limited Partnership) | Domestic non-state-owned legal person | 4.33% | 267,353,171 | 267,353,171 | 267,353,171 | 0 | ||
| Beijing Guangyin Venture Capital Center (Limited Partnership) | Domestic non-state-owned legal person | 2.89% | 178,235,447 | 178,235,447 | 178,235,447 | 0 | Pledged | 30,000,000 |
| Beijing Kerui Technology Innovation Investment Center (Limited Partnership) | Domestic non-state-owned legal person | 1.44% | 89,117,723 | 89,117,723 | 89,117,723 | 0 | ||
| Beijing Offcn Future Information Consulting Center (Limited Partnership) | Domestic non-state-owned legal person | 1.30% | 80,000,000 | 80,000,000 | 0 | 80,000,000 | ||
| Zhou Xiayun | Domestic natural person | 1.28% | 78,848,640 | 0 | 0 | 78,848,640 | Pledged | 62,148,845 |
| Zhou Hui | Domestic natural person | 1.17% | 72,277,920 | 0 | 0 | 72,277,920 | Pledged | 18,249,020 |
| Zhou Li | Domestic natural person | 0.78% | 48,185,280 | 0 | 0 | 48,185,280 |
| Particulars about the strategic investor or general legal person who becomes the top 10 shareholders due to the placement of new shares | N/A | ||
| Explanation on associated relationship or concerted actions among the above-mentioned shareholders: | The controlling shareholders and the actual controllers of the Company Lu Zhongfang and Li Yongxin are mother and son. Lu Zhongfang, Li Yongxin and Beijing Offcn Future Information Consulting Center (Limited Partnership) are acting in concert. Zhou Xiayun and Zhou Hui are father and son. Zhou Xiayun and Zhouli are father and daughter. The Company does not know whether the other shareholders are related parties or whether they are acting-in-concert parties as defined in the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the listed Company. | ||
| Particulars about shares held by the Top 10 shareholders without sales restriction(s) | |||
| Name of shareholder | Number of shares without sales restrictions held at the end of the reporting period | Type of shares | |
| Type of shares | Quantity | ||
| Beijing Offcn Future Information Consulting Center (Limited Partnership) | 80,000,000 | RMB common shares | 80,000,000 |
| Zhou Xiayun | 78,848,640 | RMB common shares | 78,848,640 |
| Li Yongxin | 72,696,561 | RMB common shares | 72,696,561 |
| Zhou Hui | 72,277,920 | RMB common shares | 72,277,920 |
| Zhou Li | 48,185,280 | RMB common shares | 48,185,280 |
| Hong Kong Securities Clearing Company Ltd. | 46,759,862 | RMB common shares | 46,759,862 |
| China Citic Bank Co. Ltd.- Bank of Communications Schroeder New Vitality Flexible Allocation of Hybrid Securities Investment Fund | 23,812,965 | RMB common shares | 23,812,965 |
| National Social Security Fund Combination 102 | 20,799,654 | RMB common shares | 20,799,654 |
| Agricultural Bank of China Ltd.- Bank of Communications Schroeder Growth Hybrid Securities Investment Fund | 13,123,569 | RMB common shares | 13,123,569 |
| China Construction Bank Ltd.- Bank of Communications Schroeder Blue Chip Hybrid Securities Investment Fund | 10,941,232 | RMB common shares | 10,941,232 |
| Explanation on associated relationship and concerted actions among top ten common shareholders without sales restrictions, and among top ten shareholders and top ten common shareholders without sales restrictions | The controlling shareholders and the actual controllers of the Company Lu Zhongfang and Li Yongxin are mother and son. Lu Zhongfang, Li Yongxin and Beijing Offcn Future Information Consulting Center (Limited Partnership) are acting in concert. Zhou Xiayun and Zhou Hui are father and son. Zhou Xiayun and Zhouli are father and daughter. The Company does not know whether the other shareholders are related parties or whether they are acting-in-concert parties as defined in the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the listed Company. | ||
| Explanation on the top 10 common shareholders’ participation in margin financing | N/A | ||
| Name of controlling shareholder | Nationality | Whether obtained any permanent residency abroad |
| Lu Zhongfang | China | No |
| Li Yongxin | China | No |
| Major occupations and jobs | Mr. Li Yongxin is the current Chairman of the Board of the Company. | |
| Particulars about controlling or holding shares of other companies listed at home and/or abroad in the reporting period | N/A | |
| Name of new controlling shareholder | Lu Zhongfang, Li Yongxin |
| Updated date | January 31, 2019 |
| Designated website link for index check | CNINFO（http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=9900021221&stockCode=002607&announcementId=1205806723&announcementTime=2019-01-29） |
| Designated disclosure date on website | January 29, 2019 |
| Name of actual controller | Relationship with the actual controller | Nationality | Whether obtained any permanent residency abroad |
| Lu Zhongfang | Herself | China | No |
| Li Yongxin | Himself | China | No |
| Beijing Offcn Future Information Consulting Center (Limited Partnership) | Acting in concert (including agreement, relatives, or under common control) | China | No |
| Major occupations and jobs | Mr. Li Yongxin is the current Chairman of the Board of the Company. | ||
| Particulars about the domestic and/or foreign-listed companies with shares held by the actual controller in the past 10 years | N/A | ||
| Name of new actual controller | Lu Zhongfang, Li Yongxin |
| Updated date | January 31, 2019 |
| Designated website link for index check | CNINFO（http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=9900021221&stockCode=002607&announcementId=1205806723&announcementTime=2019-01-29） |
| Designated disclosure date on website | January 29, 2019 |
The actual controller controlled the Company by trust or other asset management methods:
□ Applicable √ Not applicable
4. Other institutional shareholders owning over 10% of shares
□ Applicable √ Not applicable
5. Particulars about restrictions on shareholding reduction of controlling shareholders, actual controllers,restructuring parties, and other commitment subjects
□ Applicable √ Not applicable
Chapter VII. Information about Preferred Shares
□ Applicable √ Not applicable
There are no preferred shares of the Company during the reporting period
Chapter VIII. Convertible Corporate Bonds
□ Applicable √ Not applicable
There are no convertible corporate bonds during the reporting period
Chapter IX. Information about Directors, Supervisors, Senior
Management and Employees
Section I. Changes in shares held by directors, supervisors and senior executives
| Name | Position | Tenure status | Gender | Age | Start Date | End Date | Shares held at the beginning of the period (share) | Quantity of shares increased in the current period (share) | Quantity of shares decreased in the current period (share) | Quantity of shares held at the end of the period (share) |
| Li Yongxin | Chairman of the Board | Current | M | 44 | February 1, 2019 | January 31, 2022 | 0 | 1,131,415,121 | 0 | 1,131,415,121 |
| Wang Zhendong | Director, general manager | Current | M | 44 | February 1, 2019 | January 31, 2022 | 0 | 962,471,418 | 0 | 962,471,418 |
| Shi Lei | Director | Current | M | 44 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Yi Ziting | Director | Current | F | 46 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Wang Qiang | Independent director | Current | M | 43 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Tong Yan | Independent director | Current | F | 43 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Zhang Xuanming | Independent director | Current | M | 42 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Yu Hongwei | Chairman of the Supervisory Committee | Current | F | 54 | July 22, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| He Di | Supervisor | Current | M | 43 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Li Wen | Supervisor | Current | F | 41 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Wang Xuejun | Deputy general manager | Current | M | 57 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| He Youli | Deputy general manager | Current | M | 45 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Luo Xue | Chief Financial Officer | Current | M | 52 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Gui Hongzhi | Secretary of the Board, deputy general manager | Current | M | 49 | February 1, 2019 | January 31, 2022 | 0 | 0 | 0 | 0 |
| Zhou Xiayun | Chairman of the Board | Resigned | M | 66 | November 30, 2006 | February 1, 2019 | 78,848,640 | 0 | 0 | 78,848,640 |
| Zhou Hui | Director, general manager | Resigned | M | 42 | November 30, 2006 | February 1, 2019 | 72,277,920 | 0 | 0 | 72,277,920 |
| Xiao Meirong | Director, deputy general manager | Resigned | F | 58 | November 30, 2006 | February 1, 2019 | 1,076,400 | 0 | 75,001 | 1,001,399 |
| Xu Xiaohua | Director | Resigned | M | 72 | November 30, 2006 | February 1, 2019 | 219,024 | 0 | 0 | 219,024 |
| Yang Qingmei | Director | Resigned | F | 56 | November 30, 2006 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Li Lisheng | Director | Resigned | M | 41 | July 10, 2015 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Zhao Dingtao | Independent director | Resigned | M | 65 | December 16, 2012 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Zhou Youmei | Independent director | Resigned | M | 60 | December 16, 2012 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Wang Li | Independent director | Resigned | F | 54 | May 15, 2015 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Zha Weidong | Chairman of the Supervisory Committee | Resigned | M | 60 | January 12, 2016 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Cao Yinghong | Supervisor | Resigned | M | 41 | November 30, 2006 | February 1, 2019 | 473,639 | 0 | 275,839 | 197,800 |
| Liu Feilin | Supervisor | Resigned | F | 49 | December 8, 2012 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Zhou Halei | Secretary of the Board, deputy general manager | Resigned | M | 34 | February 2, 2018 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Wang Zhoubo | Chief Financial Officer | Resigned | M | 35 | September 1, 2017 | February 1, 2019 | 0 | 0 | 0 | 0 |
| Guo Shihong | Chairman of the Supervisory Committee | Resigned | M | 45 | February 1, 2019 | July 22, 2019 | 0 | 48,123,570 | 0 | 48,123,570 |
| Zhang Yongsheng | Deputy general manager | Resigned | M | 45 | February 1, 2019 | July 4, 2019 | 0 | 48,123,570 | 0 | 48,123,570 |
| Total | -- | -- | -- | -- | -- | -- | 152,895,623 | 2,190,133,679 | 350,840 | 2,342,678,462 |
| Name | Position | Type | Date | Reason |
| Zhou Xiayun | Chairman of the Board | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Mr. Zhou Xiayun ceased to serve as the chairman of the Company since February 1, 2019. Thereafter, Mr. Zhou Xiayun no longer held any position in the Company. |
| Zhou Hui | Director, general manager | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Mr. Zhou Hui ceased to serve as the director and general manager of the Company since February 1, 2019. Thereafter, Mr. Zhou Hui no longer held any positions in the Company. |
| Xiao Meirong | Director, deputy general manager | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Ms. Xiao Meirong ceased to serve as the director and deputy general manager of the Company since February 1, 2019. Thereafter, Ms. Xiao Meirong no longer held any positions in the Company. |
| Xu Xiaohua | Director | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Mr. Xu Xiaohua ceased to serve as the director of the Company since February 1, 2019. Thereafter, Mr. Xu Xiaohua no longer held any positions in the Company. |
| Yang Qingmei | Director | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Ms. Yang Qingmei ceased to serve as the director of the Company since February 1, 2019.Thereafter, Ms. Yang Qingmei no longer held any positions in the Company. |
| Li Lisheng | Director | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Mr. Li Lisheng ceased to serve as the director of the Company since February 1, 2019. Thereafter, Mr. Li Lisheng no longer held any positions in the Company. |
| Zhao Dingtao | Independent director | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Mr. Zhao Dingtao ceased to serve as the independent director of the Company since February 1, 2019. Thereafter, Mr. Zhao Dingtao no longer held any positions in the Company. |
| Zhou Youmei | Independent director | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Mr. Zhou Youmei ceased to serve as the independent director of the Company since February 1, 2019. Thereafter, Mr. Zhou Youmei no longer held any positions in the Company. |
| Wang Li | Independent director | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the board of directors, Ms. Wang Li ceased to serve as the independent director of the Company since February 1, 2019. Thereafter, Ms. Wang Li no longer held any positions in the Company. |
| Zha Weidong | Chairman of the Supervisory Committee | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the Supervisory Committee, Mr. Zha Weidong ceased to serve as the chairman of the Supervisory Committee of the Company since February 1, 2019. Thereafter, Mr. Zha Weidong no longer held any positions in the Company. |
| Cao Yinghong | Supervisor | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the Supervisory Committee, Mr. Cao Yinghong ceased to serve as supervisor of the Company since February 1, 2019.Thereafter, Mr. Cao Yinghong no longer held any positions in the Company. |
| Liu Feilin | Supervisor | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring and the re-election of the Supervisory Committee, Ms. Liu Feilin ceased to serve as supervisor of the Company since February 1, 2019.Thereafter, Ms. Liu Feilin no longer held any positions in the Company. |
| Zhou Halei | Secretary of the Board, deputy general manager | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring, Mr. Zhou Halei ceased to serve as the Secretary of the Board and Deputy General Manager of the Company since February 1, 2019. Thereafter, Mr. Zhou Halei no longer held any positions in the Company. |
| Wang Zhoubo | Chief Financial Officer | Resigned at the end of tenure | February 1, 2019 | Due to the Company’s major assets restructuring, Mr. Wang Zhoubo ceased to serve as the chief financial officer of the Company since February 1, 2019. Thereafter, Mr. Wang Zhoubo no longer held any positions in the Company. |
| Guo Shihong | Chairman of the Supervisory Committee | Resigned | July 22, 2019 | Due to job changes, Mr. Guo Shihong ceased to serve as supervisor and the chairman of the Supervisory Committee of the Company. Thereafter, Mr. Guo Shihong no longer held any positions in the Company. |
| Zhang Yongsheng | Deputy general manager | Resigned | July 4, 2019 | Due to job changes, Mr. Zhang Yongsheng ceased to serve as the Deputy General Manager of the Company. After resignation Mr. Zhang Yongsheng no longer held any positions in the Company. |
December 2018, he was the executive director and general manager of Beijing Offcn Education TechnologyStock Co., Ltd. From December 2018 to present, he has served as the director and general manager ofBeijing Offcn Education Technology Co., Ltd. From February 2019 to present, he has served as the directorand general manager of Offcn Education Technology Co., Ltd.Mr. Shi Lei, born in 1976, is a Chinese citizen and has no permanent residency abroad. He started his careerin education industry in the year of 1999. From 2005 to 2010, he was in charge of marketing operations andmanagement of Beijing Offcn Online Education Technology Co., Ltd. From 2010 to November 2015, hewas the vice president of Beijing Offcn Future Education Consultancy Co., Ltd. From November 2015 toDecember 2018, he served as a director, the Chief Financial Officer and secretary of the Board of BeijingOffcn Education Technology Stock Co., Ltd. From December 2018 to present, he has served as a director ofBeijing Offcn Education Technology Co., Ltd. From February 2019 to present, he has served as a directorof Offcn Education Technology Co., Ltd.Ms. Yi Ziting, born in 1974, is a Chinese citizen and has no permanent residency abroad. She has a master’sdegree. Ms. Yi Ziting switched her career path to education industry in the year of 2011. From 1994 to2004, she served successively as a technician and an assistant engineer in Zhuzhou Smelting Group Co.,Ltd. From 2007 to 2011, she was the head of legal department of China Crop Protection IndustryAssociation (CCPIA). Starting from 2011, Ms. Yi Ziting has been successively holding the posts of Head ofTeaching Evaluation and Management Committee, Assistant President, and Associate President of BeijingOffcn Future Education Consultancy Co., Ltd. From November 2015 to December 2018, she served as adirector of Beijing Offcn Education Technology Co., Ltd. From December 2018 to present, she has servedas the chairman of the Supervisory Committee of Beijing Offcn Education Technology Co., Ltd. FromFebruary 2019 to present, she has served as a director of Offcn Education Technology Co., Ltd.Mr. Wang Qiang, born in 1977, is a Chinese citizen and has no permanent residency abroad. He graduatedfrom the Department of Laws, Peking University in 2001 and received his bachelor’s degree in law. He wasonce employed by Guangzhou NetEase Information Technology Co., Ltd as the chief editor of EconomyChannel and assistant to president of marketing. From December 2015 to December 2018, he served as anindependent director of Beijing Offcn Education Technology Stock Co., Ltd. From February 2019 topresent, he has served as an independent director of Offcn Education Technology Co., Ltd.Ms. Tong Yan, born in 1977, is a Chinese citizen and has no permanent residency abroad. She has adoctoral degree and owns the Certified Public Accountant Qualification Certificate. From 2006 to present,Ms. Tong Yan has been working for the Beijing Institute of Technology and currently she is a professor ofthe Institute. From March 2016 to present, she has served as an independent director of Hebei JinniuChemical Corporation Ltd. From February 2019 to present, she has served as an independent director ofOffcn Education Technology Co., Ltd.Mr. Zhang Xuanming, born in 1978, is a Chinese citizen and has no permanent residency abroad. He has amaster’s degree and is qualified as a Chinese lawyer. From 2003 to 2005, he worked as a full-time lawyerin Beijing Weizheng Law Firm. From 2005 to 2010, he was a partner of Beijing Hechuan Law Firm. From
April 2017 to present, he has served as the director of Beijing Meixin Law Firm. From July 2013 to present,he has served as a supervisor of Tongling Friendship Real Estate Co., Ltd. From October 2015 to present,he has served as a supervisor of Hebei Xinmiao Tourism Development Co., Ltd. From February 2019 topresent, he has served as an independent director of Offcn Education Technology Co., Ltd.
2. Supervisors
Ms. Yu Hongwei, born in 1966, is a Chinese citizen and has no permanent residency abroad. She has abachelor’s degree. From 1985 to 1995, Ms. Yu Hongwei served as a Naval Officer. From 1995 to 2002, shewas the chief representative of GATX Beijing Office. From 2002 to 2008, she served as the administrativedirector of the Zhuoyue College in the University of International Business and Economics. From 2008 to2013, she worked for the Chinese Academy of Science,as the director of Senior Talents Department in thePersonnel Exchange and Development Center, then as the Deputy Party Secretary, and Chairman of TradeUnion. From 2013 to October 2015, Ms. Yu Hongwei served as a department director of Beijing OffcnFuture Education Consultancy Co., Ltd. From November 2015 to December 2018, she successively heldthe posts of department director, the secretary of Party Branch and the secretary of Party Committee ofBeijing Offcn Education Technology Stock Co.,Ltd. From December 2018 to present, she has served as thesecretary of Party Committee of Beijing Offcn Education Technology Co., Ltd. From July 2019 to present,she has served as the Chairman of the Supervisory Committee of Offcn Education Technology Co., Ltd.Mr. He Di, born in 1977, is a Chinese citizen and has no permanent residency abroad. He received hisbachelor’s degree in law from the Department of Political Science and Public Administration, PekingUniversity in 1999. His work experience in education industry started from the year of 2010. Before that,from 1999 to 2000, he was the account manager of Beijing Impression Advertising Co., Ltd. From 2000 to2002, he was employed as the account director of Beijing Blue focus Consulting Company. From 2002 to2004, he worked as the account director for Shanghai Highteam Internet (China) Consulting Co., Ltd. From2004 to 2005, he served as the account director of Beijing Insight Co., Ltd. From 2005 to 2009, he servedas the senior account director of Ogilvy China. From 2009 to 2010, he served as the president’s assistant ofAnbang Insurance Group. From 2010 to November 2015, he served as an assistant president of BeijingOffcn Future Education Consultancy Co., Ltd. From November 2015 to December 2018, he worked as asupervisor of Beijing Offcn Education Technology Stock Co.,Ltd. From December 2018 to present, he hasserved as a supervisor of Beijing Offcn Education Technology Co., Ltd. From February 2019 to present, hehas served as a supervisor of Offcn Education Technology Co., Ltd.Ms. Li Wen, born in 1979, is a Chinese citizen and has no permanent residency abroad. She owns amaster’s degree and is qualified as a Chinese lawyer. She started her journey in education industry in theyear of 2007. From 2007 to 2010, she worked as a teacher and R&D staff in Beijing Offcn OnlineEducation Technology Co., Ltd. Starting from 2010, she firstly served as a teacher, then the dean’s assistantand successively the dean of Interview Training Department. From November 2015 to December 2018, sheserved as the supervisor representing employees of Beijing Offcn Education Technology Co., Ltd. FromDecember 2018 to present, she has served as a supervisor of Beijing Offcn Education Technology Co., Ltd.
From February 2019 to present, she has served as a supervisor of Offcn Education Technology Co., Ltd.
3. Senior Executives
Please see the above for Mr. Wang Zhendong’s resume.Mr. Wang Xuejun, born in 1963, is a Chinese citizen and has no permanent residency abroad. He owns abachelor’s degree and started working in education industry in the year of 2004. From 1985 to 1995, heworked as an engineer in Tianjin Machine and Tool Factory. From 1995 to 1999, he served as the operatingdirector of Tianjin Grinder Factory. From 2001 to 2004, he was employed as the general manager ofZhongxing Electromechanical Co., Ltd.in Tianjin Development Zone. From 2004 to 2010, he was in chargeof regional marketing of Beijing Offcn Online Education Technology Co., Ltd. From 2010 to November2015, he served as an assistant president and successively the vice president of Beijing Offcn FutureEducation Consultancy Co., Ltd. From November 2015 to December 2018, he performed his duty as thedeputy general manager of Beijing Offcn Education Technology Stock Co.,Ltd. From December 2018 topresent, Mr. Wang Xuejun has served as the deputy general manager of Beijing Offcn EducationTechnology Co., Ltd. From February 2019 to present, he has served as the deputy general manager of OffcnEducation Technology Co., Ltd.Mr. He Youli, born in 1975, is a Chinese citizen and has no permanent residency abroad. He startedworking in education industry in the year of 1999. From 2005 to 2010, he was in charge of marketingoperations of Beijing Offcn Online Education Technology Co., Ltd. From 2010 to November 2015, heserved as an assistant president and successively the vice president of Beijing Offcn Future EducationConsultancy Co., Ltd. From November 2015 to December 2018, he was employed as the deputy generalmanager of Beijing Offcn Education Technology Stock Co.,Ltd. From December 2018 to present, he hasserved as the deputy general manager of Beijing Offcn Education Technology Co., Ltd. From February2019 to present, he has served as the deputy general manager of Offcn Education Technology Co., Ltd.Mr. Luo Xue, born in 1968, is a Chinese citizen and has no permanent residency abroad. He owns abachelor’s degree and is a certified public accountant, a registered asset appraiser and an intermediateaccountant. From July 1991 to September 2000, he worked at the Zhongyuan Oil Field, Sinopec. FromOctober 2000 to January 2011, he was successively employed by Beijing Pan-China CPA Ltd., DeloitteTouche Tohmatsu CPA Ltd. and Reanda Certified Public Accountants LLP, where he held the posts fromaudit manager to technical partner. From February 2011 to August 2014, he served as the financial directorand secretary of the Board of Cortech Drilling Equipment Ltd. From August 2014 to December 2016, hewas employed as the CFO of LandOcean Energy Services Co., Ltd. From 2017 to December 2018, he wasthe head of the financial department of Beijing Offcn Education Technology Stock Co., Ltd. From February2019 to present, he has served as the financial director of Offcn Education Technology Co., Ltd.Mr. Gui Hongzhi, born in 1971, is a Chinese citizen and has no permanent residency abroad. He owns anMBA degree. From April 2003 to August 2006, he worked at the CRED Holding Co., Ltd. as the managerof Securities Department. In the same company, he served as the deputy general manager and secretary of
the Board from August 2006 to July 2015. From September 2015 to December 2018, he was employed ashead of Securities Affairs Department by Beijing Offcn Education Technology Co., Ltd. From February2019 to present, he has served as the deputy general manager and secretary of the Board of OffcnEducation Technology Co., Ltd.
Positions held in shareholders’ entities:
√ Applicable □ Not applicable
| Name | Name of shareholder’s entity | Position in shareholders’ entity | Start date | End date | ||
| Wang Zhendong | Beijing Offcn Future Information Consulting Center (Limited Partnership) | Executive Partner | April 10, 2018 | — | N/A | |
| Particulars about positions held in shareholders’ entities | N/A | |||||
| Name | Name of the entity | Positions held in the entity | Start date | End date | Whether received any remuneration from the entity |
| Li Yongxin | Kunming Wuhua Offcn Training School | Director | January 18, 2015 | — | N/A |
| Li Yongxin | Beijing Offcn Future Group Co., Ltd. | Supervisor | June 13, 2019 | — | N/A |
| Shi Lei | Hainan Huiyou Film&TV Technology Co., Ltd. | Director | March 10, 2017 | — | N/A |
| Wang Zhendong | Beijing Xindezhiyuan Enterprise Management Consultancy Co., Ltd. | Supervisor | August. 6, 2014 | — | N/A |
| Wang Zhendong | Beijing Offcn Xinzhiyu Network Technology Co., Ltd. | Supervisor | May 8, 2012 | — | N/A |
| Tong Yan | Beijing Institute of Technology | Professor | July 1, 2016 | — | Yes |
| Tong Yan | Hebei Jinniu Chemical Industry Co., Ltd | Independent director | May 13, 2019 | — | Yes |
| Tong Yan | Beijing Interactive Network Technology Co., Ltd. | Independent Director | October. 21, 2019 | — | Yes |
| Tong Yan | China Fund Management Co., Ltd. | Independent Director | December 27, 2019 | — | Yes |
| Tong Yan | Financial Street Property Management Co., Ltd. | Independent Director | December 13, 2019 | — | Yes |
| He Di | Tianjin Hexi District Offcn Training School Co., Ltd. | Director | July 15, 2019 | — | N/A |
| He Di | Yuxi Offcn Training School Co., Ltd. | Director | December 24, 2018 | — | N/A |
| Zhang Xuanming | Tongling Friendship Real Estate Co., Ltd. | Supervisor | July 1, 2013 | — | N/A |
| Zhang Xuanming | Hebei Xinmiao Tourism Development Co., Ltd. | Supervisor | October 28, 2015 | — | N/A |
| Zhang Xuanming | Beijing Meixin Law Firm | Director | April 15, 2017 | — | Yes |
| Zhang Xuanming | Beijing Jinyonghao Trading Co., Ltd. | Executive director | January 3, 2020 | — | Yes |
| Particulars about positions held in the entity | N/A | ||||
Particulars about punishments made by securities regulators in past three years on the Company’s currentdirectors, supervisors, and senior executives and those who resigned during the reporting period:
□ Applicable √ Not applicable
Section IV. Remuneration for Directors, Supervisors and Senior Executives
Decision-making procedures, determination basis and actual payment of remuneration of directors,supervisors and senior executivesIn order to further improve the remuneration management system for the Company’s directors, supervisors,and senior executives, establish an incentive and restraint mechanism compatible with the modernenterprise system, match responsibilities with rights, and fully mobilize the enthusiasm of the Company’sdirectors, supervisors, and senior executives, the Company formulated the Regulations for RemunerationManagement System of Directors, Supervisors, and Senior Executives, which was examined and approvedby the Company’s 2018 General Meeting of Shareholders. According to the above-mentioned regulations,the Company pays allowances to independent directors each year. The amount of the allowances is subjectto the review and approval of the Company’s Shareholders’ General Meeting. The allowances forindependent directors are issued quarterly. The Company does not provide separate allowances for internaldirectors and internal supervisors. The remuneration of the Company’s internal directors, internalsupervisors, and senior executives is issued according to the Company’s salary system.Remuneration of directors, supervisors, senior executives during the reporting period:
Unit: RMB
| Name | Position | Gender | Age | Tenure Status | Total Before-tax Remuneration Gained from the Company | Whether Gained Remuneration from the Related Parties of the Company |
| Li Yongxin | Chairman of the Board | Male | 44 | Current | 1,863,737.48 | N |
| Wang Zhendong | Director, General Manager | Male | 44 | Current | 1,667,333.60 | N |
| Shi Lei | Director | Male | 44 | Current | 1,664,614.22 | N |
| Yi Ziting | Director | Female | 46 | Current | 1,192,495.39 | N |
| Wang Qiang | Independent Director | Male | 43 | Current | 110,000.00 | N |
| Tong Yan | Independent Director | Female | 43 | Current | 110,000.00 | N |
| Zhang Xuanming | Independent Director | Male | 42 | Current | 110,000.00 | N |
| Yu Hongwei | Chairman of the Supervisory Committee | Female | 54 | Current | 400,118.67 | N |
| He Di | Supervisor | Male | 43 | Current | 1,184,379.92 | N |
| Li Wen | Supervisor | Female | 41 | Current | 1,000,830.41 | N |
| Wang Xuejun | Deputy General Manager | Male | 57 | Current | 1,660,772.38 | N |
| He Youli | Deputy General Manager | Male | 45 | Current | 1,664,883.11 | N |
| Luo Xue | Chief Financial Officer | Male | 52 | Current | 988,718.84 | N |
| Gui Hongzhi | Secretary of the Board, Deputy General Manager | Male | 49 | Current | 993,905.66 | N |
| Guo Shihong | Chairman of the Supervisory Committee | Male | 45 | Resigned | 278,448.43 | N |
| Zhang Yongsheng | Deputy General Manager | Male | 45 | Resigned | 240,048.02 | N |
| Total | -- | -- | -- | -- | 15,130,286.14 | -- |
| Number of current employees of the parent company (person) | 0 |
| Number of current employees of the major subsidiaries (person) | 35,209 |
| Total number of current employees (person) | 35,209 |
| Total number of employees receiving remuneration from the Company during the reporting period (person) | 35,209 |
| Role type | |
| Category | Number (person) |
| Management personnel | 4,179 |
| Marketing personnel | 2,051 |
| R&D personnel | 13,475 |
| Teachers | 4,172 |
| Customer service personnel | 11,332 |
| Total | 35,209 |
| Educational background | |
| Category | Number (person) |
| Master’s degree and above | 6,180 |
| Bachelor’s degree | 24,250 |
| Associate’s degree | 4,730 |
| Technical secondary school and below | 49 |
| Total | 35,209 |
on quantitative indicators of performance and qualitative standards to ensure that both the work results andgrowth of employees were given attention to. The Company attracts and retains its core talents through adiversified performance-oriented incentive mechanism, so that the core personnel can be more closelyaligned with the interests of the Company and its shareholders in order to drive the company's long-termoperating performance to continuously grow.
3. Training plan
During the reporting period, the Company comprehensively upgraded employee training system. Withdiversified “online+offline” learning methods, training content and modes are constantly innovated so thatcontinuous flow of knowledge and diversified learning options can be provided for employees’ careerdevelopment, during which enhancing the ability of building management teams and improving the trainingsystem for new employees are focused on.In terms of training organizing, the Company organized and mobilized human resources department both atthe headquarters and subsidiaries as well as management personnel to ensure the normal operation ofemployee training. To be more specific, human resources department at the headquarters serves to “plan,research and coordinate” the Company’s overall training program, focusing on mobilizing trainingresources, establishing training platforms and designing and carrying-out key talent training projects.Human resources departments in subsidiaries are training needs discoverers ,solution providers and trainingactivity organizers, focusing on daily training operations and management for each business unit.Management personnel are responsible for ability-building of employees and have to include the training ofsubordinates and cultivating talents for the Company into their work tasks.In addition, to meet different development needs of the employees, the Company actively implemented anumber of training programs such as “Luming Training”, “Backbone Training”, “Management Training”and so on. These training programs are facing all personnel during their whole career life from differentaspects and guide them to find clear development directions and to acquire growth space.
4. Labor outsourcing
□ Applicable √ Not applicable
Chapter X. Corporate Governance
Section I. Basic summary of corporate governance of the CompanyDuring the reporting period, in accordance with relevant laws and regulations, and rules and regulatorydocuments from supervision authorities, i.e. Company Law, Securities Law, Code of CorporateGovernance for Listed Companies in China, Stock Listing Rules of Shenzhen Stock Exchange, andGuidelines of the Shenzhen Stock Exchange for the Standard Operation of Companies Listed on the SMEBoard, the Company consistently improved its corporate governance structure and internal control system,and enhanced the level of corporate governance based on the actual situation. The Company’s overalloperation, corporate governance system and information disclosure were sound and standardized. Theactual conditions of corporate governance met the requirements of the regulatory documents with respect tothe corporate governance of listed companies issued by CSRC.
1. Shareholders and the Shareholders’ General Meeting
In strict accordance with Articles of Corporation and Rules of Procedure for Shareholders’ GeneralMeetings as well as other applicable regulations and requirements, the Company standardized the gathering,convening, deliberations and voting procedures of its shareholders’ general meetings and hired legaladvisers to issue legal opinions for the shareholders’ general meetings. The Company equally treated allshareholders, especially ensured the minority of shareholders’ equal status guaranteed. During the reportingperiod, the Company convened three shareholders’ general meetings in total, and all resolutions of theshareholders’ general meetings were seriously implemented by the board of directors.
2. The relationship between the Company and the controlling shareholders
The controlling shareholders of the Company exercised the rights and obligations of the investors in strictaccordance with Company Law. During the reporting period, there was neither any direct or indirectinterference with the Company’s decision-making and operations beyond the Shareholders’ GeneralMeeting by the controlling shareholders nor a situation where the controlling shareholders damaged thelegitimate rights and interests of other shareholders of the listed Company. The Company is independent inpersonnel, assets, finance, institutions, business, and accounting from its controlling shareholders so thatthey take responsibilities and risks independently. There was neither significant related-party transactionsbetween the Company and the controlling shareholders nor the situation where controlling shareholdersoccupied the funds of the listed Company, or the listed Company provided guarantees for the controllingshareholders and their subsidiaries.
3. Directors and the Board of Directors
The Company elected candidates for the Board of Directors in strict accordance with Company Law,Articles of Corporation, and Regulated Opinions on Shareholders General Meetings of Listed Companies.The number of directors and composition of the Board of Directors met the requirements of laws and
regulations. The Board of Directors of the Company convened Board sessions in strict accordance with therelevant provisions of Articles of Corporation, Working System for Independent Directors, Rules ofProcedure for the Board of Directors and Guidelines of the Shenzhen Stock Exchange for the Directors’Behavior of Companies Listed on the SME Board. All directors of the Company attended the Boardsessions on time, fulfilled their duties diligently, scrupulously reviewed various proposals and madescientific and reasonable decisions on major matters of the Company to effectively safeguard the interestsof the Company and the legitimate rights and interests of all shareholders. Under the Board of Directors ofthe Company are four professional committees: Strategy and Investment Committee, NominationCommittee, Audit Committee and Remuneration and Appraisal Committee. With clearly defined powersand responsibilities and effective operations, each committee gave full play to its professional functions andprovided scientific and professional opinions for the decision-making of the Board of Directors.
4. Supervisors and the Supervisor Committee
The Company elected candidates for the Board of Supervisors in strict accordance with Company Law,Articles of Corporation, and Regulated Opinions on Shareholders General Meetings of Listed Companies.The number of supervisors and composition of the Board of Supervisors met the requirements of laws andregulations. The Board of Supervisors of the Company convened the Board sessions in strict accordancewith the relevant provisions of Articles of Corporation, Rules of Procedure for the Board of Supervisors,and other related regulations. All supervisors of the Company attended the Board sessions on time, fulfilledtheir duties scrupulously, provided supervision and opinions for major issues, related-party transactions,financial status, etc., and safeguarded legitimate rights and interests of the Company and shareholders.
5. Relevant stakeholders
The Company fully respect and safeguard the legitimate rights and interests of relevant stakeholders,constantly strengthen the awareness of social responsibility and enhance communication with all parties tocoordinate the interests of the society, government, shareholders, Company, and employees, and balance theinterests of the shareholders, employees and society. The Company adhered to the principle of mutualbenefits and win-win results with relevant stakeholders and jointly promoted the Company’s harmonious,steady and healthy development.
6. Information disclosure and transparency
In strict accordance with the requirements of Information Disclosure Management System and InvestorRelations Management System, the Company designated the Secretary of the Board of Directors to beresponsible for information disclosure and receiving shareholders’ visits and consultations and to disclosethe relevant information in a true, accurate, complete, timely and fair manner according to the relevantregulations so as to ensure that all shareholders of the Company can have equal access to the information.
7. Performance appraisal and incentives
During the reporting period, the Company constantly improved working performance evaluation systemand incentive mechanism. The appointment and remuneration of the Company’s directors, supervisors and
senior executives were open and transparent, which met the requirements of relevant laws and regulations.The Company regularly and comprehensively evaluated employees’ working skills, values and theirrecognition of corporate culture by an evaluation method based on quantitative indicators of performanceand qualitative standards to ensure that both the work results and growth of employees were given attentionto.
8. Investor relations management
During the reporting period, the Company constantly strengthened the management of investor relationsand safeguarded the legitimate rights and interests of the Company’s shareholders. The Companydesignated the Secretary of the Board of Directors as the head of investor relations management to organizeand implement the daily management of investor relations, promptly answer investors’ questions throughphone calls, emails, interactive platform and online briefings of business performance, and timely releaseRecord of Investor Relations Activities after carrying out a survey of investors, which ensured that all theinvestors have equal access to the Company’s information and fully guaranteed investors’ rights to know.
In terms of the Company’s actual governance status, is there any significant non-compliance with the regulatory documentson governance of listed companies issued by CSRC:
□ Yes √ No
In terms of the Company’s actual governance status, there is no significant non-compliance with the regulatory documents ongovernance of listed companies issued by CSRC.
Section II. Company’s independence in business, personnel, assets, institutions andfinance from controlling shareholdersThe Company standardized its operation, established and improved corporate governance structure in strictaccordance with Company Law, Securities Law, Articles of Offcn Education Technology Co., Ltd., andother relevant laws and regulations. The Company is independent in businesses, personnel, assets,institutions and finance from the controlling shareholders, actual controllers and other enterprises undertheir control and is capable of operating independently with its complete and independent business.
1. Business independence: With independent and complete business structure, the Company is capable ofrunning market-oriented business independently. There is no horizontal competition among the Company,controlling shareholders, and other enterprises under their control.
2. Personnel independence: The Company has independent personnel. It has set up various independentdepartments, including R&D, sales, administration, finance and operation management divisions, andestablished independent human resources and payroll management system. The directors, supervisors andsenior executives of the Company do not hold any posts prohibited by regulations in other companies withthe same or similar business to the Company’s.
3. Asset Completeness: The property relations between the Company and the controlling shareholders areclear. No assets, funds, or other resources owned by the Company are illegally occupied or controlled bythe controlling shareholders.
4. Institutional independence: The Company has set up a sound organization system, with independentoperation of General Meeting of Shareholders, Board of Directors, Board of Supervisors, management andall the functional departments, and established corresponding internal management and control system tomake each department have clearly defined responsibilities, perform its own duties and cooperate with eachother, thus composing an organic whole and guaranteeing the legal operation of the Company. There is nosubordinate relationship between the Company’s institutions and the functional departments of thecontrolling shareholders.
5. Financial independence: The Company has set up complete and independent financial departmentequipped with adequate full-time financial accountants, established independent accounting calculationsystem and financial management system, and independently opened bank accounts, paid taxes and madefinancial decisions. There is no interference from the controlling shareholders in the financial managementof the Company.
Section III. Horizontal Competition
□ Applicable √ Not applicable
Section IV. Annual general meeting and extraordinary general meetings convenedduring the reporting period
1. Particulars about the shareholders’ general meeting during the reporting period
| Session | Type | Proportion of participating investors | Convening date | Disclosure date | Disclosure index |
| 2019 First Extraordinary General Meeting | Extraordinary General Meeting | 37.35% | February 1, 2019 | February 2, 2019 | For details, refer to the Announcement on Resolutions of the First Extraordinary General Meeting of 2019 (No. 2019-018) disclosed on www.cninfo.com.cn. |
| 2018 Annual General Meeting | Annual General Meeting | 78.49% | April 29, 2019 | April 30, 2019 | For details, refer to the Announcement on Resolutions of the Annual General Meeting of 2018 (No. 2019-047) disclosed on www.cninfo.com.cn. |
| 2019 Second Extraordinary General Meeting | Extraordinary General Meeting | 77.79% | July 22, 2019 | July 23, 2019 | For details, refer to the Announcement on Resolutions of the Second Extraordinary General Meeting of 2019 (No. 2019-056) disclosed on www.cninfo.com.cn. |
| Attendance of independent directors at board meetings and shareholder’s general meetings | |||||||
| Name of Independent director | Board meetings Presence required in the reporting period (times) | Board meetings presence in person (times) | Board meetings presence by way of telecommunication (times) | Board meetings presence by a proxy (times) | Board meetings absence (times) | Non- attendance in person for two consecutive times | Attendance at general meetings (times) |
| Wang Qiang | 8 | 8 | 0 | 0 | 0 | N | 2 |
| Tong Yan | 8 | 1 | 7 | 0 | 0 | N | 0 |
| Zhang Xuanming | 8 | 0 | 8 | 0 | 0 | N | 0 |
□Yes √ No
During the reporting period, no objections on relevant issues of the company from independent directors.
3. Other explanations on the performance of duties by independent directorsWere the suggestions from independent directors adopted by the Company?
√ Yes □ No
During the reporting period, the Company’s independent directors were able to scrupulously exercise their rights and performtheir duties as independent directors. They carefully reviewed the issues of the Board of Directors and proactively expressedopinions, which played a catalytic role in the normative operations and scientific decision-making of the Board of Directors.The independent directors of the Company, with rich professional experience, put forward many instructive and rationalsuggestions on the Company’s development strategy and standardized operation. The independent directors of the Companyprovided cautious, objective and independent opinions on major issues required to be commented. For more details, pleaserefer to the 2019 Independent Directors’ Debriefing Report published on www.cninfo.com on the same day as this AnnualReport.
Section VI．Performance of duties by special committees affiliated to the Board duringthe reporting periodUnder the Board of Directors of the Company, there are four special committees: Audit Committee,Remuneration and Appraisal Committee, Strategy and Investment Committee and NominationCommittee.
1. Audit Committee
During the reporting period, the Audit Committee of the Company’s Board of Directors carefully reviewedthe Company’s periodic reports, regular audits of the internal audit department, and special audit work etc.,understood the Company’s financial status and operating conditions in details, and strictly reviewed theCompany’s internal control systems and its implementation. It effectively performed its duties and providedguidance and supervision on the Company’s financial status and operating conditions.
2. Remuneration and Appraisal Committee
During the reporting period, the Board of Directors formulated the Remuneration Management System forDirectors, Supervisors and Senior executives. The Remuneration and Appraisal Committee of the Board ofDirectors provided professional guidance on its formulation, which promoted the soundness andimprovement of the Company’s remuneration system.
3. Strategy and Investment Committee
During the reporting period, the Strategy and Investment Committee of the Board of Directors activelyperformed its duties in accordance with Company Law, Articles of Corporation, Working Rules of the
Strategy Committee of the Board of Directors, and other relevant regulations.
4. Nomination Committee
During the reporting period, the Nomination Committee of the Board of Directors conducted a carefulreview of the resumes and qualifications of the candidates for the new directors, senior executives andheads of internal audit institutions in accordance with Company Law, Articles of Corporation, and WorkingRules of the Nomination Committee of the Board of Directors, and actually fulfilled the duties of theNomination Committee.
Section VII. Performance of duties by the Supervisory Committee
Were there any risks in the Company according to the supervision of the Supervisory Committee during the reporting period?
□ Yes √ No
The Supervisory Committee raised no objection to matters under supervision during the reporting period.
Section VIII. Assessment and incentive mechanism for senior executivesDuring the reporting period, the Remuneration and Appraisal Committee of the Company’s Board ofDirectors conducted a comprehensive evaluation of the performance of senior executives. The Company’smanagement team has fairly fulfilled the business planning for this year according to the strategic planningfor long-term development. The Company’s current evaluation and incentive mechanism which is in linewith the current status of the Company and related laws, regulations and Articles of Corporation isoperating well.
Section IX. Evaluation report on internal control
1. Particulars about material weakness found in the Company’s internal control during the reportingperiod
□ Yes √ No
2. Self-evaluation report on internal control
| Disclosure date of full text of self-evaluation report on internal control | March 10, 2020 |
| Disclosure index of full text of self-evaluation report on | www.cninfo.com.cn |
| internal control | ||
| Proportion of assets evaluated in total assets | 100.00% | |
| Proportion of revenue evaluated in total revenue | 100.00% | |
| Recognition standard of deficiencies | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | Material Weakness: one deficiency, or a combination of deficiencies in internal control that may result in a significant deviation from the control objectives of the Company. Those with the following characteristics should be recognized as material weakness: ①Fraud of directors, supervisors and senior executives; ②Correction of misstatement in previously issued financial statements; ③Material misstatement in current financial statements not detected by the Company’s internal control; ④Invalid supervision of internal control over financial reporting by the Company’s Audit Committee and internal audit department. Significant Deficiency: one deficiency, or a combination of deficiencies in internal control that is less severe than a material weakness, yet may still result in a deviation from control objectives of the Company. Control Deficiency: Other internal control deficiencies that do not meet the standards of material weakness or significant deficiency. | Material Weakness: ①Severe violations of national laws and regulations in the Company’s operation; ②Negative news frequently disclosed by the media and the negative impact has not been eliminated; ③Serious loss of middle and senior management personnel and senior technical personnel; ④Lack or ineffectiveness of policy for major business;⑤No rectification of the material weaknesses or significant deficiencies of the Company’s internal control. Significant Deficiency: one deficiency, or a combination of deficiencies in internal control that is less severe and has minor economic consequences than a material weakness, yet may still result in a deviation from control objectives of the Company. Control Deficiency: Other internal control deficiencies that do not meet the standards of material weakness or significant deficiency. |
| Quantitative criteria | Material Weakness: Misstatements account for more than 5% of total profits. Significant Deficiency: Misstatements account for 2% to 5% (including 5%) of total profits. Control Deficiency: Misstatements account for less than 2% (including 2%) of total profits. | Refer to the quantitative criteria for the evaluation of internal control deficiencies in financial reports. |
| Number of material weaknesses in the financial report (number) | 0 |
| Number of material weaknesses in the non-financial report (number) | 0 |
| Number of significant deficiencies in the financial report (number) | 0 |
| Number of significant deficiencies in the non-financial report (number) | 0 |
Chapter XI. Corporate BondsWere there bonds publicly issued and listed on the stock exchange, either at or not at maturity, and are notfully paid on the approval report date of the annual report?No.
Chapter Ⅻ. Financial Report
Section I. Auditor’s Report
| Audit Opinion | Unmodified unqualified audit opinion |
| Audit Report sign-off Date | March 9th , 2020 |
| Audit Institution Name | Baker Tilly China Certified Public Accountants |
| Audit Report Number | Baker Tilly China [2020] No. 6338 |
| Certified Public Accounts Name | Zhou Baiming, Shen Xu |
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in ouraudit of the financial statements of the current period. These matters were addressed in the context of ouraudit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters.
| Key Audit Matters | How our audit addressed the Key Audit Matter |
recognition of revenue
Such as notes to financial statements "TheCompany’s Significant Accounting Policies AndAccounting Estimates" comments (28) and the"Notes To Important Items In ConsolidatedFinancial Statements " comments (30).Educationand training revenue accounted for 99.38% of thecompany's operating revenue in 2019.The company's revenue mainly includes ordinaryclass revenue and agreement class revenue. Whenthe ordinary class face-to-face training service iscompleted, all the training fees received inadvance are recognized as revenue. Revenue fromonline training in ordinary classes is recognized ona straight-line basis during the validity period ofthe service provided. Non-refundable portion ofrevenue from agreement class is recognized asrevenue upon completion of training services;According to the agreement, the refund part isrecognized as revenue when the non-refundableconditions are met.In view of the significant amount of education andtraining revenue, which is the main source ofcompany's profits. And the frequent occurrence oftransactions, the risk of misstatement is high.Therefore, we identified the company's educationand training revenue as a key audit matter.
| Such as notes to financial statements "The Company’s Significant Accounting Policies And Accounting Estimates" comments (28) and the "Notes To Important Items In Consolidated Financial Statements " comments (30).Education and training revenue accounted for 99.38% of the company's operating revenue in 2019. The company's revenue mainly includes ordinary class revenue and agreement class revenue. When the ordinary class face-to-face training service is completed, all the training fees received in advance are recognized as revenue. Revenue from online training in ordinary classes is recognized on a straight-line basis during the validity period of the service provided. Non-refundable portion of revenue from agreement class is recognized as revenue upon completion of training services; According to the agreement, the refund part is recognized as revenue when the non-refundable conditions are met. In view of the significant amount of education and training revenue, which is the main source of company's profits. And the frequent occurrence of transactions, the risk of misstatement is high. Therefore, we identified the company's education and training revenue as a key audit matter. | In response to the key audit matter, we performed procedures as follows: 1.Understood and tested internal controls relating to recognition of revenue and evaluated the effectiveness of related internal controls. 2.Understood the revenue recognition policies of comparable companies in the same industry, discussed the characteristics of training business with management, checked business contracts, identify contract terms and conditions related to education and training services, and evaluated the appropriateness of revenue recognition policies. 3.Implemented substantive analysis procedures for revenue and gross profit margin during the reporting period, evaluated the overall rationality of revenue. 4.Selected samples of the revenue confirmed during the reporting period, checked the receipts, bank flow, contracts, examination announcement and refunds, and evaluated whether the relevant revenue confirmation is in line with the company's revenue recognition accounting policy. 5.For the education and training revenue items confirmed before and after the balance sheet date, selected samples, checked the supporting documents for revenue recognition, and evaluated whether they are recorded in the correct accounting period. |
IV. Other InformationManagement of the Company is responsible for the other information. The other information comprises allof the information included in 2019 annual report of the Company other than the financial statements andour auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for theFinancial StatementsThe management is responsible for the preparation of the financial statements that give a true and fair viewin accordance with Accounting Standards for Business Enterprises and designing, implementing andmaintaining internal control as the management determines is necessary to enable the preparation of thefinancial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless the management either intend to liquidate the Company or to ceaseoperations or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with CAS will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if, individually or in the aggregate, they could reasonablybe expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgement and maintain professionalskepticism throughout the audit. We also:
1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud orerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement 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) Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances. However, our purpose is not to express an opinion on theeffectiveness of internal control.
3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by the management.
4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditionsthat may cast significant doubt on the Company’s ability to continue as a going concern. If we concludethat a material uncertainty exists, we are required to draw attention in our auditor’s report to the relateddisclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, futureevents or conditions may cause the Company to cease to continue as a going concern.
5) Evaluate the overall presentation, structure and content of the financial statements, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
6) Acquire sufficient and appropriate audit evidence based on the financial information of the Company orbusiness activities to express its audit opinion on the consolidated financial statements. We are responsiblefor the direction, supervision, and execution of the group audit and assume full responsibility for the auditopinion.We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.From the matters communicated with those charged with governance, we determine those matters that wereof most significance in the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor’s report unless law or regulation precludes publicdisclosure about the matter or when, in extremely rare circumstances, we determine that a matter should notbe communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
| Beijing, China 9 March,2020 | Chinese Certified Public Accountant: (Engagement partner) | Zhou Baiming |
| Chinese Certified Public Accountant: | Shen Xu |
Section II. Financial StatementThe unit of statement in financial notes is : RMB
1. Consolidated Balance Sheet
Company: Offcn Education Technology Co., Ltd.
At December 31,
2019
Unit: RMB
| ITEM | December 31, 2019 | December 31, 2018 |
| Current Assets: | ||
| Cash and cash equivalents | 2,724,335,001.58 | 648,711,545.32 |
| Financial assets held for trading | 1,754,396,227.54 | |
| Accounts Receivable | 2,721,638.09 | 6,804,330.67 |
| Financing receivables | ||
| Prepayments | 2,461,009.00 | 1,482,923.00 |
| Other receivables | 255,013,296.96 | 80,712,327.58 |
| Inc： Interest receivables | 567,341.68 | 42,203,874.33 |
| Dividends receivables | ||
| △Financial assets purchased under resale agreements | ||
| Inventories | 20,062.46 | |
| Contract assets | ||
| Other current assets | 97,336,600.16 | 2,332,281,314.29 |
| Total current assets | 4,836,263,773.33 | 3,070,012,503.32 |
| Non-current assets: | ||
| △Loans and Advances |
| Debt investments | 1,923,598,909.09 | |
| Available-for-sale financial assets | 162,800,000.00 | |
| Investment in other equity instruments | 162,800,000.00 | |
| Other non-current financial assets | 138,166,559.96 | |
| Investment properties | 688,475,053.53 | 773,542,368.65 |
| Fixed assets | 672,429,601.44 | 699,100,602.20 |
| Construction in progress | 653,580,160.32 | 91,371,160.15 |
| Bearer biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 197,507,227.40 | 204,424,848.76 |
| Development expenditure | ||
| Goodwill | 99,867,720.38 | 99,867,720.38 |
| Long-term prepaid expenses | 240,565,962.02 | 254,711,893.55 |
| Deferred tax assets | 21,482,832.13 | 10,080,515.37 |
| Other non-current assets | 325,967,628.34 | 1,836,159,908.85 |
| Total Non-current Assets | 5,124,441,654.61 | 4,132,059,017.91 |
| Total Assets | 9,960,705,427.94 | 7,202,071,521.23 |
| Current liabilities: | ||
| Short-term borrowings | 2,867,000,000.00 | 1,607,000,000.00 |
| Financial liabilities held for trading | ||
| Accounts payable | 236,481,990.86 | 144,564,705.50 |
| Receipts in advance | 2,634,276,203.88 | 1,920,139,853.63 |
| Contract liabilities | ||
| △Funds received as agent of stock exchange | ||
| Employee benefits payable | 411,475,636.03 | 287,054,391.82 |
| Taxes payable | 184,306,027.84 | 145,802,041.37 |
| Other payables | 88,693,411.98 | 46,791,123.73 |
| Inc：Interest payables | 4,521,557.54 | 3,924,585.00 |
| Dividends payables | ||
| Held-for-sale liabilities | ||
| Non-current Liabilities due within One Year | ||
| Other current liabilities | ||
| Total Current Liabilities | 6,422,233,270.59 | 4,151,352,116.05 |
| Non-current Liabilities: | ||
| △Deposits for insurance contracts | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred Income | ||
| Deferred tax liabilities | 106,932,273.03 | 96,767,500.18 |
| Other non-current liabilities | ||
| Total Non-current Liabilities | 106,932,273.03 | 96,767,500.18 |
| Total Liabilities | 6,529,165,543.62 | 4,248,119,616.23 |
| Owners' equity: | ||
| Share capital | 103,807,623.00 | 103,807,623.00 |
| Other equity instrument | ||
| Inc: preference share | ||
| Perpetual bond | ||
| Capital reserve | 1,198,581,049.50 | 1,144,781,049.50 |
| Less: Treasury stock | ||
| Other comprehensive income | 37,500,000.00 | |
| Special reserve | ||
| Surplus reserve | 45,000,000.00 | 45,000,000.00 |
| △General risk reserve | ||
| Retained earnings | 2,046,657,231.32 | 1,660,363,232.50 |
| Total Owners' Equity Attributable To the Company | 3,431,545,903.82 | 2,953,951,905.00 |
| Minority interests | -6,019.50 | |
| Total Owners' Equity | 3,431,539,884.32 | 2,953,951,905.00 |
| Total Liabilities and Owners' Equity | 9,960,705,427.94 | 7,202,071,521.23 |
| ITEM | December 31, 2019 | December 31, 2018 |
| Current Assets: | ||
| Cash and cash equivalents | 6,931,803.33 | 5,304,519.61 |
| Financial assets held for trading | 101,681.64 | |
| Accounts Receivable | ||
| Other receivables | 1,717,949,520.99 | 2,084,332,624.85 |
| Inc：Interest receivables | ||
| Dividends receivables | 1,700,000,000.00 | 1,550,000,000.00 |
| △Financial assets purchased under resale agreements | ||
| Inventories | ||
| Contract assets | ||
| Other current assets | 1,222,565.30 | |
| Total current assets | 1,724,983,005.96 | 2,090,859,709.76 |
| Non-current assets: | ||
| △Loans And Advances | ||
| Debt investments | ||
| Available-for-sale financial assets | 112,800,000.00 | |
| Long-term receivables | ||
| Long-term equity investments | 18,582,307,907.14 | 18,582,307,907.14 |
| ☆Other equity instruments | 162,800,000.00 | |
| ☆Other non-current financial assets | ||
| Investment properties | 395,978,156.15 | 477,825,678.61 |
| Fixed assets | ||
| Construction in progress | 72,569,103.57 | |
| Bearer biological assets |
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | ||
| Development expenditure | ||
| Goodwill | ||
| Long-term prepaid expenses | ||
| Deferred tax assets | 10,804,928.62 | |
| Other non-current assets | ||
| Total Non-current Assets | 19,224,460,095.48 | 19,172,933,585.75 |
| Total Assets | 20,949,443,101.44 | 21,263,793,295.51 |
| Current liabilities: | ||
| Short-term borrowings | 216,000,000.00 | |
| Financial liabilities held for trading | ||
| accounts payable | 561,752.26 | 19,854,802.89 |
| △Amounts due to issuer for securities underwriting | ||
| Employee benefits payable | ||
| Taxes payable | 791,191.77 | 4,001,488.81 |
| Other payables | 40,275,566.88 | 429,514,485.93 |
| Inc：Interest payables | ||
| Dividends payables | 319,931,024.40 | |
| Held-for-sale liabilities | ||
| Non-current liabilities due within one year |
| Other current liabilities | ||
| Total Current Liabilities | 41,628,510.91 | 669,370,777.63 |
| Non-current Liabilities: | ||
| △Deposits for insurance contracts | ||
| Inc: preference share | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred Income | ||
| Deferred tax liabilities | 12,500,420.41 | |
| Other non-current liabilities | ||
| Total Non-current Liabilities | 12,500,420.41 | |
| Total Liabilities | 54,128,931.32 | 669,370,777.63 |
| Owners' equity: | ||
| Share capital | 6,167,399,389.00 | 6,167,399,389.00 |
| Other equity instrument | ||
| Inc: preference share | ||
| Perpetual bond | ||
| Capital reserve | 12,775,326,370.33 | 12,775,326,370.33 |
| Less: Treasury stock |
| Other comprehensive income | 37,500,000.00 | |
| Special reserve | ||
| Surplus reserve | 387,458,806.65 | 219,269,455.48 |
| △General risk reserve | ||
| Retained earnings | 1,527,629,604.14 | 1,432,427,303.07 |
| Total Owners' Equity | 20,895,314,170.12 | 20,594,422,517.88 |
| Total Liabilities and Owners' Equity | 20,949,443,101.44 | 21,263,793,295.51 |
| ITEM | Year of 2019 | Year of 2018 |
| I. Total Revenue | 9,176,129,995.89 | 6,236,987,812.57 |
| Revenue | 9,176,129,995.89 | 6,236,987,812.57 |
| II. Total operating costs | 7,352,991,141.30 | 5,007,153,476.92 |
| Cost of Revenue | 3,812,594,386.55 | 2,552,352,693.08 |
| Taxes and surcharges | 56,691,639.24 | 27,289,959.15 |
| Selling and marketing | 1,482,984,426.78 | 1,101,836,301.54 |
| General and administrative expenses | 1,098,471,953.96 | 873,418,131.47 |
| Research and development expenses | 697,940,218.36 | 454,784,360.70 |
| Financial expenses | 204,308,516.41 | -2,527,969.02 |
| Inc:Interest expenses | 107,847,460.74 | 12,907,274.76 |
| Interest income | 2,451,260.28 | 50,986,095.04 |
| Add: Other income | 6,749,281.81 | 141,421.28 |
| Investment income (Losses are indicated by "-") | 259,222,749.45 | 110,351,036.22 |
| Gains from changes in fair values (Losses are indicated by "-") | 1,712,787.50 | |
| Impairment losses of creditability (Losses are indicated by "-") | -337,735.01 | |
| Impairment losses of assets(Losses are indicated by "-") | -298,945.24 | |
| Profit on disposal of assets(Losses are indicated by "-") | 182,904.69 | -141.26 |
| III. Operating profit (Loss is indicated by "-") | 2,090,668,843.03 | 1,340,027,706.65 |
| Add: Non-operating income | 2,000.00 | 764,721.54 |
| Less: Non-operating expenses | 1,343,412.25 | 1,254,197.03 |
| IV. Total profit (Total Loss is indicated by "-") | 2,089,327,430.78 | 1,339,538,231.16 |
| Less: Income tax expenses | 284,784,762.27 | 186,650,814.94 |
| V. Net profit (Net loss is indicated by "-") | 1,804,542,668.51 | 1,152,887,416.22 |
| 1. Classified by continuing/discontinuing operation | ||
| Net profit from continuing operations (Net loss is indicated by "-") | 1,804,542,668.51 | 1,152,887,416.22 |
| Net profit from discontinued operations (Net loss is indicated by "-") | ||
| 2. Classified by ownership | ||
| Net profit attributable to owners of the Company (Net loss is indicated by "-") | 1,804,548,688.01 | 1,152,887,416.22 |
| Net profit attributable to minority interests (Net loss is indicated by "-") | -6,019.50 | |
| VI. Other comprehensive income after tax | 5,512,500.00 |
| Net other comprehensive income after tax attributable to controlling interest | 5,512,500.00 | |
| 1. Other comprehensive income not reclassified into gains or losses | 5,512,500.00 | |
| Inc: Remeasured defined benefit plan net liablities or net assets changes | ||
| Under the equity method, the share of other comprehensive income not reclassified into gains or losses | ||
| Changes in the fair value of other equity instruments | 5,512,500.00 | |
| Change in fair value of the enterprise's own credit risk | ||
| 2. Other comprehensive income classified into gains or losses | ||
| VIII. Total comprehensive income | 1,810,055,168.51 | 1,152,887,416.22 |
| Total comprehensive income attributable to owners of the Company | 1,810,061,188.01 | 1,152,887,416.22 |
| Total comprehensive income attributable to minority interests | -6,019.50 | |
| IX. Earnings per share | ||
| Basic earnings per share | 0.29 | 0.22 |
| Diluted earnings per share | 0.29 | 0.22 |
| ITEM | Year 2019 | Year 2018 |
| I. Revenue | 14,647,786.07 | 205,461,660.71 |
| Cost of Revenue | 11,332,163.09 | 139,958,382.80 |
| Taxes and surcharges | 18,508,529.76 | 4,346,220.25 |
| Selling and marketing | 5,650,041.50 |
| General and administrative expenses | 13,749,951.31 | 27,181,579.24 |
| Research and development expenses | ||
| Financial expenses | -3,966.85 | 12,543,351.10 |
| Inc:Interest expenses | 12,042,879.63 | |
| Interest income | 8,912.83 | 107,822.69 |
| Add: Other income | 3,621,069.19 | |
| Investment income (Losses are indicated by "-") | 1,700,030,534.61 | 1,825,577,073.13 |
| Gains from changes in fair values (Losses are indicated by "-") | 1,681.64 | |
| Impairment losses of creditability (Losses are indicated by "-") | ||
| Impairment losses of assets(Losses are indicated by "-") | -75,232,103.38 | |
| Profit on disposal of assets(Losses are indicated by "-") | 21,518.64 | |
| II. Operating profit (Loss is indicated by "-") | 1,671,093,325.01 | 1,769,769,643.40 |
| Add: Non-operating income | 4,686,362.69 | |
| Less: Non-operating expenses | 4,321.51 | 11,715.94 |
| III. Total profit (Total Loss is indicated by "-") | 1,671,089,003.50 | 1,774,444,290.15 |
| Less: Income tax expenses | -10,804,508.21 | -2,951,070.11 |
| IV. Net profit (Net loss is indicated by "-") | 1,681,893,511.71 | 1,777,395,360.26 |
| Net profit from continuing operations (Net loss is indicated by "-") | 1,681,893,511.71 | 1,540,100,000.00 |
| Net profit from discontinued operations (Net loss is indicated by "-") | 237,295,360.26 | |
| V. Other comprehensive income after tax | 5,512,500.00 | |
| 1. Other comprehensive income not reclassified into gains or losses | 5,512,500.00 | |
| Inc: Remeasured defined benefit plan net liabilities or net assets changes |
| Under the equity method, the share of other comprehensive income not reclassified into gains or losses | ||
| Changes in the fair value of other equity instruments | 5,512,500.00 | |
| Change in fair value of the enterprise's own credit risk | ||
| 2. Other comprehensive income classified into profits or losses | ||
| Others | ||
| VI. Total comprehensive income | 1,687,406,011.71 | 1,777,395,360.26 |
| VII. Earnings per share | ||
| Basic earnings per share | ||
| Diluted earnings per share |
| ITEM | Year of 2019 | Year of 2018 |
| I. Cash Flows from Operating Activities: | ||
| Cash receipts from the sale of goods and the rendering of services | 10,149,942,938.70 | 6,653,846,413.59 |
| Cash received relating to other operating activities | 43,247,155.21 | 11,654,127.08 |
| Sub-total of cash inflows from operating activities | 10,193,190,093.91 | 6,665,500,540.67 |
| Cash payments for goods purchased and services received | 1,743,460,556.18 | 1,173,888,215.41 |
| Cash paid to and for employees | 4,169,211,234.25 | 2,955,085,643.76 |
| Cash paid for all types of taxes | 594,214,853.17 | 398,377,146.31 |
| Cash paid relating to other operating activities | 1,212,317,365.12 | 730,203,158.26 |
| Sub-total of cash outflows from operating activities | 7,719,204,008.72 | 5,257,554,163.74 |
| Net cash flow from operating activities | 2,473,986,085.19 | 1,407,946,376.93 |
| II. Cash flows from investing activities: | ||
| Cash receipts from disposals and recovery of investments | 27,446,550,000.00 | 15,194,100,000.00 |
| Cash receipts from investment income | 197,260,373.01 | 107,926,458.77 |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 70,050.40 | |
| Net cash receipts from disposals of subsidiaries and other business units | ||
| Cash received relating to other investing activities | ||
| Sub-total of cash inflows from investing activities | 27,643,810,373.01 | 15,302,096,509.17 |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 719,887,283.47 | 263,063,939.34 |
| Cash paid for investment | 27,055,030,000.00 | 17,135,960,000.00 |
| △Net increase in pledged loans receivables | ||
| Net cash payments for acquisitions of subsidiaries and other business units | 259,969,921.72 | |
| Cash paid relating to other investing activities | 3,322,708.32 | |
| Sub-total of cash outflows from investing activities | 27,774,917,283.47 | 17,662,316,569.38 |
| Net cash flow from investing activities | -131,106,910.46 | -2,360,220,060.21 |
| III. Cash flows from financing activities: | ||
| Cash received from investors | ||
| Including: cash receipts from capital contributions from minority owners of subsidiaries | ||
| Cash from borrowings | 3,343,698,800.00 | 1,607,000,000.00 |
| Other cash received relating to other financing activities |
| Sub-total of cash inflows from financing activities | 3,343,698,800.00 | 1,607,000,000.00 |
| Cash repayments of borrowings | 2,083,698,800.00 | 100,000,000.00 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 1,525,752,347.67 | 9,061,231.25 |
| Including: payments for distribution of dividends or profits to minority owners of subsidiaries | ||
| Cash paid relating to other financing activities | 1,503,370.80 | 86,000,000.00 |
| Sub-total of cash outflows from financing activities | 3,610,954,518.47 | 195,061,231.25 |
| Net cash flow from financing activities | -267,255,718.47 | 1,411,938,768.75 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| V. Net increase in cash and cash equivalents | 2,075,623,456.26 | 459,665,085.47 |
| Add: Initial cash and cash equivalents balance | 648,711,545.32 | 189,046,459.85 |
| VI. The final cash and cash equivalents balance | 2,724,335,001.58 | 648,711,545.32 |
| ITEM | Year 2019 | Year 2018 |
| I. Cash flows from operating activities: | ||
| Cash receipts from the sale of goods and the rendering of services | 230,877,112.11 | |
| Refund of tax and fee received | ||
| Cash received related to other operating activities | 554,084,857.75 | 3,590,435.61 |
| Sub-total of cash inflows from operating activities | 554,084,857.75 | 234,467,547.72 |
| Cash payments for goods purchased and services received | 353,787,362.36 | |
| Cash paid to and for employees | 21,732.78 | 5,011,990.92 |
| Cash paid for all types of taxes | 20,871,407.10 | 3,512,900.43 |
| Cash paid relating to other operating activities | 92,852,186.19 | 141,626,562.55 |
| Sub-total of cash outflows from operating activities | 113,745,326.07 | 503,938,816.26 |
| Net Cash Flow from Operating Activities | 440,339,531.68 | -269,471,268.54 |
| II. Cash Flows from Investing Activities: | ||
| Cash receipts from disposals and recovery of investments | 23,960,000.00 | 215,425,230.09 |
| Cash receipts from investment income | 1,550,030,534.61 | 141,488,000.00 |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 340,355.00 | |
| Net cash receipts from disposals of subsidiaries and other business units | ||
| Cash received relating to other investing activities | ||
| Sub-total of cash inflows from investing activities | 1,573,990,534.61 | 357,253,585.09 |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 32,330,744.18 | 19,021,755.09 |
| Cash payments to acquire investments | 24,060,000.00 | 13,000,000.00 |
| Sub-total of cash outflows from investing activities | 56,390,744.18 | 32,021,755.09 |
| Net Cash Flow from Investing Activities | 1,517,599,790.43 | 325,231,830.00 |
| III. Cash Flows from Financing Activities: | ||
| Cash receipts from capital contributions | ||
| Including: cash receipts from capital contributions from minority owners of subsidiaries | ||
| Cash receipts from borrowings | 216,000,000.00 | |
| Cash received relating to other financing activities | 21,929,348.08 |
| Sub-total of cash inflows from financing activities | 237,929,348.08 | |
| Cash repayments of borrowings | 216,000,000.00 | 404,000,000.00 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 1,738,432,883.87 | 22,317,018.18 |
| Including: payments for distribution of dividends or profits to minority owners of subsidiaries | ||
| Cash paid relating to other financing activities | 1,503,370.80 | |
| Sub-total of cash outflows from financing activities | 1,955,936,254.67 | 426,317,018.18 |
| Net Cash Flow from Financing Activities | -1,955,936,254.67 | -188,387,670.10 |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | ||
| V.Net Increase in Cash and Cash Equivalents | 2,003,067.44 | -132,627,108.64 |
| Add: Opening balance of cash and cash equivalents | 4,928,735.89 | 137,555,844.53 |
| VI. Closing Balance of Cash and Cash Equivalents | 6,931,803.33 | 4,928,735.89 |
7. Consolidated Statement of Changes in Owners' Equity
Year of 2019
Unit: RMB
| Preferredshares | Perpetualbonds |
| IV. Closing balance of the current year103,807,623.001,198,581,049.5037,500,000.0045,000,000.002,046,657,231.323,431,545,903.82-6,019.503,431,539,884.32 | |||||
| Attributable to owners of the Company | Total owners' equity | ||||
| Other equity instrument | |||||
ITEM Paid-in capital/Share capital
| Paid-in capital/Share capital | Capital reserves | Less:Treasuryshares | Othercomprehensiveincome | Specialreserves | Surplusreserves | Generalrisk reserves | Retained earnigs | Others | Subtotal |
Minorityinterests
Year of 2019
Year of 2019
Year of 2018
Unit: RMB
| Preferredshares | Perpetualbonds |
| ITEM | Year of 2018 | ||||||||||||
| Attributable to owners of the Company | Minorityinterests | Total owners'equity | |||||||||||
| Paid-in capital/Share capital | Other equity instrument | Capital reserves | Less:Treasuryshares | Othercomprehensive income | Specialreserves | Surplusreserves | General riskreserves | Retained earnigs | Others | Subtotal | |||
| IV. Closing balance of the current year103,807,623.001,144,781,049.5045,000,000.001,660,363,232.502,953,951,905.002,953,951,905.00 | |||||||||||||
8. Statement of Changes in Owners' Equity
Year of 2019
Unit: RMB
| Preferredshares | Perpetualbonds |
| ITEM | Year of 2019 | |||||||||
| Paid-in capital/Share capital | Other equity instrument | Capital reserves | Less:Treasuryshares | Othercomprehensiveincome | Specialreserves | Surplus reserves | General riskreserves | Retained earnigs | Total owners' equity | |
| IV. Closing balance of the current year6,167,399,389.0012,775,326,370.3337,500,000.00387,458,806.651,527,629,604.1420,895,314,170.12 | ||||||||||
Year of 2018
Unit: RMB
| Preferredshares | Perpetualbonds |
| ITEM | Year of 2018 | |||||||||
| Paid-in capital/Share capital | Other equity instrument | Capital reserves | Less:Treasuryshares | Othercomprehensiveincome | Specialreserves | Surplus reserves | Generalriskreserves | Retained earnigs | Total owners' equity | |
| IV. Closing balance of the current year6,167,399,389.0012,775,326,370.33219,269,455.481,432,427,303.0720,594,422,517.88 | ||||||||||
Section III. General Information
1. Overview of the company
Offcn Education Technology Co., Ltd. ( referred to as the “Company” or “the Company”) was formerlyknown as Yaxia Automobile Co.,Ltd.(referred to as “Yaxia Auto”). Yaxia Auto, a limited companyestablished by Wuhu Yaxia Industrial Co., Ltd obtained the EnterpriseBusiness License of Enterprise LegalPerson No. 3402012104768 issued by Wuhu Administration for Industry and Commerce on November 30,2006. Yaxia Auto was approved by the China Securities Regulatory Commission (referred to as the"CSRC") for The approval of the initial public offering of Wuhu Yaxia Automobile Co., Ltd. (CSRC License[2011] No. 1046) and issued RMB 22 million ordinary shares to the public and traded on the ShenzhenStock Exchange in August 2011. The controlling shareholder is Anhui Yaxia Industrial Co., Ltd. (referred toas “Yaxia Industrial”).On 1 July 2016, the company obtained the No. 91340200711040703A “EnterpriseBusiness License of Enterprise Legal Person” issued by the Wuhu Administration for Industry andCommerce. As of December 31,2019, the Company's share capital was RMB 6,167,399,389.00 .In accordance with the resolution of the 3rd Extraordinary General Meeting of Yaxia Auto in 2018 and theresolution of the 24th Board Meeting of the 4th Board of Directors, and approved by China SecuritiesRegulatory Commission's The approval of major asset restructuring of Yaxia Automobile Co., Ltd. and theissuance of shares to Lu Zhongfang and others for asset purchase (Securities Regulatory Commission
[2018] No. 1975), Yaxia Auto swapped all assets and liabilities (“exchange-out assets”) as of the
assessment date, excluding the retained assets that do not constitute a business, with the equivalent portion(“exchange-in assets”) of 100.00% of the equity in Beijing Offcn Education Technology Co., Ltd. (referredto as “Offcn Ltd.”) respectively held by 11 transaction counter-parties including Li Yongxin, and paid thedifference between the exchange-out assets and the exchange-in assets by issuing shares.On December 27, 2018, Yaxia Auto and the counterpart Yaxia Industrial signed the Confirmation ofDelivery of Assets. The delivery date of the exchange-out assets is 27 December 2018, from the date ofdelivery, Yaxia Auto, the counterparty will complete the delivery obligations, regardless of whether theexchange-out assets (including but not limited to land use rights, housing ownership, intellectual propertyrights and qualifications, licenses, other intangible assets, etc.) is actually completed, the ownership of theassets belongs to Yaxia Industrial, and all the rights, obligations, responsibilities and risks related to thedisposed assets (including contingent liabilities, implicit liabilities) are owned and undertaken by YaxiaIndustrial, which has the actual control and disposal rights over the exchange-out assets, and Yaxia Auto nolonger has any actual rights. On the same day, Offcn Ltd. completed the registration procedures forindustrial and commercial changes on shareholder changematters. After the completion of this alteration,Yaxia Auto holds a 100.00% stake in Offcn Ltd., accordingly, the controlling shareholder and actualcontroller of the company was changed to Li Yongxin and Lu Zhongfang. On February 2, 2019, Yaxia Autochanged its name and its business scope.On January 23, 2019, the registration procedures for the transfer of shares of the Company and the new
shares of the Company related to the restructuring transaction were completed. As of December 31, 2019,the Company's share capital amounted RMB 6,167,399,389.00.Unified social credit code：91340200711040703A.Company residence： Yaxia Automobile City, Yijiang North Road, Jiujiang District, Wuhu City, AnhuiProvince.Headquarters Address：Hanhua Century Building B, Xueqing Road 23, Haidian District, Beijing.The nature of the industry：Education.Customer nature：Mainly natural persons.Business Scope: technology development, technical services, technology promotion, technologytransfer ,technical consulting and technology education and training (only branch to carry out thisbusiness)in the field of education and science ; offering exhibition services, organizing cultural and artisticexchange activities (excluding performances), conference services, and consult businessmanagement.(Projects subject to approval according to the law can only carry out business activities afterapproval by the relevant departments).The financial Statements were approved by the Board of Directors of the Company on 9 March 2020.
2. The scope of the consolidated financial statements
The consolidated scope of the consolidated financial statements of the Company is determined on a controlbasis, including the financial statements of the Company and all subsidiaries.A subsidiary is an enterpriseor entity controlled by the Company.The scope of the consolidated financial statements is detailed in noteX (1) “Interest in subsidiaries” of this report. Changes in the scope of consolidated financial statementsare detailed in Note IX “Changes In The Consolidated Scope” of this report.Section IV. Basis for Preparation of Financial Statements
1. Basis of preparation
The financial statements are prepared on a going concern basis, according to the practical transactions, inaccordance with the relevant provisions of the Accounting Standards for Business Enterprises (collectivelyreferred to as the "CASs"), and based on the important accounting policies and accounting estimatesdescribed below.
2. Going concern
The Company evaluated the ability to continue operations for 12 months from 31 December 2019. Afterusing all available information to make an assessment, it did not find any matters and situations that havesignificant doubts about the ability to continue operations. It is reasonable to prepare financial statementson a going concern basis.
Section V. The Company’s Significant Accounting Policies And Accounting Estimates
1. Statement of compliance with the Accounting Standards for Business Enterprises.The financial statements based on the above-mentioned preparation basis meet the requirements of thelatest CASs and its application guidelines, interpretations, and other relevant regulations issued by theMinistry of Finance, which truly and completely present the company's financial position , financialperformance, cash flows and other information for the year then ended.In addition, the financial report compiled by reference to the listing and disclosure requirements of thedisclosure provisions of the Rules for the Information Disclosure and Compilation of Companies PubliclyIssuing Securities NO.15:--General Provisions for Financial Report(Revised in 2014) of the CSRC as wellas the Notice on Implementation of the New Accounting Standards for Listed Companies(Letter of theaccounting department [2018] no. 453).
2. Accounting period and business cycle
The Company’s accounting period starts on January 1and ends on December31.
3. Recording currency
The Company adopts Renminbi (RMB)as their recording currency.
4. Measurement attributes of the report items change and used in the current periodMeasurement attributes are adopted by the Company including history cost, replacement cost, net realizablevalue, present value, and fair value.
5. Business combinations
5.1 The accounting treatment of business combinations involving enterprises under common controlThe Company achieves a merger under the same control in one transaction or through step-by-stepmultiple transactions. Assets and liabilities obtaining from the merger of enterprise are measured accordingto the share of book value of consolidated financial statements of final controlling party under the owner’sequity of combined party within combining date. The difference between the book value of the net assetsobtained from company and the book value of the consideration the combination of payment (or theaggregate face value of shares issued as consideration) is adjusted to the capital reserve. If the capitalreserve is insufficient to offset, the retained earnings shall be adjusted.
5.2 The accounting treatment of business combinations involving enterprises under uncommon controlWhere the cost of combination exceeds the acquiree’s interest in the fair value of the acquire ’s identifiablenet assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost oninitial recognition. If the combination cost is less than the share of identifiable fair value of net assets ofacquiree, firstly, conducting the review of measurement is necessary to achieve the acquiree the identifiableassets, liabilities and the fair value of contingent liabilities as well as the combination costs. The acquiree
combination costs after reviews are still less than the fair value of identifiable net asset, the difference willbe included into the current profits and losses.By step-by-step multiple transaction to achieve business combinations not under common control should behandled in the following order：
(1) Adjust the initial investment cost of long-term equity investments. If the equity held before the purchasedate is accounted for using the equity method, it is remeasured at the fair value of the equity on thepurchase date, and the difference between the fair value and its book value is included in the currentinvestment income; Changes in other comprehensive income and other owners' equity under the equitymethod shall be converted to the current income at the acquisition date, except for other comprehensiveincome arising from the net liabilities or net assets’ changes of the benefit plan remeasured by the investee.
(2) Recognize goodwill (or the amount included in the current profit or loss). Compare the initialinvestment cost of the adjusted long-term equity investment with the fair value of the identifiable net assetsof the subsidiary that should be enjoyed on the purchase date. If the former is greater than the latter, thedifference is recognized as goodwill; The former is less than the latter, and the difference is booked into thecurrent profit and loss.Circumstances of disposing of equity through multiple transactions to the loss of control of subsidiaries
(1) Determine whether the various transactions in the process of step-by-step disposal of equity to the lossof control of subsidiaries belong to the "package deal" principleGenerally transactions in stages are treatment as a package deal in accounting if the transaction terms,conditions, and economic impact of disposal of the subsidiary's equity interests comply with one or more ofthe following:
1) These transactions are made simultaneously or with consideration of influence on each other;
2) These transactions can only achieve a complete business outcome when treated as a whole;
3) The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
4) A transaction is uneconomical when treated alone, but is economical when considered together withother transactions.
(2) Each transaction in the process of disposing of the equity in stages to the loss of control of thesubsidiary belongs to the "package deal" accounting methodDisposal of various transactions in the equity investment of the subsidiary until the loss of control belongsto a package of transactions, each transaction should be accounted for as a transaction that disposes of thesubsidiary and loses control; however, Before losing he control each time, the difference between the priceand the share of the subsidiary's net asset share corresponding to the disposal of the investment shall berecognized as other comprehensive income in the consolidated financial statements, and shall be transferredto the profit and loss for the period when control is lost.
In the consolidated financial statements, the remaining equity should be remeasured at its fair value on thedate when control is lost. The sum of the consideration obtained from the disposal of the equity and the fairvalue of the remaining equity, minus the difference between the shares of the net assets that should becontinuously calculated by the atomic company since the purchase date based on the original shareholdingratio, shall be included in the investment income of the period when the company loses control.. Othercomprehensive income related to the original subsidiary 's equity investment shall be converted to currentinvestment income when control is lost.
(3) Each transaction in the process of disposing of equity in steps to the loss of control of a subsidiary is notan accounting treatment of “package deal”If the disposal of the investment in the subsidiary does not lose control, the difference between the disposalprice in the consolidated financial statements and the share of the subsidiary’ s net asset to the disposalinvestment is included in the capital reserve (capital premium or equity premium). If the capital premium isinsufficient to offset, the retained earnings should be adjusted.When disposing of the loss of control over the investment in a subsidiary, in the consolidated financialstatements, the remaining equity should be remeasured at its fair value on the date when control is lost. Thesum of the consideration obtained from the disposal of equity and the fair value of the remaining equityminus the share of the net assets that should have been calculated by the original subsidiary from the dateof purchase based on the original shareholding ratio is included in the Investment income. Othercomprehensive income related to the equity investment of the original subsidiary shall be converted tocurrent investment income when control is lost.
6. Preparation of consolidated financial statements
Consolidated financial statements are based on the Parent’s and its subsidiaries’financial statements inaccordance with the CASs No.33 – Consolidated financial statement.
7. Classification of joint arrangement and accounting methods of joint operations
7.1 Joint venture arrangements classification and Co-operation accounting treatmentA joint arrangement refers to an arrangement jointly by two or more parties . The joint arrangement has thefollowing characteristics: (1) all participants are bound by the arrangement; (2) two or more participantsexercise joint control over the arrangement. No single party shall be able to control the arrangement, andany party that has joint control over the arrangement shall be able to prevent any other party or combinationof parties from controlling the arrangement alone.Joint control refers to the shared control over a certain economic activity as required in the contract, andonly exists when all investors sharing such control related to the activity have consented.A joint arrangement is classified as either a joint operation or a joint venture. A joint operation is a jointarrangement whereby the joint operators have rights to the assets, and obligations for the liabilities, relatingto the arrangement. A joint venture is a joint arrangement whereby the joint ventures only have the rights to
the net assets under this arrangement.
7.2 Accounting treatment of joint venture arrangement
A joint operator shall recognize the following items in relation to its interest in a joint operation, andaccount for them in accordance with relevant accounting standards:1) Its solely-held assets, and its share ofany assets held jointly; 2) Its solely-assumed liabilities, and its share of any liabilities incurred jointly;3) Itsrevenue from the sale of its share of the output arising from the joint operation; 4) Its share of the revenuefrom sale of the output by the joint operation; 5) Its solely-incurred expenses and its share of any expensesincurred jointly.The participants in a joint venture shall, in accordance with the Accounting Standards for Enterprises No.2long-term equity investment, make accounting arrangements for the investment.
8. Criteria for the determination of cash and cash equivalents
The term "cash" of cash flow statement refers to cash on hand and deposits that are available for payment atany time. The term of “cash equivalents” refers to short-term (usually due within 3 months from theacquisition date) and highly liquid investments that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk of changes in value.
9. Foreign currency transaction and foreign currency statement translation
9.1 Transactions denominated in foreign currencies
On initial recognition, a foreign currency amount, including share capital and capital reserves, is translatedinto functional currency by applying the spot exchange rate on the date of the transaction announced byPeople’s Bank of China. At the balance sheet date, foreign currency balance comprised of foreign currencymonetary items and foreign currency non-monetary items, shall be adjusted: foreign currency monetaryitems, of which the exchange difference between initial exchange rate and the spot exchange rate at the endof the period, shall be recognized into profit and loss for the period; exchange differences related to aspecific-purpose borrowing denominated in foreign currency for constructing an asset that qualifies forcapitalization shall be capitalized before it’s ready for intended use and recognized into cost of constructionin progress; foreign currency non-monetary items measured at fair value, the difference of which shall berecognized into profit and loss for the period as fair value changes.
9.2 Translation of financial statements denominated in foreign currencies
The assets and liabilities of the balance sheet are translated using the spot exchange rate at the balancesheet date; all items except for 'undistributed profits' of the owner's equity are translated at the spotexchange rate on the transaction date. The revenue and expenses in the income statement are translatedusing the approximate rate of the spot exchange rate on the transaction date. Differences arising from thetranslation of foreign currency financial statements are recognized as the other comprehensive income.
10. Financial instruments
10.1 Recognition and derecognition of financial instruments
The Company recognizes a financial asset or a financial liability when it becomes one party to thecontractual provisions of the instrument.All regular ways purchasing or selling of financial assets are recognized and derecognized on a trade datebasis. Regular way purchasing or selling, means that receive or deliver financial assets within the time limitstipulated by regulations or common practices, as agreed in the terms of the contract. Trade date, is the datethe Company promises to buy in or sell out the financial assets.The Company derecognizes the financial assets (either a part, or a part of a similar group), which is writingit off the balance sheet, if following conditions are met:
(1) Expiration of the right to receive cash flow from financial assets;
(2) The right to receive cash flow from financial assets has been transferred, or bear the obligation to payall cash received to third party in time due to “Hand-Over arrangement”; and (a) all risks and benefits ofthe financial assets has been transferred virtually, or (b) though not all risks and benefits of the financialassets has been transferred, but lose the control of the financial assets.
10.2 Classification and measurement of financial assets
According to the business model for managing financial assets and the contractual cash flow characteristicsof financial assets, the Company’s financial assets has initially been classified as follows: financial assets atamortized cost, and financial assets at fair value through other comprehensive income, financial assets atfair value through profit or loss. Subsequent measurement of financial assets depends on its categories.The Company's classification of financial assets is based on the company's business model and itscharacteristics of cash flow.
(1) Financial assets at amortized cost
Financial assets are classified as financial assets at amortized cost when following conditions are met: theCompany’s business model for managing financial assets targets to receive contractual cash flow; Thecontractual terms of the financial asset stipulate that the cash flow generated on a specific date is only thepayment of the principal and the interest based on the outstanding principal amount. For such financialassets, using effective interest rate method and subsequently measure at amortized cost, gains or lossesarising from amortization or impairment are recognized in current profit or loss.
(2) Liability investment at fair value through other comprehensive income
Financial assets are classified as liability investment at fair value through other comprehensive incomewhen following conditions are met: the Company’s business model for managing financial assets targetsboth the collection of contractual cash flows and the sale of financial assets. The contractual terms of thefinancial asset stipulate that the cash flow generated on a specific date is only the payment of the principaland the interest based on the outstanding principal amount. For such financial assets, subsequently measure
at fair value. The discount or premium is amortized using the effective interest method and recognized asinterest income or expense. Except for the impairment loss and the exchange differences of foreignmonetary financial assets are recognized as profit or loss for the period, the changes in the fair value ofsuch financial assets are recognized in other comprehensive income, the accumulated gains or losses istransferred to profit or loss until it is derecognized. Interest income related to such financial assets isincluded in the current profit and loss.
(3) Equity investment at fair value through other comprehensive income
The Company irrevocably designated the non-trading equity investment as financial assets at fair valuethrough other comprehensive income, and only the related dividend income is recognized in profit or loss.The accumulated gains or losses is transferred to retained earnings until it is derecognized.
(4) Financial assets at fair value through profit or loss
Any financial assets that are not held in one of the two business models mentioned above are measured atfair value through profit or loss. At the time of initial recognition, in order to eliminate or significantlyreduce accounting mismatches, financial assets can be designated as financial assets at fair value throughprofit or loss. For such financial assets, subsequently measured at fair value, and all changes in fair valueare recognized in profit or loss.When and only when, the Company changes its business model for managing financial assets it mustreclassify all affected financial assets.For financial assets at fair value through profit or loss, the related transaction expense is directly recognizedin current profit or loss as incurred, and other financial assets’ transaction expense is included in the initialrecognition amount.
10.3 Classification and measurement of financial liabilities
The Company’s financial assets have initially been classified as follows: financial liabilities at amortizedcost and financial liabilities at fair value through profit or loss.The financial liabilities meeting any of the following conditions can be designated as the financial liabilitiesat fair value through profit and loss：(1) Such designation can eliminate or significantly reduce accountingmismatches. (2) According to corporate risk management or investment strategies as stated in formalwritten documents, the management and performance evaluation of financial liability portfolios orcombinations of financial assets and financial liabilities are based on fair value , and reported to keymanagement personnel on this basis within the enterprise.(3) Such financial liabilities include embeddedderivatives that need to be split separately.The Company determines the classification of financial liabilities at initial recognition. For financialliabilities measured at fair value through profit or loss, the related transaction expense is directlyrecognized in current profit or loss. The related transaction expense of other financial liabilities is includedin the initial recognition amount.
Subsequent measurement of financial liabilities depends on its categories:
(1) Financial liabilities at amortized cost
Based on amortized cost, subsequently measure it using the effective interest rate method.
(2) Financial liabilities at fair value through profit or loss
It includes financial liabilities (including derivatives that are financial liabilities) and financial liabilitiesthat are designated at fair value through profit or loss.
10.4 Offsetting of financial instruments
If the following conditions are met at the same time, the net amount of the financial assets and financialliabilities offset each other shall be shown in the balance sheet: there is a legal right to offset the recognizedamount, and such legal right is currently enforceable; Plans to liquidate the financial asset on a net basis orsimultaneously liquidate the financial liability.
10.5 Impairment of financial assets
Based on expected credit losses, the Company undertakes impairment treatment and confirms lossprovisions of financial assets at amortized cost, debt instrument investments at fair value through othercomprehensive income and financial guarantee contracts. Credit loss refers to the difference between thecash flow of all contracts discounted at the original effective interest rate and the expected cash flow of allcontracts receivables, i.e. the present value of all cash shortages.The Company estimates, individually or in combination, the expected credit losses of financial assetsmeasured at amortized cost and financial assets (debt instruments) measured at fair value and whosechanges are accounted for in other comprehensive income, taking into account all reasonable andevidence-based information, including forward-looking information.
(1) General model of expected credit loss
If the credit risk of the financial instrument has increased significantly since the initial recognition, theCompany shall measure the loss provision at the amount equivalent to the expected credit loss of thefinancial instrument for the entire life of the instrument; If the credit risk of the financial instrument has notincreased significantly since the initial recognition, the company shall measure the loss provision at theamount equivalent to the expected credit loss of the financial instrument in the next 12 months. Theincrease or rollover amount of the loss provision shall be recorded in the current profit and loss as animpairment loss or gain. For the company's specific assessment of credit risk, please refer to Note XI ofthis report for details. “Risks Associated With Financial Instruments”.The credit risk of the instrument is generally deemed to have increased significantly if the default is morethan 30 days, unless there is conclusive evidence that the credit risk of the instrument has not increasedsignificantly since the initial recognition.
Specifically, the Company divides the process of credit impairment of financial instruments without creditimpairment at the time of purchase or origination into three stages. There are different accountingtreatments for the impairment of financial instruments at different stages:
Stage 1: credit risk has not increased significantly since initial recognition.For the financial instrument at this stage, the enterprise shall measure the loss provision according to theexpected credit loss in the next 12 months, and calculate the interest income according to its book balance(that is, the impairment provision is not deducted) and the actual interest rate (if the instrument is afinancial asset, the same below).Stage 2: credit risk has increased significantly since the initial recognition, but credit impairment has notyet occurred.For a financial instrument at this stage, the enterprise shall measure the loss provision according to theexpected credit loss of the instrument throughout its life, and calculate interest income according to its bookbalance and actual interest rate.Stage 3: credit impairment occurs after initial recognitionFor the financial instrument in this stage, the enterprise shall calculate the loss provision according to theexpected credit loss of the instrument throughout its lifetime, but the calculation of interest income isdifferent from that of the financial asset in the first two stages. For the financial assets whose creditimpairment has occurred, the enterprise shall calculate the interest income at its amortized cost (bookbalance less the impairment provision, that is, book value) and the actual interest rate.For financial assets whose credit impairment has occurred at the time of purchase or origin, the enterpriseshall only recognize the changes in the expected credit loss during the whole duration after the initialrecognition as loss provision, and calculate interest income at its amortized cost and the actual interest rateadjusted by credit.
(2) The Company chooses not to compare the credit risk of a financial instrument with a lower credit riskon the balance sheet date with the credit risk at the time of the initial recognition, but directly assumes thatthe credit risk of the instrument has not increased significantly since the initial recognition.If the enterprise determine financial instruments, the lower the risk of default in the borrowers in theshort-term ability to fulfill its obligation to pay the contract cash flow is very strong, and even the economicsituation and business environment in a long term adverse change, also will not necessarily reduce theborrower's ability to fulfill its obligation to pay the contract cash flow, then the financial instruments can beseen as a lower credit risk.
(3) Receivables and lease receivables
The Company, for the Accounting Standards for Enterprises No. 14 - revenues, excluding provisions bymajor financing elements (including according to the criteria does not consider no more than a year of
financing elements) in the contract of receivables, adopts the simplified model of credit losses, always inaccordance with the expected amount of credit losses throughout the duration of measuring its losses.For receivables containing significant financing elements and lease receivables specified in the AccountingStandards for Business Enterprises No. 21 -- Leasing, the company makes an accounting policy choice andchooses to adopt a simplified model of expected credit loss, that is, to measure the loss provision accordingto the amount equivalent to the expected credit loss in the whole duration.
10.6 Financial asset transfer
If almost all the risks and rewards of ownership of financial assets have been transferred to the transferee,the financial assets are derecognized; if almost all the risks and rewards of ownership of the financial assetsare retained, the financial assets are not derecognized.Neither transfer nor retain almost all risks and rewards of ownership of financial assets, which are dealtwith as follows: If the financial assets are abandoned, derecognize the financial assets and recognize theassets and liabilities; If not abandoned, it needs to recognize the relevant financial assets according to theextent to which they continue to be involved in the transferred financial assets, and recognize the relatedliabilities.If the transferred financial assets are continued to be involved by financial warranty, the assets should berecognized at lower of the book value of the financial assets and the financial warranty amount. Thefinancial warranty amount refers to the maximum amount of the consideration received that will berequired to be repaid.
11. Accounts receivable
For accounts receivable, whether significant financing is involved or not, the simplified model of expectedcredit loss is adopted. The Company will always measure its provision for loss based on the amountequivalent to the expected credit loss of its entire duration, and the increase or reversal amount of theprovision for loss resulting therefrom is included in the profit and loss of the period as an impairment lossor gain.The Company considers all reasonable and evidence-based information, including forward-lookinginformation, to estimate the expected credit loss of the accounts receivables individually or in combination.When a single financial asset can evaluate the expected credit loss information at a reasonable cost, theCompany chooses to calculate the credit loss individually. When a single financial asset cannot evaluate theexpected credit loss information at a reasonable cost, the company will divide the accounts receivables intoseveral combinations in accordance with the characteristics of credit risk, and the expected credit loss iscalculated on the basis of the combination. The basis for determining the combination is as follows:
| Combination Type | The basis for determining the combination |
| Combination 1 | Receivables from related companies |
| Combination 2 | Receivables from hotel services |
| Combination 3 | Other receivables |
| Type | Basis |
| Combination 1 | Amounts due from related parties |
| Combination 2 | Staff receivables, deposits, security deposits |
| Combination 3 | Receivables other than Portfolio 1, Portfolio 2 |
For other receivables divided into portfolios, the company calculates the expected credit loss throughdefault risk exposure and expected credit loss rate in the next 12 months or the whole duration, by referringto the historical credit loss experience and combining the current situation with the forecast of futureeconomic conditions.
14. Inventory
14.1 Classification of inventories
Inventories refer to the finished goods or commodities held for sale in daily activities, goods in progress inthe production process, consumed materials and supplies in the production process or providing services ofthe Company.
14.2 Measurement of inventories transferred out
Finished goods are accounted for using the weighted average at the end of the month method uponissuance.
14.3 Basis for determining net realizable value of inventories and provision methods for decline in value ofinventories.At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the netrealizable value is below the cost of inventories, a provision for decline in value of inventories is made. Forinventories of goods directly used for sale, in the normal production and operation process, the netrealizable value is determined by the amount of the estimated selling price of the inventory less theestimated sales cost and relevant taxes and fees; for material inventories that need to be processed, in thenormal production and operation process, the net realizable value is determined by the amount of theestimated selling price of finished products produced less the estimated cost to be occurred at the time ofcompletion, the estimated selling expenses and related taxes; on the balance sheet date, some of the sameinventory has if the contract price is agreed and there is no contract price in other parts, the net realizablevalue is determined separately and compared with its corresponding cost to determine the amount of theprovision for inventory depreciation or reversal.
14.4 Inventory count system
The perpetual inventory system is maintained for stock system.
14.5 Amortization of low-value consumables and packages
（1）Low-value consumables
Low-value consumables are amortized by one-time write-off.
（2）Packages
Packages are amortized by one-time write-off.
15. Hold for sale
The Company divides the corporate components (or non-current asset) that meet all of the followingconditions into holding for sale:(1) Based on the usual practice of selling such assets or disposal groups insimilar transactions, they can be sold immediately under current conditions;(2) The sale is highly probable,a resolution has been made on a sale plan and a firm purchase commitment has been obtained and it isexpected that the sale will be completed within one year. Approvals from relevant authorities or regulatoryauthorities have been obtained in accordance with relevant regulations.The Company adjusts the expected net salvage value held for sale to reflect the net amount of its fair valueless costs to sell (not over its carrying amount). The difference between the original book value and theadjusted net residual value is included in the profit or loss of the current period as an asset impairment loss.At the same time, provision for impairment of assets held for sale was made. For the amount of impairmentloss of assets confirmed by the disposal group held for sale, the book value of goodwill in the disposalgroup should be offset first, and then the proportion of the book value of various non-current assetsmeasured in the disposal group according to the application of this standard measurement. Proportionatelydeducts its book value.If the fair value of the non-current assets held for sale on the balance sheet date is less than the net value ofthe selling expenses, the amount of the previous write-down shall be restored and the impairment of assetsrecognized after being classified as held for sale shall be made. The amount of the loss is reversed and theamount reversed is included in the current profit or loss. Impairment losses on assets recognized prior toclassification as held for sale shall not be reversed. If the fair value of the disposal group held for sale onthe subsequent balance sheet day is increased, the net amount after the sale expense is increased, theamount of the previously written down amount shall be restored, and shall apply to the measurementrequirements of this standard after being classified as held for sale. The impairment loss of assetsconfirmed by non-current assets is reversed within the amount, and the reversed amount is included in thecurrent profit or loss. The carrying amount of the goodwill that has been eliminated and the non-currentassets applicable to the measurement of this standard will not be reversed if it is recognized before theassets are classified as held for sale. The subsequent reversal of the asset impairment loss confirmed by thedisposal group held for sale shall be based on the proportion of the book value of various non-current assetsmeasured and applied in the disposal group in addition to goodwill, and shall increase its book valueproportionately.The Company is committed to a sale plan involving loss of control of subsidiary shall classify all the assetsand liabilities of that subsidiary held for sale in consolidated balance sheets when the above criteria are met,regardless of whether the Company retain a non-controlling interests in its former subsidiary after the sale.In the balance sheets of parent company the investment should be classified as held for sale in full.
16. Debt investment
The Company uses the general model of expected credit losses for debt investment. For details, please refer
to Note V.(10). "Financial Instruments”.
17. Long-term equity investments
17.1 Determination of investment costs
（1）The business combinations under common control, the combined party to pay in cash, transfersnon-cash assets, assumed debt or equity securities as combined consideration, on the combining dateaccording to the owner's equity in the combined party on the final control party's share of the book value ofthe consolidated financial statements as its initial investment cost. The difference between initialinvestment cost in the long-term equity investment and book value of the paid merger consideration of thetotal amount of the face value of the issued shares to adjust capital reserves; if capital reserves areinsufficient to write-downs, it needs to adjust the retained earnings.Where a business combination under the same control is realized step by step, the combination datecalculated on the basis of the shareholding ratio shall enjoy the share of the book owner’ s equity of thecombined party as the initial investment cost of the investment. The difference between the initialinvestment cost and the book value of the original long-term equity investment plus the sum of the bookvalues of further consideration paid for the new shares paid on the merger date is adjusted for capitalreserve (capital premium or equity premium). If capital reserve is insufficient to offset, then it needs toadjust the retained earnings.
(2) The business combinations not under common control, in accordance with the payment of the fair valueof the merger consideration is its initial investment cost on the acquisition date.
(3) Except for the formation of enterprise merger: if the purchase price is paid in cash, the initial investmentcost shall be the purchase price actually paid; Where equity securities are issued, the fair value of equitysecurities issued shall be taken as the initial investment cost. Where an investor invests, the initialinvestment cost shall be the value agreed upon in the investment contract or agreement (except where thevalue agreed upon in the contract or agreement is not fair).
17.2 Subsequent measurement and recognition methods of profits and losses
For the long-term equity investment controlled by the Company to the investee, the Company shall adoptthe cost method in the individual financial statements of the company. Long-term equity investments withjoint control or significant influence shall be accounted for using the equity method.Under the cost method, a long-term equity investment is measured at initial investment cost. Except forcash dividends or profits already declared but not yet paid that are included in the price or considerationactually paid upon acquisition of the investment, investment income is recognized in the period inaccordance with the attributable share of cash dividends or profit distributions declared by the investee, andat the same time whether long-term investment in accordance with the relevant policy considerations of thedeclined value of asset impairment.For checking by the equity method, the initial investment cost of the long-term equity investment is notadjusted if it is greater than the fair value share of the net identifiable assets of the investee in the
investment; if the initial investment cost of the long-term equity investment is smaller than the fair valueshare of the net identifiable assets of the investee in the investment, the balance is charged to current profitand loss and the cost of the long-term equity investment is adjusted.When the equity method is adopted, after the acquisition of long-term equity investment, the investmentprofit and loss shall be recognized and the book value of long-term equity investment shall be adjustedaccording to the share of net profit and loss realized by the investee that should be enjoyed or shared. Uponconfirmation of the invested entity shall be accorded to the net profits and losses of the share, in order toobtain the invested entity, when the fair value of the identifiable assets such as basis, according to thecompany's accounting policies and accounting periods, and offset and associated enterprises and jointventures between insider trading profits and losses according to the shareholding calculation belongs to partof the investment enterprise (but insider trading loss belongs to the asset impairment loss, should be a fullconfirmation), net income of the invested entity after adjustment for confirmation. According to the profitor cash dividend declared to be distributed by the investee, calculate the share payable, and correspondinglyreduce the book value of the long-term equity investment. The company shall recognize the net lossincurred by the investee to the extent that the book value of the long-term equity investment and otherlong-term rights and interests substantially constituting the net investment of the investee shall be writtendown to zero, except where the company is obligated to bear additional losses. For the changes of owners'equity other than the net profit and loss of the investee, the book value of the long-term equity investmentshall be adjusted and included in the owners' equity.
17.3 Determine the basis of controlling and significant influence on the invested entityControl refers to having the power over the investee, enjoying the variable return through participating inthe investee's relevant activities, and having the ability to use the power over the investee to affect thereturn amount; Major influence means that the investor has the right to participate in the decision making ofthe financial and business policies of the investee, but cannot control or jointly control the formulation ofthese policies with other parties.
17.4 Disposal of long-term equity investments
(1) Partial disposal of a long-term equity investment in a subsidiary without loss of controlIf part of the long-term equity investment in the subsidiary is disposed of without losing control, thedifference between the disposal price and the book value corresponding to the disposal investment shall berecognized as the current investment income.
(2) Loss of control over a subsidiary by partial disposal of an equity investment or other reasonsIf the Company loses control over the subsidiary due to the disposal of equity investment or other reasons,the book value of the long-term equity investment corresponding to the sold equity shall be carried forward,and the difference between the sale price and the book value of the disposal long-term equity investmentshall be recognized as investment income (loss). Meanwhile, the remaining equity shall be recognized aslong-term equity investment or other relevant financial assets according to its book value. If the remaining
equity after disposal is able to exert joint control or significant influence on the subsidiary, accountingtreatment shall be conducted according to the relevant provisions of the conversion from cost method toequity method.
17.5 Methods of impairment assessment and determining the provision for impairment lossFor the long term investment in subsidiaries, joint venture and associates, The Company reviews thelong-term equity investments at each balance sheet date to determine whether there is any indication thatthey have suffered an impairment loss. If an impairment indication exists, the recoverable amount isestimated. If such recoverable amount is less than its carrying amount, a provision for impairment losses inrespect of the deficit is recognized in profit or loss for the period.
18. Investment properties
18.1 The Company’s investment properties include a land use right that is leased out, a land use right heldfor transfer upon capital appreciation, and a building that is leased out.
18.2 The Company uses the cost model for subsequent measurement of investment property, and adopts adepreciation or amortization policy for the investment property, which is consistent with that for fixedassets or intangible assets. The Company reviews the investment properties at each balance sheet date todetermine whether there is any indication that they have suffered an impairment loss. If there is anyindication that such assets may be impaired, the recoverable amounts are estimated for such assets. If therecoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accountedfor as an impairment loss and is recognized in profit or loss for the period.
19. Fixed assets
19.1 Recognition, measurement and depreciation criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, forrental to others, or for administrative purposes, and have useful lives of more than one accounting year.Fixed assets are initially measured at acquisition cost, and depreciated over its useful life using thestraight-line method since the month subsequent to the one in which it is ready for intended use.
19.2 Deprecation methods for each category of fixed assets
| Category | Deprecation methods | Depreciation period (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Buildings | Straight-line | 20-40 | 5 | 4.75-2.38 |
| Decoration of buildings | Straight-line | 10 | -- | 10.00 |
| Transportation equipment | Straight-line | 4 | 5 | 23.75 |
| Electronic equipment | Straight-line | 3-5 | 5 | 31.67-19.00 |
| Office equipment | Straight-line | 3-5 | 5 | 31.67-19.00 |
19.3 Impairment method of fixed assets, impairment preparation provision methodThe date of balance sheet, some indications state clearly that the fixed assets conduct impairment,according to the difference between the book value and recoverable amount provision the correspondingimpairment loss.
20. Construction in progress
20.1 Construction in progress should be transferred into fixed assets at its actual costs after it has reachedthe working condition for its intended use. Construction in progress that has reached the working conditionbut not completed, shall be transferred at its estimated costs. The estimated cost of construction in progressshould be adjusted against the actual costs after completion of settlement, while the depreciation alreadyprovided will not be adjusted.
20.2 The Company assesses at each balance sheet date whether there is any indication that construction inprogress may be impaired. If there is any indication that such assets may be impaired, recoverable amountsare estimated for such assets.
21. Borrowing cost
21.1 Recognition criteria of capitalization
Borrowing costs are capitalized when expenditures for such asset and borrowing costs are incurred andactivities relating to the acquisition, construction or production of the asset that are necessary to prepare theasset for its intended use or sale have commenced. Other borrowing costs are recognized as an expense inthe period in which they are incurred.
21.2 Period of capitalization
(1) Borrowing costs directly attributable to the acquisition, construction or production of qualifying assetare capitalized when expenditures for such asset and borrowing costs are incurred and activities relating tothe acquisition, construction or production of the asset that are necessary to prepare the asset for itsintended use or sale have commenced.
(2) Capitalization of borrowing costs ceases when the qualifying asset being acquired, constructed orproduced becomes ready for its intended use or sale. Capitalization of borrowing costs is suspended duringperiods in which the acquisition, construction or production of a qualifying asset is suspended abnormallyand when the suspension is for a continuous period of more than 3 months. Capitalization is suspendeduntil the acquisition, construction or production of the asset is resumed.
(3) Capitalization of borrowing costs ceases when the qualifying asset being acquired, constructed orproduced becomes ready for its intended use or sale，the borrowing costs stop capitalization.
21.3 Capitalization amount of borrowing costs
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is
the actual interest expense incurred on that borrowing for the period less any bank interest earned fromdepositing the borrowed funds before being used on the asset or any investment income on the temporaryinvestment of those funds. Where funds are borrowed under general-purpose borrowings, the Companydetermines the amount of interest to be capitalized on such borrowings by applying a capitalization rate tothe weighted average of the excess of cumulative expenditures on the asset over the amounts ofspecific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicableto the general-purpose borrowings.
22. Intangible assets
22.1 Intangible assets, including land use rights etc. are recognized at costs.
22.2 Intangible assets with finite useful lives are amortized in accordance with the expected realizationmethod of the economic benefits related to the intangible asset over its estimated useful life. If it is notpossible to reliably determine the expected realization method, use the straight-line method. The specificyears are as follows:
| Item | Useful life(Year) |
| Land use rights | 40 |
| Software use rights | 5-10 |
| Trademark rights | 10 |
The Company make judgement on whether there is any indication that the asset may be impaired at thebalance sheet date.The goodwill and intangible assets with an uncertain useful life resulting from a business combination wastested for impairment annually, regardless of whether there is any indication of impairment.The impairment should be recorded when the assets occur the following indications:
(1) The market price of assets fell sharply in the current period, and the decline was significantly higherthan the expected decline due to the passage of time or normal use; (2) Significant changes of the economic,technical or legal environment in which the enterprise operates and the market in which the assets arelocated will occur in the current period or in the near future, which will adversely affect the company; (3)The market interest rate or other market investment returns have increased during the current period, whichaffects the company's discount rate for calculating the present value of the expected future cash flow ofassets, leading to the recoverable amount has been greatly reduced; (4) There is evidence that the assetshave become obsolete or their entities have been damaged; (5) The assets have been or will be idle,terminated or planned to be disposed of in advance; (6)The evidence reported by the enterprise indicatesthat economic performance of the assets has been or will be lower than expected, such as the net cash flowcreated by the assets or the realized operating profit (or loss) is far lower (or higher) than the expectedamount; (7) Other indications that the asset may have signs of impairment.If there are any signs of asset impairment, the recoverable amount should be estimated.The recoverable amount should be determined based on the higher of the net amount of the fair value of theasset minus the disposal costs and the present value of the estimated future cash flows of the asset.Disposal costs include legal costs related to asset disposal, related taxes, transportation charges, and directcosts incurred to make the asset available for sale.The present value of the estimated future cash flows of the asset should be determined by discounting theamount of the asset based on the expected future cash flow generated during the continuous use of the assetand at the time of final disposal. The present value of the expected future cash flow of the asset should takeinto account factors such as the estimated future cash flow of the asset, its useful life, and the discount rate.The measurement results of the recoverable amount indicate that if the recoverable amount of the asset islower than its book value, the book value of the asset should be written down to the recoverable amount,and the reduced amount should be recognized as the asset impairment loss and included in the current profitand loss. Meanwhile, corresponding provisions for asset impairment should be made.
24. Long-term prepaid expenses
Long-term prepaid expenses are recorded according to the actual amount incurred and amortized in theperiod of benefit or within the prescribed period. If the long-term deferred expense item cannot benefit thesubsequent accounting period, the amortized value of the item that has not been amortized will betransferred into the current profit and loss.
25. Employee compensation
Employee compensation is to point to the all forms of remuneration or compensation that the Company receiveservices rendered by employees or give except share-based payment in order to terminate the labor relationship.Employee compensation includes short-term compensation, severance welfare, dismissal benefits and otherlong-term employee benefits. The compensation that Company offers to the worker spouse, children, dependents,the deceased employee survivors and other beneficiaries, also belongs to employee compensation.
25.1 Short-term employee benefits
During the accounting period when the employees provide services, the Company shall recognize the actualshort-term compensation as liabilities and record it into the current profit and loss or the cost of related assets.Among them, non-monetary welfare is measured according to fair value.
25.2 Termination benefits
When the Company terminates the employment relationship with employees before the expiration of theemployment contracts or provides compensation as an offer to encourage employees to accept voluntaryredundancy, if the Company has a formal plan for termination of employment relationship or has made anoffer for voluntary redundancy which will be implemented immediately, and the Company cannotunilaterally withdraw from the termination plan or the redundancy offer, a provision for the compensationpayable arising from the termination of employment relationship with employees is recognized with acorresponding charge to the profit or loss for the period, and include in current profits or losses.
25.3 Defined contribution plan
Pursuant to the relevant laws and regulations of the PRC, employees of the Company participate in thesocial insurance system established and managed by government organization. The Company makes socialinsurance contributions, including contributions to basic pension insurance at the applicable benchmarksand rates stipulated by the government for the benefit of its employees. The pension insurancecontributions are recognized as part of the cost of assets or charged to profit or loss on an accrual basis.
26. Provisions
26.1 The Company shall recognize this obligation as contingent liability when the obligations arising fromthe provision of external guarantees, litigation matters, product quality guarantees, loss contracts and othercontingencies become the current obligations assumed by the Company and the fulfillment of suchobligations is likely to result in the outflow of economic benefits from the company and the amount of suchobligations can be reliably measured.
26.2 The Company shall initially measure the provisions according to the best estimate of the expensesrequired to perform the relevant current obligations, and shall review the book value of the estimatedliabilities on the balance sheet date.
27. Share-based payments
27.1 Categories of share-based payments
Share-based payments comprise equity-settled and cash-settled payments.
27.2 Determination of fair value of equity instruments
(1) If there is an active market, it should be determined based on the quoted price in the active market.
(2) If there is no active market, it is determined by using valuation techniques, including considering theprices used in recent market transactions made by parties familiar with the situation and taking transactionsvoluntarily, and considering the current fair values and cash flows of other financial instruments that aresubstantially the same discount method and option pricing model.
27.3 Basis for determining the best estimate of exercisable equity instruments
The Company would make best estimate in accordance with the newly acquired information such aschanges in the number of employees entitled to equity instruments.
27.4 Relevant accounting treatment of implementation, modification and termination of share-basedpayment plan
(1) Equity-settled share-based payments
Equity-settled share-based payments that are immediately available after the grant in exchange foremployee services are included in related costs or expenses based on the fair value of the equityinstruments on the grant date, and the capital reserve is adjusted accordingly. Equity-settled share-basedpayments for services that have been completed during the waiting period or that are exercisable only if therequired performance conditions are met are exchanged for employee services. At each reporting dateduring the waiting period, the best estimate of the number of exercisable equity instruments is based on thefair value of the equity instrument grant date, the services obtained in the current period are included inrelated costs or expenses, and the capital reserve is adjusted accordingly.For equity-settled share-based payments in exchange for services provided by other parties, if the fair valueof services provided by other parties can be reliably measured, they should be measured at the fair value ofthe services of other parties on the acquisition date; if the fair values of services provided by other partiescannot be measured reliably, but for the equity instruments whose fair value can be reliably measured, theyshould be measured at the fair value of the equity instrument on the date of service acquisition and includedin related costs or expenses, increasing owner's equity accordingly.
(2) Cash-settled share-based payments
The cash-settled share-based payment in exchange for employee services immediately after the grant isincluded in the related costs or expenses at the fair value of the liability assumed by the Company on thegrant date, and the liability is increased accordingly. Cash-settled share-based payments for services thathave been completed within the waiting period or that have met the required performance conditions inexchange for employee services are based on the best estimate of the right to exercise at each balance sheetdate during the waiting period, According to the fair value of liabilities assumed by the company, the
services obtained in the current period are included in related costs or expenses and correspondingliabilities.
(3) Modifying and terminating the share payment plan
If the amendment increases the fair value of the equity instruments granted, the Company will recognizethe increase in the acquisition of services in accordance with the increase in the fair value of the equityinstruments; if the amendment increases the number of equity instruments granted, the company willincrease the value of the equity instruments. The fair value is correspondingly recognized as an increase inaccess to services; if the company modifies the conditions of the exercisable rights in a manner that benefitsemployees, the company considers the modified conditions of the exercisable rights when processing theconditions of the exercisable rights.If the amendment reduces the fair value of the equity instrument granted, the Company continues torecognize the amount of services obtained based on the fair value of the equity instrument on the grant date,without considering the decrease in the fair value of the equity instrument; if the amendment reduces theequity granted for the number of instruments, the company will treat the reduction as the cancellation of thegranted equity instruments; if the conditions of the exercisable rights are modified in a manner that is notconducive to employees, the revised conditions of the exercisable rights are not considered whenprocessing the conditions of the exercisable rights.If the Company cancels the granted equity instruments or clears the granted equity instruments during thewaiting period (except for those that are canceled because the conditions of the exercisable rights are notmet), the cancellation or settlement is treated as an expedited exercisable right and the original amountrecognized during the remaining waiting period.
28. Revenue
28.1 Sales of goods
Revenue from sales of goods is recognized when (1) the Company has transferred to the buyer thesignificant risks and rewards of ownership of the goods; (2) the Company retains neither continuingmanagerial involvement to the degree usually associated with ownership nor effective control over thegoods sold; (3) the amount of revenue can be measured reliably; (4) it is probable that the associatedeconomic benefits will flow to the Company; and (5) the associated costs incurred or to be incurred can bemeasured reliably.
28.2 Offering services
Revenue from rendering of services is recognized when the amount of revenue can be measured reliably; itis probable that the associated economic benefits will flow to the enterprise; the stage of completion of thetransaction can be determined reliably; and the associated costs incurred or to be incurred can be measuredreliably. Revenue from rendering of services is recognized using the percentage of completion method atthe balance sheet date. The stage of completion of a transaction for rendering for services is determinedbased on surveys of work performed. When the outcome of the transaction involving the rendering of
services cannot be estimated reliably, revenue is recognized only to the extent of According to the ratio ofthe labor services provided to the total labor services that should be provided, and the costs incurred arerecognized as expenses for the period. When it is not probable that the costs incurred will be recovered,revenue is not recognized.
28.3 Revenue from alienating of right to use assets
When the economic benefit will probably flow into the Company and the revenue can be measured reliably,the amount of revenue from alienating of right to use assets shall be recognized as follows: revenue ofinterest shall be confirmed by the time and actual interest of the assets that have been used; revenue ofcharge for use shall be confirmed by the agreed time and methods in the contract.The Company's revenue mainly includes training revenue from the common courses training and thecontractual courses training. When a face-to-face training in the common courses is completed, all thetraining fees received in advance are recognized as revenue. Revenue from online training in commoncourses is recognized on a straight-line basis during the validity period of the service provided.Non-refundable portion of advance received for the contractual courses is recognized as revenue uponcompletion of training services. According to the agreement on the contractual courses, the refund part ofthe advance received is recognized as revenue when the non-refundable conditions are met.
29. Government grants
29.1 Government grants include asset related government grants and income related government grants.
29.2 If a government grant is in the form of a transfer of a monetary asset, it is measured at the amountreceived or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fairvalue. If the fair value cannot be reliably determined, it is measured at a nominal amount.
29.3 The government grant adopts the total method
(1) A government grant related to an asset is recognized as deferred income, and amortized to profit or losson a reasonable and systematic basis over the useful life of the related asset. If the relevant assets are sold,transferred, scrapped or damaged before the end of their useful lives, the undistributed balance of relateddeferred income will be transferred to the profit or loss of the asset disposal in the current period.
(2) If a government grant related to income is used to compensate for the related expenses or losses in thesubsequent period, it shall be recognized as deferred income and shall be recorded in the current profit orloss in which the relevant expenses are recognized; For the compensation of related expenses or losses thathave occurred, they shall be directly included in the current profits and losses.For government grants that include both the asset-related portion and the income-related portion, thedifferent parts are separately accounted for; if it is indistinguishable, the overall classification isrevenue-related government subsidies.
29.4 Government grants related to the company's daily activities in accordance with the nature of the
economic business are included in other income or written down the related costs; government grants thatare unrelated to the daily activities of the company shall be included in non-operating income andexpenditure.
30. The deferred income tax assets and the deferred income tax liabilities
30.1 According to the book value of the assets, liabilities and its tax base the difference between the (notconfirmed project as assets and liabilities of its tax base can be determined in accordance with theprovisions of the tax law, the tax base and the difference between the book number), according to theforecast of the asset is recovered or the applicable tax rate calculation during the debt confirmed deferredincome tax assets and deferred income tax liabilities.
30.2 Confirm the deferred income tax assets to probably get used to making the deductible temporarydifferences are limited to the amount of taxable income. During the balance sheet date, there is strongevidence that the future is likely to obtain sufficient taxable income to offset the deductible temporarydifference, confirm the unconfirmed deferred income tax assets in previous accounting periods.
30.3 On the balance sheet date, review the book value of the deferred income tax assets, and if during theperiod of the future may not be able to obtain sufficient taxable income to offset the benefit of the deferredincome tax assets, the write-downs on the book value of the deferred income tax assets. If it is likely toobtain sufficient taxable income, return the amount of write-downs.
30.4 The Company's current income tax and deferred income tax as recorded into the profits and losses ofthe current income tax expenses, or earnings, but does not include the income tax in the followingcircumstances: (1) The business combination;(2) Direct confirmation of transactions or events in theowner's equity.
31. Lease
31.1 Operating leases
The Company as lessee under operating leases: operating lease payments are recognized on a straight-linebasis over the term of the relevant lease, and are either included in the cost of related asset or charged toprofit or loss for the period. Initial direct costs incurred are charged to profit or loss for the period.Contingent rents are charged to profit or loss in the period in which they are actually incurred.The Company as lessor under operating leases: rental income from operating leases is recognized in profitor loss on a straight-line basis over the term of the relevant lease. Initial direct costs with more than aninsignificant amount are capitalized when incurred, and are recognized in profit or loss on the same basis asrental income over the lease term. Other initial direct costs with an insignificant amount are charged toprofit or loss in the period in which they are incurred. Contingent rents are charged to profit or loss in theperiod in which they actually arise.
31.2 Financial leases
The Company as lessee under finance leases: at the commencement of the lease term, the Company recordsthe leased asset at an amount equal to the lower of the fair value of the leased asset and the present value ofthe minimum lease payments at the inception of the lease, and recognizes a long-term payable at an amountequal to the minimum lease payments. The difference between the recorded amounts is accounted for asunrecognized finance charge. Unrecognized finance charges are recognized as finance charge for the periodusing the effective interest method over the lease term.The Company as lessor under finance leases: at the commencement of the lease term, the aggregate of theminimum lease receivable at the inception of the lease and the initial direct costs is recognized as a financelease receivable, and the unguaranteed residual value is recorded at the same time. The difference betweenthe aggregate of the minimum lease receivable, the initial direct costs and the unguaranteed residual value,and the aggregate of their present values is recognized as unearned finance income. Unearned financeincome is recognized as finance income for the period using the effective interest method over the leaseterm.
32. Segment report
The Company identifies operating segments based on the internal organization structure, managementrequirements and internal reporting system, and discloses segment information of reportable segmentswhich is determined on the basis of operating segments.An operating segment is a component of the company that satisfies all of the following conditions: (1) thecomponent is able to earn revenue and incur expenses from its ordinary activities; (2) whose operatingresults are regularly reviewed by the company’s management to make decisions about resources to beallocated to the segment and to assess its performance, and (3) for which the information on financialposition, operating results and cash flows is available to the company. If two or more operating segmentshave similar economic characteristics and satisfy certain conditions, they are aggregated into one singleoperating segment.
Section VI. Taxes
1. Major categories of taxes and tax rates
| Category of tax | Basis of tax computation | Tax rate |
| Value-added tax | Taxable revenue for sales of goods and supply of services | 3%、5%、6% |
| City maintenance and construction tax | Circulation Taxes payable | 5%、7% |
| Education surcharge | Circulation Taxes payable | 3% |
| Local education surcharge | Circulation Taxes payable | 1.5%、2% |
| Corporate income tax | Taxable income | 15%、20%、25% |
1.1 Value-added tax
According to the Notice of the Ministry of Finance and the State Administration of Taxation onComprehensively Launching the Pilot Project of Changing Business Tax to Value-added Tax (Cai Shui[2016] No. 36) and the Ministry of Finance and State Administration of Taxation on Clarifying theReinsurance, Notice of the Real Estate Leasing and Non-Certificate Education Policy (Cai Shui [2016] No.
68) related provisions, the company's subsidiaries and affiliates' income from non-degree educationservices are subject to VAT at 3% and 6% tax rates .The Company and its subsidiaries operate leased buildings in accordance with the relevant provisions of theStatement of the State Administration of Taxation on Issuing the Interim Measures for the Administration ofValue-added Tax Levy of Real Estate Operating Leasing Services Provided by Taxpayers (StateAdministration of Taxation Announcement 2016 No. 16) You can choose to apply the simple taxcalculation method and calculate the amount of VAT payable according to the 5% levy rate.
1.2 Enterprise income tax
（1）The Company's subsidiary, Offcn Ltd. enterprise income tax, is paid in advance by each branch at theplace of registration, and the head office is settled and paid.
（2）The Company and its subsidiaries have different enterprise income tax rates, as detailed below：
| Name | Tax rate |
| 1. The Company | 25% |
| 2. Offcn Ltd. | 15% |
| 3. Yaxia Automobile Wuhu Yawei Services Co., Ltd. | 25% |
| 4. Yaxia Automobile Ningguo Driver Training School | 25% |
| 5. Yaxia Automobile Huangshan Fudi Services Co., Ltd. | 20% |
| 6. Yaxia Automobile Caohu Kaixuan Services Co., Ltd. | 25% |
| 7. Yaxia Automobile Bozhou Driver Training School | 25% |
| 8. Yaxia Automobile Suzhou Bokai Services Co., Ltd. | 25% |
| 9. Zhejiang Offcn Co. Ltd. | 25% |
| 10. Taizhou Offcn Co. Ltd. | 20% |
| 11.Offcn Xinzhiyu Online Technology Co., Ltd. | 20% |
| 12. Hulunbuir Hailar Offcn Co., Ltd. | 20% |
| 13. Xilinhot Offcn Co., Ltd. | 25% |
| 14. Yueqing Offcn Co., Ltd. | 20% |
| 15. Jiaozuo Offcn Co., Ltd. | 20% |
| 16. Xinzheng Offcn Co., Ltd. | 20% |
| 17. Chongqing Jiangbei Offcn Co., Ltd. | 20% |
| Name | Tax rate |
| 18. Nanning Offcn Co., Ltd. | 25% |
| 19. Beijing Xindezhiyuan Enterprise Consulting Co.,Ltd. | 20% |
| 20. Baiyin Offcn Co., Ltd. | 20% |
| 21. Shandong Kunzhong Real Estate Co., Ltd. | 25% |
| 22. Nanjing Huiyue Hotel Management Co., Ltd. | 25% |
| 23. Sanmenxia Offcn Co., Ltd. | 20% |
| 24. Liaoning Offcn Cultural Exchange Co., Ltd. | 25% |
| 25. Liaoning Offcn Co., Ltd. | 25% |
| 26. Tianjin Wuqing Offcn Co., Ltd. | 25% |
| 27. Shandong Offcn Co., Ltd. | 25% |
| 28. Jilin Changyi Offcn Co., Ltd. | 25% |
| 29. Yuxi Offcn Co., Ltd. | 25% |
| 30. Tonghua Offcn Co., Ltd. | 25% |
| 31. Hunan Lighsalt Offcn Co., Ltd. | 25% |
| 32. Tianjin Hexi Offcn Co., Ltd. | 25% |
| 33. Chengdu Offcn Co., Ltd. | 25% |
| 34. Shandong Zuoda Business Management Co., Ltd. | 25% |
| 35.Liaoning Zhongcheng Real Estate Development Co.,Ltd. | 25% |
December 1, 2011 (excluding the technical maintenance fee paid before 30 November 2011) can beadded to the value of the technical maintenance fee invoice issued by the technical maintenance serviceunit. The full amount of the tax payable is deductible, and those that are insufficient for deduction can becarried forward to the next period to continue the deduction. The company and the qualified subsidiariesand subsidiaries should deduct the VAT payable amount in full according to the regulations.
2.2 Education surcharge, local education surcharge
（1）According to the Notice of the Ministry of Finance and the State Administration of Taxation onExpanding the Exemption Scope of Government Funds (Cai Shui [2016] No. 12), starting from February 1,2016, additional education fees will be exempted. The exemption scope of the local education supplementand water conservancy construction fund should be expanded from the current obligors who pay monthlytaxes or monthly sales or turnover of not more than RMB 30,000 (quarterly taxation of quarterly sales orturnover of not more than RMB 90,000). to the obligors who pay the monthly sales or turnover of not morethan RMB 100,000 (the quarterly sales or turnover of the quarterly tax does not exceed RMB 300,000).Subsidiaries and subsidiaries of the company that meet the conditions for exemption are exempted fromeducation surcharge and local education surcharge.
（2）In accordance with the provisions of the Opinions of the General Office of the Provincial People'sGovernment on Reducing Enterprise Costs and Stimulating Market Vigor, No. 27 [2016] of HubeiGovernment Office, starting from May 1 2016, the additional rate of local education for enterprises will beincreased from 2 % down to 1.5%. The company's qualified subsidiaries apply this policy to calculate andpay local education surcharges.
2.3 Enterprise income tax
(1) On August 10, 2017, Offcn Ltd. passed the high-tech enterprise certification organized by BeijingState Taxation Bureau, Beijing Local Taxation Bureau, Beijing Finance Bureau, and Beijing Science andTechnology Commission, and obtained the high-tech enterprise certificate numbered GR201711001302.The certificate is valid from 10 August 2017 to 9 August 2020.According to Article 28 of the People's Republic of China Corporate Income Tax Law (Presidential Orderof the People's Republic of China [2007] No. 63) “High-tech enterprises that the state needs to support, theenterprise income tax should be reduced by 15%. Offcn Ltd. and its branches pay 15% enterprise incometax in 2019”.
(2) According to the document of the Notice on Implementing the Inclusive Tax Reduction Policy for Smalland Micro Enterprises (Cai Shui [2019] No. 13), from January 1,2019 to December 31,2021, The portionof the annual taxable income that does not exceed RMB 1 million is deducted from the taxable income by25% and the corporate income tax is paid at a rate of 20%; the part of annual taxable income exceeds RMB1 million but does not exceed RMB 3 million 50% of the taxable income should be deducted, and corporateincome tax should be paid at the rate of 20%. Eligible subsidiaries and affiliates of the Company shouldpay corporate income tax in accordance with the policy.
Section VII. Changes in Accounting Policies and Accounting Estimates, and Correctionsof Accounting Errors
1. Changes in Accounting Policies
1.1 Since January 1, 2019, the Company has adopted the relevant provisions of "Notice on Revising andIssuing the Format of General Enterprise Financial Statements for 2019" [Cai Kuai (2019) No. 6]. Theimpact of accounting policy changes is as follows:
| The contents and reasons for the changes of accounting policies | Affected financial statements line items |
| Divide the “Notes receivable and Accounts receivable” into “Notes receivables” and “Accounts receivables” | As of , the amount of notes receivables and accounts receivables presented in the statement of the consolidated financial position were RMB 0.00 and RMB 2,721,638,09;As of December 31, 2018, the amount of notes receivables and accounts receivables were RMB 0.00and RMB 6,804,330.67. As of December 31, 2019,both of the notes receivables and accounts receivables are presented as RMB 0.00. As of December 31, 2018, both of the notes receivables and accounts receivables are also presented as RMB 0.00. |
| Divide the “Notes payable and Accounts payable” into “Notes payable” and “Accounts payable” | As of December 31, 2019, the amount of notes payable and accounts payable presented in the statement of the consolidated financial position were RMB 0.00 and RMB 236,481,990,86;As of December 31, 2018, the amount of notes payables and accounts receivables were RMB 0.00and RMB 144,564,705.50. As of December 31, 2019, the amount of notes payable and accounts payable presented in the statement of the parent financial position were RMB 0.00 and RMB 561,752,26 ;As of December 31, 2018, the amount of notes payables and accounts receivables were RMB 0.00 and RMB 19,854,802.89. |
1.3 The Company has adopted the relevant provisions of the CASs No.7-- Monetary Assets Exchange(Accounting [2019] No.8) from 10 June 2019. The Company shall adjust non-monetary asset exchangesbetween January 1, 2019 and the implementation date of this standard according to the standards. TheCompany does not need to make retrospective adjustments to non-monetary asset exchanges that occurredbefore January 1, 2019. Changes in accounting policies have no impact on the company's consolidation andthe parent company's financial statements.
1.4 The Company has adopted the relevant provisions of the CASs No.12-- Monetary Assets Exchange(Accounting [ 2019] No.9) since 17 June 2019. The Company shall adjust the debt restructuring thatoccurred between January 1, 2019 and the implementation date of this standard in accordance with thestandards. The Company does not need to make retrospective adjustments to debt restructurings thatoccurred before January 1, 2019. Changes in accounting policies have no impact on the Company'sconsolidation and the parent company's financial statements.
2. Changes in Accounting Estimates
None.
3. Corrections of Accounting Errors of Prior Period
None.
4. Implementation of the new financial instrument standards for the first time and adjust relateditems at the beginning of the year.Consolidated Balance Sheet
Unit：RMB
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Current Assets: | |||
| Cash and cash equivalents | 648,711,545.32 | 648,711,545.32 | |
| △Settlement reserve | |||
| △Due from banks and other financial institutions | |||
| Financial assets held for trading | 2,252,670,000.00 | 2,252,670,000.00 | |
| Financial assets measured by fair value through profit or loss |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Derivative Financial assets | |||
| Notes Receivable | |||
| Accounts Receivable | 6,804,330.67 | 7,042,453.33 | 238,122.66 |
| Financing receivables | |||
| Prepayments | 1,482,923.00 | 1,482,923.00 | |
| △Premium receivable | |||
| △Reinsurance premium receivable | |||
| △Reserve receivable for reinsurance | |||
| Other receivables | 80,712,327.58 | 39,115,348.64 | -41,596,978.94 |
| Inc: interest receivables | 42,203,874.33 | 537,152.77 | -41,666,721.56 |
| Dividends receivables | |||
| △Financial assets purchased under resale agreements | |||
| Inventories | 20,062.46 | 20,062.46 | |
| Contract assets | |||
| Available for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 2,332,281,314.29 | 79,611,314.29 | -2,252,670,000.00 |
| Total current assets | 3,070,012,503.32 | 3,028,653,647.04 | -41,358,856.28 |
| Non-current assets: |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| △Loans And Advances | |||
| Debt investments | 1,841,666,721.56 | 1,841,666,721.56 | |
| Available-for-sale financial assets | 162,800,000.00 | -162,800,000.00 | |
| Other debt investments | |||
| Held-to-maturity investments | |||
| Long-term receivables | |||
| Long-term equity investments | |||
| Other equity instruments | 155,450,000.00 | 155,450,000.00 | |
| Other non-current financial assets | 50,000,000.00 | 50,000,000.00 | |
| Investment properties | 773,542,368.65 | 773,542,368.65 | |
| Fixed assets | 699,100,602.20 | 699,100,602.20 | |
| Construction in progress | 91,371,160.15 | 91,371,160.15 | |
| Bearer biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 204,424,848.76 | 204,424,848.76 | |
| Development expenditure | |||
| Goodwill | 99,867,720.38 | 99,867,720.38 | |
| Long-term prepaid expenses | 254,711,893.55 | 254,711,893.55 |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Deferred tax assets | 10,080,515.37 | 10,019,820.37 | -60,695.00 |
| Other non-current assets | 1,836,159,908.85 | 36,159,908.85 | -1,800,000,000.00 |
| Total Non-current Assets | 4,132,059,017.91 | 4,216,315,044.47 | 84,256,026.56 |
| Total Assets | 7,202,071,521.23 | 7,244,968,691.51 | 42,897,170.28 |
| Current liabilities: | |||
| Short-term borrowings | 1,607,000,000.00 | 1,607,000,000.00 | |
| △Borrowings from central bank | |||
| △Placement from banks and other financial institutions | |||
| Financial liabilities held for trading | |||
| Financial liabilities measured by fair value through profit or loss | |||
| Derivative Financial liabilities | |||
| Notes payable | |||
| Accounts payable | 144,564,705.50 | 144,564,705.50 | |
| Receipts in advance | 1,920,139,853.63 | 1,920,139,853.63 | |
| Contract liabilities | |||
| △Financial assets sold under repurchase agreements | |||
| △Absorbing deposit and deposit in inter-bank market | |||
| △Customer deposits for trading in securities |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| △Amounts due to issuer for securities underwriting | |||
| Employee benefits payable | 287,054,391.82 | 287,054,391.82 | |
| Taxes payable | 145,802,041.37 | 145,802,041.37 | |
| Other payables | 46,791,123.73 | 46,791,123.73 | |
| Inc: Interest payables | 3,924,585.00 | 3,924,585.00 | |
| Dividends payables | |||
| △Fees and commissions payable | |||
| △Reinsurance accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current Liabilities due within One Year | |||
| Other current liabilities | |||
| Total Current Liabilities | 4,151,352,116.05 | 4,151,352,116.05 | |
| Non-current Liabilities: | |||
| △Deposits for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Inc: preference share | |||
| Perpetual bond | |||
| Lease liabilities |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred Income | |||
| Deferred tax liabilities | 96,767,500.18 | 107,430,000.18 | 10,662,500.00 |
| Other non-current liabilities | |||
| Total Non-current Liabilities | 96,767,500.18 | 107,430,000.18 | 10,662,500.00 |
| Total Liabilities | 4,248,119,616.23 | 4,258,782,116.23 | 10,662,500.00 |
| Owners' equity: | |||
| Paid-in capital (share capital) | 103,807,623.00 | 103,807,623.00 | |
| Other equity instrument | |||
| Inc: preference share | |||
| Perpetual bond | |||
| Capital reserve | 1,144,781,049.50 | 1,144,781,049.50 | |
| Deduct: Treasury stock | |||
| Other comprehensive income | 31,987,500.00 | 31,987,500.00 | |
| Special reserve | |||
| Surplus reserve | 45,000,000.00 | 45,000,000.00 | |
| △General risk reserve |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Retained earnings | 1,660,363,232.50 | 1,660,610,402.78 | 247,170.28 |
| Total Owners' Equity Attributable To the Company | 2,953,951,905.00 | 2,986,186,575.28 | 32,234,670.28 |
| Minority interests | |||
| Total Owners' Equity | 2,953,951,905.00 | 2,986,186,575.28 | 32,234,670.28 |
| Total Liabilities and Owners' Equity | 7,202,071,521.23 | 7,244,968,691.51 | 42,897,170.28 |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Current Assets: | |||
| Cash and cash equivalents | 5,304,519.61 | 5,304,519.61 | |
| △Settlement reserve | |||
| △Due from banks and other financial institutions | |||
| Financial assets held for trading | |||
| Financial assets measured by fair value through profit or loss | |||
| Derivative Financial assets | |||
| Notes Receivable | |||
| Accounts Receivable | |||
| Financing receivables |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Prepayments | |||
| △Premium receivable | |||
| △Reinsurance premium receivable | |||
| △Reserve receivable for reinsurance | |||
| Other receivables | 2,084,332,624.85 | 2,084,332,624.85 | |
| Inc: interest receivables | |||
| Dividends receivables | 1,550,000,000.00 | 1,550,000,000.00 | |
| △Financial assets purchased under resale agreements | |||
| Inventories | |||
| Contract assets | |||
| Available for sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 1,222,565.30 | 1,222,565.30 | |
| Total current assets | 2,090,859,709.76 | 2,090,859,709.76 | |
| Non-current assets: | |||
| △Loans And Advances | |||
| Debt investments | |||
| Available-for-sale financial assets | 112,800,000.00 | -112,800,000.00 | |
| Other debt investments |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Held-to-maturity investments | |||
| Long-term receivables | |||
| Long-term equity investments | 18,582,307,907.14 | 18,582,307,907.14 | |
| Other equity instruments | 155,450,000.00 | 155,450,000.00 | |
| Other non-current financial assets | |||
| Investment properties | 477,825,678.61 | 477,825,678.61 | |
| Fixed assets | |||
| Construction in progress | |||
| Bearer biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | |||
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | |||
| Deferred tax assets | |||
| Other non-current assets | |||
| Total Non-current Assets | 19,172,933,585.75 | 19,215,583,585.75 | 42,650,000.00 |
| Total Assets | 21,263,793,295.51 | 21,306,443,295.51 | 42,650,000.00 |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Current liabilities: | |||
| Short-term borrowings | 216,000,000.00 | 216,000,000.00 | |
| △Borrowings from central bank | |||
| △Placement from banks and other financial institutions | |||
| Financial liabilities held for trading | |||
| Financial liabilities measured by fair value through profit or loss | |||
| Derivative Financial liabilities | |||
| Notes payable | |||
| Accounts payable | 19,854,802.89 | 19,854,802.89 | |
| Receipts in advance | |||
| Contract liabilities | |||
| △Financial assets sold under repurchase agreements | |||
| △Absorbing deposit and deposit in inter-bank market | |||
| △Customer deposits for trading in securities | |||
| △Amounts due to issuer for securities underwriting | |||
| Employee benefits payable | |||
| Taxes payable | 4,001,488.81 | 4,001,488.81 | |
| Other payables | 429,514,485.93 | 429,514,485.93 | |
| Inc: Interest payables |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Dividends payables | 319,931,024.40 | 319,931,024.40 | |
| △Fees and commissions payable | |||
| △Reinsurance accounts payable | |||
| Held-for-sale liabilities | |||
| Non-current Liabilities due within One Year | |||
| Other current liabilities | |||
| Total Current Liabilities | 669,370,777.63 | 669,370,777.63 | |
| Non-current Liabilities: | |||
| △Deposits for insurance contracts | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Inc: preference share | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred Income | |||
| Deferred tax liabilities | 10,662,500.00 | 10,662,500.00 |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Other non-current liabilities | |||
| Total Non-current Liabilities | 10,662,500.00 | 10,662,500.00 | |
| Total Liabilities | 669,370,777.63 | 680,033,277.63 | 10,662,500.00 |
| Owners' equity: | |||
| Paid-in capital (share capital) | 6,167,399,389.00 | 6,167,399,389.00 | |
| Other equity instrument | |||
| Inc: preference share | |||
| Perpetual bond | |||
| Capital reserve | 12,775,326,370.33 | 12,775,326,370.33 | |
| Deduct: Treasury stock | |||
| Other comprehensive income | 31,987,500.00 | 31,987,500.00 | |
| Special reserve | |||
| Surplus reserve | 219,269,455.48 | 219,269,455.48 | |
| △General risk reserve | |||
| Retained earnings | 1,432,427,303.07 | 1,432,427,303.07 | |
| Total Owners' Equity | 20,594,422,517.88 | 20,626,410,017.88 | 31,987,500.00 |
| Total Liabilities and Owners' Equity | 21,263,793,295.51 | 21,306,443,295.51 | 42,650,000.00 |
The Company adjusted the retained earnings at the beginning of the year and other related items in thefinancial statements based on the cumulative impacts in accordance with the new financial instrumentstandards. No adjustments were made to the previous comparative data.Impact of first implementation of new financial instrument standards：
Consolidated statements：
| Item | December 31, 2018 | Reclassification | Remeasurement | January 1, 2019 |
| Assets: | ||||
| Financial assets held for trading | 2,252,670,000.00 | 2,252,670,000.00 | ||
| Accounts Receivable | 6,804,330.67 | 238,122.66 | 7,042,453.33 | |
| Other receivables | 80,712,327.58 | -41,666,721.56 | 69,742.62 | 39,115,348.64 |
| Inc: interest receivables | 42,203,874.33 | -41,666,721.56 | 537,152.77 | |
| Other current assets | 2,332,281,314.29 | -2,252,670,000.00 | 79,611,314.29 | |
| Debt investments | 1,841,666,721.56 | 1,841,666,721.56 | ||
| Available-for-sale financial assets | 162,800,000.00 | -162,800,000.00 | ||
| Other equity instruments | 112,800,000.00 | 42,650,000.00 | 155,450,000.00 | |
| Other non-current financial assets | 50,000,000.00 | 50,000,000.00 | ||
| Deferred tax assets | 10,080,515.37 | -60,695.00 | 10,019,820.37 | |
| Other non-current assets | 1,836,159,908.85 | -1,800,000,000.00 | 36,159,908.85 | |
| Liabilities: | ||||
| Deferred tax liabilities | 96,767,500.18 | 10,662,500.00 | 107,430,000.18 |
| Item | December 31, 2018 | Reclassification | Remeasurement | January 1, 2019 |
| Owners' equity: | ||||
| Other comprehensive income | 31,987,500.00 | 31,987,500.00 | ||
| Retained earnings | 1,660,363,232.50 | 247,170.28 | 1,660,610,402.78 |
| Item | December 31, 2018 | Reclassificaton | Remeasurement | January 1, 2019 |
| Assets: | ||||
| Available-for-sale financial assets | 112,800,000.00 | -112,800,000.00 | ||
| Other equity instruments | 112,800,000.00 | 42,650,000.00 | 155,450,000.00 | |
| Liabilities: | ||||
| Deferred tax liabilities | 10,662,500.00 | 10,662,500.00 | ||
| Owners' equity: | ||||
| Other comprehensive income | 31,987,500.00 | 31,987,500.00 |
| Item | Closing balance | Opening balance |
| Cash on hand | 40,288.16 | 136,531.09 |
| Item | Closing balance | Opening balance |
| Cash at bank | 2,657,929,052.80 | 615,383,805.40 |
| Other cash balances | 66,365,660.62 | 33,191,208.83 |
| Total | 2,724,335,001.58 | 648,711,545.32 |
| Item | Closing balance | Opening balance |
| Financial assets classified as at fair value through profit or loss | 1,754,396,227.54 | 2,252,670,000.00 |
| Including: Debt instrument investment | 1,754,396,227.54 | 2,252,670,000.00 |
| Total | 1,754,396,227.54 | 2,252,670,000.00 |
| Aging | Closing balance | Opening balance |
| Within 1 year(inclusive) | 2,721,638.09 | 7,042,453.33 |
| Total | 2,721,638.09 | 7,042,453.33 |
| Item | Closing balance |
| Carrying amount | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Accounts receivable for which bad debt provision has been assessed by credit risk portfolios total | 2,864,882.20 | 100.00 | 143,244.11 | 5.00 | 2,721,638.09 |
| Inc:Combination2 | 2,864,882.20 | 100.00 | 143,244.11 | 5.00 | 2,721,638.09 |
| Total | 2,864,882.20 | -- | 143,244.11 | -- | 2,721,638.09 |
| Item | Opening balance | ||||
| Carrying amount | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Net carrying amount | Proportion (%) | ||
| Accounts receivables for which bad debt provision has been assessed by credit risk portfolios total | 7,042,453.33 | 100.00 | 7,042,453.33 | ||
| Inc:Combination1 | 5,139,412.85 | 72.98 | 5,139,412.85 | ||
| Combination2 | 1,903,040.48 | 27.02 | 1,903,040.48 | ||
| Total | 7,042,453.33 | -- | 7,042,453.33 | ||
| Item | Closing balance |
| Accounts Receivable | Bad debt provision | Proportion (%) | |
| Inc:Combination2 | 2,864,882.20 | 143,244.11 | 5.00 |
| Total | 2,864,882.20 | 143,244.11 | -- |
| Item | Opening balance | Changes in the period | Closing balance | |||
| Provision | recovery or reversal | Write-off | Other changes | |||
| Provision for bad debts of accounts receivable | 143,244.11 | 143,244.11 | ||||
| Total | 143,244.11 | 143,244.11 | ||||
| Creditor | Nature of payment | Amount | Bad debt provision | Aging | Percentage of total accounts receivable（%） |
| Customer 1 | Hotel service | 556,966.00 | 27,848.30 | Within 1 year | 19.44 |
| Customer 2 | Hotel service | 299,560.00 | 14,978.00 | Within 1 year | 10.46 |
| Customer 3 | Hotel service | 289,000.00 | 14,450.00 | Within 1 year | 10.09 |
| Customer 4 | Hotel service | 272,094.00 | 13,604.70 | Within 1 year | 9.50 |
| Customer 5 | Hotel service | 258,000.00 | 12,900.00 | Within 1 year | 9.01 |
| Total | 1,675,620.00 | 83,781.00 | 58.50 |
4. Prepayments
4.1 Disclosure by aging
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year(inclusive) | 2,461,009.00 | 100.00 | 1,482,923.00 | 100.00 |
| Total | 2,461,009.00 | 100.00 | 1,482,923.00 | 100.00 |
| Creditor | Nature of payment | Closing balance | Aging | Percentage of total advances（%） | Bad debt provision |
| Nanjing Suzhiyun Travel Agency Co.,Ltd. | Ticket | 2,461,009.00 | Within 1 year | 100.00 | |
| Total | 2,461,009.00 | 100.00 |
| Item | Closing balance | Opening balance |
| Interest receivables | 567,341.68 | 537,152.77 |
| Other receivables | 254,445,955.28 | 38,578,195.87 |
| Total | 255,013,296.96 | 39,115,348.64 |
| Item | Closing balance | Opening balance |
| Time deposit | 567,341.68 | 537,152.77 |
| Total | 567,341.68 | 537,152.77 |
| Aging | Closing balance | Opening balance |
| Within 1 year (inclusive) | 227,228,669.54 | 17,143,210.72 |
| 1-2 years (inclusive) | 7,070,138.50 | 2,209,175.42 |
| 2-3 years (inclusive) | 2,007,720.77 | 9,877,808.30 |
| 3-4 years (inclusive) | 9,442,596.18 | 672,589.95 |
| 4-5 years (inclusive) | 524,308.91 | 4,185,595.32 |
| Over 5 years | 8,172,521.38 | 4,489,816.16 |
| Total | 254,445,955.28 | 38,578,195.87 |
| Item | Closing balance | Opening balance |
| Deposits and guarantees | 252,096,657.97 | 36,940,760.83 |
| Reserve | 214,164.38 | 559,502.97 |
| Disbursement fee and others | 2,135,132.93 | 1,077,932.07 |
| Total | 254,445,955.28 | 38,578,195.87 |
5.3.3 Withdrawing process of bad debt provision
| Bad debt provision | The first stage | second stage | The third stage | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment) | Expected credit losses throughout life (credit impairment has occurred) | ||
| Balance as of January 1, 2019 | 510,300.00 | 510,300.00 | ||
| Balance of other receivables on January 1, 2019 during the current period | ||||
| ——transferred to stage 2 | ||||
| ——transferred to stage 3 | ||||
| ——transferred back stage 2 | ||||
| ——transferred back to stage 1 | ||||
| Provision during the current period | 194,490.90 | 194,490.90 | ||
| Reversal during the current period | ||||
| Resale during the current peirod | ||||
| Wrtie-off during the current period | ||||
| Other changes | ||||
| Balance as of December 31, 2019 | 194,490.90 | 510,300.00 | 704,790.90 |
5.3.4 Situation of bad debt provision
| Item | Opening balance | Changes in the period | Closing balance | |||
| Provision | recovery or reversal | Write-off | Other changes | |||
| Provision for bad debts of other receivables | 510,300.00 | 194,490.90 | 704,790.90 | |||
| Total | 510,300.00 | 194,490.90 | 704,790.90 | |||
| Creditor | Nature of payment | Closing balance | Aging | Proportion in total other ending balance receivables (%) | Closing balance of bad debt provision |
| Changsha Nanhu Xincheng Construction Development Co.,Ltd. | Deposits and guarantees | 200,000,000.00 | Within 1 year | 78.39 | |
| Beijing Wushuang Technology Ltd. | Deposits and guarantees | 11,400,000.00 | Within 1 year | 4.47 | |
| Shenyang Lijing Pearl Hotel Management Co., Ltd. | Deposits and guarantees | 5,675,200.00 | 3-4 years | 2.22 | |
| Chengdu Zhongman Weiye Culture Industry Development Co.,Ltd. | Deposits and guarantees | 3,660,000.00 | Within 1 year | 1.43 | |
| Harbin Gloria Pharmaceuticals Co.,Ltd | Deposits and guarantees | 2,700,000.00 | Over 5 years | 1.06 | |
| Total | 223,435,200.00 | 87.57 |
6.Inventories
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provision for decline in value of inventories | Net carrying amount | Gross carrying amount | Provision for decline in value of inventories | Net carrying amount | |
| Finished goods | 20,062.46 | 20,062.46 | ||||
| Total | 20,062.46 | 20,062.46 | ||||
| Item | Closing balance | Opening balance |
| Prepaid expenses | 97,166,903.13 | 77,634,223.69 |
| Deductible input tax | 169,697.03 | 1,977,090.60 |
| Total | 97,336,600.16 | 79,611,314.29 |
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provision for impairment | Net carrying amount | Gross carrying amount | Provision for impairment | Net carrying amount | |
| Time deposit | 1,923,598,909.09 | 1,923,598,909.09 | 1,841,666,721.56 | 1,841,666,721.56 | ||
| Total | 1,923,598,909.09 | 1,923,598,909.09 | 1,841,666,721.56 | 1,841,666,721.56 | ||
8.2 Important debt investment at the end of the period
| Item | Closing balance | |||
| face value | Coupon rate | Real interest rate | Expiry date | |
| Huaxia Bank Co., Ltd. Beijing Sidaokou Sub-branch | 500,000,000.00 | 4.12% | 4.12% | 5 April 2021 |
| Qianmen Sub-branch, China Construction Bank Corporation | 500,000,000.00 | 3.85% | 3.85% | 13 April 2021 |
| Beijing Shangdi sub-branch of China Minsheng Bank Co., Ltd | 500,000,000.00 | 4.30% | 4.30% | 6 June 2021 |
| Meihekou Rural Credit Cooperative Cooperative Union Sales Department | 50,000,000.00 | 4.20% | 4.20% | 15 May 2021 |
| Meihekou Rural Credit Cooperative Cooperative Union Sales Department | 150,000,000.00 | 4.20% | 4.20% | 1 June 2021 |
| Meihekou Rural Credit Cooperative Cooperative Union Sales Department | 100,000,000.00 | 4.20% | 4.20% | 3 July 2021 |
| China Merchants Bank Co., Ltd. Beijing Fangzhuang sub-branch | 20,000,000.00 | 4.18% | 4.18% | 18 December 2021 |
| Total | 1,820,000,000.00 | |||
| Item | Opening balance | |||
| face value | Coupon rate | Real interest rate | Expiry date | |
| Huaxia Bank Co., Ltd. Beijing Sidaokou Sub-branch | 500,000,000.00 | 4.12% | 4.12% | 5 April 2021 |
| Qianmen Sub-branch, China Construction Bank Corporation | 500,000,000.00 | 3.85% | 3.85% | 13 April 2021 |
| Beijing Shangdi sub branch of China Minsheng Bank | 500,000,000.00 | 4.30% | 4.30% | 6 June 2021 |
| Item | Opening balance | |||
| face value | Coupon rate | Real interest rate | Expiry date | |
| Co., Ltd | ||||
| Meihekou Rural Credit Cooperative Cooperative Union Sales Department | 50,000,000.00 | 4.20% | 4.20% | 15 May 2021 |
| Meihekou Rural Credit Cooperative Cooperative Union Sales Department | 150,000,000.00 | 4.20% | 4.20% | 1 June 2021 |
| Meihekou Rural Credit Cooperative Cooperative Union Sales Department | 100,000,000.00 | 4.20% | 4.20% | 3 July 2021 |
| Total | 1,800,000,000.00 | |||
| Item | Closing balance | Opening balance |
| Shanghai Zuihuibao Network Technology Co., Ltd. | 136,000,000.00 | 128,650,000.00 |
| Anhui Ningguo Rural Commercial Bank Co., Ltd. | 26,800,000.00 | 26,800,000.00 |
| Total | 162,800,000.00 | 155,450,000.00 |
9.2 Investment in non-trading equity instruments
| Item | Dividend income recognized during the period | Cumulative gain | Cumulative loss | Amount of other comprehensive income transferred to retained earnings | Reasons designated to be measured at fair value with changes included in other comprehensive income | Reasons for transferring other comprehensive income to retained earnings |
| Shanghai Zuihuibao Network Technology Co., Ltd. | 50,000,000.00 | Plan for long-term holding | ||||
| Anhui Ningguo Rural Commercial Bank Co., Ltd. | Plan for long-term holding | |||||
| Total | 50,000,000.00 |
| Item | Closing balance | Opening balance |
| Beijing Jinwu Venture Capital Center (Limited Partnership) | 38,050,000.00 | 50,000,000.00 |
| Financial product | 100,116,559.96 | |
| Total | 138,166,559.96 | 50,000,000.00 |
| Item | Buildings | Land use rights | Construction in progress | Total |
| 1.Total original carrying amount | ||||
| 1.1 Opening balance | 376,564,752.14 | 473,640,992.73 | 71,050,324.88 | 921,256,069.75 |
| 1.2 Increase in the current period | 2,965,425.08 | 184,857.14 | 3,150,282.22 | |
| 1.2.1 Purchase | 636,235.05 | 184,857.14 | 821,092.19 | |
| 1.2.2Transferred from fixed assets | 2,329,190.03 | 2,329,190.03 | ||
| 1.3 Decrease in the current period | 2,418,955.00 | 71,050,324.88 | 73,469,279.88 | |
| 1.3.1 Transfer to fixed assets | 2,418,955.00 | 2,418,955.00 | ||
| 1.3.2 Transfer to construction in progress | 71,050,324.88 | 71,050,324.88 | ||
| 1.4 Closing balance | 377,111,222.22 | 473,825,849.87 | 850,937,072.09 | |
| 2. Accumulated depreciation and amortization | ||||
| 2.1 Opening balance | 34,079,977.25 | 53,436,119.93 | 87,516,097.18 | |
| 2.2 Increase in the current period | 8,749,512.54 | 6,937,157.88 | 15,686,670.42 | |
| 2.2.1 Depreciation | 8,260,867.87 | 6,937,157.88 | 15,198,025.75 | |
| 2.2.1 Transferred from fixed asset | 488,644.67 | 488,644.67 | ||
| 2.3 Decrease in the current period | 938,352.96 | 938,352.96 | ||
| 2.3.1 Transfer to fixed assets | 938,352.96 | 938,352.96 | ||
| 2.3.2 Transfer to construction in progress | ||||
| 2.4 Closing balance | 41,891,136.83 | 60,373,277.81 | 102,264,414.64 | |
| 3. Provision for impairment |
| Item | Buildings | Land use rights | Construction in progress | Total |
| 3.1 Opening balance | 6,556,268.55 | 53,641,335.37 | 60,197,603.92 | |
| 3.2 Increase in the current period | ||||
| 3.3 Decrease in the current period | ||||
| 3.4 Closing balance | 6,556,268.55 | 53,641,335.37 | 60,197,603.92 | |
| 4.Book value | ||||
| 4.1 Closing balance | 328,663,816.84 | 359,811,236.69 | 688,475,053.53 | |
| 4.2 Opening balance | 335,928,506.34 | 366,563,537.43 | 71,050,324.88 | 773,542,368.65 |
| Item | Closing balance | Reasons for not completing the property right certificate |
| Buildings | 244,328,763.00 | In progress |
| Land use rights | 7,924,763.57 | In progress |
| Item | Closing balance | Opening balance |
| Fixed assets | 672,429,601.44 | 699,100,602.20 |
| Total | 672,429,601.44 | 699,100,602.20 |
12.2 Fixed assets
12.2.1 Fixed assets
| Item | Buildings | Decoration of buildings | Transportation equipment | Electronic equipment | Office equipment | Total |
| I.Total original carrying amount | ||||||
| 1.Opening balance | 594,112,157.03 | 39,832,104.02 | 73,851,896.85 | 176,935,096.89 | 11,521,894.41 | 896,253,149.20 |
| 1.2 Increase in the current period | 21,988,955.00 | 2,756,261.65 | 7,961,342.23 | 503,656.80 | 33,210,215.68 | |
| 1.2.1 Purchase | 19,570,000.00 | 2,756,261.65 | 7,961,342.23 | 503,656.80 | 30,791,260.68 | |
| 1.2.2 Transferred from investment properties | 2,418,955.00 | 2,418,955.00 | ||||
| 1.3 Decrease in the current period | 2,329,190.03 | 1,791,186.41 | 25,950.00 | 4,146,326.44 | ||
| 1.3.1 Disposal or scrap | 1,791,186.41 | 25,950.00 | 1,817,136.41 | |||
| 1.3.2 Transfer to investment properties | 2,329,190.03 | 2,329,190.03 | ||||
| 1.4 Closing balance | 613,771,922.00 | 39,832,104.02 | 74,816,972.09 | 184,870,489.12 | 12,025,551.21 | 925,317,038.44 |
| II. Total accumulated depreciation | ||||||
| 2.1 Opening balance | 50,700,634.32 | 9,957,838.50 | 57,937,980.89 | 69,206,577.66 | 9,270,531.29 | 197,073,562.66 |
| 2.2 Increase in the current period | 20,494,871.63 | 3,983,135.40 | 5,815,236.32 | 26,555,017.58 | 793,228.75 | 57,641,489.68 |
| Item | Buildings | Decoration of buildings | Transportation equipment | Electronic equipment | Office equipment | Total |
| 2.2.1 provided | 19,556,518.67 | 3,983,135.40 | 5,815,236.32 | 26,555,017.58 | 793,228.75 | 56,703,136.72 |
| 2.2.2 Transfer of investment properties | 938,352.96 | 938,352.96 | ||||
| 2.3 Decrease in the current period | 488,644.67 | 1,393,302.51 | 24,652.50 | 1,906,599.68 | ||
| 2.3.1 Disposal or scrap | 1,393,302.51 | 24,652.50 | 1,417,955.01 | |||
| 2.3.2 Transfer to investment properties | 488,644.67 | 488,644.67 | ||||
| 2.4 Closing balance | 70,706,861.28 | 13,940,973.90 | 62,359,914.70 | 95,736,942.74 | 10,063,760.04 | 252,808,452.66 |
| III. Provision for impairment | ||||||
| 3.1 Opening balance | 4,309.80 | 74,674.54 | 78,984.34 | |||
| 3.2 Increase in the current period | ||||||
| 3.3 Decrease in the current period | ||||||
| 3.4 Closing balance | 4,309.80 | 74,674.54 | 78,984.34 | |||
| IV. Book value | ||||||
| 4.1 Closing balance | 543,065,060.72 | 25,891,130.12 | 12,457,057.39 | 89,129,236.58 | 1,887,116.63 | 672,429,601.44 |
| 4.2 Opening balance | 543,411,522.71 | 29,874,265.52 | 15,913,915.96 | 107,724,209.43 | 2,176,688.58 | 699,100,602.20 |
12.2.2 Fixed assets with pending certificate ownership
| Item | Closing balance | Status |
| Buildings | 19,570,000.00 | In progress |
| Item | Closing balance | Opening balance |
| Construction in progress | 653,580,160.32 | 91,371,160.15 |
| Total | 653,580,160.32 | 91,371,160.15 |
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provision for impairment | Net carrying amount | Gross carrying amount | Provision for impairment | Net carrying amount | |
| Liaoning Zhongcheng Building | 275,905,485.09 | 275,905,485.09 | ||||
| Offcn Shandong Building | 182,917,951.44 | 182,917,951.44 | ||||
| Offcn Fushun Building | 113,020,225.37 | 113,020,225.37 | 91,371,160.15 | 91,371,160.15 | ||
| Yaxia Bozhou Buildings | 62,847,721.95 | 62,847,721.95 | ||||
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provision for impairment | Net carrying amount | Gross carrying amount | Provision for impairment | Net carrying amount | |
| Yaxia Bozhou 4S Stores | 9,721,381.62 | 9,721,381.62 | ||||
| Remote training system | 7,798,395.00 | 7,798,395.00 | ||||
| Yaxia Huangshan Fudi Stores | 1,368,999.85 | 1,368,999.85 | ||||
| Total | 653,580,160.32 | 653,580,160.32 | 91,371,160.15 | 91,371,160.15 | ||
| Item | Budget amount | Opening balance | Increase in the current period | Transfer to fixed assets | Other decreases | Closing balance |
| Liaoning Zhongcheng Building | 450,000,000.00 | 275,905,485.09 | 275,905,485.09 | |||
| Offcn Shandong Building | 210,000,000.00 | 182,917,951.44 | 182,917,951.44 | |||
| Offcn Fushun Building | 330,000,000.00 | 91,371,160.15 | 21,649,065.22 | 113,020,225.37 | ||
| Total | 990,000,000.00 | 91,371,160.15 | 480,472,501.75 | 571,843,661.90 |
| Amount injected as a proportion of budget amount (%) | Construction progress (%) | Amount of accumulated capitalized interest | Including: capitalized interest for the period | Interest capitalization rate for the period (%) | Source of funds |
| 61.31 | 61.31 | self-funds | |||
| 87.10 | 87.10 | self-funds | |||
| 34.25 | 34.25 | self-funds | |||
| -- | -- |
| Item | Land use rights | Software use rights | Trademark rights | Total |
| 1.Total original carrying amount | ||||
| 1.1 Opening balance | 205,199,737.07 | 7,759,196.02 | 7,137,021.53 | 220,095,954.62 |
| 1.2 Increase in the current period | 1,090.00 | 3,500.00 | 4,590.00 | |
| 1.2.1 Purchase | 1,090.00 | 3,500.00 | 4,590.00 | |
| 1.3 Decrease in the current period | ||||
| 1.4 Closing balance | 205,199,737.07 | 7,760,286.02 | 7,140,521.53 | 220,100,544.62 |
| 2. Total accumulated amortization | ||||
| 1.Opening balance | 12,495,942.74 | 2,161,561.62 | 1,010,490.50 | 15,667,994.86 |
| 2.2 Increase in the current period | 5,291,637.40 | 915,188.44 | 715,385.52 | 6,922,211.36 |
| 2.2.1 Accrue | 5,291,637.40 | 915,188.44 | 715,385.52 | 6,922,211.36 |
| 2.3 Decrease in the current period |
| Item | Land use rights | Software use rights | Trademark rights | Total |
| 2.4 Closing balance | 17,787,580.14 | 3,076,750.06 | 1,725,876.02 | 22,590,206.22 |
| 3.Total provision for impairment | ||||
| 3.1 Opening balance | 3,111.00 | 3,111.00 | ||
| 3.2 Increase in the current period | ||||
| 3.3 Decrease in the current period | ||||
| 3.4 Closing balance | 3,111.00 | 3,111.00 | ||
| 4. Book value | ||||
| 4.1 Closing balance | 187,412,156.93 | 4,680,424.96 | 5,414,645.51 | 197,507,227.40 |
| 4.2 Opening balance | 192,703,794.33 | 5,594,523.40 | 6,126,531.03 | 204,424,848.76 |
| Name of the investee and item resulting in goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Formed by business combination | others | Dispose | others | |||
| Shandong Kunzhong Real Estate Co., Ltd. | 39,378,573.51 | 39,378,573.51 | ||||
| Nanjing Huiyue Hotel Management Co., Ltd. | 60,489,146.87 | 60,489,146.87 | ||||
| Total | 99,867,720.38 | 99,867,720.38 | ||||
15.2 Goodwill impairment provision
None.
15.3 Relevant information of asset group or combination of asset group where goodwill is locatedThe company acquired Shandong Kunzhong Real Estate Co., Ltd. in 2016 and generated goodwill of RMB39,378,573.51. The goodwill was divided into corresponding asset groups with a book value of RMB192,286,478.23. The recoverable amount of the asset group is determined based on the net amount of thefair value minus the disposal expenses.The company's acquisition of Nanjing Huiyue Hotel Management Co., Ltd. in 2018 generated goodwill ofRMB 60,489,146.87, which was divided into corresponding asset groups with a book value of RMB195,383,990.96. The recoverable amount of the asset group is determined based on the net amount of thefair value minus the disposal expenses.
15.4.Goodwill impairment testing process, key parameters and confirmation method of goodwillimpairment lossThe method of provision for impairment is detailed in Note V (23) “Impairment of long-term assets”.The recoverable amount of the company's asset group including goodwill is estimated by using the netamount of the fair value of the asset group in which the goodwill is located less the disposal costs. As themain assets have a fair value that can be referred in the market, the market comparison method is used toestimate the fair value of the base date of the assets to be estimated, taking into account differences in time,transaction, regional and individual factors. The company entrusted an asset assessment company toconduct an impairment test on goodwill. After testing, no goodwill was found to be impaired, and noprovision for impairment was made.
16. Long-term prepaid expenses
| Item | Opening balance | Increase in the period | Amortization for the period | Other reductions | Closing balance |
| Decoration expenditure | 248,341,986.87 | 22,124,565.53 | 83,512,778.76 | 186,953,773.64 | |
| Marketing fee | 5,154,741.74 | 147,940.00 | 425,160.03 | 4,877,521.71 | |
| Rent and property fees | 184,254.46 | 48,315,414.00 | 1,259,716.26 | 47,239,952.20 | |
| Other | 1,030,910.48 | 1,093,000.60 | 629,196.61 | 1,494,714.47 | |
| Total | 254,711,893.55 | 71,680,920.13 | 85,826,851.66 | 240,565,962.02 |
17. Deferred tax assets and Deferred tax liabilities
17.1 Deferred tax assets that are not presented at the net amount after offset
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment losses of assets | 930,130.35 | 177,903.51 | 592,395.34 | 97,068.84 |
| Deductible losses | 43,219,714.47 | 10,804,928.62 | 9,691,006.11 | 2,422,751.53 |
| Employee benefits provided but not paid | 70,000,000.00 | 10,500,000.00 | 50,000,000.00 | 7,500,000.00 |
| Total | 114,149,844.82 | 21,482,832.13 | 60,283,401.45 | 10,019,820.37 |
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Fixed asset accounting depreciation is less than tax law | 2,298,553.47 | 344,783.02 | 2,739,394.87 | 410,909.23 |
| Appraisal and Appreciation of Consolidated Assets of Non-identical Controlled Enterprises | 375,304,896.84 | 93,826,224.21 | 385,426,363.79 | 96,356,590.95 |
| Changes in fair value of other equity instrument investments | 50,000,000.00 | 12,500,000.00 | 42,650,000.00 | 10,662,500.00 |
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Changes in fair value of transactional financial assets | 1,712,787.50 | 261,265.80 | ||
| Total | 429,316,237.81 | 106,932,273.03 | 430,815,758.66 | 107,430,000.18 |
| Item | Closing balance | Opening balance |
| Deductible losses | 32,969,109.71 | 20,704,287.62 |
| Total | 32,969,109.71 | 20,704,287.62 |
| Year | Closing balance | Opening balance | Remarks |
| 2019 | 2,991,532.08 | ||
| 2020 | 12,537.56 | ||
| 2021 | 11,383,708.37 | 6,464,006.49 | |
| 2022 | 119,383.82 | 119,383.82 | |
| 2023 | 11,480,964.23 | 11,116,827.67 | |
| 2024 | 9,985,053.29 | ||
| Total | 32,969,109.71 | 20,704,287.62 |
18. Other non-current assets
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provision for impairment | Net carrying amount | Gross carrying amount | Provision for impairment | Net carrying amount | |
| Prepaid land payments | 218,449,062.00 | 218,449,062.00 | ||||
| Prepaid decoration | 93,560,250.00 | 93,560,250.00 | 31,056,800.00 | 31,056,800.00 | ||
| Input tax to be deducted / to be certified | 13,658,316.34 | 13,658,316.34 | 5,103,108.85 | 5,103,108.85 | ||
| Investment funds | 300,000.00 | 300,000.00 | ||||
| Total | 325,967,628.34 | 325,967,628.34 | 36,159,908.85 | 36,159,908.85 | ||
| Item | Closing balance | Opening balance |
| Pledge borrowings | 1,397,000,000.00 | 1,397,000,000.00 |
| Guaranteed borrowings | 360,000,000.00 | 210,000,000.00 |
| Unsecured borrowings | 1,110,000,000.00 | |
| Total | 2,867,000,000.00 | 1,607,000,000.00 |
| Item | Closing balance | Opening balance |
| Direct cost for class operating | 188,285,128.46 | 86,570,963.06 |
| Project payments | 13,062,592.12 | 22,223,978.38 |
| Item | Closing balance | Opening balance |
| Market promotion fees | 26,766,715.00 | 17,415,053.32 |
| House payments | 10,000,000.00 | |
| Decoration costs | 7,863,306.78 | 5,929,130.24 |
| Rent and property fees | 452,248.50 | 2,122,289.00 |
| Purchase of fixed assets | 52,000.00 | 303,291.50 |
| Total | 236,481,990.86 | 144,564,705.50 |
| Item | Closing balance | Opening balance |
| Training fees received in advance | 2,633,629,875.89 | 1,919,977,223.75 |
| Others | 646,327.99 | 162,629.88 |
| Total | 2,634,276,203.88 | 1,920,139,853.63 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Short-term compensation | 280,057,116.34 | 4,010,297,491.20 | 3,886,016,408.63 | 404,338,198.91 |
| II.Post-employment welfare- defined contribution plan liability | 6,997,275.48 | 280,976,584.55 | 280,836,422.91 | 7,137,437.12 |
| III. Dismission welfare | 678,595.82 | 678,595.82 | ||
| Total | 287,054,391.82 | 4,291,952,671.57 | 4,167,531,427.36 | 411,475,636.03 |
22.2 Short-term compensation
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Wages or salaries, bonuses, allowances and subsidies | 271,834,971.99 | 3,702,158,224.23 | 3,580,589,991.97 | 393,403,204.25 |
| II. Staff welfare | 8,107,559.69 | 8,107,559.69 | ||
| III. Social security contributions | 3,849,838.35 | 162,610,593.50 | 161,495,451.19 | 4,964,980.66 |
| Inc:1.Medical insurance | 3,362,106.44 | 146,982,338.60 | 145,911,143.84 | 4,433,301.20 |
| 2. Employment injury insurance | 146,336.20 | 6,940,244.32 | 6,921,176.98 | 165,403.54 |
| 3. Maternity insurance | 341,395.71 | 8,688,010.58 | 8,663,130.37 | 366,275.92 |
| IV. Housing fund | 4,372,306.00 | 137,120,753.57 | 135,523,045.57 | 5,970,014.00 |
| V. Labor union expenditure and employee education expenditure | 300,360.21 | 300,360.21 | ||
| Total | 280,057,116.34 | 4,010,297,491.20 | 3,886,016,408.63 | 404,338,198.91 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Basic endowment insurance | 6,708,104.22 | 270,340,960.69 | 270,242,869.68 | 6,806,195.23 |
| II. Unemployment insurance | 289,171.26 | 10,635,623.86 | 10,593,553.23 | 331,241.89 |
| Total | 6,997,275.48 | 280,976,584.55 | 280,836,422.91 | 7,137,437.12 |
22.4 Dismission welfare
| Item | Amount of current payments | Amount due but not yet paid |
| Compensation for termination of employment | 678,595.82 | |
| Total | 678,595.82 |
| Item | Closing balance | Opening balance |
| 1. Enterprise income tax | 116,032,612.72 | 108,087,908.78 |
| 2. Value-added tax | 48,652,668.81 | 24,014,349.43 |
| 3. Withholding individual income tax | 5,527,794.99 | 7,207,601.88 |
| 4. Deed tax | 5,847,718.44 | 2,672,300.00 |
| 5. City maintenance and construction tax | 3,413,989.84 | 1,657,557.52 |
| 6. Property tax | 1,288,867.69 | 815,045.68 |
| 7. Education surcharge | 1,475,646.01 | 716,598.53 |
| 8. Land use tax | 943,956.91 | 51,258.19 |
| 9. Others | 1,122,772.43 | 579,421.36 |
| Total | 184,306,027.84 | 145,802,041.37 |
24. Other payables
24.1 Master list
| Item | Closing balance | Opening balance |
| Interest payables | 4,521,557.54 | 3,924,585.00 |
| Other payables | 84,171,854.44 | 42,866,538.73 |
| Total | 88,693,411.98 | 46,791,123.73 |
| Item | Closing balance | Opening balance |
| Interest payable on short-term Borrowings | 4,521,557.54 | 3,924,585.00 |
| Total | 4,521,557.54 | 3,924,585.00 |
| Item | Closing balance | Opening balance |
| Expenses payables | 44,839,078.80 | 27,806,427.41 |
| Payment for equity transfer | 34,663,519.48 | |
| Advances and others | 3,370,870.09 | 14,132,335.28 |
| Social Security and Provident Fund | 1,298,386.07 | 881,271.76 |
| Deposits and guarantees | 46,504.28 | |
| Total | 84,171,854.44 | 42,866,538.73 |
25. Share capital
| Item | Opening balance | Changes in the current period（+、-） | Closing balance | ||||
| Issue new shares | Bonus share | Provident fund transfer to share capital | other | Total | |||
| Share capital | 103,807,623.00 | 103,807,623.00 | |||||
| Item | Opening balance | Increase | Decrease | Closing balance |
| Equity premium | 956,481,049.50 | 956,481,049.50 | ||
| Other Capital reserve | 188,300,000.00 | 53,800,000.00 | 242,100,000.00 | |
| Total | 1,144,781,049.50 | 53,800,000.00 | 1,198,581,049.50 |
27. Other comprehensive income
| Item | Opening balance | Amount incurred in this period | Closing balance | |||||
| Amount before current income tax for the current period | Less：Earned to other comprehensive income in the previous period and transferred to earnings in the current period | Less: Earned to 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 tax | Attributable to minority shareholders, after tax | |||
| 1. Other comprehensive income not reclassified into gains or losses | 31,987,500.00 | 7,350,000.00 | 1,837,500.00 | 5,512,500.00 | 37,500,000.00 | |||
| Changes in the fair value of other equity instruments | 31,987,500.00 | 7,350,000.00 | 1,837,500.00 | 5,512,500.00 | 37,500,000.00 | |||
| 2. Other comprehensive income classified into gains or losses | ||||||||
| Total | 31,987,500.00 | 7,350,000.00 | 1,837,500.00 | 5,512,500.00 | 37,500,000.00 | |||
| Item | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserve | 45,000,000.00 | 45,000,000.00 | ||
| Total | 45,000,000.00 | 45,000,000.00 |
29. Retained earnings
| Item | Amount for the current period | Amount for the prior period |
| Retained earnings at the beginning of the year before adjustment | 1,660,363,232.50 | 507,475,816.28 |
| Adjusting retained earnings at the beginning of the period(Increase +, decrease-) | 247,170.28 | |
| Retained earnings at the beginning of the year after adjustment | 1,660,610,402.78 | 507,475,816.28 |
| Add: net profit attributable to shareholders of the Parent Company | 1,804,548,688.01 | 1,152,887,416.22 |
| Less: Appropriation of statutory surplus reserve | ||
| Appropriation of arbitrary surplus reserves | ||
| Dividend payable for ordinary shares | 1,418,501,859.47 | |
| Other | ||
| Retained earnings at the end of the year | 2,046,657,231.32 | 1,660,363,232.50 |
| Item | Amount for the current period | Amount for the prior period | ||
| Revenue | Cost of revenue | Revenue | Cost of revenue | |
| Prime operating income | 9,119,325,741.43 | 3,765,351,141.48 | 6,213,752,973.70 | 2,533,243,137.03 |
| Including: Education and Training | 9,119,325,741.43 | 3,765,351,141.48 | 6,213,752,973.70 | 2,533,243,137.03 |
| Other business | 56,804,254.46 | 47,243,245.07 | 23,234,838.87 | 19,109,556.05 |
| Item | Amount for the current period | Amount for the prior period | ||
| Revenue | Cost of revenue | Revenue | Cost of revenue | |
| Total | 9,176,129,995.89 | 3,812,594,386.55 | 6,236,987,812.57 | 2,552,352,693.08 |
| Item | Amount for the current period | Amount for the prior period |
| City maintenance and construction tax | 18,428,159.57 | 13,376,423.42 |
| Stamp tax | 15,009,303.05 | 540,851.84 |
| Education surcharge | 13,118,799.94 | 9,425,216.78 |
| Property tax | 5,955,512.56 | 3,032,234.38 |
| Land holding tax | 3,490,394.16 | 431,610.66 |
| Vehicle usage tax | 188,195.28 | 183,825.31 |
| Others | 501,274.68 | 299,796.76 |
| Total | 56,691,639.24 | 27,289,959.15 |
| Item | Amount for the current period | Amount for the prior period |
| Employee's benefits | 997,702,180.56 | 736,218,162.30 |
| Marketing fee | 291,604,372.33 | 219,704,259.70 |
| Rent property, depreciation and amortization expenses | 113,285,202.76 | 77,409,063.66 |
| Item | Amount for the current period | Amount for the prior period |
| Travel expenses | 72,300,626.88 | 43,029,675.19 |
| Others | 8,092,044.25 | 25,475,140.69 |
| Total | 1,482,984,426.78 | 1,101,836,301.54 |
| Item | Amount for the current period | Amount for the prior period |
| Employee's benefits | 772,474,666.68 | 581,964,095.19 |
| Rental property, depreciation and amortization | 98,906,407.56 | 97,814,160.86 |
| Office expenses | 83,342,828.04 | 72,357,920.08 |
| Share payments | 53,800,000.00 | 53,800,000.00 |
| Travel expenses | 46,380,858.89 | 26,338,853.99 |
| Welfare fee | 6,181,511.50 | 9,449,538.13 |
| Others | 37,385,681.29 | 31,693,563.22 |
| Total | 1,098,471,953.96 | 873,418,131.47 |
| Item | Amount for the current period | Amount for the prior period |
| Employee's benefits | 658,279,542.88 | 432,743,932.40 |
| Travel expenses | 14,798,355.15 | 8,736,507.02 |
| Others | 24,862,320.33 | 13,303,921.28 |
| Item | Amount for the current period | Amount for the prior period |
| Total | 697,940,218.36 | 454,784,360.70 |
| Item | Amount for the current period | Amount for the prior period |
| Interest expenses | 107,847,460.74 | 12,907,274.76 |
| Less: Interest income | 2,451,260.28 | 50,986,095.04 |
| Service Charges | 98,912,315.95 | 35,550,851.26 |
| Total | 204,308,516.41 | -2,527,969.02 |
| Item | Amount for the current period | Amount for the prior period |
| Tax deduction | 3,685,465.99 | |
| Employee stabilized subsidy | 2,584,908.68 | 139,275.41 |
| Rent subsidy income | 328,500.00 | |
| Location benefit | 129,000.00 | |
| Taxpayer subsidy | 14,400.00 | |
| Tax handling fee refund | 6,808.23 | 2,145.87 |
| Others | 198.91 | |
| Total | 6,749,281.81 | 141,421.28 |
| Item | Amount for the current period | Amount for the prior period |
| Investment income on disposal of long-term equity investments | 2,424,577.45 | |
| Interest income obtained during the period of debt investment holding | 75,092,676.43 | |
| Investment income from available-for-sale financial assets | 2,000,000.00 | |
| Investment income from financial product | 184,130,073.02 | 105,926,458.77 |
| Total | 259,222,749.45 | 110,351,036.22 |
| Item | Amount for the current period | Amount for the prior period |
| Financial assets held for trading | 1,712,787.50 | |
| Total | 1,712,787.50 |
| Item | Amount for the current period | Amount for the prior period |
| Accounts receivable bad debt losses | -143,244.11 | |
| Loss on bad debts of other receivables | -194,490.90 | |
| Total | -337,735.01 |
| Item | Amount for the current period | Amount for the prior period |
| Bad debt losses | -298,945.24 | |
| Total | -298,945.24 |
| Item | Amount for the current period | Amount for the prior period |
| Fixed assets | 182,904.69 | -141.26 |
| Total | 182,904.69 | -141.26 |
| Item | Amount for the current period | Amount for the prior period | Amount included in current non-recurring gains and losses |
| Gains from disposal of non-current assets | 67,550.40 | ||
| Inc: gains from disposal of fixed assets | 67,550.40 | ||
| Government subsidy | |||
| Others | 2,000.00 | 697,171.14 | 2,000.00 |
| Total | 2,000.00 | 764,721.54 | 2,000.00 |
| Item | Amount for the current period | Amount for the prior period | Amount included in current non-recurring gains and losses |
| External donation | 70,000.00 | 1,112,004.04 | 70,000.00 |
| Forfeiture and late payments | 72,956.87 | 973.54 | 72,956.87 |
| Compensation expenses | 1,193,903.00 | 1,193,903.00 | |
| Loss of assets, damage | 3,663.00 | ||
| Others | 6,552.38 | 137,556.45 | 6,552.38 |
| Total | 1,343,412.25 | 1,254,197.03 | 1,343,412.25 |
| Item | Amount for the current period | Amount for the prior period |
| Income tax expenses | 284,784,762.27 | 186,650,814.94 |
| Current tax expense | 298,583,001.18 | 197,027,999.99 |
| Deferred tax expense | -13,798,238.91 | -10,377,185.05 |
| Item | Amount for the current period | Amount for the prior period |
| Total profit | 2,089,327,430.78 | 1,339,538,231.16 |
| Income tax expenses calculated pursuant to statutory/applicable tax rate(s) | 313,399,114.62 | 200,930,734.67 |
| Item | Amount for the current period | Amount for the prior period |
| Impact from different tax rates applicable to subsidiaries | -4,485,774.18 | -987,082.76 |
| Impact from adjustment to income tax in prior periods | 818.15 | |
| Impact from non-deductible cost, expense and loss | 10,371,786.41 | 6,591,245.00 |
| Tax deduction | -34,747,243.80 | -22,206,826.45 |
| Impact from using deductible losses of previously unrecognized deferred income tax assets | -2,123,555.33 | -602,582.62 |
| The effect of deductible temporary differences or deductible losses of deferred income tax assets not recognized in the current period | 2,369,616.40 | 2,925,327.10 |
| Income tax expenses | 284,784,762.27 | 186,650,814.94 |
| Item | Amount for the current period | Amount for the prior period |
| Current account | 21,013,208.09 | |
| Deposits and guarantees | 12,966,970.83 | 2,602,934.69 |
| Other income and non-operating income | 6,707,550.47 | 268,971.68 |
| Interest income | 2,442,258.77 | 8,782,220.71 |
| Item | Amount for the current period | Amount for the prior period |
| Others | 117,167.05 | |
| Total | 43,247,155.21 | 11,654,127.08 |
| Item | Amount for the current period | Amount for the prior period |
| Daily expenses | 776,387,546.48 | 536,701,362.78 |
| Deposits and guarantees | 228,169,372.25 | |
| Current account | 105,790,520.79 | 155,500,000.00 |
| Service Charge | 98,912,315.95 | 35,550,851.26 |
| Non-operating expenses | 1,343,412.25 | 1,254,197.03 |
| Reserve | 462,505.64 | 211,476.40 |
| Disbursement fee and others | 1,251,691.76 | 985,270.79 |
| Total | 1,212,317,365.12 | 730,203,158.26 |
| Item | Amount for the current period | Amount for the prior period |
| Net cash paid for disposal of subsidiaries | 3,322,708.32 | |
| Total | 3,322,708.32 |
46.4 Cash paid relating to other financing activities
| Item | Amount for the current period | Amount for the prior period |
| Distribution fee | 86,000,000.00 | |
| Dividend handling fee | 1,503,370.80 | |
| Total | 1,503,370.80 | 86,000,000.00 |
| Supplementary information | Amount for the current period | Amount for the prior period |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 1,804,542,668.51 | 1,152,887,416.22 |
| Add: Provision for impairment losses of assets | 337,735.01 | 298,945.24 |
| Depreciation of fixed assets, depletion of oil and gas assets, depreciation of bearer biological assets | 71,901,162.47 | 46,341,556.76 |
| Amortization of intangible assets | 6,922,211.36 | 6,508,918.44 |
| Amortization of long-term prepaid expenses | 83,512,778.76 | 85,081,732.39 |
| Losses/(gains) on disposal of fixed assets, intangible assets and other long-term asset | -182,904.69 | 141.26 |
| Losses /(gains) on write-off of fixed assets | -63,887.40 | |
| Losses/(gains) on changes in fair values | -1,712,787.50 | |
| Financial expenses/ (income) | 107,847,460.74 | 12,907,274.76 |
| Supplementary information | Amount for the current period | Amount for the prior period |
| Losses/(gains) arising from investments | -259,222,749.45 | -110,351,036.22 |
| Decrease /(increase) in deferred tax assets | -11,463,011.76 | -8,190,894.32 |
| Increase/(decrease) in deferred tax liabilities | -2,335,227.15 | -2,186,290.73 |
| Decrease /(increase) in inventories | 20,062.46 | -20,062.46 |
| Decrease /(increase) in receivables from operating activities | -276,297,092.22 | -66,907,954.79 |
| Increase/(decrease) in payables from operating activities | 896,315,778.65 | 237,840,517.78 |
| Others(Note) | 53,800,000.00 | 53,800,000.00 |
| Net cash flow from operating activities | 2,473,986,085.19 | 1,407,946,376.93 |
| 2.Significant investing and financing activities that do not involve cash flow | ||
| Conversion of debt into capital | ||
| Reclassification of current portion of convertible bonds to current liabilities | ||
| Fixed assets capitalized under finance lease | ||
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 2,724,335,001.58 | 648,711,545.32 |
| Less: Opening balance of cash | 648,711,545.32 | 189,046,459.85 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 2,075,623,456.26 | 459,665,085.47 |
Note：others are share-based payments, the detailed information refer to Note XV “Share-based Payments”.
47.2. Cash and Cash Equivalents
| Item | Closing balance | Opening balance |
| I. Cash | 2,724,335,001.58 | 648,711,545.32 |
| Including: Cash on hand | 40,288.16 | 136,531.09 |
| Cash at bank | 2,657,929,052.80 | 615,383,805.40 |
| Other cash balances | 66,365,660.62 | 33,191,208.83 |
| II. Cash equivalents | ||
| Including: Investments in debt securities | ||
| due within three months | ||
| III. Closing balance of cash and cash equivalents | 2,724,335,001.58 | 648,711,545.32 |
| Including: Cash and cash equivalents with restricted use of parent company or subsidiaries within the group |
| Item | Closing balance | Reason for restriction |
| Debt investment | 1,500,000,000.00 | Pledge for borrowings |
| Total | 1,500,000,000.00 |
| Types | Amount | Item | Amount included in current non-recurring gains and losses |
| Types | Amount | Item | Amount included in current non-recurring gains and losses |
| Employee stabilized subsidy | 2,584,908.68 | Other income | 2,584,908.68 |
| Rent subsidy income | 328,500.00 | Other income | 328,500.00 |
| Location benefit | 129,000.00 | Other income | 129,000.00 |
| Taxpayer subsidy | 14,400.00 | Other income | 14,400.00 |
| Others | 198.91 | Other income | 198.91 |
| Total | 3,057,007.59 | 3,057,007.59 |
| The name of the subsidiary | Proportion of shareholding (%) | Reason for changes |
| Tonghua Offcn Co., Ltd. | 100.00 | New establishment |
| Hunan Lightsalt Offcn Co., Ltd. | 90.00 | New establishment |
| Tianjin Hexi Offcn Co., Ltd. | 100.00 | New establishment |
| The name of the subsidiary | Proportion of shareholding (%) | Reason for changes |
| Chengdu Offcn Co., Ltd. | 100.00 | New establishment |
| Shandong Zuoda Business Management Co., Ltd. | 100.00 | New establishment |
| Liaoning Zhongcheng Real Eestate Development Co., Ltd. | 100.00 | Acquisition |
| Name | Location of operation | Place of registration | Nature of business | Proportion of shareholding | Voting rights ratio（%） | Acquisition Method | |
| Direct | Indirect | ||||||
| 1. Offcn Ltd. | Beijing | Beijing | Service | 100.00 | 100.00 | Reverse purchase | |
| 2. Yaxia Automobile Wuhu Yawei Services Co., Ltd. | Wuhu | Wuhu | Sales | 100.00 | 100.00 | New establishment | |
| 3. Yaxia Automobile Ningguo Driver Training Co., Ltd. | Ningguo | Ningguo | Service | 100.00 | 100.00 | New establishment | |
| 4. Yaxia Automobile Huangshan Fudi Services Co., Ltd | Huangshan | Huangshan | Sales | 100.00 | 100.00 | New establishment | |
| 5. Yaxia Automobile Chaohu Kaixuan Services CO., Ltd. | Hefei | Hefei | Sales | 100.00 | 100.00 | New establishment | |
| Name | Location of operation | Place of registration | Nature of business | Proportion of shareholding | Voting rights ratio（%） | Acquisition Method | |
| Direct | Indirect | ||||||
| 6. Yaxia Automobile Bozhou Driver Training Co., Ltd. | Bozhou | Bozhou | Service | 100.00 | 100.00 | New establishment | |
| 7. Yaxia Automobile Suzhou Bokai Services Co., Ltd. | Suzhou | Suzhou | Sales | 100.00 | 100.00 | Acquisition | |
| 8. Zhejiang Offcn Co., Ltd. | Hangzhou | Hangzhou | Service | 100.00 | 100.00 | New establishment | |
| 9. Taizhou Offcn Co., Ltd. | Taizhou | Taizhou | Service | 100.00 | 100.00 | New establishment | |
| 10. Offcn Xinzhiyu Online Technology Co.,Ltd. | Beijing | Beijing | Service | 100.00 | 100.00 | New establishment | |
| 11. Hulunbuir Hailar Offcn Co., Ltd. | Hulunbeier | Hulunbeier | Service | 100.00 | 100.00 | New establishment | |
| 12. Xilinhot Offcn Co., Ltd. | Xilinhaote | Xilinhaote | Service | 100.00 | 100.00 | New establishment | |
| 13. Yueqing Offcn Co., Ltd. | Yueqing | Yueqing | Service | 100.00 | 100.00 | New establishment | |
| 14. Jiaozuo Offcn Co., Ltd. | Jiaozuo | Jiaozuo | Service | 100.00 | 100.00 | New establishment | |
| 15. Xinzheng Offcn Co., Ltd. | Zhengzhou | Zhengzhou | Service | 100.00 | 100.00 | New establishment | |
| 16. Chongqing Jiangbei Offcn Co., Ltd. | Chongqing | Chongqing | Service | 100.00 | 100.00 | New establishment | |
| 17. Nanning Offcn Co., Ltd. | Nanning | Nanning | Service | 100.00 | 100.00 | New | |
| Name | Location of operation | Place of registration | Nature of business | Proportion of shareholding | Voting rights ratio（%） | Acquisition Method | |
| Direct | Indirect | ||||||
| establishment | |||||||
| 18. Baiyin Offcn Co., Ltd. | Baiyin | Baiyin | Service | 100.00 | 100.00 | New establishment | |
| 19. Beijing Xindezhiyuan Enterprise Consulting Co., Ltd. | Beijing | Beijing | Service | 100.00 | 100.00 | New establishment | |
| 20. Nanjing Huiyue Hotel Management Co., Ltd. | Nanjing | Nanjing | Service | 100.00 | 100.00 | Acquisition | |
| 21. Shandong Kunzhong Real Estate Co., Ltd. | Jinan | Jinan | Service | 100.00 | 100.00 | Acquisition | |
| 22. Sanmenxia Offcn Co., Ltd. | Sanmenxia | Sanmenxia | Service | 100.00 | 100.00 | New establishment | |
| 23.Liaoning Offcn Cultural Exchange Co., Ltd. | Shenyang | Shenyang | Service | 100.00 | 100.00 | New establishment | |
| 24. Liaoning Offcn Co., Ltd. | Shenfuxinqu | Shenfuxinqu | Service | 100.00 | 100.00 | New establishment | |
| 25. Tianjing Wuqing Offcn Co., Ltd. | Tianjin | Tianjin | Service | 100.00 | 100.00 | New establishment | |
| 26. Shandong Offcn Co., Ltd. | Qingdao | Qingdao | Service | 100.00 | 100.00 | New establishment | |
| 27. Jilin Changyi Offcn Co., Ltd. | Jilin | Jilin | Service | 100.00 | 100.00 | New establishment | |
| 28. Yuxi Offcn Co., Ltd. | Yuxi | Yuxi | Service | 100.00 | 100.00 | New establishment | |
| Name | Location of operation | Place of registration | Nature of business | Proportion of shareholding | Voting rights ratio（%） | Acquisition Method | |
| Direct | Indirect | ||||||
| 29. Tonghua Offcn Co., Ltd. | Tonghua | Tonghua | Service | 100.00 | 100.00 | New establishment | |
| 30. Hunan Lightsalt Offcn Co., Ltd. | Changsha | Changsha | Service | 90.00 | 90.00 | New establishment | |
| 31. Tianjin Hexi Offcn Co., Ltd. | Tianjin | Tianjin | Service | 100.00 | 100.00 | New establishment | |
| 32.Chengdu Offcn Co., Ltd. | Chengdu | Chengdu | Service | 100.00 | 100.00 | New establishment | |
| 33. Shandong Zuoda Business Management Co., Ltd. | Rizhao | Rizhao | Service | 100.00 | 100.00 | New establishment | |
| 34. Liaoning Zhongcheng Real Estate Development Co., Ltd. | Shenfuxinqu | Shenfuxinqu | Real estate | 100.00 | 100.00 | Acquisition | |
2. Transactions leading to the change of shareholding in subsidiaries but not losing the controlNone.
3. Investment subject
None.
4. Equity in joint venture arrangement or joint venture
None.
5. Significant joint operations
None.
6. Interests in structured entities not included in the consolidated financial statementsNone.
7.Other
None.Section Ⅺ. Risks Associated With Financial Instruments
The Company's main financial instruments include cash and cash equivalents, financial assets held fortrading, accounts receivable, other receivables, debt investments, other equity instruments, othernon-current financial assets, etc. The risks associated with these financial instruments and the riskmanagement policies adopted by the Company to reduce these risks are described below. The company'smanagement manages and monitors these exposures to ensure that these risks are contained within adefined range.Risk management objective and policy: The Company’s risk management is to strike an appropriatebalance between risks and benefits, minimize the negative impact of risks on the Company's businessperformance and maximize the interests of shareholders and other equity investors. Based on this riskmanagement objective, the basic strategy of the Company's risk management is to determine and analyzevarious risks faced by the Company, establish an appropriate bottom line for risk tolerance, make riskmanagement and timely and reliably supervise various risks to control the risks within the limited scope.The main risks caused by the Company's financial instruments are credit risk, liquidity risk and market risk.
1. Classification of financial instruments
1.1 Carrying value of various financial assets
(1) December 31, 2019
| Item | Financial assets measured at amortized cost | Financial assets at fair value through profit or loss | Financial assets at fair value through other comprehensive income | Total |
| Cash and cash equivalents | 2,724,335,001.58 | 2,724,335,001.58 | ||
| Financial assets held for trading | 1,754,396,227.54 | 1,754,396,227.54 | ||
| Accounts Receivable | 2,721,638.09 | 2,721,638.09 | ||
| Other receivables | 255,013,296.96 | 255,013,296.96 | ||
| Debt investments | 1,923,598,909.09 | 1,923,598,909.09 | ||
| Other equity instruments | 162,800,000.00 | 162,800,000.00 | ||
| Other non-current financial assets | 138,166,559.96 | 138,166,559.96 |
| Item | Financial assets at fair value through profit or loss | Held-to-maturity investments | Loans and accounts receivables | Available-for-sale financial assets | Total |
| Cash and cash equivalents | 648,711,545.32 | 648,711,545.32 | |||
| Accounts | 6,804,330.67 | 6,804,330.67 |
| Item | Financial assets at fair value through profit or loss | Held-to-maturity investments | Loans and accounts receivables | Available-for-sale financial assets | Total |
| Receivable | |||||
| Other receivables | 80,712,327.58 | 80,712,327.58 | |||
| Other current assets | 2,252,670,000.00 | 2,252,670,000.00 | |||
| Available-for-sale financial assets | 162,800,000.00 | 162,800,000.00 | |||
| Other non-current financial assets | 1,800,000,000.00 | 1,800,000,000.00 |
| Item | Financial liabilities at fair value through profit or loss | Other liabilities | Total |
| Short-term borrowings | 2,867,000,000.00 | 2,867,000,000.00 | |
| Accounts payables | 236,481,990.86 | 236,481,990.86 | |
| Other payables | 88,693,411.98 | 88,693,411.98 |
| Item | Financial liabilities at fair value through profit or loss | Other liabilities | Total |
| Short-term borrowings | 1,607,000,000.00 | 1,607,000,000.00 |
| Item | Financial liabilities at fair value through profit or loss | Other liabilities | Total |
| Accounts payables | 144,564,705.50 | 144,564,705.50 | |
| Other payables | 46,791,123.73 | 46,791,123.73 |
| Item | Closing balance |
| Within 1 year | 1-5 years | Over 5 years | Total | |
| Short-term borrowings | 2,867,000,000.00 | 2,867,000,000.00 | ||
| Accounts payable | 236,481,990.86 | 236,481,990.86 | ||
| Other payables | 88,693,411.98 | 88,693,411.98 |
| Item | Opening balance | |||
| Within 1 year | 1-5 years | Over 5 years | Total | |
| Short-term borrowings | 1,607,000,000.00 | 1,607,000,000.00 | ||
| Accounts payables | 134,564,705.50 | 10,000,000.00 | 144,564,705.50 | |
| Other payables | 46,791,123.73 | 46,791,123.73 | ||
To maintain or adjust the capital structure, the Company may adjust the distribution of profits toshareholders, return capital to shareholders or issue new shares. The Company is not subject to externalmandatory capital requirements. Capital management objectives, policies or procedures for 2019 remainunchanged.
Section XIII. Fair Value Disclosure
1.The financial assets and financial liabilities measured at fair value at the end of the reportingperiod
| Item | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I、Continuous fair value measurement | ||||
| 1. Held-for-trading financial asset | 1,854,512,787.50 | 38,050,000.00 | 1,892,562,787.50 | |
| (1) Financial asset at fair value through profit or loss | 1,854,512,787.50 | 38,050,000.00 | 1,892,562,787.50 | |
| ① Debt instruments | 1,854,512,787.50 | 38,050,000.00 | 1,892,562,787.50 | |
| ② Equity instruments | ||||
| ③Derivative financial assets | ||||
| (2) Designated as financial asset at fair value through profit or loss | ||||
| ① Debt instruments | ||||
| ② Equity instruments | ||||
| 2. Receivables for financing | ||||
| 3. Other debt investments | ||||
| 4. Other equity instruments | 162,800,000.00 | 162,800,000.00 | ||
| 5. Investment properties | ||||
| Item | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| 6. Biological assets | ||||
| Total assets measured continuously at fair value | 1,854,512,787.50 | 200,850,000.00 | 2,055,362,787.50 | |
| 7. Held-for-trading financial liabilities | ||||
| (1) Financial liabilities at fair value through profit or loss | ||||
| Including：Issued held-for-trading bonds | ||||
| Derivative financial liabilities | ||||
| (2) Designated as financial asset at fair value through profit or loss | ||||
| Total liabilities measured continuously at fair value | ||||
| II. Non-continuous fair value measurement | ||||
| 1. Available for sale assets | ||||
| Total assets measured non-continuously at fair value | ||||
| Total liabilities measured non-continuously at fair value | ||||
techniques and qualitative and quantitative information of important parametersThe Company's sustainable third-level fair value measurement items are mainly non-tradable equityinstrument investment and debt instrument investment. The fair value is determined by market method andliquidity discount.
5.Continuous third-level fair value measurement items, adjustment information between beginningand ending book value and sensitivity analysis of unobservable parametersNone.
6.Continuous fair value measurement items, the reasons for the conversion between different levelsduring the current period, and the policy to determine the conversion pointNone.
7.Valuation technical changes occurred during the period and the reasons for the changesNone.
8.The fair value of financial assets and financial liabilities not measured at fair valueNone.
Section XIV. Related Party Relationships and Transactions
1. Basis of identifying related party
Parties are considered to be related if one party has the ability to control or joint control the other party orexercise significant influence over the other party. Parties (two or more than two) are also considered to berelated if they are subject to common control, joint control or significant influence from other party.
2. The controlling shareholder of the Company
The Company is ultimately controlled by Li Yongxin and Lu Zhongfang. As of December 31, 2019, theircombined shareholding accounted for 60.58% of the Company's share capital.
3. Subsidiaries of the company
The details of the subsidiaries of the Company are detailed in Note X.(1) “Interest in subsidiaries”.
4. Joint vetures and associates of the company
None.
5. Other related parties of the company
| Name | Relationship |
| Name | Relationship |
| Li Yongxin | The controlling shareholder |
| Beijing Qianqiu Intelligence Book & Media Co., Ltd. | Actual controller |
| Beijing Offcn Online Technology Co., Ltd. | Actual controller |
| Beijing Haidian Offcn Training School | Actual controller |
| Jinan Offcn Training School | Actual controller |
| Kunming Wuhua Offcn Training School | Actual controller |
| Baoding Lianchi Offcn Training School | Actual controller |
| Beijing Haidian Baoquan Financial Training Centre | Actual controller |
| Cangzhou Yunhe Offcn Training School | Actual controller |
| Chengdu Wuhou Offcn Training School | Actual controller |
| Cifeng Hongshan Offcn Training Centre | Actual controller |
| Dezhou Offcn Training School | Actual controller |
| Haikou Meinan Offcn Training School | Actual controller |
| Handan Congtai Offcn Training School | Actual controller |
| Hegang Offcn Training School | Actual controller |
| Heihe Aihui Offcn Training School | Actual controller |
| Kiamusze Offcn Training School | Actual controller |
| Leshan Shizhong Offcn Training School | Actual controller |
| Mudanjiang Offcn Training School | Actual controller |
| Name | Relationship |
| Qiaihar Tiefeng Offcn Training School | Actual controller |
| Shaoyang Shuangqing Offcn Training School | Actual controller |
| Tangshan Lunan Offcn Training School | Actual controller |
| Weifang Offcn Training School | Actual controller |
| Urumqi Shayibake Offcn Training School | Actual controller |
| Yiyang Heshan Offcn Training School | Actual controller |
| Shenyang Lijing Pearl Hotel Management Co., Ltd. | Companies controlled by our executives and core employees |
| Beijing Taifu Hotel Management Co., Ltd. | Companies controlled by our executives and core employees |
| Beijing Xinshou Fuyuan Plantation | The company controlled by the company's controlling shareholder and actual controller Li Yongxin's spouse Xu Hua |
| Yaxia Industrial Group Co., Ltd. | Former controlling shareholder of the company |
| Wang Zhendong | The company's directors / senior managers / shareholders who directly hold more than 5% (including 5%) of the company's shares |
| Shi Lei | Director of the company |
| Yi Ziting | Director of the company |
| Wang Qiang | Independent director of the company |
| Tong Yan | Independent director of the company |
| Zhang Xuanming | Independent director of the company |
| Guo Shihong | Former Supervisor of the Company |
| Yu Hongwei | Supervisor of the company |
| Name | Relationship |
| Li Wen | Supervisor of the company |
| He Di | Supervisor of the company |
| Wang Xuejun | Senior management of the company |
| He Youli | Senior management of the company |
| Zhang Yongsheng | Former Senior management of the company |
| Gui Hongzhi | Senior management of the company |
| Luo Xue | Senior management of the company |
| Li Lin | The company's core technical staff |
| Liu Yan | The company's core technical staff |
| Zhang Hongjun | The company's core technical staff |
| Related parties | Content of related party transaction | Amount for the current period | Amount for the previous period |
| Beijing Taifu Hotel Management Co., Ltd. | Accommodation and catering services | 23,189,480.00 | 19,167,180.00 |
| Tangshan Lunan Offcn Training School | Joint school running | 514,563.11 | 29,760.00 |
| Related parties | Content of related party transaction | Amount for the current period | Amount for the previous period |
| Chifeng Hongshan Offcn Training Centre | Joint school running | 473,378.94 | 15,000.00 |
| Weifang Offcn Training School | Joint school running | 456,310.67 | 112,441.25 |
| Cangzhou Yunhe Offcn Training School | Joint school running | 222,592.25 | 11,280.00 |
| Kiamusze Offcn Training School | Joint school running | 218,446.62 | 33,000.00 |
| Beijing Haidian Baoquan Financial Training Centre | Joint school running | 150,485.44 | 100,000.00 |
| Mudanjiang Offcn Training School | Joint school running | 126,213.59 | 28,000.00 |
| Shaoyang Shuangqing Offcn Training School | Joint school running | 97,087.36 | 10,000.00 |
| Haikou Meinan Offcn Training School | Joint school running | 82,524.29 | 40,000.00 |
| Dezhou Offcn Training School | Joint school running | 77,669.91 | 129,370.00 |
| Qiqihar Tiefeng Offcn Training School | Joint school running | 75,728.16 | 50,000.00 |
| Beijing Haidian Offcn Training School | Joint school running | 73,786.40 | |
| Yiyang Heshan Offcn Training School | Joint school running | 73,786.40 | 21,000.00 |
| Hegang Offcn Training School | Joint school running | 62,135.92 | 28,000.00 |
| Urumqi Shayibake Offcn Training Centre | Joint school running | 58,252.43 | 200,000.00 |
| Heihe Aihui Offcn Training Centre | Joint school running | 53,398.06 | 29,000.00 |
| Chengdu Wuhou Offcn Training School | Joint school running | 48,543.69 | 41,200.00 |
| Related parties | Content of related party transaction | Amount for the current period | Amount for the previous period |
| Handan Congtai Offcn Training School | Joint school running | 48,543.69 | 18,600.00 |
| Leshan Shizhong Offcn Training School | Joint school running | 44,660.20 | 64,000.00 |
| Baoding Lianchi Offcn Training School | Joint school running | 25,690.00 | |
| Nanjing Huiyue Hotel Management Co., Ltd. | Accommodation and catering services | 339,358.00 |
| Related parties | Content of related party transaction | Amount for the current period | Amount for the previous period |
| Beijing Qianqiu Intelligence Book & Media Co., Ltd. | Exhibition services | 2,499,999.93 | 2,150,943.40 |
| Trustee /Outsourcer Name | Trustee / Contractor Name | Type | Entrustment / contracting start date | Entrustment / Contract Termination Date | Custody income / contracting income pricing basis | Annually recognized custody income / contracting income |
| Li Yongxin | Offcn Ltd. | 33 Civil non-schools | 19 October 2018 | Long term | All reasonable returns on the entrusted assets | 411,320.75 |
| Total | 411,320.75 |
6.2.2 The Company's entrusted management / contracting situation table：
None.
6.3 Related lease
6.3.1 The Company as the lessor：
| Name of lessee | Category | Lease start date | Lease termination date | Rental income pricing basis | Rental income recognised in the current period | Rental income recognized in the previous period |
| Yaxia Industrial Group Co., Ltd. | operating lease | December 27, 2018 | December 26, 2021 | Agreed price | 18,866,011.25 | |
| Total | 18,866,011.25 |
| Name of lessor | Category | Lease start date | Lease termination date | Rental fee pricing basis | Rental fee recognised in the current period | Rental fee recognized in the previous period |
| Shenyang Lijing Pearl Hotel Management Co., Lted. | Operating lease | 1 July 2016 | 30 June 2026 | Agreed price | 23,836,000.00 | 23,268,449.98 |
| Beijing Xinshou Fuyuan Plantation | Operating lease | 1 January 2017 | 31 December 2021 | Agreed price | 500,000.00 | 500,000.00 |
| Nanjing Huiyue Hotel Management Co., Ltd.（Note） | Operating lease | 1 July 2016 | 30 June 2026 | Agreed price | 2,500,000.00 | |
| Total | 24,336,000.00 | 26,268,449.98 |
6.4.1 The Company act as the guarantor
None.
6.4.2 The Company is the guaranteed party
| guarantor | Guarantee amount | Guarantee start date | Guarantee expiration date | Whether the guarantee has been fulfilled |
| Li Yongxin | 100,000,000.00 | 13 December 2018 | 13 December 2019 | Yes |
| Li Yongxin | 110,000,000.00 | 26 December 2018 | 26 December 2019 | Yes |
| Li Yongxin | 360,000,000.00 | 9 January 2019 | 9 January 2020 | No |
| Related party | Related transaction content | Category | pricing principles | Amount for the current period | Amount for the prior period | ||
| Amount | Proportion | Amount | Proportion | ||||
| Beijing Huiyouzhiyuan Investment Centre（Limited Partnership） | Transfer shares. | Equity transfer | Agreed price | 256,192,287.89 | 95.65 | ||
| Qin Xiaohang | Transfer shares. | Equity transfer | Agreed price | 4,351,074.15 | 1.62 | ||
| Li Yongxin | Shares of 33 Civil non-schools | Equity transfer | Agreed price | 7,300,000.00 | 2.73 | ||
| Total | 267,843,362.04 | 100.00 | |||||
| Item | Amount for the current period | Amount for the prior period |
| Key executive compensation | 15,130,286.14 | 16,583,375.84 |
| Item | Related party | Closing balance | openning balance | ||
| Carrying amount | Bad debt provision | Carrying amount | Bad debt provision | ||
| Accounts receivable | Beijing Qianqiu Intelligence Book & Media Co., Ltd. | 2,280,000.00 | |||
| Item | Related party | Closing balance | openning balance | ||
| Carrying amount | Bad debt provision | Carrying amount | Bad debt provision | ||
| Accounts receivable | Anshan Offcn Training School | 49,291.89 | 2,464.59 | ||
| Accounts receivable | Baoding Lianchi Offcn Training School | 7,311.15 | 365.56 | ||
| Accounts receivable | Chengdu Wuhou Offcn Training School | 15,128.21 | 756.41 | ||
| Accounts receivable | Chifeng Hongshan Offcn Training Centre | 6,450.72 | 322.54 | ||
| Accounts receivable | Chongqing Shapinba Offcn Training School | 22,760.93 | 1,138.05 | ||
| Accounts receivable | Cangzhou Yunhe Offcn Training School | 4,794.48 | 239.72 | ||
| Accounts receivable | Dalian Offcn Training School | 228,137.16 | 11,406.86 | ||
| Accounts receivable | Dezhou Offcn Training School | 51,353.44 | 2,567.67 | ||
| Accounts receivable | Handan Congtai Offcn Training School | 7,952.76 | 397.64 | ||
| Accounts receivable | Hegang Offcn Training School | 15,885.13 | 794.26 | ||
| Accounts receivable | Heihe Aihui Offcn Training Centre | 15,848.75 | 792.44 | ||
| Accounts receivable | Hohhot Saihan Offcn Training School | 48,880.47 | 2,444.02 | ||
| Accounts receivable | Haikou Meinan Offcn Training School | 26,036.58 | 1,301.83 | ||
| Accounts receivable | Kiamusze Offcn Training School | 22,648.85 | 1,132.44 | ||
| Accounts receivable | Jinzhou Offcn Training School | 75,665.62 | 3,783.28 | ||
| Accounts receivable | Leshan Shizhong Offcn Training School | 37,339.90 | 1,867.00 | ||
| Accounts receivable | Mudanjiang Offcn Training School | 15,102.66 | 755.13 | ||
| Accounts receivable | Qiqihar Tiefeng Offcn Training School | 29,280.29 | 1,464.01 | ||
| Item | Related party | Closing balance | openning balance | ||
| Carrying amount | Bad debt provision | Carrying amount | Bad debt provision | ||
| Accounts receivable | Xining Offcn Training School | 14,628.98 | 731.45 | ||
| Accounts receivable | Shenyang Offcn Training School | 56,950.90 | 2,847.55 | ||
| Accounts receivable | Tangshan Lunan Offcn Training School | 12,944.19 | 647.21 | ||
| Accounts receivable | Taiyuan Hi-Tech Zone Offcn Training School | 703,079.63 | 35,153.98 | ||
| Accounts receivable | Weifang Offcn Training School | 18,905.56 | 945.28 | ||
| Accounts receivable | Urumqi Shayibake Offcn Training Centre | 113,742.27 | 5,687.11 | ||
| Accounts receivable | Wulin Offcn Training School | 1,160,694.74 | 58,034.74 | ||
| Accounts receivable | Yiyang Heshan Offcn Training School | 13,052.85 | 652.64 | ||
| Accounts receivable | Beijing Haidian Baoquan Financial Training Centre | 85,544.74 | 4,277.24 | ||
| Other receivable | Shenyang Lijing Pearl Hotel Management Co., Ltd. | 5,675,200.00 | |||
| Total | 5,675,200.00 | 10,814,612.85 | 142,970.65 | ||
| Item | Related party | Closing balance | openning balance |
| Accounts payables | Beijing Xinshou Fuyuan Plantation | 500,000.00 | |
| Total | 500,000.00 |
Note: This report does not include receivables and payables of related parties such as a small amount ofemployee reserves and employee reimbursement payments that have not yet been issued.
8. Related party commitments
For details of the commitments of related parties, please refer to Note XVI to this report.
9. Other
None.
Section XV. Share-based Payment
1. Overview of share-based payment
| Project | Content |
| Total equity instruments granted in the current year | One million shares |
2. Equity-settled share payments
| Item | Content |
| Determination of fair value of equity instruments on the grant date | Based on the latest issue of new shares, it is determined to be RMB 270 per share |
| Basis for determining the number of vested equity instruments | Estimate the number of restricted stocks that can be unlocked based on turnover rate |
| Reasons for significant differences between the current period's estimates and the previous period's estimates | None. |
| Accumulated amount of equity-settled share-based payments included in capital reserve | 269,000,000.00 |
| Total expenses recognized for equity-settled share-based payments in the current period | 53,800,000.00 |
company, since 1 June 2015 within five years, will continue to serve the Offcn Ltd., can not leave, do nottransfer in the meantime its holdings of shares of the company to the public. If he leaves during this period,he will still have to pay a total of RMB 269 million for the difference of equity transfer to Lu zhongfang,Liu bin, Zhang Yongsheng and Guo Shihong .
Section XVI. Commitments and Contingencies
1. Important commitments
Pursuant to the Profit Forecast Compensation Agreement signed between the Company and the eightnatural person shareholders of Offcn Ltd. (Lu Zhongfang, Li Yongxin, Wang Zhendong, Guo Shihong, LiuBin, Zhang Yongsheng, Yang Shaofeng, Zhang Zhian) on May 4, 2018, the compensation obligors confirmand promise that after the completion of the major assets restructuring, the net profits attributable to theshareholders of the parent company after deducting non-recurring profits and losses under the consolidatedstatements of Offcn Ltd. shall not be less than RMB 930 million, RMB1.3 billion and RMB1.65 billion inyears of 2018, 2019 and 2020 respectively. If the certified public accountant confirms that the actual netprofits accumulated by Offcn Ltd. fall beneath the aggregate committed net profits as of the end ofany of the three fiscal years, each compensation obligor shall assume the compensation obligationaccording to the proportion of the shares to the total shares of Offcn Ltd. held by all the compensationobligors before the transaction. All compensation obligors are given priority to conduct compensation withshares. When the total amount of share compensation reaches 90% of the total number of shares issued topurchase assets, all compensation obligors shall conduct compensation in cash.
2. Contingency
None.
Section XVII. Events Subsequent to the Balance Sheet Date
1. Significant unadjusted events
None.
2. Profit distribution
On 9 March 2020, the board of directors of the Company proposed that the Company, based on the totalshare capital of 6,167,399,389 shares, distribute a cash dividend of RMB 2.40 (including tax) to allshareholders for every 10 shares, for a total of RMB 1,480,175,853.36 . This proposal is yet to be approvedby the shareholders' meeting. The cash dividend proposed after the balance sheet date is not recognized as aliability on the balance sheet date.
3. Sales return
None.
4. Other
None.
Section XVIII. Other Significant Events
1. Debt Restructuring
None.
2. Asset replacement
None.
3. Pension plan
None.
4. Discontinued operations;
None.
5. Segment information
5.1 Report segment determining and accounting policy
The Company's main production and operation activities are decided by the Company, which is mainlyengaged in education and training business. Therefore, the Company is managed as an operating segment.For accounting policies, please refer to Note V to this report, "The Company’s Significant AccountingPolicies And Accounting Estimates”
5.2 Other information
5.2.1 Revenue from external transactions for each product and service or each similar product and service.
| Item | Amount for the current period | Amount for the prior period |
| Main business | 9,119,325,741.43 | 6,213,752,973.70 |
| Including：Education and training | 9,119,325,741.43 | 6,213,752,973.70 |
| Other businesses | 56,804,254.46 | 23,234,838.87 |
| Total | 9,176,129,995.89 | 6,236,987,812.57 |
5.2.2 The total amount of foreign transaction income obtained by the enterprise from its own country andfrom other countries or regions.
| Area name | Amount for the current period | Amount for the prior period |
| Domestic area | 9,176,129,995.89 | 6,236,987,812.57 |
| Total | 9,176,129,995.89 | 6,236,987,812.57 |
| Classification | Closing balance | Opening balance |
| Buildings | 328,663,816.84 | 335,928,506.34 |
| Land use rights | 359,811,236.69 | 366,563,537.43 |
| Construction in progress | 71,050,324.88 | |
| Total | 688,475,053.53 | 773,542,368.65 |
| Remaining lease term | Minimum lease payments |
| Within 1 year (inclusive) | 183,187,049.40 |
| 1-2 years (inclusive) | 221,180,212.15 |
| 2-3 years (inclusive) | 172,208,663.03 |
| Over 3 years | 304,560,781.48 |
| Total | 881,136,706.06 |
| Item | Closing balance | Opening balance |
| Dividends receivables | 1,700,000,000.00 | 1,550,000,000.00 |
| Other receivables | 17,949,520.99 | 534,332,624.85 |
| Total | 1,717,949,520.99 | 2,084,332,624.85 |
| Investee | Closing balance | Opening balance |
| Offcn Ltd. | 1,700,000,000.00 | 1,550,000,000.00 |
| Total | 1,700,000,000.00 | 1,550,000,000.00 |
1.2.2 Important dividend receivable over one year
None.
1.3 Other receivables
1.3.1 Disclosure by aging
| Aging | Closing balance | Opening balance |
| Within 1 year | 17,949,520.99 | 534,332,624.85 |
| Total | 17,949,520.99 | 534,332,624.85 |
| Item | Closing balance | Opening balance |
| Current account | 17,943,920.99 | |
| Deposits and guarantees | 5,600.00 | |
| Expenditure on assets pending collection | 534,332,624.85 | |
| Total | 17,949,520.99 | 534,332,624.85 |
| Creditor | Nature of payment | Closing balance | Aging | Percentage of total other receivables (%) | Bad debt provision |
| Yaxia Automobile Bozhou Driver Training School | Current account | 9,811,756.63 | Within 1 year | 54.67 |
| Creditor | Nature of payment | Closing balance | Aging | Percentage of total other receivables (%) | Bad debt provision |
| Yaxia Automobile Wufu Yawei Services Co., Ltd. | Current account | 3,084,160.61 | Within 1 year | 17.18 | |
| Yaxia Automobile Suzhou Bokai Services Co., Ltd. | Current account | 2,990,829.21 | Within 1 year | 16.66 | |
| Yaxia Automobile Huangshan Fudi Services Co., Ltd. | Current account | 1,836,463.85 | Within 1 year | 10.23 | |
| Yaxia Automobile Caohu Kaixuan Services Co., Ltd. | Current account | 220,710.69 | Within 1 year | 1.23 | |
| Total | 17,943,920.99 | 99.97 |
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Net carrying amount | Carrying amount | Provision for impairment | Net carrying amount | |
| Investment in subsidiaries | 18,582,307,907.14 | 18,582,307,907.14 | 18,582,307,907.14 | 18,582,307,907.14 | ||
| Total | 18,582,307,907.14 | 18,582,307,907.14 | 18,582,307,907.14 | 18,582,307,907.14 | ||
Investment in subsidiaries
| Investee | Opening balance | Increase | Decrease | Closing balance | Provision for impairment | Impairment reserve closing balance |
| Offcn Ltd. | 18,500,000,000.00 | 18,500,000,000.00 | ||||
| Yaxia Automobile Wufu Yawei Services Co., Ltd. | 23,000,000.00 | 23,000,000.00 | ||||
| Yaxia Automobile Ningguo Driver Training School | 17,474,782.14 | 17,474,782.14 | ||||
| Yaxia Automobile Huangshan Fudi Services Co., Ltd. | 5,000,000.00 | 5,000,000.00 | ||||
| Yaxia Automobile Caohu Kaixuan Services Co., Ltd. | 5,000,000.00 | 5,000,000.00 | ||||
| Yaxia Automobile Bozhou Driver Training School | 20,000,000.00 | 20,000,000.00 | ||||
| Yaxia Automobile Suzhou Bokai Services Co., Ltd. | 11,833,125.00 | 11,833,125.00 | ||||
| Total | 18,582,307,907.14 | 18,582,307,907.14 |
| Item | Opening balance | Changes in the current period（+、-） | Closing balance | ||||
| Issue new shares | Bonus share | Capital reserve converted into share capital | other | Total | |||
| Item | Opening balance | Changes in the current period（+、-） | Closing balance | ||||
| Issue new shares | Bonus share | Capital reserve converted into share capital | other | Total | |||
| 1、 Shares with limited sale conditions | 5,461,996,948.00 | -114,933,519.00 | -114,933,519.00 | 5,347,063,429.00 | |||
| 1.1 Other domestic shares | 5,461,996,948.00 | -114,933,519.00 | -114,933,519.00 | 5,347,063,429.00 | |||
| Inc: Domestic legal person shares | 534,706,341.00 | 534,706,341.00 | |||||
| Domestic natural person holdings | 4,927,290,607.00 | -114,933,519.00 | -114,933,519.00 | 4,812,357,088.00 | |||
| 2、 Shares in circulation without restrictions on sale | 705,402,441.00 | 114,933,519.00 | 114,933,519.00 | 820,335,960.00 | |||
| common stock | 705,402,441.00 | 114,933,519.00 | 114,933,519.00 | 820,335,960.00 | |||
| Total | 6,167,399,389.00 | 6,167,399,389.00 | |||||
| Item | Amount for the current period | Amount for the prior period | ||
| Revenue | Cost of revenue | Revenue | Cost of revenue | |
| Prime operating income | 147,661,522.84 | 138,111,971.06 | ||
| Other businesses | 14,647,786.07 | 11,332,163.09 | 57,800,137.87 | 1,846,411.74 |
| Total | 14,647,786.07 | 11,332,163.09 | 205,461,660.71 | 139,958,382.80 |
5. Investment income
| Item | Amount for the current period | Amount for the prior period |
| Income from long-term equity investments under cost method | 1,700,000,000.00 | 1,742,740,000.00 |
| Investment income from disposal of long-term equity investment | 68,464,613.94 | |
| Investment income from holding available-for-sale financial assets | 1,248,000.00 | |
| Investment income from disposal of available-for-sale financial assets | 13,124,459.19 | |
| Investment income from Financial product | 30,534.61 | |
| Total | 1,700,030,534.61 | 1,825,577,073.13 |
| Breakdown of non-recurring profit and loss | Amount | Description |
| (1) Profit and loss on disposal of non current assets | 182,904.69 | |
| (2) Tax refunds, reductions or exemptions without approval or without formal approval documents | ||
| (3) Government subsidies included in the current profit and loss (closely related to the business of the enterprise, except for government subsidies that are fixed or quantified in accordance with national unified standards) | 472,098.91 | |
| (4) Capital occupation fees charged to non-financial enterprises included in the current profit and loss |
| Breakdown of non-recurring profit and loss | Amount | Description |
| (5) The company can obtain the differences when the investment cost of an enterprise's acquisition of subsidiaries, associates and joint ventures is less than the income derived from the fair value of the identifiable net assets of the investee. | ||
| (6) Non-monetary asset exchange gains and losses | ||
| (7) Profit or loss from entrusting others to invest or manage assets | 184,130,073.02 | |
| (8) Impairments for assets due to force majeure factors, such as natural disasters | ||
| (9) Debt restructuring gains and losses | ||
| (10) Enterprise restructuring costs, such as expenses for relocating employees, integration costs, etc. | ||
| (11) Gains and losses in excess of fair value resulting from transactions where the transaction price was significantly unfair | ||
| (12) Net profit or loss for the period from the beginning of the subsidiary to the business combination date resulting from a business combination under the same control. | ||
| (13) Gains and losses from contingencies unrelated to the company's normal business operations | ||
| (14) In addition to the effective hedging business related to the company's normal business operations, the holding of financial assets held for trading, derivative financial assets, financial liabilities held for trading, and changes in fair value arising from derivative financial liabilities, and disposal of financial assets held for trading, derivative finance investment income from assets, financial liabilities held for trading, derivative financial liabilities and other debt investments | 1,712,787.50 | |
| (15) Receivables and contract asset impairment reserves that are individually tested for impairment are reversed. | ||
| (16) Gains and losses from external entrusted loans | ||
| (17) Gains and losses from changes in the fair value of investment real estate that are subsequently measured at the fair value model |
| Breakdown of non-recurring profit and loss | Amount | Description |
| (18) The impact on the current profit and loss should be adjusted in one time in accordance with the requirements of tax and accounting laws | ||
| (19) Custody fee income from entrusted operations | 411,320.75 | , |
| (20) Non-operating income and expenses other than the above | -1,341,412.25 | |
| (21) Other profit and loss items that meet the definition of non-recurring profit and loss | -53,800,000.00 | |
| Total non-recurring profit and loss | 131,767,772.62 | |
| Less：Amount of income tax impact | 27,588,747.77 | |
| Non-recurring profit and loss after deducting income tax effects | 104,179,024.85 | |
| Inc：Non-recurring profit and loss attributable to owners of the parent company | 104,179,024.85 | |
| Non-recurring profit and loss attributable to minority shareholders |
| Profit for the reporting period | Weighted average return on net assets (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the company | 60.71 | 0.29 | 0.29 |
| Net profit attributable to ordinary shareholders of the company after deducting non-recurring gains and losses | 57.20 | 0.28 | 0.28 |
Note: In order to ensure the comparability of financial data, the weighted average return on net assets of thecurrent period is not overestimated. The net assets attributable to shareholders of listed companies at theend of the previous year used in the calculation are the opening balance of 2019 after the adjustment of thenew financial instrument standards, not the balance as of December 31, 2018.
Chapter XIII. Documents Available for Reference
I. The full text of 2019 Annual Report signed by Wang Zhendong, the Company’s legal representative.II. The financial statement signed and sealed by the legal representative, the person in charge of accountingwork and the person in charge of accounting department (the accounting person).III. The original copy of audit report sealed by the accounting firm, and signed and sealed by the certifiedpublic accountant.IV. The original copies of all the documents of the Company which have been disclosed in newspapersdesignated by the China Securities Regulatory Commission during the reporting period.V. The place where the above-mentioned documents are maintained: the office of the Company’s Secretaryof the Board .