Winner Medical Co., Ltd.2020 Annual Report
April 2021
Section 1 Important Notes, Contents, and DefinitionsThe board of directors, the board of supervisors and directors, supervisors and seniormanagement of the Company hereby guarantee that no false or misleading statement ormajor omission was made to the materials in this report and that they will assume all theresponsibility, individually and jointly, for the authenticity, accuracy and completeness of thecontents of the annual report.Li Jianquan, the head of the Company, Fang Xiuyuan, the head of accounting work, and WuKezhen, the head of accounting body (accountant in charge), guarantee the authenticity,accuracy, and completeness of the financial report in the current year report.All directors of the Company personally attended the board meeting for reviewing this report.The forward-looking contents in this report, such as the future development strategy andperformance planning, are the goals sets by the Company, which are planned matters. Theachievement of the goals depends on many factors, including market change, which isuncertain. So these contents are not the company's profit forecast for the next year and do notconstitute a substantial commitment of the Company to investors and related parties.Investors and related parties should be fully aware of related risks and understand thedifferences among plans, forecasts, and commitments. Investors are asked to beware ofinvestment risks!The Company needs to comply with the disclosure requirements of the No. 17 Guideline ofShenzhen Stock Exchange for Industry Information Disclosure of Listed Companies Engagingin Textile and Apparel Business.Investors are asked to read this report carefully. The main risks that the Company may facein the future are described in the section "Prospect of the Company's Future Development" in"Discussion and Analysis of Operation" of this report. Investors are asked to beware of therisks.The preplanned profit distribution deliberated and approved by the board of directors is asfollows: taking 426,492,308 shares as the radix, the Company will send cash dividends of 18yuan (tax included) and 0 bonus share (tax included) to all shareholders for every 10 shares,converting capital reserve into 0 share capital for every 10 shares.
To Shareholders
Dear shareholders,Greetings! Thirty years ago, we established Winner Medical with the aim of manufacturing surgical dressings. Twelve years ago, we establishedPurcotton, dreaming of "purcotton changes the world". Two years ago, we established PureH2B based on "nature, science, and bodybuilding". Today,Winner Medical owns three brands: Winner Medical, Purcotton, and PureH2B, and has gradually grown into a health enterprise developing medicaland consumption sectors at the same time.The year 2020 was both difficult and hopeful for Winner Medical. In the fight against the COVID-19 pandemic that is still raging around the world,Winner Medical, as one of the companies closest to the center of the pandemic and one of the fastest responders, shouldered its responsibility to raceagainst time to save lives, adhering to its operating principle of "prioritizing quality over profit, brand over speed, and social responsibility overcorporate value".All staff in Winner Medical (Huanggang)'s mask factories worked for several month nonstop since before the Spring Festival; Winner Medical (Jiayu)and Winner Medical (Chongyang) resumed work on the first day of the lunar year, all staff working for several month nonstop; it took only 20 daysfor Winner Medical (Chongyang) to increase its daily output of protective suits from 3,000 pieces to 50,000 pieces.We prioritize social value overeverything else and keep our promises to provide medical workers and other anti-pandemic workers with high-quality and low-cost anti-pandemicproducts. Prioritizing life and health over everything else and following high standards and requirements, we ensured that every move me made workin the fight against the COVID-19 pandemic. By the end of December 2020, we had provided nearly 4 billion masks, more than 86 million protectivesuits, isolation gowns, and surgical gowns in the battle against the pandemic. Winner Medical has been casting armors for the heroes in harm's way.In June 2020, Winner Medical was praised by the Joint Prevention and Control Mechanism of the State Council as a well-deserved "ordnance factory"in fighting the pandemic. In September, Winner Medical (Huanggang) was awarded the title of "National Advanced Unit for Fighting the COVID-19Pandemic" by the CPC Central Committee and the State Council. It is also the only enterprise awarded with the title in Hubei Province. The pandemicwill finally end, and Winner Medical will keep making the impossible possible.Opportunities always accompany challenges. The pandemic has also brought unprecedented changes to our awareness and our industry. The medicalconsumables industry is reaching a new height with the support of national policies and public awareness. Winner Medical's masks and protectiveproducts were highly appraised by medical workers of hospitals for their high quality, which has greatly enhanced its brand awareness. In 2020,Winner Medical's hospital channels in China has grown to more than 3,000, and its number of OTC pharmacies in China was over 90,000. Meanwhile,in the international market, Winner Medical have established friendly cooperative relations with multinational companies and large chain pharmaciesthat we've failed to establish partnership for years, and we will maintain the cooperation relationships with them. As for online business, the numberof members on Winner Medical's e-commerce platform surged rapidly. With ordinary consumers' demand for our products increased significantly,there were good development opportunities for our home care products. I believe this is a good start, and Winner Medical is developing around Chinaand going global.Facing the sudden plummet of store business caused by the pandemic, Purcotton, a wholly-owned subsidiary of Winner Medical, managed to makethe number of Purcotton members surge by linking the sales in offline stores and Wechat mini program; the launches of "commodity digitalization"and "omnichannel digitalization" systems have greatly raised our sales and delivery efficiencies, and significantly improved customer experience;Purcotton currently has more than 257 chain stores, and the franchise model of stores has also been proved successful in pilot projects; our coreproducts such as cotton tissues and sanitary pads are already sold in more than 5,000 offline stores of large supermarket chains, over 4,000convenience stores, and maternal and child retail stores in more than 20 provinces. With multiple channels, Purcotton has further expanded its productcoverage and improved its brand recognition, providing consumers with more convenient services in diverse shopping scenarios.Winner Medical was listed on the Shenzhen Stock Exchange on September 17, 2020, entering a new stage and a new starting point. How to constantlymaximize the return on investment for shareholders? How to constantly provide consumers with the best products? How to create the most value forsociety? How to maintain our competitive edge in the complex global environment and the competitive market environment? All these are the new
Winner Medical Co., Ltd. 2020 Annual Reportmissions of Winner Medical in its new journey.The historical tide is surging forward. We have to reconsider the value of life and the speed of time after 2020. In an era of tremendous changes, withnew technologies such as artificial intelligence, cloud computing, and big data constantly emerging, only by staying true to our original mission canwe flourish.In 2020, Winner Medical started a new reform based on innovation, organizational changes, and digital transformations, to improve its adaptability tochanges and to fully promote its business transformation that is "consumer-centric and driven by digital and intelligent manufacturing." We areconstantly optimizing our internal management, adopting a matrix organizational structure that is closer to users and consumers. Moving toward ourgoals, we are implementing our digital strategies steps by steps, including "centralized commodity digital operation", "omni-channel digital operation","consumer omni-channel operation", " smart logistics digital operation", and "smart manufacturing digital operation".Adhering to the people-oriented principle, we have further strengthened our investment in employee rights and benefits, and improved our long-termincentive mechanism. In 2020, the company promoted a program to grant restricted stock incentives to no more than 1,036 employees for the mutualimprovement of employees and the company, sharing the dividends of corporate development with employees of Winner Medical.Looking ahead, it is still a long way to go for Winner Medical. We will keep attaching greater importance to the R&D of basic materials of purecotton spunlace non-woven fabric and high-end wound care products, and do our best in basic materials; we will continue to make Winner Medical ahealth enterprise that develops and produces world-leading medical consumables, home care products, and quality daily necessities. Staying true toour original mission, we are striving to be a constant innovator, leading the industry to change from providing products "made in China" to providingproducts "created in China", and to change Chinese brands into international brands. Upholding the sustainable development concept, we pursuequality life, health, and environmental protection at the same time, aiming to constantly bring happiness and quality products to consumers and tocreate value for a better life.Behind the rise of every national brand, there is the determination and great courage to overcome obstacles. The past thirty years have witnessedWinner Medical's staying true to its original mission.We will always prioritize quality over profit, brand over speed, and social responsibility over corporate value. Just as the old Chinese saying goes, aman should be steadfast at the age of thirty. It is the right time for Winner Medical.I would like to thank all the shareholders for their trust and support for Winner Medical. You are invited to witness more exciting stories of WinnerMedical.
Li Jianquan, Chairman of Winner Medical
April 20, 2021
Contents
Section 1 Important Notes, Contents, and Definitions ...... 2
Section 2 Company Profile and Major Financial Indicators ...... 8
Section 3 Business Summary ...... 12
Section 4 Discussion and Analysis of Operations ...... 31
Section 5 Important Matters ...... 87
Section 6 Changes in Shares and Shareholders ...... 114
Section 7 Preferred Shares ...... 124
Section 8 Convertible Bonds ...... 125
Section 9 Directors, Supervisors, Senior Management and Employees ...... 126
Section 10 Corporate governance ...... 139
Section 11 Corporate Bonds ...... 148
Section 12 Financial Report ...... 149
Section 13 Reference file directory ...... 325
Definitions
| Term | Definition | |
| Company, Winner Medical | Refers to | Winner Medical Co., Ltd. |
| Winner Group | Refers to | Winner Group Limited, a controlling shareholder of the Company |
| Glory Ray Holdings | Refers to | Glory Ray Holdings Limited, another enterprise controlled by the Company's actual controller and used to be the Company's indirect controlling shareholder |
| Glory Ray Limited | Refers to | Glory Ray Limited, another enterprise controlled by the Company's actual controller and used to be the Company's indirect controlling shareholder |
| Sequoia Xinyuan | Refers to | Beijing Sequoia Xinyuan Equity Investment Center (L.P.), a shareholder of the Company |
| Kangsheng Investment | Refers to | Shenzhen Kangsheng Investment Partnership (L.P.), a shareholder of the Company |
| Kangxin Investment | Refers to | Shenzhen Kangxin Investment Partnership (L.P.), a shareholder of the Company |
| SCGC | Refers to | Shenzhen Capital Group Co., Ltd., a shareholder of the Company |
| Kanglong Investment | Refers to | Shenzhen Kanglong Investment Partnership (L.P.), a shareholder of the Company |
| Kangli Investment | Refers to | Shenzhen Kangli Investment Partnership (L.P.), a shareholder of the Company |
| Winner Medical (Chongyang) | Refers to | Chongyang Winner Medical Textile Co., Ltd., later renamed Winner Medical (Chongyang) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Jiayu) | Refers to | Jiayu Winner Medical Textile Co., Ltd., later renamed Winner Medical (Jiayu) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Jingmen) | Refers to | Jingmen Winner Medical Textile Co., Ltd., later renamed Winner Medical (Jingmen) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Yichang) | Refers to | Yichang Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Huanggang) | Refers to | Winner Medical (Huanggang) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Tianmen) | Refers to | Winner Medical (Tianmen) Co., Ltd. whose former name is Hubei Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of the Company |
| Shenzhen Purcotton | Refers to | Shenzhen Purcotton Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Guangzhou Purcotton | Refers to | Guangzhou Purcotton Medical Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Beijing Purcotton | Refers to | Beijing Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Shanghai Purcotton | Refers to | Shanghai Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen |
| Purcotton | ||
| Qianhai Purcotton | Refers to | Shenzhen Qianhai Purcotton E-Commerce Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Purunderwear | Refers to | Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Winner (Huanggang) Cotton | Refers to | Winner (Huanggang) Cotton Processing & Trading Co., Ltd., a wholly-owned subsidiary of Winner Medical (Huanggang) |
| Winner Medical Malaysia | Refers to | Winner Medical Malaysia Sdn. Bhd., a subsidiary controlled by the Company |
| Winner Medical (Hong Kong) | Refers to | Winner Medical (Hong Kong) Ltd., a subsidiary controlled by the Company |
| Winner Medical (Heyuan) | Refers to | Winner Medical (Heyuan) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Wuhan) | Refers to | Winner Medical (Wuhan) Co., Ltd. whose former name is Hubei Winner Medical Co., Ltd., a wholly-owned subsidiary of the Company |
| Pure HB (Shanghai) | Refers to | Pure HB (Shanghai) Co., Ltd., a wholly-owned subsidiary of the Company |
| PureH2B | Refers to | Shenzhen PureH2B Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Chengdu Wenjian Likang | Refers to | Chengdu Wenjian Likang Medical Products Co., Ltd., a wholly-owned subsidiary of the Company |
| China Nepstar | Refers to | China Nepstar Chain Drugstore Ltd. |
| LBX Pharmacy | Refers to | LBX Pharmacy Chain Joint Stock Company |
| Hengan International, Hengan | Refers to | Hengan International Group Co. Ltd. (01044.HK) |
| Tmall | Refers to | An integrated online Business-to-Consumer (B2C) shopping platform (www.tmall.com) under Alibaba Group |
| JD.com | Refers to | Beijing Jingdong Century Trading Co., Ltd. (JD.com, Inc.), a company listed on U.S. exchanges with an integrated online B2C shopping platform (www.jd.com) |
| Vipshop | Refers to | Vipshop International Holdings Limited, a company listed on U.S. exchanges with an integrated online B2C shopping platform (www.vip.com) |
| Key Client | Refers to | Corporate clients with bulk purchase or customized purchase needs regarding Purcotton business |
| Galaxy Real Estate | Refers to | Shenzhen Galaxy Real Estate Development Co., Ltd. |
| Reporting period | Refers to | Year 2020 |
| yuan | Refers to | CNY |
| 10,000 yuan | Refers to | CNY 10,000 yuan |
Section 2 Company Profile and Major Financial IndicatorsI. Company Profile
| Stock abbreviation | Winner Medical | Stock code | 300888 |
| Company name in Chinese | Winner Medical Co., Ltd. | ||
| Company short name in Chinese | Winner Medical | ||
| Company name in foreign language (if any) | Winner Medical Co., Ltd. | ||
| Company short name in foreign language (if any) | Winner Medical | ||
| Legal representative of the company | Li Jianquan | ||
| Registered address | Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City | ||
| Postal code of the registered address | 518109 | ||
| Office address | Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City | ||
| Postal code of the office address | 518109 | ||
| Website | http://www.winnermedical.com, http://www.winnermedical.cn | ||
| investor@winnermedical.com | |||
II. Contact Person and Contact Information
| Secretary to the board of directors | Securities affairs representative | |
| Name | Chen Huixuan | Wei Na, Liu Yanxiang |
| Contact address | Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City | Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City |
| Tel | 0755-28066858 | 0755-28066858 |
| Fax | 0755-28134688 | 0755-28134688 |
| investor@winnermedical.com | investor@winnermedical.com |
III. Information Disclosure and Keeping Place
| Media designated by the Company for information disclosure | Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily |
| Website designated by China Securities Regulatory | www.cninfo.com.cn |
| Commission for annual report | |
| Place where this report is available for inspection | Securities Department |
IV. Other Relevant Information
Accounting firm engaged by the Company
| Name of the accounting firm | BDO China Shu Lun Pan CPAs |
| Office address of the accounting firm | Floor 4, No. 61, Nanjing East Road, Huangpu District, Shanghai |
| Name of signatory accountant | Chen Qiong, Gao Junlei |
The sponsor institution engaged by the Company to perform the continuous supervision responsibility during the reporting period
√Applicable □ Not applicable
| Organization Name | Office Address | Representative | Continuous Supervision Time |
| China International Capital Corporation Limited | 27th and 28th floors, Tower 2, International Trade Building, No. 1, Jianguo Menwai Main Street, Chaoyang District, Beijing | Shen Lulu, Wang Haonan | December 31, 2023 |
The financial advisor engaged by the Company to perform the continuous supervision responsibility during the reporting period
□ Applicable √ Not applicable
V. Major Accounting Data and Financial Indicators
Whether the Company needs to retroactively adjust or restate the accounting data of the previous years
□Yes √No
| 2020 | 2019 | Increase/decrease this year compared to the previous year | 2018 | |
| Revenue(yuan) | 12,533,945,946.63 | 4,574,625,915.60 | 173.99% | 3,838,917,180.79 |
| Net profits attributable to shareholders of listed companies (yuan) | 3,810,412,504.40 | 546,293,677.91 | 597.50% | 424,684,852.89 |
| Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses (yuan) | 3,750,822,797.63 | 480,452,746.25 | 680.69% | 411,288,936.00 |
| Net cash flow from operating activities (yuan) | 4,767,496,287.39 | 599,772,565.88 | 694.88% | 467,862,582.44 |
| Basic EPS (yuan/share) | 9.80 | 1.45 | 575.86% | 1.14 |
| Diluted EPS (yuan/share) | 9.79 | 1.45 | 575.17% | 1.14 |
| Weighted average return on net assets | 64.68% | 18.80% | Increase by 45.88 percent | 18.34% |
| End of 2020 | End of 2019 | Increase/decrease at the end of this year compared | End of 2018 |
| to the end of the previous year | ||||
| Total assets (yuan) | 13,002,251,764.44 | 4,531,474,379.58 | 186.93% | 3,958,417,799.14 |
| Net assets attributable to shareholders of listed companies (yuan) | 10,453,934,045.43 | 3,160,380,500.84 | 230.78% | 2,657,001,622.90 |
The lower of the company's net profit before and after deducting non-recurring profits and losses in the last three fiscal years is negative, and the auditreport of the most recent year shows that the Company's ability to continue as a going concern is uncertain.
□Yes √No
Net profit before and after deducting non-recurring profits and losses is negative
□Yes √No
VI. Key Quarterly Financial Indicators
Unit: yuan
| Q1 | Q2 | Q3 | Q4 | |
| Revenue | 1,482,975,289.36 | 2,696,803,593.91 | 5,343,370,125.43 | 3,010,796,937.93 |
| Net profits attributable to shareholders of listed companies | 318,806,306.55 | 713,412,383.36 | 2,117,879,590.69 | 660,314,223.80 |
| Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses | 317,949,508.13 | 705,011,541.34 | 2,109,396,234.75 | 618,465,513.41 |
| Net cash flow from operating activities | 611,546,751.39 | 1,861,859,230.86 | 1,491,721,330.18 | 802,368,974.96 |
Whether there is significant difference between the above financial indicators or the total sum of them and the financial indicators related to thequarterly report and semiannual report disclosed by the Company
□Yes √No
VII. Differences in Accounting Data Under Domestic and Foreign Accounting Standards
1. Differences between net profits and net assets in financial statements disclosed according to the InternationalAccounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the International Accounting Standards (IAS) andChinese Accounting Standards during the reporting period.
2. Differences between net profits and net assets in financial statements disclosed according to the OverseasAccounting Standards and Chinese Accounting Standards Simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards and ChineseAccounting Standards during the reporting period.
VIII. Non-Recurring Profit and Loss Items and Amount
√Applicable □ Not applicable
Unit: yuan
| Item | Amount in 2020 | Amount in 2019 | Amount in 2018 | Description |
| Profits and losses on the disposal of non-current assets (including the write-off part of the provision for asset impairment) | -25,914,736.75 | 55,074,788.79 | -2,446,573.74 | |
| Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state | 74,592,796.36 | 27,146,755.50 | 26,831,043.90 | |
| In addition to the effective hedging business related to the company's normal business operations, the profit and loss from fair value changes arising from holding tradable financial assets, derivative financial assets, tradable financial liabilities, and derivative financial liabilities, as well as the investment income from disposal of tradable financial assets and derivative financial assets, tradable financial liabilities, derivative financial liabilities, and other debt investments | 28,197,958.34 | -5,798,618.00 | -9,223,789.96 | |
| Income and expenditure other than those mentioned above | -4,844,628.50 | 1,236,411.96 | 829,360.14 | |
| Less: Amount affected by income tax | 12,117,518.33 | 11,818,507.38 | 2,592,882.46 | |
| Amount of minority shareholders' equity affected (after tax) | 324,164.35 | -100.79 | 1,240.99 | |
| Total | 59,589,706.77 | 65,840,931.66 | 13,395,916.89 | -- |
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 on InformationDisclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from the non-recurrent profit and loss itemsenumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits andLosses
□ Applicable √ Not applicable
No definition of non-recurrent profit and loss items defined and enumerated in the Interpretative Announcement No. 1 on Information Disclosure ofPublic Securities Issuing Companies - Non-recurrent Profits and Losses as non-recurrent profit and loss items during the reporting period.
Section 3 Business SummaryI. Main Business of the Company During Reporting PeriodThe Company needs to comply with the disclosure requirements of the No. 10 Guideline of Shenzhen Stock Exchange's GEM Board for InformationDisclosure of Listed Companies Engaging in Medical Device Business.
(I) Main business of the Company during reporting periodWinner Medical is a health enterprise developing both medical and consumption products under its three brands: Winner, Purcotton, and PureH2B.Specifically, the Company has been adhering to the core business principle of “quality priority over profit; brand priority over speed; social valuepriority over enterprise value”. Through continuous innovation and expansion of industrial boundaries, the Company has developed from a singlemanufacturer of medical consumables into a large medical health enterprise covering wound care, infection prevention, operating room consumables,personal care, home care, maternal and child care, home textile and clothing and other fields of health care enterprises.
1. Medical consumables
Winner Medical is a benchmarking enterprise in the domestic medical consumables industry. Its main product lines cover wound care, infectionprevention and disinfection and cleaning. The specific products include high-end wound dressing products, traditional wound care and dressingproducts, infection control products in operating room, disease prevention products and disinfection and cleaning products for body surface cleaning.
The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton procurement, R&D,production, and direct export. The Company's products have been certified by the EU CE certification, the US FDA certification and the JapaneseMinistry of Health, Labour and Welfare certification, and exported to Europe, America, Japan and other countries. In 2005, "Winner" brand enteredthe domestic hospital and drugstore market. With its excellent product quality and service, Winner Medical gradually established a good brand andreputation in domestic hospitals and drugstores. Since the outbreak of COVID-19 in 2020, the "Winner" brand epidemic prevention products haveentered the hospital and the civilian market. Because of its public commitment not to increase prices and the quality of its products, it has won theunanimous praise at home and abroad, government units and the public, and the brand reputation and popularity have been greatly improved.
In terms of products, Winner Medical focuses on market demand, is close to clinical and terminal, is driven by R&D and innovation, and constantlyimproves product layout. Its business scope extends from sales of single wound care products such as cotton gauze to sales of comprehensivesolutions of wound care, infection prevention, disinfection and cleaning. Disposable medical consumables and operating room consumables can moreeffectively reduce nosocomial infection than reusable medical products. With the attention of the state and hospitals to nosocomial infection andresidents' attention to personal health environment, disposable medical consumables and operating room consumables are gradually accepted by thedomestic market. Winner Medical's medical dressing product line has been expanded from traditional dressing products mainly focused on gauzeproducts to high-end dressing products, such as silica gel foam dressing, hydrocolloid dressing, super absorbent pad, negative pressure drainageproducts, etc. it is mainly applied to chronic wound healing scenes such as diabetic foot, large-area burns and wounds. The Company's technical levelin the field of high-end dressings has been in the forefront of the industry, and is expected to break the monopoly of large international medicalenterprises and realize import substitution.
2. Healthy consumer goods
Purcotton is a healthy life brand with " Medical background ,Pure cotton philosophy,, Quality in our DNA" as its core competitiveness, which startswith cotton spun lace non-woven fabric, takes "medicine close to life, Purcotton care for health" as its brand proposition, and its products includecotton dry wipes cotton surface sanitary napkin, cotton wet wipes and other non-woven consumer goods, baby products, baby clothing, adult clothingand other textile consumer goods. Purcotton advocates the life concept of "comfort, health, environmental protection", replacing chemical fiber withcotton and keeping away from chemical stimulation. It provides overall solutions for different life scenes, having a good user reputation and formed afully differentiated brand image in the field of consumer goods with strong brand appeal. In October 2019, Purcotton won the reputation of "70 Brandof the 70th Anniversary of the Founding of New China" sponsored by CCTV.
In terms of products, with excellent quality control ability and technology research and development ability, the Company continues to introducemedical grade quality consumer goods. Cotton is the main raw material of core products of Purcotton, which adopts global high-quality cotton tocontrol product quality and safety from the source. According to the high standard of medical consumables, all kinds of pollution sources are strictlycontrolled in the production process. Disposable underwear, newborn baby clothing and other close-fitting clothing are packaged with medical gradesterilization to further ensure the safety and environmental protection of the products. Purcotton products cover multiple consumer groups, such asmothers and infants, children and adults, and span multiple product lines, such as high-end cotton wipes, female care, baby care, adult clothing, hometextile products, etc.
In July 2019, the Company launched the "PureH2B" brand, aiming to build a one-stop retail platform covering beauty makeup, personal care, sportsand other healthy and beautiful life needs. As of December 31, 2020, "PureH2B" has sold products through 8 offline stores, online official websitesand Wechat mini programs, and its business is still in the initial stage.
(II) Main Products and PurposesIts health product system covers: wound care products, infection prevention products, disinfection & cleaning products under its medical consumablessection; the non-woven consumer goods and textile consumer goods under its healthy consumer goods section; and pure cotton spunlace non-wovenfabric, an industry intermediate product.The main categories and images of some products under the Company's medical consumables section are as follows:
| Product Class | Product Category | Main Purpose | Product | Image of Some Products |
| Wound care products | Traditional wound care products | For absorbing wound exudate, dressing wounds, and sports protection | Gauze sheets, non-woven sheets, gauze bandage, dressing change kits, etc. | |
| Advanced wound care products | For creating a moisture balance at the wound interface to optimize its benefits for wound healing, reduce the frequency of dressing replacement, and reduce secondary damage | Silicone dressings, alginate dressings, etc. | ||
| Infection prevention products | OR infection control products | For preventing infections in the operating room | Surgical packs, surgical gowns, etc. | |
| Disease prevention and control products | For occupational protection of medical staff and patient isolation | Masks, protective suits, isolation gowns, etc. | ||
| Disinfection & cleaning products | Disinfection & cleaning products | For wound cleaning and disinfection, and daily cleaning | Cotton swabs, cotton pads, cotton balls, alcohol cotton pads, disinfectant, etc. |
As the important guarantee for medical staff's occupational protection and patient isolation protection, disease protection and control products such asmasks and protective suits play an indispensable role in coping with major health incidents and improving public health. During the reporting period,the company shipped nearly 4 billion masks, more than 86 million protective suits, isolation gowns, and surgical gowns to the world to help fightagainst the COVID-19 pandemic.
Winner Medical Co., Ltd. 2020 Annual ReportThe main categories and images of some products under the company's healthy consumer goods section are as follows:
| Class | Product Category | Product | Image of Some Products |
| Non-woven consumer goods | |||
| Cotton tissues | |||
| Wet wipes | |||
| Sanitary pads | |||
| Other non-woven consumer goods | Cotton swabs, makeup cotton pads, disposable underwear, etc. | ||
| Textile consumer goods | |||
| Baby supplies | Baby's bath towels, handkerchiefs, and quilts, etc. | ||
| Baby clothing | Baby's leisure wear, outing costume, underwear, footwear, etc. | ||
| Adult clothing | Adult's leisure wear, outing costume, underwear, footwear, etc. |
| Other textile consumer goods | Bedding, bathroom accessories, etc. |
The purposes and images of the Company's pure cotton spunlace nonwoven fabric are as follow:
| Class | Main Purpose | Image |
| Cotton spun lace non-woven fabric | With 100% quality cotton as raw materials, the fabric is made with the pure cotton spunlace nonwoven fabric technology. It can be used in fields such as personal care, home care, medical equipment, and industrial wipes. |
(III) Main Operating Modes
1. Purchasing Mode
The Company has established a complete procurement management system, which mainly includes the Procurement Control Process, ProcurementPrice Management Process, New Supplier Selection and Review Control Process, Supplier Performance Appraisal Management Process, and theCompany also has made a Qualified Supplier Directory. According to the Company's regulations, purchase applications shall be submitted byrequiring departments based on customer orders, sales plans, and production plans. The purchasing department shall strictly follow the purchasingmanagement regulations after analyzing the purchasing requirements and the raw material market. The procurement of key bulk raw materials (suchas cotton and veil) is implemented in a unified manner according to the Company's rules on its strategic procurement.The Company implements a strict supplier management system to ensure product quality and stable product supply. The Company has set a supplierdirectory and a perfect update and elimination mechanism to dynamically manage existing suppliers and new suppliers, which enables the Companyto preferentially cooperate with the suppliers with the highest assessment results. For new suppliers, the Company has made strict selection criteriaand supplier development and process management systems, including on-site inspection on suppliers; for suppliers with poor or even unqualifiedannual performance, the Company will add them to the key watch list or eliminate them. Generally, the Company will sign an annual frameworkagreement with a supplier to specify the cooperation content and the annual cooperation arrangement, and specific procurement contracts will besigned separately.
2. Production Mode
The Company formulates production plans according to customers' POs and requirements, its annual sales plans, and monthly rolling sales plans.Based on its own production capacity and demand fluctuations, the Company adopts the production strategies of Make to Order (MTO) and Made toStock (MTS).
3. Sales Mode
The Company sells products through multiple channels. The main sales channels are shown in the following figure:
4. Marketing Mode
The Company is developing its products under the Winner, Purcotton, and PureH2B brands a coordinated way. With 30 years of experience in theproduction of medical supplies, Winner is a leading medical consumables brand in the Chinese market and a brand with a global vision. With "Toenhance your health, life and well-being" as its vision and industry-leading product quality as the cornerstone of its brand value, the productmarketing and promotion for the brand rely more on its brand reputation. With pure cotton products as its label, Purcotton adopts unique,differentiated strategies to build its brand. By integrating multiple promotion channels such as directly-sales stores, brand roadshows, celebrityendorsements, event sponsorship, new media, and advertising, Purcotton keeps conveying to consumers its proposition of "making medicine close tolife and protecting health with pure cotton" and its vision of " purcotton changes the world ", which helps deepen the meaning of Purcotton brand andincrease its brand awareness and loyalty. PureH2B offers consumers select things that are high-quality, healthy, and beautiful from around the worldthrough its paid membership system. It offers its members products with extremely competitive prices and a series of excellent offline services suchas beauty salons, free makeup, and seminars. With " love, protect and enjoy nature " as its vision, and " Influence the mainstream consumptionattitude with ‘inner health brings outer beauty’ philosophy, andattract mainstream consumers with natural products " as its mission, PureH2B isbringing consumers a new all-round digital retail experience.
(IV) Main Driving Factors of Performance
1. Medical Consumables Industry and Consumer Goods Industry Will Keep Growing RapidlyAs the global demand for healthcare of aging population increases, resident income continues to grow, and medical and healthcare improve, the globalmedical consumables market is showing a steady growth trend. The COVID-19 pandemic has made global consumers pay more attention to healthand personal protection. In China, especially, most families choose to wear masks when they take public transport and are in public places, so thedemand for masks is expected to increase significantly compared with that before the pandemic. After the COVID-19 pandemic outbreak, as thegovernment, medical workers, and consumers in China pay greater attention to protection and quality, the use rate of disposable medical consumablesand disposable surgical packs will get higher; meanwhile, as the Chinese government attaches importance to the medical consumables industry, thesupervision over the industry are continuously strengthened while the reserves of medical consumables are increasing. Therefore, companies that donot comply with laws and regulations will surely be eliminated. In addition, China's medical dressings are changing from traditional dressings tohigh-end dressings, and they are expected to replace imported dressings step by step. The medical consumables market in China is growing rapidly,creating a good external environment for enterprise development.In recent years, the total retail sales of consumer goods in China has been rising rapidly, showing an obvious trend of consumption upgrading.Consumers' demand for green, healthy, and environmentally friendly products is increasing, bringing good opportunities in the consumer goodsindustry.
2. The Company's Ability to Innovate and Its Foresight Enable It to Lead the Market and Seize OpportunitiesIn terms of technological innovation, the Company's pure cotton spunlace non-woven fabric is a kind of pioneering fabric in the industry, withbreakthrough significance. The Company innovatively applies the fabric in healthy consumer goods and medical consumables. In terms of productinnovation, the Company keeps introducing new products based on medical consumables and healthy consumer goods, to increase loyalty of existingcustomers and to win new customers. In addition, the Company keeps exploring new areas based on its R&D advantages. For example, the innovativeapplication of pure cotton spunlace non-woven fabrics in infection prevention products such as medical protective suits, surgical gowns, and isolationgowns, which has not only alleviated the shortage of raw materials during the pandemic but also improved the breathability and comfort ofanti-pandemic products. As for high-end wound dressings, the Company keeps tackling obstacles to enrich its high-end dressing products. With atop-down innovation system established, the Company is able to grasp the trend of market development in a timely manner to develop new products
Winner Medical Co., Ltd. 2020 Annual Reportand constantly promote its self-innovation.
3. High-Quality Products and Precise Brand Positioning Enhance Brand Value
The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton procurement, R&D,production, and direct export. The Company is one of the early companies that established a medical-grade quality management system in theindustry and it has passed the ISO13485 Medical Devices Quality Management System Certification. Its product quality complies with the European,American, Japanese, and Chinese standards. Winner Medical enjoys a high brand reputation and recognition. In the reporting period, Winner Medicalwas praised by the Joint Prevention and Control Mechanism of the State Council as a well-deserved "ordnance factory" in fighting the pandemic. Itswholly-owned subsidiary Winner Medical (Huanggang) was awarded the title of "National Advanced Unit for Fighting the COVID-19 Pandemic" bythe CPC Central Committee and the State Council. It is also the only enterprise awarded the title in Hubei Province. Winner Medical has expanded itsbusiness from the medical field to the consumer goods field, which has also increased the brand value of its consumer products.Purcotton is committed to fulfilling consumers' demand for high-quality, "comfortable, healthy, and environmentally friendly" products. Constantlywinning recognition from consumers since its launch in 2009, Purcotton has rapidly grown into a top brand of maternal and child products on Tmall,and has gained high reputation and recognition in the field of maternal and child consumer products.In conclusion, with high brand value, the Winner and Purcotton brands will help the Company increase customer loyalty, stabilize product prices, andexpand its market share in the fierce competitive market, thereby ensuring its sustainable and stable profitability.The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry InformationDisclosure of Listed Companies Engaging in Textile and Apparel Business.(V) The Industry in Which We Operate
1. Industry definition
According to the Classification Rules of Medical Devices (2015) (Order No. 15 of the China Food and Drug Administration) and the ClassificationCatalogue of Medical Devices (Notice No. 104 of the China Food and Drug Administration in 2017), the medical dressings produced and sold by theCompany belong to the nursing and protective devices in medical devices. According to the Industry Classification of National Economy(GB/T4754-2017) and the Industry Classification Guidelines for Listed Companies (revised in 2012), the industry of the Company is specialequipment manufacturing industry (C35) in manufacturing industry (C).The products of the Company's healthy consumer goods include cotton dry wipes cotton surface sanitary napkin, cotton wet wipes and othernon-woven consumer goods, baby products, baby clothing, adult clothing and other textile consumer goods. According to the Industry Classificationof National Economy (GB/T4754-2017) and the Industry Classification Guidelines for Listed Companies (revised in 2012), the consumer goodsoperated by the Company mainly belong to the textile industry (C17) and the textile clothing and apparel industry (C18) in the manufacturing industry(C).
2、 Development of the industry
(1) Development Status of Medical Consumables Industry in China and Overseas
Medical consumables refer to the medical and health materials used in the process of clinical diagnosis and nursing, testing and repair. With a widevariety of models in each category, medical consumables are widely used in many fields, and they are important materials for medical institutions tocarry out daily medical and nursing work. From the perspective of value, medical consumables can be divided into high-value medical consumablesand low-value medical consumables.
Data source: Blue Book of Medical Device Industry, China Medical News, IBM Report
Data source: China Medical Device Blue Book, Chinese Medicine, Magna Information Centre, IBM ReportCompared with high-value medical consumables, low-value medical consumables are mainly injection and punching, medical dressings and medicalpolymers, with low entry threshold and fierce market competition. Due to the wide application and benefit from the improvement of people's livingstandards and the continuous growth of medical demand in China, the market space of low-value medical consumables is huge, and will continue tomaintain high-speed growth in the future. According to the research and analysis of IBM, it is estimated that the market scale of low-value medicalconsumables in China will reach RMB 221.3 billion by 2025.
① Market development of operating room infection control products
Due to the growth of the number of surgical operations and the strengthening of infection control measures, the market of operating room infectioncontrol products is growing continuously. According to the statistics of CMI, the market size of operating room infection control products is expectedto reach USD 3.688 billion in 2026, with an average annual compound growth rate of 4.9%.Operating room infection control products can be divided into reusable products and disposable products. The change from reusable products todisposable products is the development trend of the industry. The main reasons include: on the one hand, compared with reusable products, disposablesurgical infection control products can significantly reduce the risk of cross infection. According to Coherent, disposable operating room infectioncontrol products can reduce the risk of cross infection during surgery by 60%. The Guide to Operating Room Nursing Practice compiled by theOperating Room Professional Committee of Chinese Nursing Association also recommends the use of disposable aseptic products in the operatingroom. On the other hand, disposable operating room infection control products also have advantages in convenience and cost compared with reusableproducts, which makes the demand for disposable products more active.Compared with a single product, the market scale of customized surgical packages will show a rapid growth trend. According to the statistics of CMI,
Winner Medical Co., Ltd. 2020 Annual Reportthe market size of global customized surgical packages is expected to grow to USD 21.347 billion in 2026, with an average annual compound growthrate of 10.2%. In China, the market size of customized surgical packs is expected to rise to USD 1.504 billion, with an average compound annualgrowth rate of 12.2%, which is quite promising.
② Market development of high-end wound dressing products
Judging from the global trend, the demand for high value-added and multifunctional medical dressings made of new materials is increasing, and thehigh-end medical dressing industry will usher in good development opportunities. According to the statistics of BMI, the global high-end dressingmarket is expected to reachUSD 7.015 billion in 2022.As the manufacturers in China improve their technologies and product quality, and relevant government departments and institutions formulate andimplement laws, regulations, and industry policies to support the development of medical dressings, including high-end dressings, high-end medicaldressings in China is expected to replace the imported ones in the future.
(2) Development Status of Consumer Goods Industry Segments
① Development of household paper industry
According to the statistics of China National Household Paper Industry Association, in 2018, China's household paper market consumption was 8.896million tons, with a year-on-year growth of 4.5%; the total consumption reached RMB 116.8 billion, with a year-on-year growth of 5.6%, and the unitprice of consumption continued to rise.
2010-2020 Household Paper Consumption
Unit: 10,000 t
Data source: China National Household Paper Industry AssociationHousehold paper has the characteristics of rigid and continuous demand, its market continues to expand, and the popularization rate of facial tissueand wipe paper products also further increases. Because of its more environmental protection and less sensitization, pure cotton wipes can replacetraditional paper products and have great market potential. Since cotton tissues are gaining higher acceptance, Tmall has added cotton tissue as acategory under its paper products.Cotton tissues are widely used in many scenarios such as cleaning and personal care. As people's consumption capacity improves, cotton tissues'penetration rate is expected to rise. The Company is the pioneer of cotton wipes, leading the industry to achieve rapid growth in the past few years.According to the data of Leading Industry Research Institute, the demand for cotton wipes in China increased from 2.35 billion sheets in 2015 to
23.35 billion sheets in 2019, with an average annual compound growth rate of 77.5%.
② Development of disposable sanitary products industry
According to Euromonitor statistics, the market of absorptive care products in China increased from RMB 128.9 billion to RMB 168 billion in2015-2019, with an average annual compound growth rate of 6.9%. Among them, female health care products increased from RMB 74 billion toRMB 87.9 billion, with an average annual compound growth rate of 4.4%. The market scale of infant diapers increased from RMB 47.9 billion to
Winner Medical Co., Ltd. 2020 Annual ReportRMB 67 billion, with an average annual compound growth rate of 8.7%. The market scale of adult incontinence products increased from RMB 1.6billion to RMB 4.3 billion, with an average annual compound growth rate of 28.6%. The market scale of wet wipes increased from RMB 5.4 billion toRMB 8.8 billion, with an average annual compound growth rate of 13.3%. Adult incontinence products started late in China and are still in theintroduction period. With the gradual emergence of aging population, the huge potential of adult incontinence products market in China will bereleased. The market penetration rate of wipes in China is relatively low. At present, the market is dominated by baby wet wipes and general-purposewet wipes. Female hygiene wet wipes, makeup removal wet wipes, home cleaning wet wipes and other categories account for a relatively smallproportion, so there is a large market space to develop.
③ Development of textile industry and textile clothing and apparel industry
China has become the world's largest producer and consumer of textiles and clothing. The sales of specialized retail goods of textiles, clothing anddaily necessities increased from RMB 70.302 billion in 2007 to RMB 667.640 billion in 2019, with an average compound annual growth rate of
20.63%. Among them, the sales of textile, clothing and daily necessities in chain retail enterprises have increased rapidly in recent years, reachingRMB 144.802 billion in 2019.The development of e-commerce industry also led to the transformation and upgrading of textile, clothing and daily necessities industries. Accordingto the statistics of China National Textile And Apparel Council, the total volume of e-commerce transactions of textile and clothing in China in 2019was RMB 6.69 trillion, accounting for 19.22% of the total volume of national e-commerce transactions, which is the most active trading category ofe-commerce platform. Among them, the scale of online retail of textile and clothing is RMB 1670 billion, accounting for 19.59% of the total onlineretail sales of physical goods.
3. Competitive position of the Company
(1) Medical consumables business
Winner Medical is a manufacturer with comprehensive leading advantage in China's medical consumables industry. It has established a medical-gradequality management system earlier in the industry and realized the whole industry chain operation mode from cotton procurement to R & D,production and sales. As a leading enterprise in the medical dressings industry, the Company promotes the establishment of the medical dressings
Winner Medical Co., Ltd. 2020 Annual Reportbranch of China Chamber of Commerce for Import and Export of Medicines and Health Products, and serves as the president of the medical dressingsindustry, leading the industry to continuously expand its international market share with high-quality products. After the outbreak of COVID-19, theCompany has fully exerting its core business principle, “social value priority over enterprise value”, strictly controlled the quality of epidemicprevention products, and did not increase the price of terminal products. Its products were highly praised by the country and the public, and the brandvalue was greatly improved. The Company's own brand "Winner" has entered more than 3,000 hospitals and more than 90,000 pharmacies in China,most of which are third-class and second-class hospitals. It also has product counters and product series display in famous chain pharmacies such asNepstar, DaShenLin, Jianzhijia, Gaoji and LBX Pharmacy.
(2) Healthy consumer goods business
Purcotton takes "cotton" as the core, covering multiple consumer groups, such as mothers and infants, children and adults, and span multiple productlines, such as high-end cotton wipes, female care, baby care, adult clothing, home textile products, etc. The Company takes the self-developed cottonspun lace non-woven fabric as the basic material carrier, and successfully realizes the expansion of medical products to household products. TheCompany is the pioneer and industry leader of cotton non-woven consumer goods market. With its leading product R & D ability, medical-gradeproduct quality and popular brand image, the Company has rapidly increased the market share of cotton non-woven products. Purcotton hasdeveloped into a flagship national brand among high-quality domestic consumer brands, which is one of the primary choices for consumers to buycotton consumer goods.II Significant Changes in Prime Assets
1. Significant Changes in Prime Assets
| Prime Assets | Significant Changes |
| Equity assets | Increased by 4.5658 million yuan compared to that at the beginning of the year, an increase of 51.54%, mainly due to the increase of income from the investment in joint ventures. |
| Fixed assets | Increased by 126.0151 million yuan compared to that at the beginning of the year, an increase of 9.89%, mainly due to the factories under construction at the beginning of the year turning into fixed assets in this year and the newly increased investment in this year |
| Intangible assets | Increased by 76.668 million yuan compared to that at the beginning of the year, an increase of 58.23%, mainly due to the subsidiaries' new investment in land use rights |
| Construction in progress | Decreased by 126.4255 million yuan compared to that at the beginning of the year, a decrease of 67.32%, mainly due to subsidiaries' factories under construction at the beginning of the year turning into fixed assets in this period |
| Tradable financial assets | Increased by 4,131.1786 million yuan compared to that at the beginning of the year (it was 0 yuan at the beginning of the reporting period), an increase of 100 %, mainly due to the company's cash management with Cash and cash equivalents |
| Cash and cash equivalents | Increased by 3,681.7005 million yuan compared to that at the beginning of the year, an increase of 765.68%, mainly due to the net cash inflow from operating activities. |
2. Major Overseas Assets
□ Applicable √ Not applicable
Winner Medical Co., Ltd. 2020 Annual ReportIII. Analysis of Core Competitiveness
1. Advantages of Business Philosophy and Corporate Culture
With offering quality products as its mission, the Winner brand aims to lead in the medical dressing industry, to grow from a small Chinese enterpriseto a large international enterprise offering high-quality products recognized by developed countries, bringing Chinese medical dressings to theinternational stage. With " To enhance your health, life and well-being " as its vision, the brand keeps focusing on product quantity and innovations,and making its way into the medical consumables and high-end medical dressing market. Cotton fiber has ten prominent advantages, including natural,safe, comfortable, naturally degradable, high output ratio, drought-resistant, salt and alkali-resistant, environmentally friendly, time-honored, and highsocial value. With its brand vision of " purcotton changes the world ", Purcotton applies "comfortable, healthy, and environmentally friendly" cottonsin household supplies and home care products to help customers raise life quality, constantly bringing them happiness and reassurance. Sticking to the"cotton fiber only" principle in its operation, Purcotton aims to develop recyclable and renewable resources, gradually replace chemical fibers withnatural fibers, and give full play to the use value and environmental protection value of cotton fibers, following the path of sustainable development.With " love, protect and enjoy nature " as its brand vision, PureH2B insists on the principle of pursuing beauty without sacrificing health for health isbeauty. PureH2B select natural cosmetics and toiletries, healthy food and health products, 3C and health equipment with excellent experience fromaround the world for customers. Meanwhile, the groundbreaking, innovative natural products developed independently by PureH2B are winning thetrust of consumers with their applicability and safety, meeting the needs of consumers who pursue both quality life and health and environmentalprotection. The visions and business philosophies regarding the company's three brands are focused on human health, environmental protection, andimproving the quality of life, which are in line with humans' sustainable development strategy.The Company will always uphold its core operating principle of " quality before profit, brand before speed, social value before corporate value ", andstick by its core values of " Self-sacrifice / Responsible / Collaborative / Innovative / Tenacity / Self-criticism /Sustainable development ". TheCompany promotes healthy sports such as running, mountain climbing, and ball games. The Company is weakening the power from titles to reducebureaucracy, and creating open workplaces to ensure efficient cross-department communication. During the COVID-19 pandemic, the Companyresponded quickly to fully guarantee the production of epidemic prevention materials. It carried out a series of activities regarding decision-makingmanagement, process integration, product and equipment innovation, and industrial chain integration, to improve its adaptability to market demand. InJanuary 2020, the first month of the epidemic outbreak, the Company provided 108.9 million masks and 114,000 protective suits to hospitals in Hubei,providing timely help in fighting the pandemic when there was no material reserve. As of December 31, 2020, the Company had provided nearly 4billion masks, more than 86 million protective suits and isolation gowns, with a total of more than 13 million yuan of recorded donations, which fullydisplays the company's team cohesiveness.
2. Advantages of R&D and Innovation
The Company independently developed the pure cotton spunlace non-woven technology in 2005, and has built a complete technology cluster basedon the technology, obtaining patent licenses in more than 30 countries and regions including the United States, Europe, and Japan. The Companyinnovatively apply pure cotton spunlace non-woven fabric in infection prevention products such as medical protective suits, surgical gowns, andisolation gowns, which has not only alleviated the shortage of raw materials during the pandemic but also improved the breathability and comfort ofanti-pandemic products. In the field of consumer goods, the Company has developed pure cotton tissues, pure cotton wet wipes, sanitary pads withpure cotton surface, facecloths, disposable underwear, and other products. It was invited to participate in the formulation of 14 national standards andindustry standards, including the performance requirements of pure cotton nonwoven surgical dressings, and technical specifications for contact layerdressings and masks for children.Since its establishment, the Company has been attaching great importance to scientific and technological innovation and cooperation. It has carriedout industry–university–research (IUR) projects with many universities and research institutes, including Hong Kong Polytechnic University, HongKong Research Institute of Textiles and Apparel, Wuhan Textile University, and Soochow University. The Company and the Shenzhen Institute ofAdvanced Technology of the Chinese Academy of Sciences have jointly established the "Joint Lab for Wound Dressing Innovative TechnologyResearch" to conduct cutting-edge technology research and new product development of wound dressings. At present, the Company has twoprovincial R&D platforms, the "Guangdong Functional Cotton Engineering Technology Research Center" and the "Guangdong Wound Repair
Winner Medical Co., Ltd. 2020 Annual ReportMaterial Engineering Technology Research Center" that are dedicated to the research of functional cotton and wound repair materials.As of December 31, 2020, the Company has obtained 38 patents for inventions, 412 patents for utility models, and 220 design patents in China; andobtained 56 patents for inventions and 5 patents for utility models overseas. The Company was regarded as a "Leading Enterprise in IndependentInnovation" by the Shenzhen Municipal People's Government, and a "Shenzhen Enterprise with Intellectual Property Advantages" by the ShenzhenAdministration for Market Regulation.
3. Advantages of Quality Control
The Company is one of the early companies that established a sound quality management system that meets the standards of the ISO13485,FDA21CFR820, and China's Regulation on the Supervision and Administration of Medical Devices, and has passed relevant certifications. Its medicaldressings meet the quality standards of many countries and regions, including Europe, the United States, Japan, and China, and have been accepted bythese countries and regions. It also implements the quality control requirements of medical devices when expanding its heath consumer goodsbusiness. In addition, the Company's R&D Center and Lads have the professional capabilities for product testing certified by the China NationalAccreditation Service for Conformity Assessment (CNAS).To ensure the safety of raw materials for its products, Purcotton uses high-quality cotton from around the world to produce its core products, such asits pure cotton tissue, sanitary pads with pure cotton surface, and pure cotton wet wipes. All the workshops are managed according to the managementrequirements for the workshops of medical dressings, which can help strictly control bacterial contamination and pollution sources. In addition, theCompany also applies the microbiological testing for medical device inspection to Purcotton's product inspection, which makes sure that consumergoods such as underwear and baby clothing with sterilization packaging meet the sterilization standards of medical devices in terms of the totalnumber of bacterial colonies. With its medical-level quantity management control system, Purcotton is able to provide customers with high-qualityconsumer goods that are safe and environmentally friendly. Adhering to the concept of "making medicine close to life, protecting health with purecotton", Purcotton not only applies quality natural cotton but also attaches importance to the green weaving and finishing process. To ensure that itsproducts are safe and natural, no fluorescent brighteners are added to its products, and some of its products are OEKO-TEX Standard 100 certified.
4. Product Advantages
(1) Medical Consumables
The Company's product categories include wound care, infection protection, and cleaning and disinfection, covering application scenarios like clinicaland medical institutions and families, which can better meet clients' needs of one-stop procurement. In addition to traditional acute wound careproducts, the Company has also developed representative high-end wet dressings like silicone foam dressings, hydrocolloid dressings, and superabsorbent pads for chronic wounds that are difficult to heal, which has further enrich its products. For the clinical use scenarios, the Company iscommitted to change from selling single products to providing customers with integrated solutions. Its infection prevention products include dozensof surgical packs for various sections, such as heart and brain, abdominal cavity, urology, reproduction, facial features, and limbs. In terms of diseaseprotection and control, the Company replaces chemical fiber fabrics with pure cotton spunlace non-woven fabrics for masks, protective suits, surgicalgowns, and isolation gowns. Such innovative products not only meet infection prevention and control standards but also are more comfortable andenvironmentally friendly with better breathability. As for home care products, the Company provides consumers with medical masks, saline cottonpad, hydrocolloid band-aid in portable, sterilized, and diversified packages. These professional health care products and services in daily home carehelp customers reduce the frequency of going to the hospital.
(2) Healthy Consumer Goods
The Company's healthy consumer goods consist of non-woven consumer goods and textile consumer goods. The non-woven consumer goods includecotton tissues, sanitary pads, and wet wipes; the textile consumer goods include baby supplies, baby clothing, adult clothing, and bedding. TheCompany accurately captured the market demand for domestic high-quality consumer products under the backdrop of consumption upgrading, andtook the lead in proposing the innovative concept of replacing chemical fibers with cotton and getting rid of chemical stimulation, and provideconsumers with healthy consumer goods of medical grade. And its cotton tissues are pioneering tissues in the industry, which can partially replacehousehold paper. Pure cotton tissues are made of degradable cotton after physical processing. There are less chemical stimulation and the tissues can
Winner Medical Co., Ltd. 2020 Annual Reportbe reused. Both the production and use of the tissues are more comfortable, safe, and environmentally friendly, so consumer acceptance of the tissueshas been significantly improved, and there are many imitators in the market. For pure cotton wet wipes and sanitary pads with pure cotton surface,cotton materials are innovatively used in the parts of these products that contact human skin to replace traditional chemical fiber and effectivelyreduce chemical irritation, so they are popular in the markets of baby and female consumers. Due to the excellent breathability and softness of gauzefabrics, the Company's woven consumer products such as gauze bedding and bath towels are getting more popular.
5. Brand Advantages
(1) Brand Advantages in the Field of Medical Consumables
As one of the leading enterprises in the field of medical consumables, the Company attaches great importance to product quality and service. For thepurpose of brand communication, the Company has done a lot, including holding exhibitions around the world, initiating the "Winner MedicalAcademy" to gather experts for publicity and education, hosting or participating in academic forums and public welfare activities, which have wonthe Winner brand a high reputation in the industry, and Winner products have been widely recognized by customers at home and abroad. TheCompany was highly praised by the nation during the COVID-19 pandemic. In June 2020, Winner Medical was praised by the Joint Prevention andControl Mechanism of the State Council as a well-deserved "ordnance factory" in fighting the pandemic. In September, Winner Medical (Huanggang)was awarded the title of "National Advanced Unit for Fighting the COVID-19 Pandemic" by the CPC Central Committee and the State Council. TheCompany's medical consumables are mainly sold to developed countries and regions such as Europe, Japan, and the United States, and the productsunder its brand Winner are mainly sold to developing countries and regions such as Asia, Africa, and Latin America. The Company are providingservices for world-renowned medical supplies companies such as M?lnlycke, Lohmann, and PAUL HARTMANN. According to statistics from theChina Chamber of Commerce for Import and Export of Medicines and Health Products (CCCMHPIE), the Company has been ranked among the topthree exporters of Chinese medical dressings for many consecutive years. By the end of 2020, products under the Winner brand have entered morethan 3,000 domestic hospitals and nearly 90,000 pharmacies in China. Most of the hospitals are tertiary hospitals and secondary hospitals; there arecounters and display areas for Winner products in many well-known chain pharmacies, such as China Nepstar, Dashenlin, Cowellhealth, and LBXPharmacy; in Hong Kong, products under the Winner brand have covered all the public hospitals and most private hospitals.
(2) Brand Advantages in the Field of Healthy Consumer Goods
Consumers' demand for high-quality products is increasing due to consumption upgrading. Sticking to the "cotton fiber only" principle in itsoperations, Purcotton insists on offering "comfortable, healthy, and environmentally friendly" cotton products with high quality to consumers toconstantly bring them happiness and quality products, which makes Purcotton products popular among consumers. Adhering to the concept of"making medicine close to life, protecting health with pure cotton", Purcotton advocates the use of cotton, to reduce environmental pollution and toenable consumers to return to a natural and sustainable lifestyle with pure cotton. The pure cotton tissues developed by Purcotton is a pioneeringcategory. Purcotton are creating new categories and lifestyles by applying cotton materials in its core products, such as its pure cotton wet wipes,sanitary pads with pure cotton surface, pure cotton diapers, and its gauze textile products and clothing. It has shaped an brand image of "new Chineseproducts" with cotton as the core material and excellent product quality. Its brand awareness is increasing and its reputation is improving year by year,forming effective competition barriers and bringing powerful added value of products for Purcotton.
6. Advantages of Sales Channels
(1) Advantages of Online Channels
In terms of online channels, the Company has completed its deployment on mainstream third-party e-commerce platforms, including Tmall andJD.com. for its products under its Winner brand and Purcotton brand. With the huge user traffic gathered, its sales has covered most online shoppingconsumer groups, and the sales data indicated that the sales of its products rank among the top in the relevant product categories in major e-commerceplatforms. At the same time, Purcotton is also actively exploring cooperation with new social retail and e-commerce platforms by the way of settingbrand counters in these platforms, which helps it open up new sales growth channels. With the attributes of "sales + social", Purcotton's officialwebsite is an important platform for its product display, user interaction, and brand promotion. In addition, its self-own official platform, Wechat miniprogram, and APP are also important parts of the Company's marketing channels.
(2) Advantages of Offline Channels
As for medical consumables, the Company's dealers in the hospital market of domestic medical business have covered more than 3,000 hospitals inmore than 30 provinces (cities, autonomous regions) across China; its dealers in the retail pharmacy market have covered more than 90,000 retailpharmacies in more than 20 provinces (cities, autonomous regions) across China; its clients and dealers for its medical business abroad are coveringmore than 110 countries and regions around the world, including Europe, Japan, and America.As for healthy consumer goods, the Company has opened a total of 276 offline stores as of the end of 2020, including 257 offline stores (including thefranchise stores it began to try in May 2020) of Purcotton in mid-to-high-end shopping malls in more than 50 cities in China (including Shenzhen,Shanghai, Beijing, and Guangzhou); 11 stores of Purunderwear; and 8 offline stores of PureH2B in Shenzhen, Wuhan, Beijing, Hangzhou, Chengdu,and Shanghai. The Company integrates its brand concept into its store design. It hires well-known designers at home and abroad to upgrade its storeimage and to enhance its consumer experience with an exhibition-style product display balancing both aesthetics and richness of products. It also addsan experience area to highlight product display and user experience, which has helped increase the Company's sales revenue and further increase itsbrand awareness.As for offline terminals like chain stores and supermarkets, based on Purcotton's positioning of high-quality consumer goods, the Company mainlydeploys Purcotton products in High-end boutique supermarkets and local leading supermarkets. Meanwhile, the Company also has set up dedicatedsales teams to cover the bulk purchase or customized purchase needs of corporate clients. Purcotton's core products such as cotton tissues and sanitarypads of the Nice Princess series have entered chain supermarkets, chain convenience stores, and offline maternal and child stores, including 5,000outlets of mainstream chain supermarkets (such as CR Vanguard, Ole', Yonghui Supermarket, Sam's Club, and Wal-Mart), 4,000 chain convenientstores (such as 7-11, Lawson, Bianlifeng, Today, and Everyday Chain), and the offline maternal and child stores in over 20 cities.
(3) Advantages of Integration Between Online and Offline Channels
The omnichannel retail model is a newly emerging retail form that provides consumers with a consistent shopping experience by integrating physicalchannels, e-commerce channels, and mobile e-commerce channels. In such form, the convenience of online channels and the consumer experience ofoffline channels can complement each other. Having a deep insight into the development trend of integrating online and offline channels, theCompany thoroughly optimized and integrated various channels to integrate traffic and sales of offline stores and online Wechat mini programs,thereby further improving its operating efficiency and performance. Online channels can meet offline consumers subsequent consumption needs whileoffline channels can provide online consumers further product information and service experience. Flows of traffics can be directed between the twokinds of channels, so online and offline traffic can be effectively obtained. As of the end of the reporting period, the number of Purcotton users hasexceeded 25 million, including 12.76 million registered members of its private platforms (5.76 million store registered members, and over 7 millionregistered members of its official website and Wechat mini programs).
7. Advantages of Full Industrial Chain
Since its establishment, the Company has always been attaching great importance to its product quality, cost and delivery management andcontrol. It has built a full industrial chain with advantages from raw material procurement, production, sterilization, warehousing, to delivery. TheCompany has seven wholly-owned production subsidiaries in Hubei, covering a total area of more than one million square meters, including 105,000square meters of clean workshops. The seven factories supply large quantities of high-quality medical supplies and daily necessities to all over theworld each year. Established in 2005 with an area of 550,000 square meters, Winner Medical (Huanggang) is the main production site of pure cottonspunlace non-woven fabrics, cotton tissues, sanitary pads, and masks; with an area of 67,000 square meters, Winner Medical (Jingmen) is the mainproduction site of gauze clothing, degreased medical bleached gauze, and dyed medical gauze; with an area of 93,000 square meters, Winner Medical(Jiayu) has four product categories with pure cotton as basic materials, i.e. the cleaning, disinfection, beauty, and care categories, and two productcollections: medical and daily use products; established in 2001 with an area of 140,000 square meters, Winner Medical (Chongyang) is theCompany's main force of producing its disposable medical consumables, disposable surgical kits, all kinds of cotton balls and cotton pads; establishedin 2017 with a total area of about 467,000 square meters of its phase I and phases II sites, Winner Medical (Wuhan) has brought in electron beamsterilization and international modern cotton spunlace production line; established in 2000, Winner Medical (Tianmen) is the production base ofmedical gauze in China for trade; established in 1999, Winner Medical (Yichang) is the main production base for its grey cloth.
With constant improvement, the Company's excellent production management system has been upgraded from 1.0 to 3.0, covering seven modules (i.e.standardization, visualization, automation, Just-in-Time, rapid response, value engineering, organizational guarantee). It has gradually established andimproved its daily management system in factory. It has improved its production efficiency through equipment innovation. For example, itsself-developed soft ear loop mask manufacturing equipment truly realize the unmanned manufacturing of masks with high-efficient equipment; it hasbasically realized the fully automated production of its products like cotton tissues and wet wipes; it has preliminarily replace manual production withmachinery production for cotton swabs, cotton balls, cotton pads, makeup cotton, packages, and drapes, which has greatly supported its rapidproduction and supply. The Company is also going to explore and build smart factories. It will realize "unmanned production, process-basedmanagement, and process digitalization" step by step.
Section 4 Discussion and Analysis of OperationsI. Overview
During the reporting period, N95 masks, medical masks, protective clothing, isolation gowns and other medical supplies produced by the Companywere the most scarce strategic materials for epidemic prevention. Adhering to the principle of “social value priority over enterprise value”, theCompany responded to the national demand for the first time and made every effort to ensure the supply of epidemic prevention and treatmentmaterials. During the anti-epidemic period, the Company supplied a large number of protective materials to the society and Wuhan, Hubei Province,where the epidemic situation is most serious, and all over the world. It publicly promised “no price increase at the terminal”, “no holiday during theSpring Festival” and “24-hour production without shutdown”. The Company's social responsibility actions were called "military factory" by the JointPrevention Group of the State Council to fight against the epidemic, and its wholly-owned subsidiary Huanggang Winner was awarded the title of“National Advanced Unit in Combating COVID-19” by the Central Committee of the Communist Party of China and the State Council. In thehospital and OTC drugstore channels, the Company actively carried out academic marketing, major customer development and retail marketing cloudprojects, and improve the market coverage and share of the 3A hospitals and large chain drugstores. In terms of e-commerce, it constantly improvedcustomer experience and platform management ability, enhance consumer stickiness and loyalty, and enable online businesses to quickly seize thepersonal protection and home care market. With the rapid expansion of global market for the products of infection prevention and protection, as wellas the expansion of overseas popularity, reputation and influence, the Company has implemented aggressive customer expansion strategies. Theexport countries of products have increased from more than 70 in 2019 to more than 110, achieving a better global coverage. As of December 31,2020, the Company has delivered nearly 4 billion masks at home and abroad, with more than 86 million protective clothing, isolation gowns andsurgical gowns, and more than RMB 13 million of donations and materials have been recorded.In 2020, the Company's main business income of medical consumables business achieved RMB 8.684 billion, an increase of 616.36% over the sameperiod of last year. During the reporting period, the Company's overseas sales of medical consumables business reached RMB 5.898 billion, anincrease of 652.04% over the same period of last year. The Company's domestic sales of medical consumables business achieved RMB 2.786 billion,an increase of 550.98% over the same period of last year. Among them, medical consumables products have covered more than 3,000 hospitalsnationwide, with sales revenue of RMB 1.108 billion, an increase of about 4.74 times over the same period of last year; In the retail channel ofdrugstores, it covers nearly 90,000 OTC drugstores nationwide, with sales revenue of RMB 480 million, an increase of 2.10 times over the sameperiod last year; In e-commerce platforms such as Tmall, Jingdong and Amazon, the sales revenue was RMB 494 million, a year-on-year increase of
14.12 times.
Although COVID-19 had a serious impact on the domestic retail market, the Company's healthy consumer goods still maintained a year-on-yeargrowth of 16.93%, mainly due to the early layout of online and offline integration mechanism, and the technology, team management and internalbenefit distribution of offline stores and online Wechat mini programs, realizing the integration of offline stores and online sales. Meanwhile, theCompany's Purcotton and PureH2B make the flow of retail e-commerce platform realize efficient transformation through image upgrading, storeexpansion, product iteration, community operation and other measures. In terms of brand building, through social marketing, such as donation andpublic welfare, the brand star spokesperson of Purcotton, and the promotion by famous person and other forms to enhance popularity, reputation andcustomer loyalty.The Company's sales revenue of health consumer goods business achieved RMB 3.517 billion, an increase of 16.93% over the same period of lastyear, of which the sales revenue of Purcotton was RMB 3.477 billion, an increase of 15.80% over the same period of last year; the sales revenue ofPureH2B was RMB 40 million. Affected by COVID-19, the sales of Purcotton’s offline stores was RMB 939 million (including sales of franchisedstores, excluding sales of Wechat mini programs from stores), with a year-on-year decrease of 18.87%; the sales of e-commerce channel was RMB
2.314 billion, with a year-on-year growth of 38.29%, including the sales of RMB 1.909 billion in Tmall, Jingdong and other third-party e-commerceplatforms, with a year-on-year growth of 19.59%, and the sales of RMB 405 million in its own platforms’ official website, Wechat mini programs andAPP, with a year-on-year growth of 425.56%. It is worth mentioning that the sales of Wechat mini programs from stores reached RMB 205 million;
the sales of supermarkets was RMB 134 million, with a year-on-year growth of 29.10%; the sales of major customers reached RMB 90 million, with ayear-on-year growth of 31.87%.During the reporting period, the revenue of cotton spun laced non-woven fabric was RMB 237 million, with a year-on-year decrease of 19.04%. Themain reason is: during the COVID-19 period, the Company innovatively applied cotton spun laced non-woven fabrics to epidemic preventionproducts, which not only solved the problem of shortage of raw materials, but also received high recognition from medical staff and residents for itscomfort and air permeability. Because the Company's production of cotton spun laced non-woven priority to meet the production of epidemicprevention products, so the external sales decreased.The Company shall comply with the disclosure requirements of Shenzhen Stock Exchange GEM Industry Information Disclosure Guidelines No. 10 -Listed Companies Engaging in Medical Devices BusinessDuring the reporting period, the Company focused on the following work:
(I) Showing responsibility and making due contribution to the global fight against COVID-19In 2020, COVID-19 affected the factory, and all the workers in the anti-epidemic product factory did not take a vacation. All the staff in theHuanggang Winner masks workshop had been working all day for several months before the Spring Festival, producing masks at full capacity. Thedaily output of N95 masks increased from 36,000 to 45,000 in only two days, and the production capacity of medical surgical masks also doubledrapidly. Then Jiayu Winner, Chongyang Winner started on the first day of the Chinese New Year, also for several months without vacation.Chongyang Winner only took 20 days to produce 3,000 pieces of protective clothing to 50,000 pieces per day. On January 21, the Company publiclypromised not to increase the price of mask terminals. On March 29, in the face of overseas epidemic, the Company did not sell masks at a high price.The Company insists on high quality in production and supply, showing the excellence and value of Made in China. The Company puts the nationalinterests above everything else, regards the epidemic as a battlefield, and insists on sending epidemic prevention materials to the places where thecountry needs them most. The Company puts the social value above everything else, adheres to the promise, and provides epidemic preventionproducts with excellent quality and price for the majority of medical staff and anti-epidemic workers.(II) Strengthening R & D innovation and product upgradingDuring the reporting period, the price of raw materials for epidemic prevention changed greatly and the supply was short. In order to solve theproblem of shortage of raw materials for epidemic prevention and long-time wearing of protective clothing and surgical gowns, cotton protectiveclothing, isolation gowns and surgical gowns were rapidly developed; at the same time, it has rapidly developed face masks with soft earloop, facemasks with cotton lining, face masks with essential oil and other new products, which have been rapidly expanded from professional application topersonal consumption. In addition, the Company has obtained Class III Medical Device Registration Certificate for Foam Dressing in December 2020,indicating that the product layout of the high-end dressing product line in the wound care field is perfecting in the domestic market, enriching theproduct solutions for pressure ulcer prevention and exudate management in the field of chronic wound care, and is in line with the future developmenttrend of the industry and the increasing aging situation in China. It is an important step to replace import with domestic high-end dressing products.During the reporting period, the Company's key research projects are as follows. In 2020, the Company obtained 117 utility model patents, 9 designpatents and 8 invention patent certificates. By the end of the reporting period, the Company had one National Class III Medical Device RegistrationCertificate and 59 Class II Medical Device Registration Certificates. The acquisition of the above patents and registration certificates will help theCompany to further establish product technology and competition barriers, and enhance the core competitiveness of the enterprise.(III) Orderly promoting digital transformationThe Company seized the opportunity to accelerate the pace of digital transformation and improve operational efficiency. During the reporting period,the omni-channel commodity digital operation project of Purcotton was officially launched, realizing six business links of design, R & D, commodity,production, supply chain and logistics; the omni-channel digital operation project realized the membership, price and promotion through the onlineself-owned platform and the offline self-operated channel; “Ethereal Sound” and “Guanxingtai” were launched to provide core operation data,membership data, profit data and commodity data for the management. At the early stage of COVID-19, with the help of big data, cloud computingand other new technologies, the mobile terminal can see the change of information and quantity of each commodity, and analyze its trend, predict themarket demand for products in time, so that the supply chain can make quick adjustment. After the development and operation practice of variousdigital projects, the enterprise's digital platform framework has been initially built. From commodity digital operation, omni-channel digital operation
Winner Medical Co., Ltd. 2020 Annual Reportto consumer digital operation, it has a very clear information technology structure of the foreground, middleground and background.
II. Analysis of Main Business
1. Overview
Please refer to “I. Overview” of “Discussion and Analysis of Operations”.
2、Revenues and costs
(1) Composition of operating revenues
Overall operating revenues
Unit: yuan
| 2020 | 2019 | Year-on-year increase/decrease | |||
| Amount | Proportion in operating revenues | Amount | Proportion in operating revenues | ||
| Total operating revenues | 12,533,945,946.63 | 100% | 4,574,625,915.60 | 100% | 173.99% |
| By sectors | |||||
| Medical consumables | 8,684,149,320.97 | 69.28% | 1,212,257,599.69 | 26.50% | 616.36% |
| Healthy consumer goods | 3,517,061,738.06 | 28.06% | 3,007,901,073.21 | 65.75% | 16.93% |
| Cotton spun lace non-woven fabric | 236,563,201.01 | 1.89% | 292,202,035.31 | 6.39% | -19.04% |
| Other businesses | 96,171,686.59 | 0.77% | 62,265,207.39 | 1.36% | 54.45% |
| By products | |||||
| Medical consumables - traditional wound care and wound dressing products | 523,188,721.27 | 4.17% | 572,867,534.44 | 12.52% | -8.67% |
| Medical consumables - advanced wound dressing products | 86,564,910.83 | 0.69% | 84,554,968.77 | 1.85% | 2.38% |
| Medical consumables - infection prevention products in operating rooms | 690,626,432.63 | 5.51% | 241,157,325.81 | 5.27% | 186.38% |
| Medical consumables - | 7,011,523,043.56 | 55.94% | 149,205,899.10 | 3.26% | 4,599.23% |
| products on disease prevention and control | |||||
| Medical consumables - disinfecting and sanitizing products | 372,246,212.68 | 2.97% | 164,471,871.57 | 3.60% | 126.33% |
| Healthy living consumer products - cotton tissues | 944,201,375.98 | 7.53% | 913,288,905.37 | 19.96% | 3.38% |
| Healthy living consumer products - menstrual pads | 416,487,477.36 | 3.32% | 318,421,909.18 | 6.96% | 30.80% |
| Healthy living consumer products - wet wipes | 212,241,182.02 | 1.69% | 222,926,018.90 | 4.87% | -4.79% |
| Healthy living consumer products - other non-woven consumables | 599,948,666.83 | 4.79% | 240,484,180.17 | 5.26% | 149.48% |
| Healthy living consumer products - baby care products | 278,354,957.01 | 2.22% | 291,957,767.02 | 6.38% | -4.66% |
| Healthy living consumer products - baby clothing | 366,929,602.68 | 2.93% | 351,852,911.51 | 7.69% | 4.28% |
| Healthy living consumer products - adult clothing | 447,589,263.48 | 3.57% | 408,858,786.18 | 8.94% | 9.47% |
| Healthy living consumer products - other textile consumables | 251,309,212.70 | 2.01% | 260,110,594.88 | 5.69% | -3.38% |
| Cotton spun lace non-woven fabric | 236,563,201.01 | 1.89% | 292,202,035.31 | 6.39% | -19.04% |
| Other businesses | 96,171,686.59 | 0.77% | 62,265,207.39 | 1.36% | 54.45% |
| By regions | |||||
| Domestic | 6,555,970,567.31 | 52.31% | 3,709,092,964.69 | 81.08% | 76.75% |
| Abroad | 5,977,975,379.32 | 47.69% | 865,532,950.91 | 18.92% | 590.67% |
Winner Medical Co., Ltd. 2020 Annual ReportRemarks: In 2020, the Company has assigned the cotton tissues sold by Winner Medical to “medical consumables” from “healthy living consumerproduct - cotton tissue” according to the classification of channels and sectors, and adjusted the data for 2019 at the same time. The amount of mainbusiness revenue involving adjustment in 2019 was RMB 23,377,280.91 and the main business cost was RMB 8,667,521.43, the same below.
(2) Information on sectors, products or regions that account for more than 10% of the Company’s operatingrevenue or operating profit
√Applicable □ Not applicable
Unit: yuan
| Revenue | Cost | Gross profit margin | Year-on-year increase/decrease of Revenue | Increase or decrease in cost over the same period of the previous year | Year-on-year increase/decrease of Gross profit margin | |
| By sectors | ||||||
| Medical consumables | 8,684,149,320.97 | 3,279,305,593.85 | 62.24% | 616.36% | 343.14% | 23.28% |
| Healthy consumer goods | 3,517,061,738.06 | 1,575,848,274.82 | 55.19% | 16.93% | 26.91% | -3.52% |
| By products | ||||||
| Medical consumables - products on disease prevention and control | 7,011,523,043.56 | 2,283,582,659.33 | 67.43% | 4,599.23% | 2,485.46% | 26.63% |
| By regions | ||||||
| Domestic | 6,555,970,567.31 | 3,024,104,751.24 | 53.87% | 76.75% | 78.45% | -0.44% |
| Abroad | 5,977,975,379.32 | 2,046,317,550.52 | 65.77% | 590.67% | 295.61% | 25.53% |
Note: Medical consumables under “by sectors” generate main business revenues and costs, excluding other businesses, the same below.In the event that the statistical caliber of the Company’s main business data is adjusted in the reporting period, the Company shall follow the mainbusiness data in the past year adjusted by the caliber at the end of the reporting period
□ Applicable √ Not applicable
The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry InformationDisclosure of Listed Companies Engaging in Textile and Apparel Business.
Unit: yuan
| Revenue | Cost | Gross profit margin | Year-on-year increase/decrease of Revenue | Increase or decrease in cost over the same period of the previous year | Year-on-year increase/decrease of Gross profit margin | |
| By sectors | ||||||
| Medical | 8,684,149,320.97 | 3,279,305,593.85 | 62.24% | 616.36% | 343.14% | 23.28% |
| consumables | ||||||
| Healthy consumer goods | 3,517,061,738.06 | 1,575,848,274.82 | 55.19% | 16.93% | 26.91% | -3.52% |
| By products | ||||||
| Medical consumables - products on disease prevention and control | 7,011,523,043.56 | 2,283,582,659.33 | 67.43% | 4,599.23% | 2,485.46% | 26.63% |
| By regions | ||||||
| Domestic | 6,555,970,567.31 | 3,024,104,751.24 | 53.87% | 76.75% | 78.45% | -0.44% |
| Abroad | 5,977,975,379.32 | 2,046,317,550.52 | 65.77% | 590.67% | 295.61% | 25.53% |
In the event that the statistical caliber of the Company’s main business data is adjusted in the reporting period, the Company shall follow the mainbusiness data in the past year adjusted by the caliber at the end of the reporting period
□ Applicable √ Not applicable
Whether the Company has sales terminals in brick-and-mortar stores
√ Yes □ No
Distribution of brick-and-mortar stores
| Types of stores | Number of stores | Area of stores | Number of new stores during the reporting period | Number of stores closed at the end of the reporting period | Reasons for store closings | Brands involved |
| Direct-sale stores | 271 | 114,151 | 43 | 23 | The closed stores are under the brand of Purcotton, resulting mainly the Company’s active strategies against the epidemic control and contract expirations. | 252 stores for Purcotton, 8 stores for PureH2B, and 11 stores for Purunderwear |
| Franchises | 5 | 1,348 | 5 | 0 | N/A | Purcotton |
Total area and performances of direct-sale stores
| Levels of areas | Number of stores | Total area | Revenue in 2020 (RMB ’0,000) | Same period last year | YoY increase/decrease in average performance of stores | Reasons |
| Less than 300m2 | 84 | 17,221.80 | 26,502.73 | 34,779.29 | -23.80% |
| 300~500 m2 | 59 | 22,439.61 | 23,251.06 | 28,429.67 | -18.22% | |
| 500~500 m2 | 57 | 35,579.96 | 26,030.18 | 33,002.14 | -21.13% |
| More than 800m2 | 24 | 22,716.81 | 10,385.33 | 11,280.46 | -7.94% | |
| Total | 224 | 97,958.18 | 86,169.30 | 107,491.56 | -19.84% | Brick-and-mortar stores cannot open as usual after the Spring Festival thanks to the COVID-19 pandemic and the decrease in shopping mall traffic. |
Note: The above data are from Purcotton stores opening for more than 12 months as of December 31, 2020, and the operating revenues ofbrick-and-mortar stores exclude the sales of the stores driven to applets.Top 5 Stores in terms of Operating Revenues
| S/N | Name of stores | Opening date | Revenue (yuan) | Average performance of the store (RMB/m2) |
| 1 | The Store in Shenzhen Uniwalk Center | October 25, 2017 | 13,394,106.74 | 33,170.15 |
| 2 | The Store in Futian COCO PARK | May 15, 2010 | 10,679,340.69 | 16,417.13 |
| 3 | The Store in Shenzhen UpperHills | January 18, 2018 | 9,505,693.11 | 7,131.05 |
| 4 | The Store in Suzhou Center Mall | November 11, 2017 | 9,403,568.08 | 8,479.32 |
| 5 | The Store in Beijing Jinyuan Yansha Mall | August 6, 2012 | 8,833,086.12 | 15,104.71 |
| Total | -- | -- | 51,815,794.74 | 12,696.56 |
New stores of listed companies
√ Yes □ No
| Name of stores | Address of stores | Opening time | Contract area (m2) | Investment amount (RMB) | Product Category | Business type | Business model | Property ownership status | Number of stores |
| Direct-sale stores of Purcotton | East China | 2020 | 2,353.73 | 18,324,738.57 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 7 |
| Direct-sale stores of Purcotton | South China | 2020 | 2,704.12 | 17,717,058.71 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 6 |
| Direct-sale stores of Purcotton | Southwest China | 2020 | 1,936.38 | 11,338,682.17 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 5 |
| Direct-sale stores of Purcotton | Central China | 2020 | 1,430.34 | 10,479,048.83 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 4 |
| Direct-sale stores of Purcotton | Northeast China | 2020 | 769.00 | 5,484,303.24 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 3 |
| Direct-sale stores of Purcotton | Northwest China | 2020 | 614.14 | 3,625,600.14 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 2 |
| Direct-sale stores of Purcotton | North China | 2020 | 140.00 | 934,885.29 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 1 |
| Purcotton franchises | Central China | 2020 | 211.00 | 578,584.43 | Healthy consumer goods | Retail | Franchises | Franchisee leasing | 1 |
| Purcotton franchises | Northwest China | 2020 | 945.62 | 2,360,263.91 | Healthy consumer goods | Retail | Franchises | Franchisee leasing | 3 |
| Purcotton franchises | Southwest China | 2020 | 191.40 | 555,438.48 | Healthy consumer goods | Retail | Franchises | Franchisee leasing | 1 |
| Total | 11,295.73 | 71,398,603.77 | 33 |
Does the Company disclose the information on Top 5 franchises
□Yes √No
(3) Is the Company’s revenue from physical sales greater than that from labor services
√ Yes □ No
| Classification of sectors | Item | Unit | 2020 | 2019 | Year-on-year increase/decrease |
| Medical consumables - gauze | Sales volume | ton | 6,104.92 | 6,865.84 | -11.08% |
| Output | ton | 6,263.58 | 7,351.34 | -14.80% | |
| Inventory | ton | 875.78 | 717.12 | 22.12% | |
| Medical consumables - cotton | Sales volume | ton | 3,405.98 | 3,584.59 | -4.98% |
| Output | ton | 3,498.68 | 3,821.24 | -8.44% | |
| Inventory | ton | 552.03 | 459.33 | 20.18% | |
| Medical consumables - | Sales volume | ’0,000 pieces | 338,900.27 | 41,023.65 | 726.11% |
| masks | Output | ’0,000 pieces | 360,134.89 | 47,506.3 | 658.08% |
| Inventory | ’0,000 pieces | 28,713.66 | 7,479.04 | 283.92% | |
| Medical consumables - protective clothing | Sales volume | ’0,000 suits | 972.46 | 188.78 | 415.13% |
| Output | ’0,000 suits | 1,029.43 | 184.79 | 457.07% | |
| Inventory | ’0,000 suits | 58.52 | 1.55 | 3,666.25% | |
| Medical consumables - surgical gowns | Sales volume | ’0,000 suits | 1,984.47 | 461.39 | 330.11% |
| Output | ’0,000 suits | 2,073.64 | 488.65 | 324.36% | |
| Inventory | ’0,000 suits | 120.34 | 31.17 | 286.08% | |
| Medical consumables - medical combo kits | Sales volume | ’0,000 kits | 2,964.26 | 3,735.98 | -20.66% |
| Output | ’0,000 kits | 2,940.51 | 3,942.48 | -25.41% | |
| Inventory | ’0,000 kits | 253.93 | 277.69 | -8.55% | |
| Healthy living consumer products - cotton tissues | Sales volume | ’0,000 kits | 17,466.21 | 13,528.66 | 29.11% |
| Output | ’0,000 kits | 16,522.28 | 17,854.54 | -7.46% | |
| Inventory | ’0,000 kits | 5,668.11 | 6,612.04 | -14.28% | |
| Healthy living consumer products - menstrual pads | Sales volume | ’0,000 pieces | 56,676.09 | 39,434.35 | 43.72% |
| Output | ’0,000 pieces | 64,540.95 | 40,888.57 | 57.85% | |
| Inventory | ’0,000 pieces | 21,001.83 | 13,136.97 | 59.87% | |
| Cotton spun lace non-woven fabric | Sales volume | ton | 5,496.68 | 7,532.47 | -27.03% |
| Output | ton | 5,449.27 | 7,268.61 | -25.03% | |
| Inventory | ton | 233.06 | 280.47 | -16.90% |
Reasons for a YoY change of 30% or above in relevant data
√Applicable □ Not applicable
(1) Sales, output and inventory of medical consumables (including masks, protective clothing, surgical gowns) have increased significantly mainlydue to the impact of the epidemic; and to meet the increase in demands, the Company has expand its production capacity, and increased the output andstock inventory. There are no significant changes in medical consumables related to gauze, cotton and medical combo kits, mainly because that,suffered from the COVID-19 pandemic, hospitals around the world have seen a sharp decrease in outpatient visits and surgeries except for COVID-19patients.
(2) The sales, output and inventory of menstrual pads under healthy living consumer product increased dramatically. It is mainly because that, duringthe reporting period, Nice Princess, a brand of menstrual pads, kept on introducing new products during the reporting period, successively launchingseries of products (such as antibacterial menstrual pads, gauze menstrual pads, tampons and teen pads) to diversify its products and meet the needs ofdifferent consumers; moreover, it set off new trends in fabric technology. In terms of marketing strategies, Nice Princess started to deploy the campusmarket during the reporting period, and carried out campus promotion throughout the year to create campus-exclusive products, gradually penetratingand supplementing the range of the population. At the same time, it kept on expanding its channel map, entering top national hypermarkets such asYonghui Superstores, increasing its offline shares, continuing to develop its own stores, and using applets to connect online and offline channels inorder to implement new retail business models.
(3) There are no significant changes in the output, sales and inventory of 100% cotton spunlace nonwoven fabrics. It should be noted that a smallportion of the Company’s 100% cotton spunlace nonwoven fabrics are used for direct sales to the public, and the vast majority of them are for self-usepurposes, which are mainly used in the manufacturing of nonwoven consumer products in the category of healthy living consumer products. The
Winner Medical Co., Ltd. 2020 Annual Reportabove table shows the sales, output and inventory of 100% cotton spunlace nonwoven fabrics only sold to the public, excluding the part for own use.
(4) Performance of significant sales contracts entered into by the Company up to the current reporting period
√Applicable □ Not applicable
| Name of the Company to the contract | Name of the other party to the contract | Total contract amount | Progress of contract performance | Amount of sales revenue recognized during the reporting period | Cumulative amount of sales revenue recognized | Collection status of accounts receivable | Any significant change in the conditions that may affect the performance of major contracts | Any significant risk that may hamper the performance of contracts |
| Winner Medical Co., Ltd. | Customer I | USD 195.609864 million | 100.00% | USD 195.609864 million (RMB 1,367.8924 million) | USD 195.609864 million (RMB 1,367.8924 million) | As of the date of the financial statements, all payments have been collected. | No | No |
| Winner Medical Co., Ltd. | Customer II | USD 117.00 million | 61.81% | USD 72.3121 million (RMB 503.51984 million) | USD 72.3121 million (RMB 503.51984 million) | As of the date of the auditor’s report, all amounts recognized as sales revenues have been collected with some advance receipts. | No | No |
| Winner Medical Co., Ltd. | Customer III | USD115.23 million | 57.56% | USD66.3315 million (RMB 462.3954 million) | USD 66.3315 million (RMB 462.3954 million) | As of the date of the auditor’s report, all amounts recognized as sales revenues have been collected with some advance receipts. | No | No |
(5) Composition of cost
Classification of sectors and products
Unit: yuan
| Classification of sectors | Item | 2020 | 2019 | Year-on-year increase/decrease | ||
| Amount | Proportion in cost | Amount | Proportion in cost | |||
| Medical consumables | Direct material cost | 2,706,864,141.05 | 82.54% | 515,256,812.50 | 69.63% | 425.34% |
| Medical consumables | Direct labor cost | 318,244,837.14 | 9.70% | 126,036,604.92 | 17.03% | 152.50% |
| Medical consumables | Manufacturing cost | 254,196,615.66 | 7.76% | 98,730,583.60 | 13.34% | 157.46% |
| Subtotal of medical consumables | 3,279,305,593.85 | 100.00% | 740,024,001.02 | 100.00% | 343.14% | |
| Healthy consumer goods | Direct material cost | 1,120,006,275.88 | 71.07% | 867,760,541.48 | 69.88% | 29.07% |
| Healthy consumer goods | Direct labor cost | 176,676,326.91 | 11.21% | 159,640,983.71 | 12.86% | 10.67% |
| Healthy consumer goods | Manufacturing cost | 279,165,672.03 | 17.72% | 214,343,134.32 | 17.26% | 30.24% |
| Subtotal of healthy living consumer products | 1,575,848,274.82 | 100.00% | 1,241,744,659.51 | 100.00% | 26.91% | |
| Cotton spun lace non-woven fabric | Direct material cost | 122,395,322.42 | 77.53% | 155,193,951.89 | 79.39% | -21.13% |
| Cotton spun lace non-woven fabric | Direct labor cost | 11,115,431.40 | 7.04% | 11,859,275.04 | 6.07% | -6.27% |
| Cotton spun lace non-woven fabric | Manufacturing cost | 24,367,546.28 | 15.43% | 28,424,162.48 | 14.54% | -14.27% |
| Subtotal of 100% cotton spunlace nonwoven fabrics | 157,878,300.10 | 100.00% | 195,477,389.41 | 100.00% | -19.23% | |
| Other businesses | 57,390,132.99 | 34,680,485.12 | 65.48% | |||
| Total | 5,070,422,301.76 | 2,211,926,535.06 | 129.23% |
Unit: yuan
| Classification of products | Item | 2020 | 2019 | Year-on-year increase/decrease | ||
| Amount | Proportion in cost | Amount | Proportion in cost | |||
| Medical consumables | Traditional wound care products | 342,069,897.28 | 6.75% | 359,858,750.23 | 16.27% | -4.94% |
| Medical consumables | Advanced wound care products | 42,459,087.13 | 0.84% | 40,793,177.69 | 1.84% | 4.08% |
| Medical consumables | OR infection control products | 394,497,062.26 | 7.78% | 151,778,891.11 | 6.86% | 159.92% |
| Medical consumables | Disease prevention and control products | 2,283,582,659.33 | 45.04% | 88,324,036.30 | 3.99% | 2,485.46% |
| Medical consumables | Disinfection & cleaning products | 216,696,887.85 | 4.27% | 99,269,145.69 | 4.49% | 118.29% |
| Subtotal of medical consumables | 3,279,305,593.85 | 64.68% | 740,024,001.02 | 33.45% | 343.14% | |
| Healthy living consumer products - nonwoven | Cotton tissues | 444,752,822.23 | 8.77% | 444,136,771.51 | 20.08% | 0.14% |
| Healthy living consumer products - nonwoven | Sanitary pads | 136,141,753.72 | 2.69% | 95,411,535.19 | 4.31% | 42.69% |
| Healthy living consumer products - nonwoven | Wet wipes | 91,292,475.29 | 1.80% | 99,106,190.50 | 4.48% | -7.88% |
| Healthy living consumer products - nonwoven | Other non-woven consumer goods | 302,306,309.87 | 5.96% | 110,768,879.14 | 5.01% | 172.92% |
| Healthy living consumer products - textile products | Baby supplies | 136,114,444.45 | 2.68% | 120,423,283.55 | 5.44% | 13.03% |
| Healthy living consumer products - textile products | Baby clothing | 165,433,346.32 | 3.26% | 129,266,952.84 | 5.84% | 27.98% |
| Healthy living consumer products - textile products | Adult clothing | 182,699,935.40 | 3.60% | 136,718,731.76 | 6.18% | 33.63% |
| Healthy living consumer products - textile products | Other textile consumer goods | 117,107,187.55 | 2.31% | 105,912,315.02 | 4.79% | 10.57% |
| Subtotal of healthy living consumer products | 1,575,848,274.82 | 31.08% | 1,241,744,659.51 | 56.13% | 26.91% | |
| Cotton spun lace non-woven fabric | Cotton spun lace non-woven fabric | 157,878,300.10 | 3.11% | 195,477,389.41 | 8.84% | -19.23% |
| Other businesses | 57,390,132.99 | 1.13% | 34,680,485.12 | 1.58% | 65.48% | |
| Total | 5,070,422,301.76 | 100.00% | 2,211,926,535.06 | 100.00% | 129.23% |
DescriptionNA
(6) Any change in the scope of consolidation during the reporting period
√ Yes □ No
Shenzhen PurCotton Technology Co., Ltd. , a subsidiary of the Company, invested RMB 6 million to establish Huanggang Shenzhen PurCottonTechnology Co., Ltd. on September 27, 2020. Apart from this, there was no other change in the scope of consolidation.
(7) Significant changes or adjustments in the Company’s business, products or services during the reportingperiod
□ Applicable √ Not applicable
(8) Major customers and major suppliers
The Company’s major customers
| Total sales amount of the Top 5 customers (Rmb) | 3,734,065,627.48 |
| Proportion of Top 5 customers’ combined sales amount in total annual sales | 29.79% |
| Proportion of related party sales in the total annual sales of the Top 5 customers | 0.00% |
Information on the Company’s Top 5 customers
| S/N | Name of customer | Sales (Rmb) | Proportion in total annual sales |
| 1 | First | 1,367,892,355.26 | 10.91% |
| 2 | Second | 755,281,050.17 | 6.03% |
| 3 | Third | 692,949,253.41 | 5.53% |
| 4 | Fourth | 462,395,379.23 | 3.69% |
| 5 | Fifth | 455,547,589.41 | 3.63% |
| Total | -- | 3,734,065,627.48 | 29.79% |
Other description of major customers
□ Applicable √ Not applicable
The Company’s major suppliers
| Total purchase amount of the Top 5 suppliers (Rmb) | 1,106,596,430.89 |
| Proportion of Top 5 suppliers’ combined purchase amount in total annual purchase | 23.51% |
| Proportion of related party purchases in the total annual purchases of the Top 5 suppliers | 0.00% |
Information on the Company’s Top 5 suppliers
| S/N | Name of supplier | Purchase amount (Rmb) | Proportion in total annual purchases |
| 1 | First | 464,218,474.97 | 9.86% |
| 2 | Second | 210,536,175.60 | 4.47% |
| 3 | Third | 173,046,431.56 | 3.68% |
| 4 | Fourth | 132,442,089.17 | 2.81% |
| 5 | Fifth | 126,353,259.59 | 2.68% |
| Total | -- | 1,106,596,430.89 | 23.51% |
Other description of major supplier
□ Applicable √ Not applicable
3. Fees
Unit: yuan
| 2020 | 2019 | Year-on-year increase/decrease | Description of significant changes | |
| Sales expenses | 1,575,163,912.49 | 1,355,767,449.04 | 16.18% | There is no significant change, which is mainly due to the first-time application of the new revenue standard and the assignment of freight costs of RMB 306,580,400 to cost of sales |
| Administrative expenses | 436,965,446.22 | 197,456,021.51 | 121.30% | This is mainly due to the increase in sales and management costs. |
| Financial expenses | 218,640,968.32 | 6,198,700.74 | 3,427.21% | This is mainly due to the significant growth of overseas sales and increase in foreign currency exchange loss. |
| R&D expenses | 411,383,173.80 | 155,193,227.21 | 165.08% | This is mainly due to the significant increase in investment in research and development by the Company during the reporting period. |
The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry InformationDisclosure of Listed Companies Engaging in Textile and Apparel Business.
| Sales expenses | 2020 | 2019 | Year-on-year increase/decrease | Description of significant changes |
| Employee compensation | 397,499,114.63 | 332,127,465.49 | 19.68% | No major changes |
| Freight | 0.00 | 196,498,073.03 | -100.00% | This is mainly due to the impact of changes in the new revenue standards. |
| Travel expenses | 8,983,106.15 | 10,484,575.41 | -14.32% | No major changes |
| Office communication costs | 15,438,257.66 | 7,250,547.58 | 112.93% | This is mainly due to the growth in business volume. |
| Sales commission | 285,232,187.12 | 108,043,777.92 | 164.00% | This is mainly due to the growth in business volume. |
| Insurance premiums | 7,140,391.33 | 3,574,782.66 | 99.74% | This is mainly due to the increase in property insurance and product liability insurance. |
| Depreciation and amortization | 92,468,599.20 | 52,988,533.78 | 74.51% | This is mainly due to the increase in healthy living consumer product store upgrades and losses from some store closings. |
| Advertising and promotion expenses | 372,944,041.90 | 268,623,712.41 | 38.84% | This is mainly due to the increase in advertising and promotion expenses for Purcotton consumer products on third-party platforms. |
| Rent | 294,980,913.63 | 316,591,949.73 | -6.83% | No major changes |
| Material consumption | 11,464,378.72 | 9,795,929.74 | 17.03% | No major changes |
| Water/electricity fee | 9,181,005.97 | 9,896,052.66 | -7.23% | No major changes |
| Service fees | 9,840,472.61 | 377,528.78 | 2506.55% | This is mainly due to the increase in consulting fees. |
| Other | 69,991,443.57 | 39,514,519.85 | 77.13% | This is mainly due to the increase in other expenses related to sales activities. |
| Total | 1,575,163,912.49 | 1,355,767,449.04 | 16.18% | The increase in selling expenses was significantly lower than that in sales, mainly due to the first-time application of the new revenue standard and the adjustment of freight costs to cost of sales. |
4. Other information required by the disclosure guidelines for textile and apparel-related sectors
(1) Production capacity
The Company’s own production capacity
| Current reporting period | Same period last year |
More than 10% YoY change in production capacity utilization rate
√ Yes □ No
| Business category | Product Category | Unit | 2020 | 2019 | Percentage of change in production | Change reason description | ||||
| Production capacity | Output | Production capability | Production capacity | Output | Production capability | |||||
| utilization rate | utilization rate | capacity utilization rate | ||||||||
| Medical consumables | Gauze | ton | 9,693.52 | 6,226.67 | 64.24% | 12,251.74 | 7,351.34 | 60.00% | 4.24% | No major changes |
| Cotton | ton | 1,895.40 | 1,243.40 | 65.60% | 1,895.40 | 1,789.30 | 94.40% | -28.80% | This is mainly due to insufficient production caused by the impact of the epidemic on production. | |
| Mask | ’0,000 pieces | 298,925.00 | 294,683.00 | 98.58% | 54,218.00 | 47,506.30 | 87.62% | 10.96% | This is mainly due to the impact of the epidemic which leading the Company to increase the investment in production capacity as well as the demands and output. | |
| Protective clothing | ’0,000 suits | 936.00 | 932.36 | 99.61% | 13.87 | 13.87 | 100% | -0.39% | No major changes | |
| Surgical gowns | ’0,000 suits | 2,250.00 | 2,042.14 | 90.76% | 505.00 | 468.71 | 92.81% | -2.05% | No major changes | |
| Medical combo kits | ’0,000 kits | 3,576.00 | 2,940.51 | 82.23% | 4,320.00 | 3,942.48 | 91.26% | -9.03% | No major changes |
| Healthy consumer goods | Cotton tissues | ’0,000 kits | 28,407.10 | 16,522.28 | 58.16% | 20,417.98 | 17,854.54 | 87.45% | -29.29% | This is mainly due to the new production capacity officially put into operation in 2020, and insufficient production caused by the impact of the epidemic on output. |
| Sanitary pads | ’0,000 pieces | 50,079.74 | 37,435.52 | 74.75% | 34,777.60 | 28,329.29 | 81.46% | -6.71% | No major changes |
| Cotton spun lace non-woven fabric | Cotton spun lace non-woven fabric | ton | 48,179.71 | 35,710.09 | 74.12% | 29,231.19 | 26,119.37 | 89.35% | -15.23% | This is mainly due to the new production capacity officially put into operation in 2020, and insufficient production caused by the impact of the epidemic on output. |
Note: The capacity and production in this table are based on the statistics of self-produced capacity and output, while the output in the Sales-outputRatio Table includes self-produced and purchased outputs, where the output of menstrual pads under “healthy living consumer product” is lower thanthat in the Sales-output Ratio Table, which is mainly due to the outsourced processing of some models of menstrual pads. Additionally, the output of100% cotton spunlace nonwoven fabrics is the total output, including the output for direct external sales and that for self-consumption.Is there overseas production capacity?
□Yes √No
(2) Sales model and channels
Sales channels and actual operation of productsThe Company’s healthy living consumer products and 100% cotton spunlace nonwoven fabrics are involved in textile and apparel industries. Thesales channels for healthy living consumer products include e-commerce, direct chains and supermarkets, key accounts and franchisees; while thesales channel of 100% cotton spunlace nonwoven fabrics is direct selling.
Unit: yuan
| Sales channels | Revenue | Cost | Gross profit margin | Year-on-year increase/decrease of Revenue | Increase or decrease in cost over the same period of the previous year | Year-on-year increase/decrease of Gross profit margin |
| Online sales | 2,338,150,522.38 | 1,157,335,860.30 | 50.50% | 664,502,338.68 | 385,688,358.99 | -3.39% |
| Direct selling | 951,124,341.09 | 335,856,731.53 | 64.69% | -211,230,977.53 | -73,174,992.43 | -0.12% |
| Franchising | 3,721,496.47 | 2,128,355.47 | 42.81% | 3,721,496.47 | 2,128,355.47 | 42.81% |
| Distribution | 0.00 | 0.00 | 0.00% | 0.00 | 0.00 | 0.00% |
| Supermarket channels | 134,302,951.18 | 45,314,023.05 | 66.26% | 30,276,319.83 | 9,519,033.31 | 0.67% |
| Key Client | 89,762,426.94 | 35,213,304.47 | 60.77% | 21,891,487.40 | 9,942,859.97 | -2.00% |
| Subtotal of healthy living consumer product | 3,517,061,738.06 | 1,575,848,274.82 | 55.19% | 509,160,664.85 | 334,103,615.31 | -3.52% |
| Direct selling | 236,563,201.01 | 157,878,300.10 | 33.26% | -55,638,834.30 | -37,599,089.31 | 0.16% |
| Subtotal of 100% cotton spunlace nonwoven fabrics | 236,563,201.01 | 157,878,300.10 | 33.26% | -55,638,834.30 | -37,599,089.31 | 0.16% |
Winner Medical Co., Ltd. 2020 Annual ReportReasons for changeThe Company only has healthy living consumer products and 100% cotton spunlace nonwoven fabrics involved in textile and apparel industry, so theabove-mentioned operating revenues and cost generated through channels are not equal to the total operating revenues and cost. In 2020, except forthe new franchise sales channel (the channel sales and gross profit margin for the same period last year were 0), the gross profit margin of all otherchannels changed within 5%, without significant changes.
(3) Franchising and distribution
The proportion of franchisees and distributors’ sales revenues exceeds 30%
□Yes √No
Top 5 franchisees
| S/N | Name of franchisee | Time of cooperation | A related party or not | Total sales (Rmb) | Level of franchisee |
| 1 | First | May 1, 2020 | No | 2,058,519.63 | The Stores in Lhasa Shenli Times Square/Xining Wangfujing Daxiangcheng |
| 2 | Second | June 12, 2020 | No | 985,139.10 | The store in Yinchuan CCPark |
| 3 | Third | November 9, 2020 | No | 554,981.77 | The Store in Hengyang Shanshan Outlets |
| 4 | Fourth | December 24, 2020 | No | 122,855.97 | The Store in Dujiangyan IMIX Park |
| Total | -- | -- | -- | 3,721,496.47 | -- |
Top 5 distributors
| S/N | Name of franchisee | Time of cooperation | A related party or not | Total sales (Rmb) |
(4) Online sales
The proportion of online sales in sales revenues exceeds more than 30%
□Yes √No
Is there a self-built sales platform?
√ Yes □ No
| Operation starting time | January 6, 2014 |
| Number of registered users | 12,760,000 |
| Average number of monthly active users | 2,470,000 |
Does it work with a third-party sales platform?
√ Yes □ No
Unit: yuan
| Name of platform | Transaction amount during the reporting period | Payment to the platform | Return rate |
| Taobao (healthy living consumer products) | 1,345,436,808.05 | 184,091,776.88 | 0.88% |
| Jingdong (healthy living consumer products) | 432,476,052.46 | 25,010,805.94 | 0.40% |
| Amazon (medical consumables) | 99,113,909.43 | 17,177,371.97 | 1.60% |
| Vipshop (healthy living consumer products) | 50,211,803.73 | 3,037,375.63 | 1.30% |
Opening or closing online sales channels by the Company
□ Applicable √ Not applicable
Description of the impact on the current and future development of the CompanyNot applicable.
(5) Agency operation
Does it adopt agency operation?
□Yes √No
(6) Inventory
Inventory
| Main products | Inventory turnover in days | Inventory balance | YoY increase/decrease in inventory balance | Reasons |
| Medical consumables | 37 | 471,660,832.68 | 305,040,135.91 | Affected by the COVID-19 pandemic, the sales structure of the Company changed significantly in 2020: the inventory of medical products increased and that of healthy living consumer products decreased. |
| Healthy consumer goods | 214 | 690,382,305.65 | -100,475,394.67 | Affected by the COVID-19 pandemic, the sales structure of the Company changed significantly in 2020: the inventory of medical products increased and that of healthy living consumer products decreased. |
| Cotton spun lace non-woven fabric | 107 | 54,443,801.88 | 19,511,025.11 | Affected by the COVID-19 pandemic in 2020, the external sales of 100% cotton spunlace nonwoven fabrics decreased, and due to the SoP of new production lines, the output, along with the inventory quantity and amount, increased. |
| Overall | 91 | 1,216,486,940.21 | 224,075,766.35 |
Provision accrual for inventory depreciation
| Product Category | Provision for inventory depreciation | Proportion of provision for depreciation | Net value of inventories | Original value of inventories | Inventory age | |||
| Within 1 year | 1~2 years | 2~3 years | 3 years or above | |||||
| Medical consumables | 18,363,480.52 | 3.75% | 471,660,832.68 | 490,024,313.20 | 483,617,669.97 | 5,121,737.89 | 748,093.71 | 536,811.63 |
| Healthy consumer goods | 128,071,760.96 | 15.65% | 690,382,305.65 | 818,454,066.61 | 746,813,333.88 | 59,864,887.44 | 9,835,863.38 | 3,414,285.13 |
| Cotton spun lace non-woven fabric | 2,851,521.34 | 4.98% | 54,443,801.88 | 57,295,323.22 | 57,286,885.30 | 3,094.26 | 1,211.26 | 4,132.40 |
| Total | 149,286,762.82 | 10.93% | 1,216,486,940.21 | 1,365,773,703.03 | 1,287,717,889.15 | 64,989,719.59 | 10,585,168.35 | 3,955,229.17 |
For the Company’s inventories, the original values of medical consumables, healthy living consumer products and 100% cotton spunlace nonwovenfabrics accounted for 31.52%, 59.93% and 8.54%, respectively. In terms of healthy living consumer products, its brand Purcotton has textile products(such as clothing and apparel with strong seasonality) and nonwoven products (which require continuous innovation and upgrading). In the meantime,affected by the COVID-19 pandemic in 2020, the global retail market suffered serious decline, which had a great impact on the sales of Purcotton’sproducts, leading to an increase in the inventory stagnation risk. Therefore, the proportion of provision accrual for inventory depreciation of healthyliving consumer products is higher than that of the other two sectors. Compared to its competitors in the textile and apparel industry, the Company’sproportion of provision accrual remained at a medium level.Inventory information of end channels such as franchises or distributorsPurcotton, a brand of the Company’s healthy living consumer products, started franchises in 2020. Its business model requires franchisees to beresponsible for the construction and daily operation of stores while Purcotton providing goods and supply chain supports. After the sales of goods,Purcotton and franchisees realize their respective benefits through sharing. The ownership of the franchisee’s inventory belongs to Purcotton, and asof December 31, 2020, the inventory balance of five franchisees were RMB 3.4943 million.
(7) Brand building
Whether the company is involved in the production and sales of branded clothing, apparel and home textile products
√ Yes □ No
Private brand
| Brand name | Trademark name | Main product types | Features | Target customers | Main product price bands | Main market territory | Level of cities |
| Purcotton | Purcotton | Cotton tissues | Made of 100% high-quality natural cotton without fluorescent whitening agent; | All-age customer base | RMB 5-30 /pack (100 pieces) | Nationwide | Second- and third-tier cities and above |
| mild and non-irritating; meeting the daily needs of consumers | |||||||
| Purcotton | Nice Princess | Sanitary pads | 100% cotton surface layer (surface layer, spacer, sanitary wing surface layer) | Female population at appropriate ages | RMB 1.99-3.99 /piece | Nationwide | Second- and third-tier cities and above |
| Purcotton | BBNice | Cotton diapers | 100% cotton surface layer; unique in the market; made from natural cotton; 2mm ultra-thin core with 28 times ultra-high absorption capacity | Parental population | RMB 3.32-4.14 /piece | Nationwide | Second- and third-tier cities and above |
| Purcotton | Purcotton | Wet wipes | 100% cotton material; soft and non-slippery; gentle and non-irritating | All-age customer base | RMB 20-40 /pack | Nationwide | Second- and third-tier cities and above |
| Purcotton | Purcotton | Baby products/clothing | 100% cotton material without fluorescent nor formaldehyde; the unique gauze fabric to provide more comfortable care | Expecting mothers, newborns, babies, toddlers | RMB 100-400 /piece | Nationwide | Second- and third-tier cities and above |
| Purcotton | Purcotton | Adult clothing / intimate apparel | 100% cotton material; high-quality cotton without fluorescent nor formaldehyde; soft to the touch; the unique gauze | adults at appropriate ages | Outwear: RMB 200-600 /piece; home wear: RMB 200-500 /piece; thermal underwear: RMB 100-500 /piece; socks: RMB | Nationwide | Second- and third-tier cities and above |
| fabrics to provide more comfortable care | 20-80 /pair | ||||||
| Purcotton | Purcotton | Bedding, toiletries | 100% cotton material; high-quality cotton without fluorescent nor formaldehyde; soft to the touch; the unique gauze fabrics to provide more comfortable care | Expecting mothers, newborns, babies, toddlers and adult customer base | Baby bedding: RMB 200-500 /set; toddler bedding: RMB 300-800 /set; adult bedding: RMB 500-2000 /set; bathroom supplies: RMB 50-200 /piece | Nationwide | Second- and third-tier cities and above |
Partner brands
| Brand name | Trademark name | Main product types | Features | Target customers | Main product price bands | Main market territory | Level of cities | Brand and trademark rights ownership | Partner name | Cooperation mode | Cooperation period |
Licensed brand
| Brand name | Trademark name | Main product types | Features | Target customers | Main product price bands | Main market territory | Level of cities | Licensor | License period | Exclusive license or not |
| Purcotton, Sanrio | Purcotton, Sanrio characters | Cotton tissue, baby clothing, underwear and loungewear | The product is made from 100% cotton material and designed with HELLO KITTY cartoon image | All-age customer base | RMB 5-300 /piece | Nationwide | Second- and third-tier cities and above | KT Licensing (Shanghai) Co., Ltd. | January 1, 2020 - December 31, 2021 | No |
Marketing and operation of each brand during the reporting periodIn terms of brand promotion, Purcotton integrates online and offline resources, and continues to deliver its brand positioning of “close medical sciencewith 100% cotton care” and brand vision of “purcotton changes the world” by means of brand tour, spokespersons, artist cooperation, social mediarecommendations and live commerce. This could realize brand marketing and cotton culture promotion through the popularization of cotton lifestyle,so that the overall message of the brand is more fleshed out. At the same time, the core business principles of quality over profit, brand over speed,and social value over corporate value and their conscientious practice have also enabled the brand to gain the trust of many consumers.
During the reporting period, the Company launched the New Year gift box for the first time, and worked with Mr. Yan Yikuan and his wife to shootvideos and print ads. It invited artists to attend live commerce (Ms. Song Yi), and worked with KOL at the same time to recommend products in alldirections, so as to expand dissemination and accumulate reputation. On World Earth Day, the Company worked with “LOHAS” to deeply interpretthe brand’s sustainable eco-friendly concept, and simultaneously started the national theme tour of Purcotton, tilted “Cotton·Nature·Human”, whichwas included in 422 special marketing cases by DIGITALING. During the parent-child festival, it worked with “OK! Baby” and Ms. Chen Ranclosely on lifestyle print ads, delivering the attitude towards brand life. On “8.18 Members’ Day” (#Enjoy times with you#), through music and youngcustomer interaction, the Company invited Dong Youlin to perform the brand theme song “Cotton”, and held offline concerts and online KTV contest.The project won the Economic Observer’s 2019-2020 Best Content Marketing Award, and the 8th Meihua Innovation Awards for Best Social MediaMarketing Innovation. At the same time, the brand spokesperson project was launched during the reporting period. The first female spokesperson ofthe brand, Ms. Tong Yao, was introduced and invited for field visit in the factory, and showed the whole process through live broadcast, presenting themedical-grade production environment, eco-friendly and sustainable raw materials and production processes to consumers. As of the end of thereporting period, the number of Purcotton users has exceeded 25 million, including 12.76 million registered members of its private platforms (5.76million store registered members, and over 7 million registered members of its official website and Wechat mini programs).
Cases involved in trademark ownership disputes
□ Applicable √ Not applicable
(8) Others
Whether the Company is engaged in apparel design-related business
√ Yes □ No
| The number of fashion designers in the Company | 31 | The number of contracted fashion designers | 1 |
| The operation of the built designer platform | Construction of PLM and 3D design platform were started in the second half of 2020 and would be put into operation in spring and summer of 2022. | ||
Did the company hold an order meeting?
□Yes √No
5. R&D investment
√Applicable □ Not applicable
1. Overview
During the reporting period, the Company continued to increase R&D investment, enrich and continuously introduce products, and makebreakthroughs especially in the fields of infection control, disease prevention and control, high-end dressings, digital intelligence and equipmentautomation, etc.In 2020, the Company, on the basis of self-developed 100% cotton spunlace nonwoven fabrics, further invested in and re-developed products in terms
Winner Medical Co., Ltd. 2020 Annual Reportof surgical gowns, medical protective clothing, isolation gowns, medical masks, and other infection control and disease control protective products,which not only dealt with extremely short supply of PP protective materials during the epidemic period, but also improved the breathability andcomfort of infection control and protective products, providing safe and eco-friendly products.In 2020, the Company continuously optimized and improved its high-end wet dressing product line, covering different stages of wound healing, suchas products related to exudate management, infection control, healing promotion and scar repair. According to global industry research reports, foamdressings are still the largest product category of high-end wet dressings at present and in the future, while bioactive dressings such as collagen andgrowth factors are the future development trends of the industry. The company will increase its R&D investments in these fields. At the same time, theCompany will continue to increase the R&D investment in and upgrade iterations of core basic materials to realize one generation of production, onegeneration of research and development and one generation of reserves, so as to maintain market competitiveness of products.In addition, Purcotton has continued to strengthen independent R&D and application research. In terms of textile products, the Company strictlyfollows and implements the guidelines of “low cost for high-end products and high costs for precision products”. This helps realize the developmentand innovation of the entire chain from new spinning technology, weaving, to product molding and functional products. The Company is committedto making more R&D investments to enhance the value of the brand, entering the unmanned area of gauze basic fabric research, improving thedifferentiation of 100% cotton spunlace nonwoven fabrics, and striving to achieve cutting-edge technologies and forward-looking R&D reserves insmart wear and full molding. In the field of nonwoven fast-moving consumer goods, during the epidemic period, antibacterial and disinfection seriesof products were quickly developed and launched, completing the multi-dimensional technology and product patent deployment.By the end of the reporting period, the Company has obtained 38 invention patents, 412 utility model patents and 220 design patents in China; 56invention patents and 5 utility model patents outside China; among them, 117 utility model patents, 9 design patents and 8 invention patent certificateswere obtained in 2020.
2. Main project information in 2020
| Medical consumables: | ||
| S/N | Name of R&D projects | Stages |
| 01 | RFID electronic gauze and detection system | R&D |
| 02 | Development of antimicrobial wound dressing | Registration |
| 03 | Development of reusable wipes made from amplitude resistant composite materials for interventional radiology | R&D |
| 04 | R&D of highly absorbent fiber dressings | R&D |
| 05 | Independent R&D and application of masks with comfort soft ear loops | Launched |
| 06 | R&D of N95 protective mask with high protection level | Launched |
| 07 | Independent R&D and application of face mask vending machine | Launched |
| 08 | Integrated polyurethane foam molding project | Launched |
| 09 | Silicone gel series for scar treatment | Registration |
| 10 | R&D and application of surgical gowns and wipes made from PC-BVB materials | R&D |
| 11 | R&D and application of positive-pressure inflatable protective clothing | R&D |
| 12 | Independent R&D and application of high-efficiency, low-resistance masks (cup shaped) | R&D |
| 13 | Independent R&D and application of antibacterial masks | R&D |
| 14 | R&D and application of high-performance PC laminated surgical protective gowns | Launched |
| 15 | Fully protective, highly breathable protective clothing | Launched |
| 16 | R&D of high-efficiency and low-resistance water injection electrode meltblown cloth | Launched |
| 17 | Development of non-porous waterproof- and vapor-permeable composites and their application to high-level surgical gowns | R&D |
| 18 | Development of WHO-recommended hand disinfection products | Launched |
| 19 | Development project of low-cost dyeing medical protective materials | Launched |
Development and application project of triple resistance fabric technology for surgical gownsmade from 100% cotton spunlace nonwoven fabrics
| Launched | ||
| 21 | R&D project of N95 mask automatic vending machine | Launched |
| Healthy living consumer products: | ||
| S/N | Project name | Stages |
| 01 | Development of preservative-free multi-piece wet wipes | Launched |
| 02 | Development of one-piece and super multi-layered woven gauze and products | Launched |
| 03 | Development of interesting intelligent light-sensitive, temperature-sensitive and bacteria-sensitive coloring textile | R&D |
| 04 | Development of hyaluronic acid skin care fabric and intimate apparel products | Launched |
| 05 | Research on the key technology of 100% cotton gauze quilt for comfortable sleeping temperature (cooperation with Soochow University) | R&D |
| 06 | R&D and application of deodorization technology for cotton fiber recombination and reformulation | R&D |
| 07 | Development of functional cotton fabrics with modified heat generation | R&D |
| 08 | Technology and product development of zero-emission atomizing watered gauze | R&D |
| 09 | Flexible and wearable intelligent, temperature-sensitive baby products | R&D |
| 10 | Development of reverse low-twisted Sirospun soft gauze and super-soft products | Launched |
The amount of R&D investment and the proportion of operating revenues in the past three years
| 2020 | 2019 | 2018 | |
| Number of R&D personnel (people) | 1,213 | 946 | 830 |
| Proportion of R&D personnel | 9.79% | 10.57% | 10.00% |
| R&D investment amount (RMB) | 411,383,173.80 | 155,193,227.21 | 116,563,955.27 |
| Proportion of R&D investment in operating revenues | 3.28% | 3.39% | 3.04% |
| Capitalized amount of R&D expenditure (RMB) | 0.00 | 0.00 | 0.00 |
| Proportion of capitalized R&D expenditure in R&D investment | 0.00% | 0.00% | 0.00% |
| Proportion of capitalized R&D expenditure in current net pro?t | 0.00% | 0.00% | 0.00% |
Reasons for significant changes in the proportion of total R&D investment in operating revenue compared to the previous year
□ Applicable √ Not applicable
Reasons for significant changes in capitalization rate of R&D investment and its reasonable explanation
□ Applicable √ Not applicable
Companies are required to comply with the disclosure requirements of “Guidelines of Shenzhen Stock Exchange on Information Disclosure byGrowth Enterprises Market No. 10: Listed Companies Engaged in Medical Device Business”Information on medical device products
√Applicable □ Not applicable
Winner Medical Co., Ltd. 2020 Annual Report(I) Statistics on the number of registration certificates for medical devices
| Statistics on the number of domestic product registration certificate | ||||
| Registration Categories | Opening balance | Number of additions | Number of failures | Closing balance |
| Class 1 | 36 | 7 | 1 | 42 |
| Category II | 57 | 4 | 2 | 59 |
| Category III | 0 | 1 | 0 | 1 |
| Total | 93 | 12 | 3 | 102 |
(II) Medical devices in the registration application process during the reporting period
1. Domestic products
| S/N | Name of certificates | Applicant | Registration categories | Scope of application | Registration stages | Progress |
| 1 | Medical disposable protective clothing | Winner Medical Co., Ltd. | II | It provides barriers for and keeps medical staff away from contacting potentially infectious patient blood, body fluids, secretions, and airborne particulate matter at work. | Technical review | In progress |
| 2 | Disposable catheterization kit | Winner Medical (Chongyang) Co., Ltd. | II | It is a disposable product for staff of medical departments to perform catheterization. | Technical review | In progress |
| 3 | Disposable oral cavity kit | Winner Medical (Chongyang) Co., Ltd. | II | It is a disposable product for dental staff to perform clinical examination, care and surgery on the human oral cavity. | Technical review | In progress |
| 4 | Disposable sterile-care pack | Winner Medical (Chongyang) Co., Ltd. | II | It is a disposable product for staff in medical units to perform daily care. | Technical review | In progress |
| 5 | Medical disposable protective clothing | Winner Medical (Chongyang) Co., Ltd. | II | It provides barriers for and keeps medical staff away from contacting potentially infectious patient blood, body fluids, secretions, and airborne particulate matter at work. | Distribution and supplementary | In progress |
| 6 | Disposable surgical gowns | Winner Medical (Chongyang) Co., Ltd. | II | Standard surgical gowns: It is applicable to operations where the patient is known to have no infectious virus in the blood. High-performance surgical gowns: It is applicable to a surgery where there is known infectious virus in the blood of the patient or it is unknown whether there is an infectious virus in the blood during emergency rescue. | Technical review | In progress |
| 7 | Gauze balls | Winner Medical (Chongyang) Co., Ltd. | II | It is a disposable product for staff in medical units to perform medical and surgical procedures, local wound cleaning, and hemostasis. | Administrative approval | In progress |
| 8 | Gauze strips | Winner Medical | II | It is used in clinical operations for filling, protection, | Distribution and | In progress |
| (Huanggang) Co., Ltd. | hemostasis and aspiration and drainage. | supplementary |
| 9 | Medical gauze pads | Winner Medical (Huanggang) Co., Ltd. | II | It is a disposable product for staff in medical units to perform surgery and wound care. | Administrative approval | In progress |
| 10 | Disposable surgical caps | Winner Medical (Huanggang) Co., Ltd. | II | It is a disposable product for staff in medical units to perform surgeries. | Distribution and supplementary | In progress |
| 11 | Medical protective face mask | Winner Medical (Huanggang) Co., Ltd. | II | It is used for filtering airborne particles, and blocking droplets, blood, body fluids and secretions in medical work environment. | Distribution and supplementary | In progress |
| 12 | 100% cotton nonwoven surgical dressing | Winner Medical (Huanggang) Co., Ltd. | II | It is for cleaning, wound protection, moisture absorption and protection of organs in the process of clinical treatment. | Distribution and supplementary | In progress |
| 13 | Medical gauze pads | Winner Medical (Jingmen) Co., Ltd. | II | It is a disposable product for staff in medical units to perform surgery and wound care, and used to absorb body exudate and wound exudate during surgeries. The product should be used after sterilization. | Technical review | In progress |
2. Overseas products
| Region | S/N | Certificate No | Name of certificates | Registration categories | Applicant | Product | Registration stages | Progress |
| CE regions | 1 | / | EU Type Examination Certificate | FFP2 masks, Category III | Winner Medical | Protective mask WN-N95FGINE | Sample testing stage | Sample testing is under application, and the next phase of technical documentation is being prepared |
| CE regions | 2 | / | Module D Certificate | PPE | Winner Medical | Protective mask WN-N95FGINE | Sample testing stage | Sample testing is under application, and the next phase of technical documentation is being prepared |
(III) Medical devices obtained certificates during the reporting period
1. Domestic products
| S/N | Name of certificates | Registration categories | Certificate owner | Product record number/registration number | Scope of application | Date of issuance | Validity | Registration |
| 1 | Self-adhesive silicone foam dressing | II | Winner Medical (Huanggang) Co., Ltd. | E Xie Zhu Zhun No. 20202142888 | It is a disposable product for covering non-chronic | 2/22/2020 | 2/21/2025 | New registration during the reporting period |
| wounds on the body surface, and absorbing exudate from wounds. | ||||||||
| 2 | Surgical gauze dressing | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20152140780 | It is a disposable product for staff in medical units to perform surgery and wound care. | 2/25/2020 | 2/24/2025 | Continuous registration during the reporting period |
| 3 | Isolation gowns | I | Winner Medical (Chongyang) Co., Ltd. | E Xianning Xie Bei No. 20200022 | It is used in medical institutions outpatient, wards, laboratories, etc. for general isolation. | 3/13/2020 | / | New filings during the reporting period |
| 4 | Medical brain cotton tablets | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20152140779 | It is a disposable product for staff in medical units to perform brain surgeries. | 4/21/2020 | 4/20/2025 | Continuous registration during the reporting period |
| 5 | Medical degreasing cotton | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20152140778 | It is a disposable product for staff in medical units and family members to perform wound debridement care, dip disinfectant, etc. | 4/1/2020 | 3/31/2025 | Continuous registration during the reporting period |
| 6 | Medical surgical masks | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20152140745 | It is for clinical staff to wear during invasive operations, providing protection for patients receiving treatment and medical staff performing invasive operations, thus blocking the spread of blood, body | 4/21/2020 | 4/20/2025 | Continuous registration during the reporting period |
fluids and splashes.
| 7 | Negative pressure drainage device | I | Winner Medical (Huanggang) Co., Ltd. | E Huanggang Xie Bei No. 20200044 | In case of clinical drainage, it is connected with a drainage catheter inserted into the body to act as a negative pressure transmission medium and/or guide and collect drainage fluid. | 7/16/2020 | / | New filings during the reporting period |
| 8 | Medical gauze pads | II | Winner Medical (Jingmen) Co., Ltd. | E Xie Zhu Zhun No. 20202143027 | It is a disposable product for staff in medical units to perform surgery and wound care, and used to absorb body exudate and wound exudate during surgeries. The product should be used after sterilization. | 7/22/2020 | 7/21/2025 | New registration during the reporting period |
| 9 | Medical gauze pads | II | Winner Medical (Tianmen) Co., Ltd. | E Xie Zhu Zhun No. 20202142900 | It is a disposable product for staff in medical units to perform surgery and wound care, and used to absorb body exudate and wound exudate during surgeries. | 8/28/2020 | 8/27/2025 | New registration during the reporting period |
| 10 | Disposable medical protective shoe covers | I | Winner Medical (Chongyang) Co., Ltd. | E Xianning Xie Bei No. 20200055 | It is used by medical staff in medical institutions to prevent exposure to potentially infectious patient blood, body fluids, secretions, etc., and act as a barrier and | 9/3/2020 | / | New filings during the reporting period |
| protection. | ||||||||
| 11 | Medical gauze sheets | II | Winner Medical (Tianmen) Co., Ltd. | E Xie Zhu Zhun No. 20202143066 | It is a disposable product for staff in medical units to perform surgery and wound care, and used to absorb body exudate and wound exudate during surgeries. | 9/23/2020 | 9/22/2025 | New registration during the reporting period |
| 12 | Liquid dressing | I | Winner Medical (Jiayu) Co., Ltd. | E Xianning Xie Bei No. 20200062 | It acts as a physical barrier by forming a protective layer on the surface of the wound. It is used for the care of small wounds, abrasions, cuts and other superficial wounds as well as surrounding skin. | 10/20/2020 | New filings during the reporting period |
| 13 | Silicone gel dressing | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20152141501 | It is used for the dressing of exuding wounds on the body surface. | 11/10/2020 | 11/9/2025 | Continuous registration during the reporting period |
| 14 | Medical tape | I | Winner Medical (Huanggang) Co., Ltd. | E Huanggang Xie Bei No. 20200097 | It is used to affix dressings to wounds or to fix other medical devices to specific parts of the body. | 11/16/2020 | / | New filings during the reporting period |
| 15 | Surgical caps | I | Winner Medical (Huanggang) Co., Ltd. | E Huanggang Xie Bei No. 20200122 | It is for anesthesiologists, itinerant nurses and other staff in operating rooms in order to keep the operating room clean and free from contamination by indoor personnel. | 12/18/2020 | / | New filings during the reporting period |
| 16 | Nursing pads | I | Winner | E Xianning Xie | It is a kind of | 12/31/2020 | / | New filings during the |
| Medical (Jiayu) Co., Ltd. | Bei No. 20190018 | hygiene care product for hospital beds or examination beds. | reporting period | |||||
| 17 | Disposable isolation gowns | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20192140590 | It is a disposable product for staff in medical units to perform general isolation. | 5/20/2019 | 5/19/2024 | Change of registration during the reporting period |
| 18 | Disposable nonwoven surgical supplies | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20192140727 | It is a disposable product for staff in medical units to perform surgeries. | 6/26/2019 | 6/25/2024 | Change of registration during the reporting period |
| 19 | Disposable surgical gowns | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20142140128 | It is a disposable product for staff in medical units to perform surgeries. | 8/14/2019 | 8/13/2024 | Change of registration during the reporting period |
| 20 | Wound contact dressing | II | Winner Medical Co., Ltd. | Yue Xie Zhu Zhun No. 20182640163 | It is a disposable product for surgical body debridement care. | 1/31/2018 | 1/30/2023 | Change of registration during the reporting period |
| 21 | Medical disposable protective clothing | II | Winner Medical (Chongyang) Co., Ltd. | E Xie Zhu Zhun No. 20142641943 | It provides barriers for and keeps medical staff away from contacting potentially infectious patient blood, body fluids, secretions, and airborne particulate matter at work. | 6/9/2017 | 6/8/2022 | Change of registration during the reporting period |
| 22 | Disposable negative pressure drainage dressing kit | II | Winner Medical (Chongyang) Co., Ltd. | E Xie Zhu Zhun No. 20152142148 | It is a disposable product for staff in medical units to perform non-chronic wound negative pressure drainage. | 4/23/2020 | 4/22/2025 | Continuous registration during the reporting period |
| 23 | Medical degreasing gauze | II | Winner Medical (Chongyang) | E Xie Zhu Zhun No. 20152142149 | It is a disposable product for staff in medical units to | 6/2/2020 | 6/1/2025 | Continuous registration during the reporting period |
| Co., Ltd. | perform medical and surgical procedures, local wound cleaning, and hemostasis. | |||||||
| 24 | Gauze balls | II | Winner Medical (Chongyang) Co., Ltd. | E Xie Zhu Zhun No. 20122641142 | It is a disposable product for staff in medical units to perform medical and surgical procedures, local wound cleaning, and hemostasis. | 11/27/2020 | 11/26/2025 | Continuous registration during the reporting period |
| 25 | Foam dressing | III | Winner Medical (Huanggang) Co., Ltd. | Guo Xie Zhu Zhun No. 20203140922 | For covering wounds and absorbing wound exudate, such as wounds with more exudate, lower limb ulcers, non-infected diabetic foot ulcers and pressure sores | 12/3/2020 | 12/2/2025 | New registration during the reporting period |
| 26 | Medical examination pads | II | Winner Medical (Jiayu) Co., Ltd. | E Xie Zhu Zhun No. 20162142269 | It is used for bedridden patient housekeeping. | 12/22/2020 | 12/21/2025 | Continuous registration during the reporting period |
| 27 | Disposable sterile-care dressing | II | Winner Medical (Huanggang) Co., Ltd. | E Xie Zhu Zhun No. 20192142703 | It is used for surgery, trauma wounds or indwelling arterial and venous catheter dressing; and can also be used for infant umbilical cord wound protection. | 3/25/2019 | 3/24/2024 | Change of registration during the reporting period |
| 28 | Medical care masks | II | Winner Medical (Huanggang) Co., Ltd. | E Xie Zhu Zhun No. 20142142015 | It is applicable for the wearer’s health care in the general medical environment where there is no risk of | 8/30/2019 | 8/29/2024 | Change of registration during the reporting period |
| body fluids and splashing, as well as general health care in public health places (this kind of mask cannot be used as a surgical or protective mask). | ||||||||
| 29 | Medical gauze sheets | II | Winner Medical (Huanggang) Co., Ltd. | E Xie Zhu Zhun No. 20142142017 | It is a disposable product for staff in medical units to perform surgery and wound care. | 9/19/2019 | 9/18/2024 | Change of registration during the reporting period |
| 30 | Medical gauze pads | II | Winner Medical (Huanggang) Co., Ltd. | E Xie Zhu Zhun No. 20142142018 | It is a disposable product for staff in medical units to perform surgery and wound care. | 9/20/2019 | 9/19/2024 | Change of registration during the reporting period |
| 31 | Cotton swabs | I | Winner Medical (Jiayu) Co., Ltd. | E Xian Xie Bei No. 20150018 | It is used for topical application of drugs or disinfectants for skin or wounds. | 5/25/2018 | / | Change of filing during the reporting period |
| 32 | Hygiene caps | I | Winner Medical Co., Ltd. | Yue Shen Xie Bei No. 20150183 | It is used to prevent cross-contamination between physicians and patients. | 7/20/2015 | / | Change of filing during the reporting period |
2. Overseas products
| Region | S/N | Certificate No | Name of certificates | Registration categories | Certificate owner | Product | Date of issuance | Validity | Registration |
| CE regions | 1 | G2S0462410064Rev.04 | EC certificate Class I | I | Winner Medical | Gauze Products, Synthetic Non-woven Products, 100% Cotton Non-woven Products, Cotton Products, Special Dressing Products | 12/9/2019 | 5/26/2024 | Obtained before to the reporting period |
| 2 | G10462410065Rev.04 | EC certificate-ClassⅡa,Ⅱb | II. | Winner Medical | Sterile and non-sterile Gauze products, Sterile and non-sterile Synthetic Non-woven Products with X-ray detectable element, Sterile and non-sterile 100% Cotton Non-woven Products with X-ray detectable element, Basic Dressing Packs with ClassⅡa/Ⅱb elements, Alginate Dressing, Foam Dressing, Hydrocolloid Dressing, Silicone Foam Dressing, Silicone Contact Layer, Super Absorbent Dressing, Activated Charcoal Super Absorbent Dressing, Silicone Super Absorbent Dressing, NPWT Gauze Dressing Kit, NPWT Foam Dressing Kit | 12/10/2019 | 5/27/2024 | Obtained before to the reporting period |
| 3 | CE 728017 | EU Type Examination Certificate | FFP2 masks, Category III | Winner Medical | Protective mask WN-N95FW, WN-N95FGINE | 10/22/2020 | 5/14/2021 | New registration during the reporting period |
| 4 | CE 728018 | Module C2 Certificate | PPE | Winner Medical | Protective mask WN-N95FW, WN-N95FGINE | 10/22/2020 | 5/14/2021 | New registration during the reporting period |
| 5 | FI20/967203 | EU Type Examination Certificate | Type 5,6, Category III | Winner Medical | Protective clothingWN-600DC, WN-600DC-1 | 11/10/2020 | 11/10/2025 | New registration during the reporting period |
| 6 | FI20/967181 | EU Type Examination Certificate | Type 5,6, Category III | Winner Medical | Protective clothingWN-600TC, WN-600TC-1 | 11/9/2020 | 11/9/2025 | New registration during the reporting period |
| 7 | CN20/42667 | Module C2 Certificate | PPE | Winner Medical | Protective clothingWN-600DC, WN-600DC-1, WN-600TC, WN-600TC-1 | 12/3/2020 | - | New registration during the reporting |
| period | |||||||||
| Russia | 1 | ΦC32011/10517 | Registration Certificate (Russia) | I | Winner Medical | 18 products including gauze swabs, gauzes ponges, gauze balls, gauze rolls, gauze lap sponges, and synthetic non-woven sponges/swabs | 1/9/2017 | / | Registered before to the reporting period |
| 2 | ΦC32011/10516 | Registration Certificate (Russia) | I | Winner Medical | 13 products including absorbent pad, gauze combine dressing, non-woven adhesive wound dressing, and finger bandage | 1/23/2017 | / | Obtained before to the reporting period | |
| 3 | ΦC32011/10515 | Registration Certificate (Russia) | I | Winner Medical | 19 products including non-woven cohesive flexible bandage, shrinking gauze bandage, and gauze bandage | 1/23/2017 | / | Obtained before to the reporting period | |
| 4 | ΦC32011/10514 | Registration Certificate (Russia) | I | Winner Medical | 12 products including isolation gown, patient gown, visitor gown, surgical gown, and caps | 1/9/2017 | / | Obtained before to the reporting period | |
| Japan | |||||||||
| 1 | BG10500019 | Registration certificate for foreign manufacturers of medical devices | I | Winner Medical | / | 12/13/2020 | 12/12/2025 | Continuous registration during the reporting period | |
| 2 | BG10500055 | Registration certificate for foreign manufacturers of medical devices | I | Winner Medical (Jiayu) | / | 7/18/2016 | 7/17/2021 | Obtained before to the reporting period | |
| 3 | BG10500206 | Registration certificate for foreign manufacturers of medical devices | I | Winner Medical (Chongyang) | / | 11/21/2017 | 11/20/2022 | Obtained before to the reporting period | |
| 4 | BG10500432 | Registration certificate | I | Winner Medical (Jingmen) | / | 7/10/2019 | 7/9/2024 | Continuous registration |
| for foreign manufacturers of medical devices | during the reporting period |
| Global | 1 | N°EGL/174757/1067150/1 | Global Organic Textile Standard | / | Winner Medical (Huanggang) | 70% Spunlace Nonwoven Fabric，30% linen Spunlace Nonwoven Fabric | 7/20/2020 | 6/30/2021 | Continuous registration during the reporting period |
| 2 | N°EGL/174757/1067150/1 | Oeko-Tex standard 100 Certificate | / | Winner Medical (Jiayu) | Cosmetic cotton, absorbent cotton (for medical cosmetic use), cotton roll, cotton ball, dental cotton roll and cotton swab, white | 12/9/2020 | 11/30/2021 | Continuous registration during the reporting period |
6. Cash flow
Unit: yuan
| Item | 2020 | 2019 | Year-on-year increase/decrease |
| Subtotal of cash inflow from operating activities | 13,506,886,695.52 | 5,160,427,012.09 | 161.74% |
| Subtotal of cash outflow from operating activities | 8,739,390,408.13 | 4,560,654,446.21 | 91.63% |
| Net cash flow from operating activities | 4,767,496,287.39 | 599,772,565.88 | 694.88% |
| Subtotal of cash inflow from investment activities | 4,572,064,826.38 | 1,221,995,896.95 | 274.15% |
| Subtotal of cash outflow from investment activities | 9,002,000,981.04 | 1,641,664,869.81 | 448.35% |
| Net cash flow from investing activities | -4,429,936,154.66 | -419,668,972.86 | 955.58% |
| Subtotal of cash inflow from financial activities | 3,743,348,396.23 | 436,290,196.07 | 758.00% |
| Subtotal of cash outflow from financial activities | 395,270,980.45 | 534,688,185.88 | -26.07% |
| Net cash flow from financing activities | 3,348,077,415.78 | -98,397,989.81 | 3,502.59% |
| Net increase in cash and cash equivalents | 3,690,564,974.73 | 83,654,260.95 | 4,311.69% |
Explanation of the main influencing factors of significant changes on a year-on-year basis in relevant data
√Applicable □ Not applicable
Affected by the COVID-19 pandemic, the Company saw significant growth in its performance, sales and purchases, resulting in substantial increasein cash inflow and outflow as well as net cash. The Company used cash surplus for cash management, increased the purchase and redemption ofwealth management products, and had large amounts of wealth management products that have not yet been redeemed at the end of the reportingperiod, leading to the significant increase in net cash and cash inflow and outflow. Moreover, thanks to the successful IPO and the availability ofproceeds during the reporting period, the Company realized a sharp increase in cash inflow from fundraising activities and net cash.Explanation of the reason for the significant difference between the Company’s net cash flow generated from operating activities during the reportingperiod and the net profit in current year
□ Applicable √ Not applicable
III. Non-main operations
√Applicable □ Not applicable
Unit: yuan
| Amount | Proportion in total profits | Formation reasons | Is it sustainable | |
| Investment income | 21,585,123.16 | 0.48% | It is mainly due to the gain on maturity of financial products and the recognition of investment income from joint ventures. | Investment income from joint ventures Yes, others No |
| Pro?t/los from changes in fair value | 11,178,589.44 | 0.25% | It is mainly due to the changes in fair value of financial products (such as structured deposits) before maturity. | No |
| Impairment of assets | -240,186,749.52 | -5.33% | It is mainly due to the provision for impairment of inventories and fixed assets. | No |
| Non-operating income | 4,227,507.56 | 0.09% | It is mainly due to the receipt of government subsidies unrelated to operating activities. | No |
| Non-operating expenses | 33,505,825.07 | 0.74% | It is mainly due to the losses on scrapping of non-current assets. | No |
| Credit impairment Loss | -35,941,692.83 | -0.80% | It is mainly due to the expected credit losses on the accrual of accounts receivable and other receivables. | No |
| Gains from asset | 9,765.86 | 0.00% | It is mainly due to the losses on | No |
| disposal | disposal of non-current assets. | |||
| Other incomes | 70,291,282.76 | 1.56% | It is mainly due to the receipt of government subsidies related to operating activities. | No |
IV. Analysis of assets and liabilities
1. Significant changes in the composition of assets
The Company implemented the new revenue standards or the new lease standards for the first time since 2020 and adjusted and performed therelevant items of the financial statements at the beginning of the year.Applicable
Unit: yuan
| End of 2020 | Early 2020 | Increase/decrease in proportions | Description of significant changes | |||
| Amount | The proportion in total assets | Amount | The proportion in total assets | |||
| Cash and cash equivalents | 4,162,539,245.78 | 32.01% | 480,838,765.63 | 10.61% | 21.40% | It is mainly due to the availability of proceeds and increase in operating cash |
| Accounts receivable | 844,317,708.12 | 6.49% | 416,345,676.13 | 9.19% | -2.70% | It is mainly due to the significant growth in sales. |
| Inventory | 1,216,486,940.21 | 9.36% | 992,411,173.86 | 21.90% | -12.54% | It is mainly due to the significant increase in sales and inventory. |
| Investment real estates | 0.00% | 0.00% | 0.00% | No change | ||
| Long-term equity investments | 13,424,230.41 | 0.10% | 8,858,476.15 | 0.20% | -0.10% | It is mainly due to the increase in investment income in affiliates. |
| Fixed assets | 1,400,749,050.00 | 10.77% | 1,274,733,960.96 | 28.13% | -17.36% | It is mainly due to the transfer of fixed assets for projects in progress in the reporting period at the beginning of the year. |
| Construction in progress | 61,383,340.97 | 0.47% | 187,808,853.01 | 4.14% | -3.67% | It is mainly due to the transfer of fixed assets for projects in progress in the reporting period at the beginning of the year. |
| Short-term debt | 150,071,416.66 | 1.15% | 120,000,000.00 | 2.65% | -1.50% | It is mainly due to the increase in outstanding short-term borrowings. |
| Long-term loans | 0.00% | 134,210,746.07 | 2.96% | -2.96% | It is mainly due to the repayment of long-term loans due. | |
| tradable financial assets | 4,131,178,589.44 | 31.77% | 0.00 | 0.00% | 31.77% | It is mainly due to the purchase of wealth management products by the proceeds and |
| own funds. | ||||||
| Amounts receivable financing | 18,182,662.70 | 0.14% | 8,456,356.50 | 0.19% | -0.05% | It is mainly due to the increase in derecognized note financing. |
| Other current assets | 35,184,227.09 | 0.27% | 84,475,166.40 | 1.86% | -1.59% | It is mainly due to the decrease in input tax to be deducted. |
| Intangible assets | 208,325,103.79 | 1.60% | 131,657,103.01 | 2.91% | -1.31% | It is mainly due to the new investment in land use rights of subsidiaries. |
| Deferred income tax assets | 143,132,351.08 | 1.10% | 69,356,697.91 | 1.53% | -0.43% | It is mainly due to the increase in deductible temporary differences. |
| Other non-current assets | 63,807,415.75 | 0.49% | 18,996,656.91 | 0.42% | 0.07% | It is mainly due to the increase in prepayments for non-current assets. |
| Notes payable | 29,418,100.00 | 0.23% | 173,023,352.30 | 3.82% | -3.59% | It is mainly due to the decrease in outstanding notes payable. |
| Contract liabilities | 530,188,257.63 | 4.08% | 32,313,636.28 | 0.71% | 3.37% | It is mainly due to the increase in consideration received from customers. |
| Payroll payable | 169,957,077.81 | 1.31% | 99,793,347.80 | 2.20% | -0.89% | It is mainly due to the increase in salary as a result of the increase in staff and performance growth. |
| Taxes payable | 444,381,369.49 | 3.42% | 47,134,987.40 | 1.04% | 2.38% | It is mainly due to the increase in corporate income tax and other taxes as a result of the growth in performance. |
| Other payables | 352,543,008.89 | 2.71% | 142,607,932.48 | 3.15% | -0.44% | It is mainly due to the increase in other operating activities-related payables. |
| Non-current liabilities due within one year | 0.00 | 0.00% | 5,000,000.00 | 0.11% | -0.11% | It is mainly due to repayment of bank loans due. |
| Other current liabilities | 23,638,266.47 | 0.18% | 5,544,602.17 | 0.12% | 0.06% | It is mainly due to the increase in the amount of sales tax to be transferred. |
| Deferred income | 94,921,260.87 | 0.73% | 46,117,344.20 | 1.02% | -0.29% | It is mainly due to the receipt of asset-related government grants during the reporting period. |
| Deferred income tax liabilities | 12,165,608.24 | 0.09% | 0.00 | 0.00% | 0.09% | It is mainly due to the taxable timing differences arising from the one-time credit for equipment used for epidemic prevention and control. |
| Capital stock | 426,492,308.00 | 3.28% | 376,492,308.00 | 8.31% | -5.03% | It is mainly due to the initial issuance of new shares. |
| Capital reserve | 4,481,709,983.24 | 34.47% | 948,913,284.10 | 20.94% | 13.53% | It is mainly due to the issuance of new shares in excess of par amount. |
| Surplus reserve | 420,212,778.13 | 3.23% | 116,855,107.20 | 2.58% | 0.65% | It is mainly due to the increase in the provision for surplus reserve. |
| Undistributed profit | 5,126,630,011.14 | 39.43% | 1,718,075,177.67 | 37.91% | 1.52% | It is mainly due to the profit rollover in the reporting period. |
| Other comprehensive income | -1,111,035.08 | -0.01% | 44,623.87 | 0.00% | -0.01% | It is mainly due to the changes in translation differences in foreign currency statements. |
| Minority equity | 14,456,046.01 | 0.11% | 3,167,502.50 | 0.07% | 0.04% | It is mainly due to the increase in minority interests in the reporting period. |
Note: The above description of major changes is an explanation of the increase or decrease in the absoluteamount of each item during the reporting period, not for the increase or decrease in proportion.
2. Assets and liabilities measured at fair value
√Applicable □ Not applicable
Unit: yuan
| Item | Opening balance | Gain/loss from changes in fair value for the period | Accumulated fair value changes included in equity | Impairment in accrual of current period | Purchase amount during the reporting period | Sales amount during the reporting period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. tradable financial assets (excluding derivative financial assets) | 11,178,589.44 | 4,120,000,000.00 | 4,131,178,589.44 | |||||
| 2. Derivative financial assets | ||||||||
| Total of the above | 0.00 | 11,178,589.44 | 4,120,000,000.00 | 4,131,178,589.44 | ||||
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | ||||
Other changesNot applicable.Whether there were any significant changes in the measurement attributes of the Company’s major assets during the reporting period
□Yes √No
3. Restricted rights to assets as of the end of the reporting period
The breakdown of monetary funds with restrictions on use due to mortgages, pledges or freezes, as well as those placed outside China withrestrictions on repatriation of funds, is as follows:
| Item | Closing Balance | Closing balance of the previous year |
| Bank acceptance deposit*1 | 17,330,824.31 |
| Letter of Credit deposit*2 | 6,958,192.79 | 145,673.48 |
| Performance bond*3 | 2,369,198.81 | 727,733.82 |
| Other restricted monetary fund balances*4 | 3,477,159.80 | 3,464,814.37 |
| Total | 12,804,551.40 | 21,669,045.98 |
*1The bank acceptance deposit is the deposit made by the Company and Shenzhen Purcotton for the issuance of bank acceptance bills.*2Letter of Credit deposit is the deposit made by Winner Medical (Tianmen) and Winner Medical (Wuhan) for international and domestic Letters ofCredit.*3Performance bond is the deposit made by Winner Medical (Hong Kong) for transactions with customers.*4 The balance of other restricted monetary funds refers to the balance of special deposit accounts for restricted non-budget units opened by ShenzhenPurcotton in accordance with the regulations of prepaid card issuance formulated by the Ministry of Commerce.V. Analysis of investment situation
1. Overview
√Applicable □ Not applicable
| Investment amount in the reporting period (RMB) | Investment amount in the same period of the previous year (RMB) | Change percentage |
| 4,382,818,387.53 | 0.00 | 100.00% |
Note: The investment amount during the reporting period is the total of the investment amount of Items 2, 3 and4 herein.
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Significant non-equity investments in progress during the reporting period
√Applicable □ Not applicable
Unit: yuan
| Project name | Investment method | Investment in fixed assets or | Industries involved in investment | Investment amount in the | Cumulative actual investmen | Source of funds | Project progress | Estimated income | Cumulative realized | Reasons for not meeting | Date of disclosure (if any) | Disclosure index (if any) |
| not | projects | current reporting period | t amount as of the end of the reporting period | gains as of the end of the reporting period | the scheduled progress and projected earnings | |||||||
| High-end dressing production line construction project | Independent | Yes | Medical consumables | 26,519,139.60 | 26,519,139.60 | Proceeds | 12.00% | 0.00 | 0.00 | None | ||
| Marketing network construction project | Independent | Yes | Healthy consumer goods | 122,291,914.63 | 122,291,914.63 | Proceeds | 17.00% | 0.00 | 0.00 | None | ||
| R&D Center construction project | Independent | Yes | Medical consumables + healthy living consumer products | 50,696,358.27 | 50,696,358.27 | Proceeds | 22.00% | 0.00 | 0.00 | None | ||
| Digital management system project | Independent | Yes | Medical consumables + healthy living consumer products | 58,310,975.03 | 58,310,975.03 | Proceeds | 22.00% | 0.00 | 0.00 | None | ||
| Phase II expansion project of Winner Medical Wuhan | Independent | Yes | Medical consumables + healthy living consumer products | 5,000,000.00 | 5,000,000.00 | Proceeds | 0.83% | 0.00 | 0.00 | None | ||
| Total | -- | -- | -- | 262,818,387.53 | 262,818,387.53 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Financial assets measured at fair value
√Applicable □ Not applicable
Unit: yuan
| Asset classes | Initial investment cost | Gain/loss from changes in fair value for the period | Accumulated fair value changes included in equity | Purchase amount in the current reporting period | Sales amount in the current reporting period | Accumulated investment income | Closing balance | Source of funds |
| Other | 2,520,000,000.00 | 6,588,777.40 | 0.00 | 2,520,000,000.00 | 0.00 | 6,588,777.40 | 2,526,588,777.40 | Proceeds |
| Other | 1,400,000,000.00 | 4,589,812.04 | 0.00 | 1,400,000,000.00 | 0.00 | 4,589,812.04 | 1,404,589,812.04 | Self-owned funds |
| Trust products | 200,000,000.00 | 0.00 | 200,000,000.00 | 0.00 | 200,000,000.00 | Self-owned funds | ||
| Total | 4,120,000,000.00 | 11,178,589.44 | 0.00 | 4,120,000,000.00 | 0.00 | 11,178,589.44 | 4,131,178,589.44 | -- |
5. The use of proceeds
√Applicable □ Not applicable
(1) The overall use of proceeds
√Applicable □ Not applicable
Unit: RMB ’0,000
| Year | Method | Total amount of proceeds | Total amount of proceeds used during the current reporting period | Total accumulated amount of proceeds used during the current reporting period | Total amount of proceeds for alteration purposes during the current reporting period | Total accumulated amount of proceeds for alteration purposes during the current reporting period | Proportion of total amount of proceeds for alteration purposes during the current reporting period | Total amount of proceeds not used during the current reporting period | Usage and purposes of proceeds not used during the current reporting period | Amount of proceeds that have been idle for more than two years |
| 2020 | IPO | 355,884.93 | 90,181.84 | 90,181.84 | 0 | 0 | 0.00% | 266,568.27 | Of which: the principal amount of proceeds was RMB 2,657.0309 million and the interest income was RMB | 0 |
| 8.6518 million. | ||||||||||
| Total | -- | 355,884.93 | 90,181.84 | 90,181.84 | 0 | 0 | 0.00% | 266,568.27 | -- | 0 |
| Description of the overall use of proceeds | ||||||||||
| The China Securities Regulatory Commission (CSRC) approved that, in its “CSRC License [2020] No. 1822” document, the Company made an initial public offering of RMB 50 million ordinary shares (A shares) at an offer price of RMB 74.30 per share, and the total proceeds amounted to RMB3715.0000 million. After deducting issuance fees of RMB 156.1507 million (excluding tax) , net proceeds totaled RMB 3,558.8493 million. The above-mentioned proceeds were in place in September 2020 and verified by BDO Certified Public Accountants (Special General Partnership) with a “Capital Verification Report” (Xin Kuai Shi Bao Zi [2020] No. ZI10584). As of December 31, 2020, the Company mobilized RMB 901.18184 million of proceeds, of which: RMB 262.8184 million of proceeds were actually used for fundraising projects (including RMB 29.1011 million of funds invested in fund-raising projects in the current reporting period and RMB 233.7173 million of funds pre-invested in fund-raising projects by replacing self-financing funds), and RMB 639.0000 million of idle proceeds for permanently replenishing the working capital. The balance of the Company’s unused proceeds was RMB 2,665.6827 million, of which: the balance of structured deposits was RMB 2,520.0000 million and the balance of RMB 145.6827 million was deposited in the proceeds account. | ||||||||||
(2) Committed proceeds projects
√Applicable □ Not applicable
Unit: RMB ’0,000
| Committed investment projects and investment of over-raised proceeds | Whether the project has been changed (including partial change) | Total investment in committed proceeds | Adjusted total investment (1) | Investment amount in the current reporting period | Cumulative investment amount as of the end of the reporting period (2) | Investment progress as of the end of the reporting period (3) = (2)/(1) | The project reaches the intended usable status date | Benefits realized in the current reporting period | Cumulative benefits realized as of the end of the reporting period | Whether projected benefits are met | Whether there is a significant change in project feasibility |
| Committed investment projects | |||||||||||
| High-end dressing production line construction project | No | 21,685.86 | 21,685.86 | 2,651.92 | 2,651.92 | 12.00% | October 31, 2022 | 0 | 0 | N/A | No |
| Marketing network construction project | No | 70,456.87 | 70,456.87 | 12,229.19 | 12,229.19 | 17.00% | October 31, 2023 | 0 | 0 | N/A | No |
| R&D Center | No | 23,542.15 | 23,542.15 | 5,069.64 | 5,069.64 | 22.00% | October 31, 2022 | 0 | 0 | N/A | No |
| construction project | |||||||||||
| Digital management system project | No | 26,881.05 | 26,881.05 | 5,831.09 | 5,831.09 | 22.00% | October 31, 2022 | 0 | 0 | N/A | No |
| Subtotal of committed investment projects | -- | 142,565.93 | 142,565.93 | 25,781.84 | 25,781.84 | -- | -- | 0 | 0 | -- | -- |
| Investment of over-raised proceeds | |||||||||||
| Winner Industrial Park (Jiayu) Project | No | 40,000 | 0.00% | June 30, 2023 | 0 | 0 | N/A | No | |||
| Phase II expansion project of Winner Medical Wuhan | No | 60,000 | 500 | 500 | 0.83% | December 31, 2022 | 0 | 0 | N/A | No | |
| Bolster working capital (if any) | -- | 63,900 | 63,900 | 63,900 | 100.00% | -- | -- | -- | -- | -- | |
| Subtotal of use of over-raised proceeds | -- | 163,900 | 64,400 | 64,400 | -- | -- | 0 | 0 | -- | -- | |
| Total | -- | 142,565.93 | 306,465.93 | 90,181.84 | 90,181.84 | -- | -- | 0 | 0 | -- | -- |
| Information on and reasons for not meeting the scheduled | N/A | ||||||||||
| progress or projected earnings (by specific project) | |
| Description of significant changes in project feasibility | N/A |
| Amount, purpose and progress of use of over-raised proceeds | Applicable |
| The amount, purpose and progress of the use of over-raised proceeds: On October 12, 2020, the 13th meeting of the Second Board of Directors and the seventh meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Some Over-raised Proceeds To Permanently Supplement the Working Capital”, and agreed that the Company could allocate RMB 639.0000 million of the over-raised proceeds to permanently supplement the working capital. As of November 2, 2020, RMB 639.0000 million of over-raised proceeds have been used to bolster working capital. On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Over-raised Proceeds for the Investment in Winner Industrial Park (Jiayu) Project”. The main body of the Proposal is as follows: The Company plans to allocate RMB 400.0000 million of the over-raised proceeds to the investment in the Winner Industrial Park (Jiayu) Project. The total investment in Winner Industrial Park (Jiayu) Project is estimated at RMB 900.0000 million, and the implementing entity is Winner Medical (Jiayu) Co., Ltd. The project is located in Hubei Jiayu Economic Development Zone, adjacent to the Park’s 2nd Road in the north, 3rd Road in the south, Jiayu Avenue in the east, and Shijingpu Road in the west. The total land area is about 451 mu. The project relies on independent research and development of patented technology achievements, and based on the existing advantages of the Company in the industry, considers natural cotton as the main raw material to innovate and improve degreasing and spunlace technology. It adopts comprehensive use of high-pressure “water needle” and other high-efficiency production technologies, and plans to build production projects in relation to spunlace, wash care, wet wipes, medical cotton/gauze/nonwoven fabrics, hand sanitizer and other products. As of December 31, 2020, the total amount invested in the above project is zero. On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Over-raised Proceeds for the Phase II Expansion Project of Winner Medical Wuhan”. The main body of the Proposal is as follows: The Company plans to allocate RMB 600.0000 million of the over-raised proceeds to the investment in the Phase II Expansion Project of Winner Medical Wuhan. The total investment in Phase II Expansion Project of Winner Medical Wuhan totals RMB 1,500.0000 million, and the implementing entity is Winner Medical (Wuhan) Co., Ltd. The project includes nonwoven coil center, sterilization processing center, domestic medical sales and marketing center, intelligent distribution center of Hubei regional headquarters, regional headquarters in Central China and the second R&D center of the Group, which are fully invested and independently operated by the Company. Thanks to the project construction, the Company’s production capacity and market share will be increased, enabling it to become a global leader in overall technical level and product quality scale. As of December 31, 2020, the total amount invested in the above project is RMB 5 million. |
| Change of location for the implementation of the proceeds investment project | Applicable |
| Occurred during the reporting period | |
| On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding Capital Increase in Wholly owned Subsidiaries with Some of the Proceeds, Changes to Implementing Entity of the Fundraising Projects, and Addition of Implementation Sites of Some Fundraising Projects”. The main body of the Proposal is as follows: To further improve the production, management efficiency and comprehensive utilization rate of resources, seize market development opportunities, and better promote the implementation of fundraising projects, the Company plans to use some of the proceeds to increase the capital of the wholly-owned subsidiaries and change the implementing entity of the fundraising projects, and add new implementation sites for the fundraising projects. Among them, the original implementing entity of the “R&D Center Construction Project” was Winner Medical (Wuhan) Co., Ltd. According to the Company’s development strategy and actual business needs, it plans to include Winner Medical Products Co., Ltd. as the implementing entity of “R&D Center Construction Project”, a fundraising project. A new implementation site in Winner Industrial Park, No. 660 Bulong Road, Longhua New District, Shenzhen is also included accordingly. | |
| Adjustment of the implementation mode of the proceeds investment project | N/A |
| Pre-investment and replacement of the proceeds investment project | Applicable |
| On October 12, 2020, the 13th meeting of the Second Board of Directors and the seventh meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Proceeds to Replace Self-raised Funds Pre-invested in the Fundraising Project”, respectively, and agreed that the Company could replace the self-raised funds pre-invested in the fundraising project with RMB 233.7173 million of proceeds. It has been verified by the “Special Auditor’s Report on Proceeds Replacement of Winner Medical Products Co., Ltd.” issued by BDO Certified Public Accountants (Special General Partnership) No.ZI10635 on October 12, 2020. Among them: the actual investment amount of the Company’s self-raised funds pre-invested in the proceeds investment project is RMB 233.7173 million, of which: RMB 26.5062 million was invested in high-end dressing production line construction project, RMB 110.0794 million was invested in marketing network construction project, RMB 50.2174 million was invested in R&D center construction project, RMB 46.9143 million was invested in digital management system project. In October and November 2020, the Company transferred RMB 73.4205 million and RMB 160.2968 million respectively from the special account for proceeds to replacing the self-raised funds that had been invested in advance in the proceeds project. | |
| Temporary replenishment of working capital with idle | N/A |
| proceeds | |
| Amount of and reasons for the balance of proceeds resulting from project implementation | N/A |
| Usage and purposes of proceeds not used during the current reporting period | As of December 31, 2020, the balance of unused proceeds of the Company was RMB 2,665.6827 million, of which: the balance of structured deposits was RMB 2,520.0000 million and the balance deposited in the proceeds account was RMB 145.6827 million. |
| Problems or other circumstances in the use and disclosure of proceeds | NA |
(3) Changes in proceeds projects
□ Applicable √ Not applicable
The Company did not have any change in the proceeds project during the reporting period.
VI. Sales of significant asset and equity
1. Information of significant assets for sale
□ Applicable √ Not applicable
The Company did not sell any significant assets during the reporting period.
2. Information of significant equity for sale
□ Applicable √ Not applicable
VII. Analysis of major holding companies and joint stock companies
√Applicable □ Not applicable
Information on major subsidiaries and joint stock companies with an impact of 10% or more on the Company’s net profit
Unit: yuan
| Company name | Company type | Principal operation | Registered capital | Total assets | Net assets | Revenue | Operating profit | Net profit |
| Winner Medical (Huanggang) Co., Ltd. | Subsidiaries | Mainly responsible for the production of large rolls of cotton and cotton tissues | 259,459,200.00 | 1,235,194,142.43 | 1,018,512,110.13 | 2,221,520,462.04 | 529,536,625.88 | 452,343,796.38 |
| Winner Medical (Chongyang) Co., Ltd. | Subsidiaries | Mainly responsible for the production of medical gauze pads and protective clothing | 28,550,000.00 | 490,306,461.66 | 276,494,265.20 | 1,369,945,452.16 | 247,619,659.21 | 212,172,351.41 |
Acquisition and disposal of subsidiaries during the reporting period
√Applicable □ Not applicable
| Company name | Method of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production operations and performances |
| Purcotton (Huanggang) Technology Co., Ltd | Establishment | Loss of RMB 772,400 with no material impact on performances |
Description of major holding companies and joint stock companiesNote: The operating revenues of the above subsidiaries include sales to the parent company and other subsidiaries in the Group.
VIII. Structured subjects controlled by the Company
□ Applicable √ Not applicable
IX. Prospects for the Company’s development(I) Industry development trend and competition patternFor details, please refer to the Company’s business summary in Section III.(II) The Company’s development strategies
In the future, Winner Medical will continue to be committed to becoming a global leader in medical consumables, home care products, and good dailynecessities. It will adhere to its original intention, continue to innovate, and keep on leading the positive development of industry to transform from“Made in China” to “Created in China”, and from Chinese brands to international brands. The Company will always adhere to the sustainabledevelopment concept of pursuing quality life and loving health as well as environmental protection, combining the two to bring happiness, peace ofmind and sustainable products to consumers and create value for a better life.(III) Major development planning
1. Technology research and development and product development plans
The Company will always consider technological innovation and product innovation as the driving force, continue to improve its product portfolio,and further consolidate its leading position in the healthcare industry. In the field of medical consumables, the Company will continue to develop andproduce high-end dressing products, optimize product structure, strengthen research and development of core basic raw materials, enhance productmarket competitiveness, and vigorously promote the application of 100% cotton spunlace nonwoven fabrics to medical gauze, medical protectiveclothing, surgical gowns, isolation gowns and other protective supplies. In the field of healthy living consumer products, the Company will continueto position “comfortable, healthy and eco-friendly” brands, expand the use scenarios of products, and continuously focus the technical researches onnew technology, new structure and new functions of yarns and fabrics. At the same time, the Company will make (more) efforts to enable researchand design teams to visit and follow the market trends at home and abroad, strengthen studies on consumers’ behavioral and psychologicalcharacteristics, and develop and design products that “delight users”.
2. Market development plans
The Company will make more efforts to market development based on its leading advantages in products and brands. In the field of medicalconsumables, for the domestic market, the Company will develop the hospital and civilian markets more in a more professional manner throughchannel classification management while consolidating the existing market share; for the international market, the Company will vigorously expandits own Winner market in developing countries and regions (e.g., those in Asia) while stabilizing the existing customers in developed countries andregions (such as Europe, America and Japan). In the field of healthy living consumer products, Purcotton will continue to promote its storedeployment in first- and second-tier cities that have large market capacities and strong consumption power, focus on entering third- and fourth-tiercities through the franchise model, thus perfecting the store marketing network. For online channels, in addition to Tmall, JD.com and othermainstream third-party e-commerce platforms, the Company further develops its own APPs, official websites, applets, etc., establishing critical salesgrowth channels. Through the building of an omni-channel marketing network and information system, the Company will further integrate online andoffline resources in terms of commodities, logistics, etc., enhance the shopping experience of consumers, enrich the ways of online and offline trafficexchange, and navigate the synergistic development of different channels.
3. Digital management system construction plan
The Company will advance the strategic planning of enterprise digital management system, comprehensively promote the “consumer-centric and newtechnology-driven” business transformation, and drive and lead the overall business change and innovation throughout the entire industry chain, andpave the digital transformation path to comprehensively promote the “consumer-centric” and “digital and intelligent manufacturing-driven” businesstransformation, so as to realize five digital strategies of “centralized digital operation of goods”, “omni-channel digital operation”, “"digital operationof consumers”, “digital operation of smart logistics” and “digital operation of smart manufacturing”, thus assisting the Company in sustainabledevelopment.
4. Human resources plans
Talents are the key to maintaining the Company’s innovative capacity and continued competitiveness. To meet the needs of rapid development, theCompany will further optimize the human resource system, and introduce mid- and high-end R&D, marketing and management talents while creatinga learning organization and improving the comprehensive quality and skill level of employees. The Company will also further improve the humanresource incentive system, establish an assessment system linking personnel, performance and results, adopt equity incentives, and enhance teamcohesion and centripetal force through the cultivation and guidance of corporate culture.
5. Merger & acquisition plans
With the expansion of business scale and the enhancement of financial strength, the Company will, from a strategic point of view, seize the
Winner Medical Co., Ltd. 2020 Annual Reportopportunities of industry development and, based on the principle of maximizing shareholders’ value, seek suitable M&A targets related to theCompany’s main business globally. Moreover, it will implement M&A plans in case of appropriate timing, conditions and targets, thus promoting theCompany’s outward development.
6. Development plans in medical protection fields
The Company will make multi-point deployment for its production capacity, contribute more to extensive industry cooperation, so as to furtherenhance its technology and capacity strength in the medical protection field. The establishment of the “Winner Medical Academy (Sensitive Control)”aims to improve the occupational safety of clinical medical staff in China and reduce the risk of occupational exposure. Provide a professionalacademic platform for infection prevention and control for clinicians, nurses and practitioners in the medical industry, so that the awareness and levelof infection prevention and control of clinical medical staff as well as the quality of hospital infection prevention and control across the country canbe effectively and efficiently improved.(IV) Possible risks to the Company
1. Risk of earnings volatility due to the COVID-19 outbreak and countermeasures
From January to December 2020, the Company achieved an operating revenue of RMB 12,533.9459 million, a growth of 173.99% YoY, and net profitattributable to owners of the parent company of RMB 3,810.4125 million, an increase of 597.50% YoY. In terms of revenue product composition,affected by the COVID-19 pandemic, the Company’s sales of medical epidemic prevention products such as medical masks and protective clothingincreased significantly in 2020. During the epidemic, the Company’s brand awareness has been further improved and sales channels have been furtherexpanded. In the medium and long term, the Company will see sustainable growth in its performance. However, with the effective prevention andcontrol of COVID-19 pandemic, widespread vaccination, dramatic growth of vaccination production capacity and increasing competition, there arerisks of a significant reduction in orders for vaccination products, and uncertainties in the substantial growth of the sales of the Company’s medicalprotection products, as well as risks of unsustainable sales revenue and net profit growth rate in the short term.Although the sales of protection products cannot maintain substantial growth, after the baptism of COVID-19 pandemic, the country, hospitals and thepublic have raised the requirements for a hygienic environment, the Company’s brand awareness, reputation and influence has been greatly enhanced,while sales channels have been further expanded. The Company then will seize market opportunities, make product adjustments according to marketdemands, increase its share and coverage in the medical consumables market.
2. Risk of raw material price fluctuations and countermeasures
The Company’s main raw materials are cotton as well as cotton yarn and cotton greige fabric for medical use made from cotton. The prices of cottonare affected by multiple factors such as planting area, natural production, inventory cycle, agricultural price policy of origin, consumer demand andeven futures prices. In addition, the prices of imported cotton are also affected by other factors such as international trade policies and exchange ratefluctuations. If the purchase price of raw materials such as cotton continues to rise in the future, it will have a greater cost pressure on the Company’sproduction and operation. If the Company fails to the adjustment of sales price with that of raw material price, it may have a negative impact on thestability of the Company’s profitability.To deal with the risk of cotton price fluctuations, the Company usually purchases forward contracts when the cotton price is relatively low, and whenthe cotton price rises to a certain level, it will adjust the sales price appropriately to reduce the negative impact on the Company’s profitability.
3. Risk of exchange rate price fluctuations and countermeasures
Medical consumables are the main exports of the Company, which are settled in major international currencies such as US dollars. From 2018 to 2020,the proportion of the Company’s foreign sales in its main operating revenues were 22.70%, 18.92% and 47.69%, respectively, which accounted for acertain proportion of overall revenue. In recent years, with the accelerated pace of RMB internationalization and further marketization of the RMBexchange rate formation mechanism, the exchange rate flexibility of RMB against the above currencies has increased. Fluctuations in the RMBexchange rate will, on the one hand, affect the Company’s product export sales prices; on the other hand, it will also cause the Company to generateexchange gains and losses. In 2018 and 2019, the Company’s exchange gains amounted to RMB 9.2173 million and RMB 3.6184 million,respectively, and in 2020, the Company’s exchange losses were RMB 239.4264 million (during the reporting period, overseas sales increased byRMB 5.120 billion, and the amount of foreign currency receipts increased significantly, resulting in greater impact of exchange rate changes). If there
Winner Medical Co., Ltd. 2020 Annual Reportis a significant appreciation of RMB in the future, it will affect the price competitiveness of the Company in overseas markets, and cause exchangelosses, which will adversely affect the Company’s operating revenues and profits.To reduce the impact of exchange rate fluctuations on the Company’s performance, (1) for long-term stable customers, the Company has an agreedprice adjustment mechanism, and in case of significant fluctuations in key elements affecting the price, the price shall be adjusted normally accordingto the agreed price adjustment mechanism; and at the same time, the Company adjusts the quotation cycle for new orders received, shortens thequotation cycle, and adjusts the quotation exchange rate in a timely manner; (2) the Company carries out forward settlement and sale of foreignexchange for the purpose of hedging, and locks the forward settlement exchange rate in advance to reduce the risk and hedge the exchange rate risk ininternational business; and (3) The Company will strengthen its research and analysis of exchange rates, pay attention to changes in the internationalmarket environment in real time, and adjust its business strategies in a timely manner to minimize the risk of exchange rate fluctuations.
4. Risk of fluctuations in downstream market demand and less-than-expected customer development and countermeasuresThanks to its three brands, i.e., “Winner Medical”, “Purcotton” and “PureH2B”, the Company realized synergetic development of medical andconsumer sectors. Its business and development prospects depend on the sustainable and healthy development of macro economy, the continuedgrowth of national per capita disposable income, and the consumers’ increasing attention to the concept of health and environmental protection.Therefore, in the event of a macroeconomic downturn, a decline in national per capita disposable income or purchasing power, or an uncertainexpected economic outlook, the downstream demand situation of the Issuer, especially consumers’ willingness and ability to purchase high-qualityproducts, may be affected, which would adversely affect the Company’s operating results. In addition, after more than ten years of rapid development,the growth of e-commerce in China has slowed down and the difficulty of acquiring customers has increased. If the Company cannot adjust itsbusiness strategy based on market conditions, it may not be able to continuously expand its customer base and reduce customer acquisition costs,which would adversely affect the Company’s long-term profitability.
5. Risk of changes in industry policies and standards and countermeasures
Medical device, which directly affects the life and health safety of users, has been a key supervised industry. In recent years, as China further deepensthe reform of the medical and health system, relevant government departments have introduced a series of regulations and policies on industrystandards, bidding, price formation mechanisms, circulation systems, etc., which have a wide and profound impact on the development of the medicaldevice industry. As the Company gradually make more efforts in the investment and development in the domestic market of medical consumables, itsdomestic sales of medical consumables are expected to further increase in the future. Affected by the COVID-19 pandemic, the foreign economicenvironment has been relatively sluggish, which may lead to medical budget cuts, and the price sensitivity of medical products has increased,resulting in a risk of further compressing the operating profits. If the Company fails to adapt to profound changes in industry policies in a timelymanner, it may have an impact on the Company’s operations.
6. Risk of not receiving reimbursement for the Heyuan Winner Medical Investment Project and countermeasuresDue to the planning of the square of Heyuan High-speed Railway Station and the surrounding high-speed railway new town along theJiangxi-Shenzhen High-speed Railway, the“Agreement on Investment and Construction of Medical Combo Kits and Cotton Household ProductsProduction Project” entered into by and between the Company and the People’s Government of Zijin County, Heyuan City in May 2016 could not befulfilled. In November 2019, the International Arbitration Court in Ganjiang New District issued an “Award” confirming the termination of the“Investment and Construction Agreement of Medical Combo Kits and Cotton Household Products Production Project”, and the People’s Governmentof the Zijin County shall compensate the Company for economic losses of RMB 550 million, with 50% to be paid by the People’s Government ofZijin County by December 31, 2019 and 50% by February 29, 2020. As of the disclosure date of the report, the company has received a land transferdeposit of RMB 3 million and a compensation payment of RMB 213 million returned by the People’s Government of Zijin County. There is a risk thatthe remaining amount may not be received on time in accordance with the “Award”. The Company is currently closely following up on thesubsequent payment plan of the People’s Government of Zijin County, Heyuan City.
7. Risks of proceeds projects and countermeasures
The Company plans to allocate the proceeds from this issuance to the construction projects of high-end dressing production lines, marketing network,R&D Center and digital management system. The development progress and operation of such projects will contribute to the Company’s developmentand profitability in the next few years.
Winner Medical Co., Ltd. 2020 Annual ReportBased on the forecast of the future market, the Company has conducted a prudential and sufficient feasibility study and demonstration of the proceedsinvestment project. Thanks to the Company’s rich business experience and market foundation accumulated over the years, it is expected that theproceeds investment project could realize good investment income. However, if there are changes in external factors such as the industry market, itcannot rule out that some projects may not be implemented as scheduled or the actual investment returns may be lower than expected. In accordancewith changes in the external market and the internal control and management system of proceeds projects, the Company will strictly control theprogress of capital investment in various projects and keep an eye on the risk of project investment.
X. Registration forms for receptions of surveys, communication, interviews and other activities
1. Registration forms for receptions of surveys, communication, interviews and other activities during thereporting period
√Applicable □ Not applicable
| Time | Location | Method | Types of objects | Objects | Main contents of discussions and documents provided | Basic information index of surveys |
| September 21, 2020 | Headquarters conference rooms | Field surveys | Institutions | Rongtong Fund, Invesco Great Wall Funds, First State Cinda Fund and other institutions | Outline of the Company’s business, operation and sustainability of products related to the epidemic, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| September 22, 2020 | Headquarters conference rooms | Field surveys | Institutions | China Southern Fund, China Merchants Fund, Da Cheng Fund, E Fund and other institutions | Outline of the Company’s business, operation and sustainability of products related to the epidemic, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| September 23, 2020 | Headquarters conference rooms | Field surveys | Institutions | ICBCCS Fund, Yinhua Fund, Cedar Asset and other institutions | Outline of the Company’s business, operation and sustainability of products related to the epidemic, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| September 24, 2020 | Headquarters conference rooms | Field surveys | Institutions | Lombarda China Fund, CCB Wealth Management, Huashang Fund, | Outline of the Company’s business, product channels, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| Essence Fund and other institutions | ||||||
| September 25, 2020 | Headquarters conference rooms | Field surveys | Institutions | BOCOM Schroders Fund, Kaifeng Investment, Morgan Stanley Huaxin Fund and other institutions | Outline of the Company’s business, product channels, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| September 29, 2020 | Shenzhen Futian Shangri-La Hotel | Field surveys | Institutions | Ping An Fund, Bosera Funds, Invesco Great Wall Funds, CITIC Securities, Kaifeng Investment, Harvest Fund, Morgan Stanley Huaxin Fund and other institutions | The Company’s competitive advantages, future development plans, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| October 28, 2020 | Headquarters conference rooms | Telephone communication | Institutions | CITIC Securities, CICC, TF Securities, China Great Wall Securities and other institutions | Presentation of the Company’s financial data for the first three quarters, and recent business conditions | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| November 4, 2020 | Headquarters conference rooms | Field surveys | Institutions | Cinda Securities, Ping An Fund and other institutions | Development space and channel development plan of the Company’s medical business, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| November 6, 2020 | Headquarters conference rooms | Field surveys | Institutions | Perseverance Asset, CITIC Securities and other institutions | Development space and channel development plan of the Company’s medical business, etc. | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| November 16, 2020 | Headquarters conference rooms | Field surveys | Institutions | GF Securities, Mingya Fund, China Re Asset | Company management structure, brand operation, brand | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
| promotion and innovation capability advantages | ||||||
| November 27, 2020 | Headquarters conference rooms | Field surveys | Institutions | Huachuang Securities, Point 72, NEUMANN ADVISORS | Profitability of the Company’s stores and brand positioning of PureH2B | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com.cn) |
Section 5 Important MattersI. Common stock profit distribution and share capital increase from capital surplusCommon stock profit distribution policy during the reporting period, especially the formulation, implementation or adjustment of cash dividendpolicy
√Applicable □ Not applicable
During the reporting period, the Company's dividend policy was formulated and implemented in accordance with the provisions of the Articles ofAssociation and the requirements of the resolution of the general meeting of shareholders. The dividend standard and proportion were clear. Therelevant decision-making procedures and mechanisms were complete. The independent directors performed their duties and fully played their role.The Company's profit distribution plan will be submitted to the general meeting of shareholders for deliberation, Minority shareholders have theopportunity to fully express their opinions and demands, and their legitimate rights and interests have been fully protected.
| Special explanation of cash dividend policy | |
| Whether it meets the requirements of the Articles of Association or the resolution of the general meeting of shareholders: | Yes |
| Whether the dividend standard and proportion are clear: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether the independent directors perform their duties and fully play their role: | Yes |
| Whether minority shareholders have the opportunity to fully express their opinions and demands, and whether their legitimate rights and interests have been fully protected: | Yes |
| If the cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant and transparent: | N/A |
The Company's profit distribution plan and capital surplus converted into share capital plan in the reporting period are consistent with the relevantprovisions of the articles of association and dividend management measures
√ Yes □ No □ Not applicable
The Company's profit distribution plan and capital surplus converted into share capital plan in the reporting period conform to the relevant provisionsof the articles of association.Profit distribution and share capital increase from capital surplus in current year
| Bonus shares per 10 shares (shares) | 0 |
| Dividend per 10 shares (RMB) (including tax) | 18 |
| Increase shares per 10 shares | 0 |
| Share capital base in distribution proposal (shares) | 426,492,308 |
| Amount of cash dividend (RMB) (including tax) | 767,686,154.40 |
| Amount of cash dividend in other forms (e.g. share repurchase) (RMB) | 0.00 |
| Total cash dividends (including other methods) (RMB) | 767,686,154.40 |
| Distributive profit (RMB) | 3,349,520,232.39 |
| Proportion of total cash dividends (including other methods) in total profit distribution | 100.00% |
| This cash dividends | |
| Other | |
| Detailed description of the proposal of profit distribution or share capital increase from accumulation fund | |
| According to the Audit Report of Winner Medical Co., Ltd. in 2020 (XKSB Zi. [2021] No.ZI10154) issued by BDO China Shu Lun Pan Certified Public Accountants LLP, the net profit attributable to the shareholders of the parent company in the consolidated statements of the Company in 2020 is RMB 3,810,412,504.40, and the net profit of the parent company in 2020 is RMB 3,033,576,709.34. According to the relevant provisions of the Company Law and the Articles of Association, after drawing the statutory surplus accumulation fund, the profit available for distribution to shareholders in the current year is RMB 2,730,219,038.41; adding the undistributed profit of RMB 717,801,193.98 at the beginning of the year, and deducting RMB 98,500,000.00 of cash dividends distributed to shareholders in the profit distribution plan of 2019, as of December 31, 2020, the profit of the parent company available for distribution to shareholders is RMB 3,349,520,232.39. In line with the principle of repaying shareholders and sharing the Company's operating results with shareholders, taking into account the reasonable return of investors and the long-term development of the Company, and on the premise of ensuring the normal business development of the Company, the annual profit distribution plan for 2020 is proposed as follows: based on the total share capital of 426,492,308 shares on December 31, 2020, and based on the profit that can be distributed by the parent company to all shareholders, it is planned to distribute cash dividends of RMB 18.00 (including tax) per 10 shares, with a total cash dividends of RMB 767,686,154.40. After the implementation of the above profit distribution plan, the remaining undistributed profit of the parent company is RMB 2,581,834,077.99, which will continue to be retained by the Company to support the Company's business development. This distribution does not implement the conversion of capital reserve into share capital and are not dividend shares. In case of any change from the disclosure to the implementation of the distribution plan due to the listing of new shares, the granting and exercising of equity incentive, the conversion of convertible bonds into shares, share repurchase, etc., the distribution proportion will be adjusted accordingly according to the principle that the total amount of cash dividends and the total amount of capital reserve converted into share capital will remain unchanged. | |
The Company's common stock dividend distribution plan (proposal) and the plan of share capital increase from accumulation fund (proposal) inrecent three years (including the reporting period)
1. Profit distribution of 2020
Based on the total share capital of 426,492,308 shares on December 31, 2020, and based on the profit that can be distributed by the parent company toall shareholders, it is planned to distribute cash dividends of RMB 18.00 (including tax) per 10 shares, with a total cash dividends of RMB767,686,154.40. After the implementation of the above profit distribution plan, the remaining undistributed profit of the parent company is RMB2,581,834,077.99, which will continue to be retained by the Company to support the Company's business development. This distribution does notimplement the conversion of capital reserve into share capital and are not dividend shares.
2. Profit distribution of 2019
According to the relevant provisions of the Company Law and the Articles of Association, the Company implements profit distribution according tothe following plan: as of December 31, 2019, the audited distributable profit of Winner Medical Co., Ltd. was RMB 717,801,193.98. In combinationwith the Company's profit situation at that time, it is decided to distribute RMB 98.5 million of the above distributable profits to all shareholders
Winner Medical Co., Ltd. 2020 Annual Reportaccording to the shareholding ratio, and the remaining undistributed profits will be carried forward to the following year.
3. Profit distribution of 2018
According to the relevant provisions of the Company Law and the Articles of Association, the Company implements profit distribution according tothe following plan: as of December 31, 2018, the audited distributable profit of Winner Medical Co., Ltd. was RMB 460,017,736.97. In combinationwith the Company's profit situation at that time, it is decided to distribute RMB 43 million of the above distributable profits to all shareholdersaccording to the shareholding ratio, and the remaining undistributed profits will be carried forward to the following year.Cash dividends of common stock of the Company in recent three years (including the report period)
Unit: yuan
| Year of dividend | Amount of cash dividend (including tax) | Net profits attributable to common shareholders of the listed company in the annual consolidated statement of dividends | Ratio of cash dividend amount to net profits attributable to common shareholders of the listed company in the consolidated statement | Amount of cash dividend in other forms (e.g. share repurchase) | Ratio of net profits attributable to common shareholders of the listed company by other means in the consolidated statements | Total cash dividends (including other methods) | Ratio of total cash dividends (including other methods) to net profits attributable to common shareholders of the listed company in the consolidated statements |
| 2020 | 767,686,154.40 | 3,810,412,504.40 | 20.15% | 0.00 | 0.00% | 767,686,154.40 | 20.15% |
| 2019 | 98,500,000.00 | 546,293,677.91 | 18.03% | 0.00 | 0.00% | 98,500,000.00 | 18.03% |
| 2018 | 43,000,000.00 | 424,684,852.89 | 10.13% | 0.00 | 0.00% | 43,000,000.00 | 10.13% |
The Company made profits during the reporting period and the profits available for distribution to common shareholders of the parent company werepositive, but no proposal for the distribution of cash dividend of common shares was put forward
□ Applicable √ Not applicable
II. Performance in fulfilling commitments
1. Commitments fulfilled within and not fulfilled by the end of the reporting period by the Company’s actualcontroller, shareholders, related parties, acquirer and other commitment parties
√Applicable □ Not applicable
| Source of commitment | Commitment party | Commitment type | Commitment content | Commitment time | Time limit for acceptance | Degree of performance |
| Commitment made in the acquisition report or equity change report |
| Commitment made at the time of asset restructuring | ||||||
| Commitment made at the time of IPO or refinancing | Wenjian Group, Li Jianquan, Xie Ping, Li Xiaoyuan | IPO lock-up | Within 36 months from the date of listing and trading of the Company's shares, the Company shall not transfer or entrust others to manage the shares directly or indirectly held by the Company that have been issued before the initial public offering of the Company's shares, nor shall the Company repurchase such shares | September 17, 2020 | 36 months from the date of listing of the Company's shares | In performance |
| Kangxin Investment, Kangsheng Investment, Kanglong Investment, Sequoia Xinyuan, Shenzhen Capital Group Co., Ltd., Kangli Investment, Fang Xiuyuan, Xu Xiaodan, Liu Weiwei, Wang Ying, Chen Huixuan, Yin Wenling | IPO lock-up | Within 12 months from the date of listing and trading of the Company's shares, the Company shall not transfer or entrust others to manage the shares directly or indirectly held by it that have been issued before the initial public offering of the Company's shares, nor shall the Company repurchase such shares | September 17, 2020 | 12 months from the date of listing of the Company's shares | In performance | |
| Wenjian Group, Li Jianquan, Xie Ping, Li Xiaoyuan, Fang Xiuyuan, Xu Xiaodan, Liu Weiwei, Wang Ying, Cheng Huixuan, Yin Wenling | IPO reduction | 1. If the shares held are reduced within two years after the lock-up period, the reduction price shall not be lower than the issue price; 2. Within 6 months after the listing of the Company, if the closing price of the Company's shares for 20 consecutive trading days is lower than the issue price (if the right or dividend is excluded during this period, the issue price will be adjusted accordingly), or the closing price of the Company's shares is lower than the issue price (if the right or dividend is excluded during this period, the issue price will be adjusted accordingly) at the end of 6 months after the listing (March 17, 2021, it will be postponed in case of non-trading day), the lock-up period of the issuer shares held by the Company is automatically extended for 6 months | September 17, 2020 | Within two years after the expiration of the lock-up period | In performance | |
| Winner Group, Li Jianquan, Kangsheng Investment, Sequoia | IPO reduction |
| September 17, 2020 | Long-term performance | In performance |
| Xinyuan | company. When reducing the shares of the Company that held by the enterprise issued prior to the IPO, the enterprise will inform the Company in advance of the reduction intention and the number of shares to be reduced in written form, The Company shall make an announcement three trading days in advance. Except when the shares of the Company held by the enterprise are less than 5%. | ||||
| Winner Medical, Winner Group, Li Jianquan | Share repurchase upon IPO fraudulent listing | There is no fraudulent issuance in the process of this public offering and listing on GEM; if the securities regulatory authority, the stock exchange or the judicial authority determines that the Company has fraudulent issuance behavior, which has a significant and substantial impact on judging whether the issuer meets the issuance conditions stipulated by law, the Company will be punished by the securities regulatory authority, the stock exchange or the judicial authority Within 5 working days from the date when the illegal facts are finally confirmed by the stock exchange or the judicial authority and other competent authority, the stock repurchase plan shall be formulated in accordance with the relevant laws and regulations and the Articles of Association, and all the new shares issued and listed shall be repurchased | September 17, 2020 | Long-term performance | In performance |
| Winner Medical, Winner Group, Li Jianquan, Fang Xiuyuan, Xu Xiaodan, Liu Weiwei, Wang Ying, Chen Huixuan, Yin Wenling, Bi Qun, Zhou Xiaoxiong, Liang Wenzhao, Guo Zhenwei, Ye Yangjing | Commitment to assume compensation liability according to law | There are no false records, misleading statements or major omissions in the prospectus. We assume individual and joint legal liabilities for its authenticity, accuracy and integrity. | September 17, 2020 | Long-term performance | In performance |
| Winner Medical, Winner Group, Li Jianquan, Fang Xiuyuan, Xu Xiaodan, Chen Huixuan, Yin | Commitment to stabilize the Company's share price in IPO | If the stock price of the Company is lower than the net assets per share within three years after listing, the Company and the relevant responsible parties can choose to implement the following measures separately or comprehensively to stabilize the stock price according to the actual situation of the Company | September 17, 2020 | 36 months from the date of listing of the Company's | In performance |
| Wenling | and the stock market when the preconditions for starting the measures to stabilize the stock price are met: 1. The Company repurchases the shares; 2. The controlling shareholders and actual controllers increase their holdings of the Company’s shares; 3. Non-independent directors and senior managers who hold posts and receive remuneration in the Company increase their holdings of the Company's shares; 4. Laws, administrative regulations, normative documents and other methods approved by CSRC. | shares | |||
| Winner Medical | Measures and commitments to make up for the diluted immediate return | In order to reduce the impact of the diluted immediate return of this issuance, we promise to take the following measures: (I) accelerate the investment progress of the investment projects with raised funds and strive to achieve the expected benefits of the project as soon as possible; (II) Strengthen the supervision of investment projects with raised funds to ensure the reasonable and legal use of raised funds; (III) Strengthen the operating management and internal control, improve the operating efficiency and profitability; (IV) Ensure a sustainable and stable profit distribution system and strengthen the return mechanism for investors | September 17, 2020 | Long-term performance | In performance |
| Winner Group, Li Jianquan | Measures and commitments to make up for the diluted immediate return | I/Our company shall not interfere in the Company's operation and management activities beyond my/our authority, encroach on the Company's interests, transfer interests to other units or individuals free of charge or under unfair conditions, damage the Company's interests in other ways, or use the Company's assets to engage in investment and consumption activities unrelated to my/our performance of duties. I/Our company promise to fully, completely and timely perform measures of making up for return established by the Company and any commitment on measures of making up for return. If I / our company violates such commitment, I / our company is willing to bear corresponding legal responsibility according to law. | Long-term performance | In performance | |
| Fang Xiuyuan, Xu Xiaodan, Chen Huixuan, Yin Wenling, Bi Qun, Zhou Xiaoxiong, | Measures and commitments to make up for the diluted immediate | 1. Shall not transfer interests to other units or individuals free of charge or under unfair conditions, or damage the Company's interests in other ways. 2. Restrict my duty consumption behavior as a director, supervisor and senior manager of the Company. 3. | September 17, 2020 | Long-term performance | In performance |
| Liang Wenzhao, Guo Zhenwei, | return | Shall not use the Company's assets to engage in investment and consumption activities unrelated to my performance of the duties of a director, supervisor and senior manager. 4. Actively promote the improvement of the Company's salary system. 5. When introducing the Company's equity incentive scheme (if any), the vesting conditions of equity incentive shall be linked with the implementation of the Company's measures to make up for the return. 6. I promise that I will issue supplementary commitments in accordance with the latest provisions of the CSRC, and actively promote the Company to make new provisions. 7. I promise to fully, completely and timely perform measures of making up for return established by the Company and any commitment I have made on measures of making up for return. | |||
| Winner Medical | Commitment on profit distribution policy | In order to better protect the legitimate rights and interests of investors, the Company deliberated and passed the revised Articles of Association (Draft) at the second extraordinary general meeting of shareholders in 2020. The Company determines the dividend return plan for the next three years: on the premise that the net profit attributable to the shareholders of the parent company is positive in the current year, the Company will make profit distribution at least once a year, and the board of directors may propose the Company to make interim profit distribution according to the Company's profit and capital demand. The Company shall give priority to cash dividend for profit distribution when it is under the conditions of cash dividend. | September 17, 2020 | 36 months from the date of listing of the Company's shares | In performance |
| Winner Group, Li Jianquan | Commitment on avoiding horizontal competition | 1. As of the date of this letter of commitment, our company / I do not and will not engage in or participate in the same or similar business and activities as the Company's main business in any form, and will not engage in or participate in the same or similar business and activities as the Company's main business through investment in other companies. 2. Our company / I undertake not to engage in or participate in any business or activities that are the same or similar to the Company's main business. 3. If the Company further expands its business scope on the basis of its existing business, and other enterprises | September 17, 2020 | Long-term performance | In performance |
| under our company’s / my control at that time have already produced and operated the business, the other enterprises under our company’s / my control at that time shall sell the relevant business, and the Company has the priority to purchase the relevant business under the same commercial conditions. 4. If the Company further expands its business scope on the basis of its existing business, and other enterprises under our company’s / my control at that time have not yet produced and operated the business, the other enterprises under our company’s / my control at that time will not engage in the same or similar business and activities as the new business of the Company. | |||||
| Winner Group, Li Jianquan | Commitment to indemnity for the recovery of social security accumulation fund | The social security and housing provident fund management departments of the Company and its major subsidiaries have issued the Certificate, confirming that from January 1, 2017 to December 31, 2019, the Company and its subsidiaries have no records of administrative punishment for violating laws and regulations related to labor, social security and housing provident fund. If Winner Medical and its subsidiaries are required to make up the social insurance premium or housing provident fund that should be paid by Winner Medical and its subsidiaries for their employees or claimed by their employees, or if litigation, arbitration and administrative punishment from relevant administrative departments occur therefrom, our company / I shall unconditionally bear the full amount of the fees that should be made up and bear the corresponding liability for compensation, to ensure that Winner Medical and its subsidiaries will not suffer any losses as a result. The controlling shareholders and the actual controller of the Company, Li Jianquan, are jointly and severally liable to each other. | September 17, 2020 | Long-term performance | In performance |
| Winner Group, Li Jianquan | Compensation commitment for demolition of Yichang Winner’s properties | The land and real estate authorities of Yichang Winner issued a certificate to confirm that the relevant subsidiaries did not violate laws and rules during the reporting period; moreover, the total area of the two properties accounts for a small proportion of the total area of the Company's and its subsidiaries' own properties. Even if there is a risk of demolition, it will not have a significant adverse impact on the production and operation of the Company and its | September 17, 2020 | Long-term performance | In performance |
| subsidiaries. In response to the relocation risk of the two properties, the controlling shareholders and the actual controller of the issuer make a commitment: “if such properties are required to be demolished within a time limit by the competent government department, the controlling shareholders and the actual controller agree to timely, unconditionally and fully compensate all losses caused to the Company.” | |||||
| Winner Medical, Winner Group, Li Jianquan, Fang Xiuyuan, Xu Xiaodan, Liu Weiwei, Wang Ying, Chen Huixuan, Yin Wenling, Bi Qun, Zhou Xiaoxiong, Liang Wenzhao, Guo Zhenwei, Ye Yangjing | Restraint measures for IPO failure to perform the contract | If we fail to fulfill the relevant commitments disclosed in the prospectus, we will publicly explain the specific reasons for our failure to fulfill the commitments in the general meeting of shareholders and the information disclosure media designated by the CSRC, and apologize to all shareholders and public investors. If we fail to fulfill the relevant public commitments, the proceeds will belong to the Company. If we cause losses to the Company or its shareholders or other investors due to our failure to fulfill the relevant public commitments, we will compensate the relevant losses to the Company or its shareholders or other investors in accordance with the law. At the same time, we shall not transfer the shares (if any) of the issuer directly or indirectly held by us during the period of assuming the aforesaid compensation liability. If we fail to bear the above compensation liability, we will stop receiving salary (if any) within 10 days after the occurrence of the above matters until I fulfill the relevant public commitments. If we fail to fulfill, have been unable to fulfill or have been unable to fulfill our commitments on time due to objective reasons beyond our control, such as changes of relevant laws and regulations, policy, natural disasters and other force majeure, we will take the following measures: (1) timely and fully disclose the specific reasons why we fail to fulfill, have been unable to fulfill or have been unable to fulfill our commitments on time; (2) Put forward supplementary commitments or alternative commitments to the Company's investors (relevant commitments shall be subject to relevant approval procedures in accordance with laws, regulations and Articles of Association), so as to protect the rights and interests of investors as far as possible | September 17, 2020 | Long-term performance | In performance |
| Equity incentive commitment | ||||||
| Other commitments made to minor shareholders of the Company | ||||||
| Whether the commitment is fulfilled on time | Yes | |||||
2. In case the Company’s asset or project saw earning expectation, and the reporting period is still covered bythe term of the earning expectation, the Company shall make a statement about the asset or project fulfilling theoriginal expectation and the reasons thereof.
□ Applicable √ Not applicable
III. Non-operating occupation of funds of listed companies by controlling shareholders and theirrelated parties
□ Applicable √ Not applicable
No non-operating occupation of funds of listed companies by controlling shareholders and their related parties during the reporting period.IV. Statement of the board of directors on the latest "non-standard audit report"
□ Applicable √ Not applicable
V. Statement of the board of directors, the board of supervisors and independent directors (if any) onthe "non-standard audit report" of the accounting firm during the reporting period
□ Applicable √ Not applicable
VI. Statement of the board of directors on accounting policy, accounting estimate change or significantaccounting error correction in the reporting period
√Applicable □ Not applicable
During the reporting period of the Company, except for the accounting policy changes caused by the changes of accounting standards, there are noother accounting policies, accounting estimate changes or corrections of major accounting errors. Among them, the accounting policy changes causedby the changes of accounting standards “Section 12 Financial statements - V. Important accounting policies and accounting estimates - 44. Changes inimportant accounting policies and accounting estimates - (1) Changes in important accounting policies”.VII. Explanation of changes in the scope of combined financial statements when compared withfinancial statements of the previous fiscal year
√Applicable □ Not applicable
Winner Medical Co., Ltd. 2020 Annual ReportShenzhen Purcotton Ltd., a subsidiary of the Company, invested RMB 6 million to establish Huanggang Purcotton Ltd. on September 27, 2020. Inaddition, there is no other change in the scope of merger.VIII. Appointment of and dismissal of accounting firmsAccounting firm currently appointed
| Name of domestic accounting firm | BDO China Shu Lun Pan CPAs |
| Remuneration of domestic accounting firm (RMB 10,000) | 80 (excluding tax) |
| Continuous years of audit services of domestic accounting firm | 7 |
| Name of certified public accountant of domestic accounting firm | Chen Qiong, Gao Junlei |
| Continuous years of audit services provided by certified public accountants of domestic accounting firm | 3 |
| Name of overseas accounting firm (if any) | None |
| Remuneration of overseas accounting firm (RMB 10,000) (if any) | 0 |
| Continuous years of audit services of overseas accounting firm (if any) | None |
| Name of certified public accountant of overseas accounting firm (if any) | None |
| Continuous years of audit services provided by certified public accountants of overseas accounting firm (if any) | None |
Has the accounting firm been changed?
□Yes √No
Engagement of internal control audit accounting firm, financial consultant or sponsor
□ Applicable √ Not applicable
IX. Delisting confronted upon disclosure of the annual report
□ Applicable √ Not applicable
X. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization of the Company during the reporting period.
XI. Major litigation, arbitration matters
√Applicable □ Not applicable
| Basic information of litigation (arbitration) | Amount involved (RMB 10,000) | Whether to form estimated liabilities | Progress of litigation (arbitration) | Trial result and influence of litigation (arbitration) | Implementation of litigation (arbitration) judgment | Date of disclosure | Disclosure index |
| Beijing Fengtai Source Fans Environmental Research Institute v. Jiayu Winner, Chongyang Winner and Huanggang Winner, public interest litigation case on environmental pollution | 1,180 | No | From August to September in 2019, Jiayu Winner, Chongyang Winner and Huanggang Winner respectively received the Civil Complaint and relevant responding legal documents served by Wuhan Intermediate People's Court, and the plaintiff was Beijing Fengtai Source Fans Environmental Research Institute. On July 24, 2020, Beijing Fengtai Source Fans Environmental Research Institute, through the exchange of evidence, held that the infringement of the three defendants had already stopped and the relevant problems had been rectified. Therefore, it applied to Wuhan Intermediate People's Court to withdraw the prosecution for the above three cases. On September 7, 2020, Wuhan Intermediate People's Court made a civil ruling (civil ruling paper No.: (2019) E 01 M.C. No.7068, (2019) E 01 M.C. No.7069, (2019) E 01 M.C. No.7070) granting the withdrawal of the lawsuit. So far, the above litigation cases have ended | The plaintiff withdrew the lawsuit without adverse effect | N/A | ||
| Tianmen Winner, Shenzhen Purcotton, Huanggang Winner v. China National Intellectual Property Administration, administrative dispute case of patent invalidation | 0 | No | On June 2, 2020, the Reexamination and Invalidation Department of the Patent Office of China National Intellectual Property Administration issued the Decision on Examination of Invalidation Request, which decided to declare the patent right of “production method of cotton non-woven medical dressings” (Patent No. ZL200510033147.1, valid until February 6, 2025) invalid. On August 26, 2020, Tianmen Winner, Shenzhen Purcotton, Huanggang Winner filed a lawsuit to Beijing Intellectual Property Court in accordance with the provisions of the Patent Law for revocation of the patent invalidation decision. On August 28, 2020, Beijing Intellectual Property Court issued the Notice of Acceptance of Administrative Case, accepting the lawsuits of Tianmen Winner, Shenzhen Purcotton, Huanggang Winner. At present, the case is still in the | If the lawsuit does not support the plaintiff's claim, the patent is finally found to be invalid. The reason for the patent invalidation decision is not that the Company and / or the patent infringes the rights of others. Therefore, the Company can still use the technology and will not have a significant adverse impact on the normal production and operation of the company | N/A |
| first instance stage | |||||||
| Winner Medical v. People's Government of Zijin County, arbitration case of contract dispute [Case No.: (2019) G.G.Z Zi No. 095] | 55,565.53 | Yes | The Company has received the award of (2019) G.G.Z Zi No. 095 Case. | The ruling confirmed that the original Investment Agreement was terminated, and the People's Government of Zijin County had to bear the lawyer's fees, legal costs and other expenses totaling RMB 2.6553 million, return RMB 3 million of land transfer deposit to the Company, and compensate for economic losses of RMB 550 million. The land, above-ground buildings, equipment and facilities and relevant supporting materials of Heyuan Winner investment and construction project were handed over to the People's Government of Zijin County. There will be no adverse impact on the Company. | As of the disclosure date of the report, the Company has received the land transfer deposit of RMB 3 million and compensation of RMB 213 million returned by the People's Government of Zijin County. The Company has handed over the project land, above-ground buildings, equipment and facilities and relevant supporting materials to the People's Government of Zijin County. |
XII. Punishment and rectification
□ Applicable √ Not applicable
No punishment or rectification of the Company during the reporting period.
XIII. Credit conditions of the company, its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XIV. Implementation of the company's equity incentive plan, employee stock ownership plan or otheremployee incentive measures
√Applicable □ Not applicable
1. 2020 restricted stock incentive plan
(1) On November 27, 2020 and December 15, 2020, the Company held the 15th meeting of the second board of directors and the 6th extraordinarygeneral meeting of shareholders in 2020 respectively, deliberated and passed the Proposal on the Company's Restricted Stock Incentive Plan in 2020(Draft) and Its Abstract and related matters. The general meeting of shareholders authorized the board of directors to determine the grant date ofrestricted stocks, and relevant matters which is necessary to grant restricted shares to the incentive object and go through the procedures for grantingrestricted shares when the incentive object meets the conditions. For details, please refer to relevant announcements disclosed by the Company on thewebsite (http://www.cninfo.com.cn) on December 16, 2020 and November 30, 2020.
(2) On December 18, 2020, the Company held the 17th meeting of the second board of directors and the 11th meeting of the second board ofsupervisors respectively, deliberated and passed the Proposal on Matters Related to the Adjustment of the Restricted Stock Incentive Plan in 2020 andthe Proposal on the First Grant of Restricted Stocks to the Incentive Objects, and determined that December 18, 2020 will be the grant date of theincentive plan, 5.833 million restricted shares will be granted to 1,036 eligible incentive objects. For details, please refer to relevant announcementdisclosed by the Company on the website (http://www.cninfo.com.cn) on December 22, 2020.
XV. Major related transactions
1. Related transactions related to daily operation
□ Applicable √ Not applicable
No major related transactions related to daily operation of the Company during the reporting period.
2. Related transactions arising from the acquisition or sale of assets or equity
□ Applicable √ Not applicable
No Related transactions arising from the acquisition or sale of assets or equity of the Company during the reporting period.
3. Related transactions of joint foreign investment
□ Applicable √ Not applicable
No related transactions of joint foreign investment of the Company during the reporting period.
4. Related claims and debts
□ Applicable √ Not applicable
No major related claims and debts of the Company during the reporting period.
V. Other major related transactions
□ Applicable √ Not applicable
No other major related transactions of the Company during the reporting period.XVI. Major contracts and their performance
1. Trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No contracting of the Company during the reporting period.
(3) Lease
√Applicable □ Not applicable
Lease description
According to the signed irreversible operating lease contract, the minimum lease payments payable by theCompany after the balance sheet date are as follows:
| Remaining lease term | Minimum lease payments |
| Within 1 year | 229,475,754.93 |
| 1~2 years | 189,063,868.38 |
| 2~3 years | 132,529,407.11 |
| More than 3 years | 103,271,438.85 |
| Total | 654,340,469.27 |
Project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to the Company
□ Applicable √ Not applicable
No lease project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to the Company during thereporting period.
2. Major guarantee
√Applicable □ Not applicable
(1) Guarantee
Unit: RMB ’0,000
| External guarantee of the Company and its subsidiaries (excluding guarantee for subsidiaries) | ||||||||
| Name of guarantee object | Disclosure date of the announcement related to guarantee limit | Guarantee limit | Actual occurrence date | Actual amount guaranteed | Type of guarantee | Guarantee period | Whether the performance has been completed | Whether it is the guarantee for the related party |
| Guarantee of the Company to its subsidiaries | ||||||||
| Name of guarantee object | Disclosure date of the announcement related to guarantee limit | Guarantee limit | Actual occurrence date | Actual amount guaranteed | Type of guarantee | Guarantee period | Whether the performance has been completed | Whether it is the guarantee for the related party |
| Winner Medical (Wuhan) Co., Ltd. | 30,000 | December 29, 2018 | 30,000 | Joint and several liability guarantee | 1.3 | Yes | Yes | |
| Shenzhen Purcotton Ltd. | 15,000 | October 10, 2019 | 15,000 | Joint and several liability guarantee | 1 | Yes | Yes | |
| Shenzhen Purcotton Ltd. | 20,000 | August 30, 2019 | 20,000 | Joint and several liability guarantee | 1 | Yes | Yes | |
| Total amount of guarantee limit approved to subsidiaries during the reporting period (B1) | 100,000 | Total actual amount of guarantee to subsidiaries during the reporting period (B2) | 65,000 | |||||
| Total amount of guarantee limit approved to subsidiaries at the end of the reporting period (B3) | 100,000 | Total actual guarantee balance to subsidiaries at the end of the reporting period (B4) | 0 | |||||
| Guarantee of a subsidiary to its subsidiaries | ||||||||
| Name of guarantee object | Disclosure date of the announcement related to guarantee | Guarantee limit | Actual occurrence date | Actual amount guaranteed | Type of guarantee | Guarantee period | Whether the performance has been | Whether it is the guarantee for the related |
| limit | completed | party | ||||
| Total amount of the Company’s guarantee (i.e. the total of the first three items) | ||||||
| Total amount of guarantee limit approved during the reporting period (A1+B1+C1) | 100,000 | Total actual amount of guarantee during the reporting period (A2+B2+C2) | 65,000 | |||
| Total amount of guarantee limit approved at the end of the reporting period (A3+B3+C3) | 100,000 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 0 | |||
| The proportion of the total amount of actual guarantee (A4 + B4 + C4) to the Company's net assets | 0.00% | |||||
| Including: | ||||||
| Balance of guarantee provided to shareholders, actual controllers and their related parties (D) | 0 | |||||
| Balance of debt guarantee provided directly or indirectly to the guaranteed object with asset-liability ratio over 70% (E) | 0 | |||||
| Amount of total guarantee exceeding 50% of net assets (F) | 0 | |||||
| Total amount of the above three guarantees (D + E + F) | 0 | |||||
| For the unexpired guarantee, an explanation of the situation that the guarantee liability has occurred or the joint and several liability may be assumed during the reporting period (if any) | NA | |||||
| Explanation of providing external guarantee in violation of specified procedures (if any) | NA | |||||
Explanation of the specific situation of adopting guarantee by compound meansNAThe Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry InformationDisclosure of Listed Companies Engaging in Textile and Apparel Business.Whether the Company provides guarantees or financial assistance to dealers
□Yes √No
(2) Illegal external guarantee
□ Applicable √ Not applicable
No illegal external guarantee of the Company during the reporting period.
3. Major contracts for daily operation
Unit: yuan
| Name of the Company to the contract | Name of the other party to the contract | Total contract amount | Progress of contract performance | Amount of sales revenue recognized | Cumulative amount of sales revenue | Collection status of accounts | Any significant change in the conditions that | Any significant risk that may hamper the |
| during the reporting period | recognized | receivable | may affect the performance of major contracts | performance of contracts |
4. Entrusted cash asset management
(1) Entrusted financial management
√Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: RMB ’0,000
| Specific type | Source of funds for entrusted financial management | Amount incurred in entrusted financial management | Outstanding balance | Overdue amount not recovered |
| Bank financial products | Self-owned funds | 140,000 | 140,000 | 0 |
| Bank financial products | Proceeds | 252,000 | 252,000 | 0 |
| Trust financial products | Self-owned funds | 20,000 | 20,000 | 0 |
| Total | 412,000 | 412,000 | 0 | |
Specific circumstance of high-risk entrusted financing with significant single amount or with low security, poor liquidity and not break-even
□ Applicable √ Not applicable
The entrusted financing is expected not to recover the principal or has other circumstances that may cause impairment
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
The Company had no entrusted loan during the reporting period.
5. Other major contracts
□ Applicable √ Not applicable
No other major contracts of the Company during the reporting period.XVII. Social responsibility
1. Social responsibility fulfillment
For details of the Company's performance of social responsibility, please refer to the Corporate Social Responsibility Report disclosed onhttp://www.cninfo.com.cn on the same day of the Company's annual report.
2. Implementation of social responsibility for targeted poverty alleviation
(1) Targeted poverty alleviation planning
On May 20, 2020, the Company donated RMB 500,000 to the poverty-stricken areas assisted by district counterparts through Longhua DistrictCharity. In the reporting year, the Company did not carry out other targeted poverty alleviation work or follow-up targeted poverty alleviation plan.
(2) Annual targeted poverty alleviation summary
On May 20, 2020, the Company donated RMB 500,000 to the poverty-stricken areas assisted by district counterparts through Longhua DistrictCharity. In the reporting year, the Company did not carry out other targeted poverty alleviation work or follow-up targeted poverty alleviation plan.
(3) Targeted poverty alleviation effect
| Indicator | Unit of measurement | Quantity / development |
| I. Overall situation | —— | —— |
| II. Itemized input | —— | —— |
| 1. Industrial development to get rid of poverty | —— | —— |
| 2. Transfer employment to get rid of poverty | —— | —— |
| 3. Relocation to get rid of poverty | —— | —— |
| 4. Poverty alleviation through improving education | —— | —— |
| 5. Poverty alleviation through providing better healthcare | —— | —— |
| 6. Poverty alleviation through better ecological protection | —— | —— |
| 7. Guaranteeing basic living standard for people unable to work | —— | —— |
| 8. Poverty alleviation through helping poor areas and poor households to develop economy and production | —— | —— |
| 9. Other projects | —— | —— |
| III. Award (content, level) | —— | —— |
(4) Follow-up targeted poverty alleviation programs
In the reporting year, the Company did not carry out targeted poverty alleviation work or follow-up targeted poverty alleviation plan.
3. Environmental protection related condition
Whether the listed company and its subsidiaries are key pollutant discharging units announced by environmental protection authorities
√ Yes □ No
| Company or subsidiary name | Names of main pollutants and characteristic pollutants | Emission mode | Number of discharge outlets | Distribution of discharge outlets | Emission concentration | Pollutant emission standards implemented | Total emissions | Total emissions approved | Emissions beyond standards |
| Winner Medical (Chongyang) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 7mg/m?、<3mg/m?、169mg/m? | 20mg/m?、50mg/m?、200mg/m? | NOX：2.43T/a、SO2：0.066T/a | NOX：13.28T/a、SO2：3.32 T/a | Not exceeding the standard |
| Winner Medical (Chongyang) Co., Ltd. | PH、COD、BOD、NH3-N、SS | Direct discharge | 1 | Sewage discharge outlet | 7.47、35mg/L、10.1mg/L、0.208mg/L、14mg/L | 6-9、80mg/L、20mg/L、10mg/L、50mg/L | COD：17.23T/a、NH3-N：0.409T/a | COD：57.6T/a、NH3-N：7.27 T/a | Not exceeding the standard |
| Winner Medical (Jiayu) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 6.1mg/m?、<3mg/m?、65mg/m? | 20mg/m?、50mg/m?、200mg/m? | NOX：2.54T/a、SO2：0.078T/a | NOX: unlicensed, SO2: unlicensed | Not exceeding the standard |
| Winner Medical (Jiayu) Co., Ltd. | PH、COD、BOD、NH3-N、SS | Direct discharge | 1 | Sewage discharge outlet | 7.5、24.7mg/L、7.3mg/L、0.319mg/L、5mg/L | 6-9、100mg/L、20mg/L、15mg/L、70mg/L | COD：8.24T/a、NH3-N：0.101T/a | COD：34.29T/a、NH3-N：1.19T/a | Not exceeding the standard |
| Winner Medical (Huanggang) Co., Ltd. | PM, SO2, NOX | / | 2 | 1#2# boiler discharge outlet | 10.3mg/m?、<3 mg/m?、122mg/m? | 20mg/m?、50 mg/m?、200mg/m? | NOX：14.04T/a、SO2：0.014T/a | NOX: 23.52T/a, SO2: unlicensed | Not exceeding the standard |
| Winner Medical (Huanggang) Co., Ltd. | PH、COD、BOD、NH3-N、SS | Indirect discharge | 1 | Sewage discharge outlet | 7.97、61.5mg/L、5.6mg/L、0.354mg/L、8mg/L | 6-9、500mg/L、300mg/L、45mg/L、400mg/L | COD：59.04T/a、NH3-N：5.904T/a | COD：90T/a、NH3-N：13.5 T/a | Not exceeding the standard |
| Winner Medical (Tianmen) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 6.0mg/m?、<3mg/m?、99mg/m? | 20mg/m?、50mg/m?、200mg/m? | NOX：6.91T/a、SO2：0.16T/a | NOX：16.235T/a、SO2：4.059T/a | Not exceeding the standard |
| Winner Medical (Tianmen) | PH、COD、BOD、NH3-N、SS | Indirect discharge | 1 | Sewage discharge outlet | 7.54、67.5mg/L、19.1mg/L、9.05mg/L、 | 6-9、400mg/L、150mg/L、30mg/L、 | COD：33.64T/a、NH3-N： | COD：132.52T/a*、NH3-N： | Not exceeding the standard |
| Co., Ltd. | 7mg/L | 250mg/L | 1.135T/a | 16.57 T/a* | |||||
| Winner Medical (Wuhan) Co., Ltd. | PM, SO2, NOX | / | / | / | / | / | / | No boiler, no license | / |
| Winner Medical (Wuhan) Co., Ltd. | PH、COD、BOD、NH3-N、SS | Indirect discharge | 1 | Sewage discharge outlet | 7.7、40mg/L、12mg/L、0.344mg/L、31.5mg/L | 6-9、500mg/L、300mg/L、45mg/L、400mg/L | COD：30.25T/a、NH3-N：3.02T/a | COD：61T/a、NH3-N：6.1T/a | Not exceeding the standard |
| Winner Medical (Jingmen) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 15.2mg/m?、<3 mg/m?、98mg/m? | 20mg/m?、50mg/m?、150mg/m? | NOX：3.314T/a、SO2：0.121 T/a | NOX：5.94T/a、SO2：1.28 T/a | Not exceeding the standard |
| Winner Medical (Jingmen) Co., Ltd. | PH、COD、BOD、NH3-N、SS | Indirect discharge | 1 | Sewage discharge outlet | 8.43、26mg/L、7.2mg/L、0.79mg/L、11mg/L | 6-9、280mg/L、150mg/L、25mg/L、210mg/L | COD：13.25T/a、NH3-N：1.32 T/a | COD：19.48T/a、NH3-N：1.95T/a | Not exceeding the standard |
| Yichang Winner Textile Weaving Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 1.46mg/m?、<3mg/m?、134mg/m? | 20mg/m?、50mg/m?、150mg/m? | Unlicensed | Unlicensed | Not exceeding the standard |
| Yichang Winner Textile Weaving Co., Ltd. | PH、COD、BOD、NH3-N、SS | Indirect discharge | 1 | Sewage discharge outlet | 7.58、135mg/L、41.5mg/L、11.8mg/L、44mg/L | 6-9、500mg/L、300mg/L、45mg/L、400mg/L | 2,830 tons of drainage, no production wastewater drainage | Unlicensed | Not exceeding the standard |
Construction and operation of pollution prevention and control facilitiesIn order to ensure the normal operation of environmental protection facilities, the Company selects advanced, mature and technically feasibleenvironmental protection facilities and treatment processes, formulates environmental protection responsibility system, emergency managementsystem, safe operation rules of environmental protection facilities, etc., assigns special personnel to be responsible for the operation and maintenanceof environmental protection facilities, formulates maintenance plan, makes operation records and daily monitoring of environmental protectionfacilities. The environmental protection facilities operate normally, and all the pollutant discharge indexes meet the requirements of pollutantdischarge permit.All subsidiaries build hazardous waste rooms, manage the whole process of hazardous waste, sign entrusted disposal agreements with third-partycompanies, and regularly transfer them to third parties for treatment.Environmental impact assessment of construction projects and other administrative permits for environmental protectionThe branches and subsidiaries of Winner Medical Co., Ltd. have implemented the environmental impact assessment system and the "threesimultaneities" system as required, and have done a good job in the environmental protection acceptance after completion.Winner Medical (Chongyang) Co., Ltd.: “Medical absorbent gauze series product line” obtained the EIA approval from Environmental Protection
Winner Medical Co., Ltd. 2020 Annual ReportBureau of Chongyang County on September 21, 2005, and passed the environmental protection acceptance after completion of EnvironmentalProtection Bureau of Chongyang County on August 22, 2008; “the project of sterile packaging and sterile production line” obtained the EIA approval(C.H.S.H [2013] No.07) from Environmental Protection Bureau of Chongyang County on March 29, 2013, and passed the environmental protectionacceptance after completion of Environmental Protection Bureau of Chongyang County on June 26, 2014; “Qingshan plant construction project” wentthrough the environmental impact assessment in July 2014 and obtained EIA approval from Environmental Protection Bureau of Chongyang Countyon November 18, 2015; the new 6390M2 workshop project” of Xianning Winner Medical (Chongyang) Co., Ltd. completed the declaration ofregistration form on May 17, 2017.Winner Medical (Jiayu) Co., Ltd.: “Absorbent cotton project with annual production of 800 tons ” obtained the EIA approval from EnvironmentalProtection Bureau of Jiayu County on March 20, 2013, and passed the environmental protection acceptance after completion of EnvironmentalProtection Bureau of Jiayu County on September 20, 2014. “Winner Purcotton construction project” obtained the EIA approval (J.H.S [2014] No.083)from Environmental Protection Bureau of Jiayu County on December 25, 2014, and passed the environmental protection acceptance after completionof Environmental Protection Bureau of Jiayu County on September 28, 2017.Yichang Winner Textile Weaving Co., Ltd.: “Medical gauze project with an annual output of 90 million meters” obtained the EIA approval fromEnvironmental Protection Bureau of Zhijiang City on December 19, 2014, and passed the environmental protection acceptance after completion ofEnvironmental Protection Bureau of Zhijiang City on October 14, 2015.Winner Medical (Tianmen) Co., Ltd.: “Cotton spun laced non-woven fabric and medical dressing products production project” obtained the EIAapproval (T.H.H. [2015] No.35) from Environmental Protection Bureau of Tianmen City on March 11, 2015. At present, phase I of the project hasbeen completed and passed the environmental protection acceptance after completion of Environmental Protection Bureau of Tianmen City onJanuary 25, 2017; the independent acceptance of phase II will be completed on May 10, 2020. “Medical dressing production line automationupgrading and transformation project” obtained the EIA approval (T.H.H. [2016] No.23) from Environmental Protection Bureau of Tianmen City onJanuary 19, 2016, and completed the independent acceptance on March 23, 2018.Winner Medical (Jingmen) Co., Ltd.: “30 million meters per year medical gauze bleaching and refining production line expansion project” obtainedthe EIA approval from Environmental Protection Bureau of Jingmen City on October 18, 1999, and passed the environmental protection acceptanceafter completion of Environmental Protection Bureau of Jingmen City on December 14, 2001; “renovation and expansion project of gauze pad, gauzesheet and shrinkage bandage” obtained the EIA approval from Environmental Protection Bureau of Jingmen City on September 23, 2003 and passedthe environmental protection acceptance after completion of Environmental Protection Bureau of Dongbao District, Jingmen City on August 3, 2005;“degreasing and bleaching medical gauze project with annual production of 1,500 tons” obtained the EIA approval from Environmental ProtectionBureau of Dongbao District, Jingmen City on April 5, 2006, and accepted together with the construction project of Purcotton on September 27, 2017;“Winner Purcotton construction project” obtained the EIA approval (D.H.H [2016] No.138) from Environmental Protection Bureau of Jingmen Cityon October 19, 2016, and passed the environmental protection acceptance of Environmental Protection Bureau of Jingmen City on September 27,2017; the expansion project of absorbent gauze production line (Purcotton phase II expansion project) obtained the EIA approval (J.H.S. [2020]No.112) from Jingmen Municipal Bureau of Ecology and Environment on December 24, 2020.Winner Medical (Huanggang) Co., Ltd.: “cotton spun laced non-woven fabric production project (phase I and phase II)” obtained the EIA approval(E.H.H. [2011] No.628) from Environmental Protection Department of Hubei Province on August 5, 2011; the phase I project passed theenvironmental protection acceptance after completion (E.H.H.[2012] No.348) of Environmental Protection Department of Hubei Province on May 8,2012. The phase II project obtained the EIA approval (H.H.H. [2015] No.304) from Environmental Protection Bureau of Huanggang City onDecember 31, 2015, and the phase I project passed the environmental protection acceptance after completion of Environmental Protection Bureau ofHuanggang City on January 24, 2017; “the new project of Purcotton distribution center” obtained the EIA approval (H.H.H. [2016] No.114) fromEnvironmental Protection Bureau of Huanggang City on June 27, 2016, and the independent acceptance of the project was completed on October 10,2018; the “boiler transformation project” obtained the EIA approval (H.H.H. [2018] No.20) from Environmental Protection Bureau of HuanggangCity on January 29, 2018, and completed self acceptance on November 14, 2019; the “foam coiled material production line project (expansion)”obtained the EIA approval (H.H.H. [2018] No.26) from Environmental Protection Bureau of Huanggang City on February 5, 2018, and completed theproject's independent acceptance on October 8, 2018; the “construction project of high-end dressing production line” obtained the EIA approval(H.H.H. [2018] No.178) from Environmental Protection Bureau of Huanggang City on November 6, 2018, and the project is currently in the
Winner Medical Co., Ltd. 2020 Annual Reportconstruction period and has not been completed; the “upgrading and transformation project of medical protective products” obtained the EIA approval(H.H.H. [2020] No.109) from Huanggang Municipal Bureau of Ecology and Environment on July 20, 2020, which is under acceptance.Winner Medical (Wuhan) Co., Ltd.: “Hubei Winner Medical Co., Ltd. cotton spun laced nonwovens and products production project” obtained theEIA approval (X.S.P.Zi [2017] No.68) from Administrative Approval Bureau of Xinzhou District, Wuhan City on July 12, 2017 (see Annex 3 for theapproval), and completed the independent acceptance of phase I on January 18, 2020; “R & D center construction project” obtained the EIA approval(X.S.P.Zi [2018] No.193) from Administrative Approval Bureau of Xinzhou District, Wuhan City on December 24, 2018 (see Annex 4 for theapproval), but the project has not started construction yet; “new electron accelerator irradiation device project” obtained the EIA approval (W.H.G.[2018] No.5) from Wuhan Environmental Protection Bureau on January 15, 2018, and the independent acceptance of phase I was completed on May15, 2020.Emergency plan for environmental emergenciesIn order to further improve the emergency management system of environmental pollution accidents, improve the ability of branches andsubsidiaries of Winner Medical Co., Ltd. to deal with major environmental pollution accidents to ensure the safety of production and operation,improve the ability of employees to deal with accidents, standardize the Company's emergency management and corresponding emergencyprocedures, and implement emergency rescue work in a timely and effective manner, prevent and reduce the occurrence of accidents to the greatestextent, branches and subsidiaries of Winner Medical Co., Ltd. have set up an environmental accident emergency leading group and formulated theEmergency Plan for Environmental Accidents. The branches and subsidiaries of Winner Medical Co., Ltd. have prepared the emergency plans forenvironmental accidents according to the requirements, and sent them to the local environmental protection authorities for record.Environmental self-monitoring schemeThe Company implements the environmental self-monitoring scheme according to the requirements of the pollutant discharge permit, and detects thepollutants through the methods of manual testing + entrusted monitoring + online monitoring. The online monitoring system of enterprises withproduction wastewater discharge carries out real-time monitoring and networking with the competent government departments. The entrusting partyof the online monitoring equipment carries out the operation and maintenance of the online monitoring equipment, and the manual testing andentrusted monitoring results are released in time on the provincial pollutant platform.Note: the self-monitoring scheme is stipulated in the pollutant discharge permit, and the pollutant discharge permit and self-monitoring scheme aremade public on the national pollutant discharge permit management platform.Other environmental information that should be disclosedNoneOther information related to environmental protectionNoneThe Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry InformationDisclosure of Listed Companies Engaging in Textile and Apparel Business.Environmental compliance of the Company during the reporting period
1. Winner Medical (Jiayu) Co., Ltd.
It is a key wastewater discharge enterprise, and the wastewater mainly includes domestic sewage and production wastewater. Domestic sewage(including canteen wastewater) is first treated in oil separation tank and septic tank, and then mixed with production wastewater to enter the sewagetreatment station in the plant. The sewage treatment station adopts “hydrolysis acidification + biological contact oxidation method” for treatment, andthen discharged from the drainage outlet through pipeline after reaching the standard. The wastewater has been installed with on-line monitoring. Thesewage treatment station passed the environmental protection acceptance after completion of Environmental Protection Bureau of Jiayu County onSeptember 28, 2017, implementing the limit value of “Discharge Standard of Water Pollutants for Textile Dyeing and Finishing Industry”(GB4287-2012). The sewage plant’s structure is concrete structure, with a service life of 20 years and environmental protection equipment for 10years.Solid waste is mainly domestic waste of employees; impurities (cotton residue, cotton dust and cotton batting) generated in the production processand cotton dust collected by dust removal equipment; the leftover materials produced in the slicing process; sludge from sewage treatment station; the
Winner Medical Co., Ltd. 2020 Annual Reporthazardous waste generated is chemical material packaging barrel. For general solid wastes, disposal agreements are signed with disposal units, and forhazardous wastes, disposal agreements are signed with qualified disposal units.
2. Winner Medical (Chongyang) Co., Ltd.
It is a key wastewater discharge enterprise. The wastewater of the project mainly includes domestic sewage, production wastewater and experimentalwastewater, etc. The production wastewater is discharged into the wastewater treatment station (hydrolysis acidification + biological contact oxidationmethod), and the treatment reaches the standard; the experimental wastewater is hazardous waste and has been entrusted to a third party company fortreatment. The domestic sewage of the employees and production wastewater generated by the enterprise are directly discharged into the sewagetreatment plant and discharged after reaching the standard. Online monitoring of wastewater has been installed, and the sewage station completedindependent acceptance on March 20, 2017, implementing the limit value of “Discharge Standard of Water Pollutants for Textile Dyeing andFinishing Industry” (GB4287-2012) The sewage plant’s structure is concrete structure, with a service life of 20 years and environmental protectionequipment for 10 years.Solid waste mainly includes office and domestic waste of employees, dust, leftover materials and unqualified products produced in the productionprocess. For domestic waste and general solid waste, disposal agreements are signed with disposal units, and for hazardous waste, entrustmentagreements are signed with third parties.
3. Winner Medical (Tianmen) Co., Ltd.
It is a key wastewater discharge enterprise. The wastewater mainly comes from the production wastewater produced by the degreasing and bleachingworkshop and the domestic sewage in the plant area. The main pollutants are pH, COD, suspended solids and BOD5. The production wastewater isdischarged to the sewage treatment station (hydrolysis acidification + biological contact oxidation method), and the treatment reaches the standard;domestic sewage enters the sewage treatment station and is treated with the production wastewater. Online monitoring of wastewater has beeninstalled, and the phase I project of the sewage station completed independent acceptance on March 23, 2018, implementing the limit value of“Discharge Standard of Water Pollutants for Textile Dyeing and Finishing Industry” (GB4287-2012). The sewage plant’s structure is concretestructure, with a service life of 20 years and environmental protection equipment for 10 years.For General solid waste and domestic waste, treatment agreements are signed with disposal units. Hazardous solid waste is mainly chemical materialpackaging barrels, which are recycled by raw material suppliers, and no hazardous waste is transferred for disposal.
4. Winner Medical (Jingmen) Co., Ltd.
It is a key wastewater discharge enterprise, and the wastewater discharged by the enterprise is mainly production wastewater and domestic sewage.The production wastewater mainly comes from the scouring and bleaching process. The PH value of the wastewater is obviously alkaline and theCOD value is high, but there is no harmful poisonous substance in it. The wastewater is discharged into the self-built sewage station, treated by“flocculation precipitation + hydrolysis acidification + biological contact oxidation method + biological aerated filter”, and then discharged into thedownstream municipal sewage plant. After simple treatment in septic tank, domestic sewage will be treated in self-built sewage station. The sewagestation has been built, online monitoring of wastewater has been installed, and the pollutant discharge permit has been obtained. It is to be accepted. Itimplements the limit value of “Discharge Standard of Water Pollutants for Textile Dyeing and Finishing Industry” (GB4287-2012). The sewageplant’s structure is concrete structure, with a service life of 20 years and environmental protection equipment for 10 years.For domestic waste and general solid wastes, disposal agreements are signed with disposal units, and for hazardous wastes, transfer agreements aresigned with third-party disposal units.
5. Winner Medical (Huanggang) Co., Ltd.
It is a key wastewater discharge enterprise, and the wastewater discharged by the enterprise is mainly production wastewater and domestic sewage.The wastewater mainly comes from spun lace forming process, degreasing / bleaching process and soft water preparation process. Most of thewastewater from spun lace forming process is reused for production after being treated by water treatment circulation system, while a small part of thewastewater are discharged into the self-built sewage station with that from degreasing / bleaching process, and then discharged after being treated by“hydrolysis acidification + biological contact oxidation” and reaching the standard. After simple treatment in septic tank, domestic sewage will betreated in self-built sewage station. Online monitoring of wastewater has been installed, and the sewage station passed the environmental protectionacceptance after completion of Environmental Protection Bureau of Huanggang City on January 24, 2017, implementing the level III standard limit inTable 4 of Integrated Wastewater Discharge Standard (GB8978-1996). The sewage plant’s structure is concrete structure, with a service life of 20
Winner Medical Co., Ltd. 2020 Annual Reportyears and environmental protection equipment for 10 years.The solid wastes of the project include general solid wastes, other solid wastes and hazardous solid wastes. The general solid wastes are mainly cottonimpurities, leftover materials, defective products, boiler coal cinders, sludge from sewage treatment facilities, etc. generated in the production process.Other solid wastes are domestic wastes generated from office and life. Among them, cotton impurities, leftover materials and defective products aresold for comprehensive utilization; after the sludge is dehydrated, it will be treated by the environmental sanitation department together with thedomestic waste. Hazardous solid wastes are mainly chemical waste packaging barrels, which are recycled by raw material suppliers, and the waste oilis stored in the plant area, and delivered to qualified units for disposal after reaching the transportation volume.
6. Winner Medical (Wuhan) Co., Ltd.
It is a key wastewater discharge enterprise. The wastewater of the project mainly includes preparation wastewater, spun laced wastewater, degreasingand bleaching wastewater and domestic water, etc. The wastewater discharge of the project is 2126.93t/d after the completion of phase I, 4067.11t/dafter the completion of phase II and 6004.5t/d after the completion of phase III. The wastewater is treated by the process of “hydrolysis acidification +anaerobic + biological contact oxidation method”. Online monitoring of wastewater has been installed, and the phase I project of the sewage stationcompleted independent acceptance on January 7, 2020, implementing the level III standard limit in Table 4 of Integrated Wastewater DischargeStandard (GB8978-1996). The sewage plant’s structure is concrete structure, with a service life of 20 years and environmental protection equipmentfor 10 years.The solid wastes of the project are mainly divided into general solid wastes, other solid wastes and hazardous solid wastes. Among them, cottonimpurities, leftover materials, defective products and fiber dust are purchased and recycled, and sludge and domestic waste are disposed by theenvironmental sanitation department.According to the Standard for Pollution Control on Hazardous Waste Storage (GB 18597-2001), the temporary storage room of hazardous waste shallbe constructed and the hazardous waste shall be stored as required. Meanwhile, the daily management of hazardous waste should be strengthened.Disposal agreements for all hazardous waste are signed with the qualified units.
Summary: in 2020, the above-mentioned key pollutant discharge enterprises are all positive lists of environmental protection law enforcement, andthe local environmental protection departments do not organize environmental protection inspection and keep relevant inspection records.
XVIII. Description of other important events
√Applicable □ Not applicable
1.Matters concerning use of part of the over raised funds to permanently supplement the working capital
| Disclosure time | Title of announcement | Announcement No. | Designated information disclosure media |
| October 14, 2020 | Announcement of the 13th Meeting of the Second Board of Directors | 2020-003 | China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and http://www.cninfo.com.cn |
| October 14, 2020 | Announcement of the 7th Meeting of the Second Board of Supervisors | 2020-004 | |
| October 14, 2020 | Announcement on Using Part of the Over Raised Funds to Permanently Supplement the Working Capital | 2020-009 | |
| October 30, 2020 | Announcement of the Resolution of the 5th Extraordinary General Meeting of Shareholders in 2020 | 2020-015 |
2. Matters concerning the increase of the capital of wholly-owned subsidiaries with part of the raised funds, changing the implementationsubject of the investment projects with raised funds and increasing the implementation location of some investment projects with raisedfunds
| Disclosure time | Title of announcement | Announcement No. | Designated information disclosure media |
| November 30, 2020 | Announcement of the Resolution of the 15th Meeting of the Second Board of Directors | 2020-016 |
China Securities Journal,Securities Times, ShanghaiSecurities News, SecuritiesDaily andhttp://www.cninfo.com.cn
November 30, 2020
| November 30, 2020 | Announcement of the Resolution of the 9th Meeting of the Second Board of Supervisors | 2020-017 |
| November 30, 2020 | Announcement on Increasing the Capital of Wholly-owned Subsidiaries with Part of the Raised Funds, Changing the Implementation Subject of the Investment Projects with Raised Funds and Increasing the Implementation Location of Some Investment Projects with Raised Funds | 2020-021 |
| December 22, 2020 | Announcement on Completing Registration of Industrial and Commercial Changes | 2020-036 |
3. Announcement on using over raised funds to invest the project of Winner Medical (Jiayu) Science and Technology Industrial Park and theexpansion project of Wuhan Winner phase II
| Disclosure time | Title of announcement | Announcement No. | Designated information disclosure media |
| November 30, 2020 | Announcement of the Resolution of the 15th Meeting of the Second Board of Directors | 2020-016 | China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and http://www.cninfo.com.cn |
| November 30, 2020 | Announcement of the Resolution of the 9th Meeting of the Second Board of Supervisors | 2020-017 | |
| November 30, 2020 | Announcement on Using Over Raised Funds to Invest the Expansion Project of Wuhan Winner Phase II | 2020-019 | |
| November 30, 2020 | Announcement on Using Over Raised Funds to Invest the Project of Winner Medical (Jiayu) Science and Technology Industrial Park | 2020-020 | |
| December 16, 2020 | Announcement of the Resolution of the 6th Extraordinary General Meeting of Shareholders in 2020 | 2020-030 |
4. Matters concerning the 2020 restricted stock incentive plan (Draft) and its abstract
| Disclosure time | Title of announcement | Announcement No. | Designated information disclosure media |
| November 30, 2020 | Announcement of the Resolution of the 15th Meeting of the Second Board of Directors | 2020-016 | China Securities Journal, Securities Times, Shanghai |
| November 30, 2020 | Announcement of the Resolution of the 9th Meeting of the Second Board of Supervisors | 2020-017 | Securities News, Securities Daily and http://www.cninfo.com.cn |
| November 30, 2020 | Announcement on Using Over Raised Funds to Invest the Expansion Project of Wuhan Winner Phase II | 2020-019 | |
| November 30, 2020 | 2020 Restricted Stock Incentive Plan (Draft) and Its Abstract | 2020-022 | |
| December 11, 2020 | Explanation on Announcement and Verification Opinions of the Board of Supervisors on the List of Incentive Objects of the 2020 Restricted Stock Incentive Plan | 2020-026 | |
| December 16, 2020 | Announcement of the Resolution of the 6th Extraordinary General Meeting of Shareholders in 2020 | 2020-030 | |
| December 16, 2020 | Self-inspection Report on Insider Trading of Company Stock with Inside Information of 2020 Restricted Stock Incentive Plan | 2020-031 | |
| December 22, 2020 | Announcement of the Resolution of the 17th Meeting of the Second Board of Directors | 2020-032 | |
| December 22, 2020 | Announcement of the Resolution of the 11th Meeting of the Second Board of Supervisors | 2020-033 | |
| December 22, 2020 | Announcement on Matters Related to the Adjustment of 2020 Restricted Stock Incentive Plan | 2020-034 | |
| December 22, 2020 | Announcement on the First Grant of Restricted Stocks to Incentive Objects | 2020-035 |
XIX. Major events of subsidiaries
□ Applicable √ Not applicable
Section 6 Changes in Shares and Shareholders
I. Change in shares
1. Change in shares
Unit: share
| Before this change | Increase/decrease (+, -) | After this change | |||||||
| Quantity | Proportion | New issue of shares | Share donation | Share capital increase from reserved funds | Other | Subtotal | Quantity | Proportion | |
| I. Restricted shares | 376,492,308 | 100.00% | 5,010,143 | 5,010,143 | 381,502,451 | 89.45% | |||
| 1. State shareholding | 0 | ||||||||
| 2. State legal person shareholding | 8,492,308 | 2.26% | 43,136 | 43,136 | 8,535,444 | 2.00% | |||
| 3. Other domestic holdings | 77,561,152 | 20.60% | 4,964,574 | 4,964,574 | 82,525,726 | 19.35% | |||
| Wherein: domestic legal person shareholding | 77,561,152 | 20.60% | 11,535 | 11,535 | 77,572,687 | 18.19% | |||
| Domestic natural person shareholding | 12,655 | 12,655 | 12,655 | 0.00% | |||||
| Fund financial products, etc. | 4,940,384 | 4,940,384 | 4,940,384 | 1.16% | |||||
| 4. Foreign shareholding | 290,438,848 | 2,433 | 2,433 | 290,441,281 | 68.10% | ||||
| Wherein: foreign legal person shareholding | 290,438,848 | 2,433 | 2,433 | 290,441,281 | 68.10% | ||||
| Foreign natural person shareholding | 0 | ||||||||
| II. Unrestricted shares | 44,989,857 | 44,989,857 | 44,989,857 | 10.55% | |||||
| 1. RMB common share | 44,989,857 | 44,989,857 | 44,989,857 | 10.55% | |||||
| 2. Foreign shares listed in China | |||||||||
| 3.Foreign shares listed abroad | |||||||||
| 4. Other | |||||||||
| III. Total amount of shares | 376,492,308 | 50,000,000 | 50,000,000 | 426,492,308 | 100.00% | ||||
Winner Medical Co., Ltd. 2020 Annual ReportCauses for change in shares
√Applicable □ Not applicable
After the reply of China Securities Regulatory Commission on Approval of the Registration of the Initial Public Offering of Shares of Winner MedicalCo., Ltd. (Z.J.X.K. [2020] No.1822), the Company issued 50 million RMB ordinary shares (A-shares) to the public. After the issuance, the total sharecapital increased from 376,492,308 shares to 426,492,308 shares.
Approval of changes in shares
√Applicable □ Not applicable
After the reply of China Securities Regulatory Commission on Approval of the Registration of the Initial Public Offering of Winner Medical Co.,Ltd. (Z.J.X.K. [2020] No.1822), the Company issued 50 million RMB ordinary shares (A-shares), which was listed and traded on the GrowthEnterprise Board of Shenzhen Stock Exchange on September 17, 2020.
Transfer of share changes
□ Applicable √ Not applicable
Implementation progress of share repurchase
□ Applicable √ Not applicable
Implementation progress of reducing repurchased shares by centralized competitive bidding
□ Applicable √ Not applicable
Influence of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the company and other financialindexes in the most recent year and the most recent period
√Applicable □ Not applicable
During the reporting period, the Company completed the IPO of shares, and the total share capital increased from 376,492,308 shares to 426,492,308shares. According to the total share capital before the IPO, the basic earnings per share of the Company in 2020 was RMB 10.12 / share, the dilutedearnings per share was RMB 10.12 / share, and the net assets per share attributable to the common shareholders of the Company was RMB 13.28 /share; according to the total share capital after the IPO, the basic earnings per share of the Company in 2020 was RMB 9.80 / share, the dilutedearnings per share was RMB 9.79 / share, and the net assets per share attributable to the common shareholders of the Company was RMB 15.14 /share.Other information the company deems necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√Applicable □ Not applicable
Unit: share
| Shareholder's name | Number of restricted shares at the beginning of the period | Number of restricted shares increased in current period | Number of shares released from restricted sale in current period | Number of restricted shares at the end of the period | Reasons for restricted sale | The proposed date of lifting the restricted sale |
| Winner Group Limited | 290,438,848 | 290,438,848 | Restricted sale before IPO | September 17, 2023 | ||
| Beijing Sequoia | 34,500,000 | 34,500,000 | Restricted sale | September 17, 2021 |
| Xinyuan Equity Investment Center (limited partnership) | before IPO | |||||
| Shenzhen Kangsheng Investment Partnership (limited partnership) | 21,371,232 | 21,371,232 | Restricted sale before IPO | September 17, 2021 | ||
| Shenzhen Kangxin Investment Partnership (limited partnership) | 11,334,400 | 11,334,400 | Restricted sale before IPO | September 17, 2021 | ||
| Shenzhen Capital Group Co.,Ltd. | 8,492,308 | 8,492,308 | Restricted sale before IPO | September 17, 2021 | ||
| Shenzhen Kanglong Investment Partnership (limited partnership) | 6,844,432 | 6,844,432 | Restricted sale before IPO | September 17, 2021 | ||
| Shenzhen Kangli Investment Partnership (limited partnership) | 3,511,088 | 3,511,088 | Restricted sale before IPO | September 17, 2021 | ||
| IPO offline placement of restricted shares | 0 | 2,965,739 | 2,965,739 | 10% of the final allocated accounts of the offline issuance part of the IPO are restricted according to the lottery results | March 17, 2021 | |
| China International Capital Corporation Limited - China | 0 | 2,044,404 | 2,044,404 | Restricted sale of strategic placement | September 17, 2021 |
| Merchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan | ||||||
| Total | 376,492,308 | 5,010,143 | 0 | 381,502,451 | -- | -- |
II. Securities issuance and listing
1. Securities issuance (excluding preferred shares) during the reporting period
√Applicable □ Not applicable
| Names of stock and its derivative | Issue date | Issue price (or interest rate) | Number of issue | Listing date | Number of shares approved for listed transaction | End date of transaction | Disclosure index | Date of disclosure |
| Stock | ||||||||
| RMB common share (A-share) | September 7, 2020 | RMB 74.30 / share | 50,000,000 | September 17, 2020 | 44,989,857 | |||
| Convertible corporate bonds, separately traded convertible corporate bonds and corporate bonds | ||||||||
| Other derivative securities | ||||||||
Description of securities issuance (excluding preferred shares) during the reporting periodAfter the reply of China Securities Regulatory Commission on Approval of the Registration of the Initial Public Offering of Shares of Winner MedicalCo., Ltd. (Z.J.X.K. [2020] No.1822), the Company issued 50 million RMB ordinary shares (A-shares) to the public at an issue price of RMB 74.30per share. The total amount of raised funds was RMB 3,715 million. After deducting the issuing expenses, the net amount of raised funds of theCompany was RMB 3,558.8493 million, among which the total amount of over raised funds was RMB 2,133.19 million. On September 14, 2020,BDO China Shu Lun Pan Certified Public Accountants LLP verified the availability of the Company's raised funds and issued the Capital VerificationReport (X.K.S.Zi [2020] No.ZI10584).
2. Description of changes in the total number of shares, shareholder structure, asset and liability structure of theCompany
√Applicable □ Not applicable
During the reporting period, the Company was approved to issue 50 million RMB ordinary shares upon the IPO. After the issuance, the total sharecapital of the Company increased from 376,492,308 shares to 426,492,308 shares. At the end of the last year of the reporting period, the total assets ofthe Company was RMB 4,531,474,400, the liabilities was RMB 1,367,926,400, and the asset-liability ratio was 30.19%; at the end of the reporting
period, the total assets of the Company was RMB 13,002,251,800, the total liabilities was RMB 2,533,861,700, and the asset-liability ratio was
19.49%.
3. Existing internal employee shares
□ Applicable √ Not applicable
III. Shareholders and actual controllers
1. Number and shareholding of the Company's shareholders
Unit: share
| Total number of common shareholders at the end of the reporting period | 28,429 | Total number of common shareholders at the end of the previous month before the disclosure date of the annual report | 32,007 | Total number of preferred shareholders with voting rights restored at the end of the reporting period (if any) (see Note 9) | 0 | Total number of preferred shareholders with voting rights restored at the end of the previous month before the disclosure date of the annual report (if any) (see Note 9) | 0 | |
| Shareholders holding more than 5% shares or top 10 shareholders | ||||||||
| Shareholder's name | Shareholder nature | Shareholding ratio | Number of shares held at the end of the reporting period | Increase or decrease during the reporting period | Number of shares held with limited sales conditions | Number of shares held with unlimited sales conditions | Pledge or freeze | |
| Status of shares | Quantity | |||||||
| Winner Group Limited | Overseas legal person | 68.10% | 290,438,848 | 290,438,848 | 290,438,848 | 0 | ||
| Beijing Sequoia Xinyuan Equity Investment Center (limited partnership) | Domestic non-state legal person | 8.09% | 34,500,000 | 34,500,000 | 34,500,000 | 0 | ||
| Shenzhen Kangsheng Investment Partnership (limited partnership) | Domestic non-state legal person | 5.01% | 21,371,232 | 21,371,232 | 21,371,232 | 0 | ||
| Shenzhen Kangxin Investment Partnership (limited partnership) | Domestic non-state legal person | 2.66% | 11,334,400 | 11,334,400 | 11,334,400 | 0 | ||
| Shenzhen Capital Group Co.,Ltd. | State legal person | 1.99% | 8,492,308 | 8,492,308 | 8,492,308 | 0 | ||
| Shenzhen Kanglong Investment Partnership (limited partnership) | Domestic non-state legal person | 1.60% | 6,844,432 | 6,844,432 | 6,844,432 | 0 | ||
| Bank of Communications Co., Ltd.－Wanjia industry preferred hybrid securities investment fund (LOF) | Other | 0.94% | 4,000,003 | 4,000,003 | 0 | 4,000,003 | ||
| Shenzhen Kangli Investment Partnership (limited partnership) | Domestic non-state legal person | 0.82% | 3,511,088 | 3,511,088 | 3,511,088 | 0 | ||
| China CITIC Bank Co., Ltd.－Bank of Communications Schroeder new vitality flexible allocation of hybrid securities investment funds | Other | 0.57% | 2,452,274 | 2,452,274 | 0 | 2,452,274 | ||
| China International Capital Corporation Limited - China Merchants Bank | Other | 0.48% | 2,044,404 | 2,044,404 | 2,044,404 | 0 |
| - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan | ||||
| Situation of strategic investors or general legal persons becoming the top 10 shareholders due to the allotment of new shares (if any) (see note 4) | China International Capital Corporation Limited - China Merchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan became the top 10 shareholders of the Company due to the placement of new shares. The lock-up period is one year, and the sales restriction will be lifted on September 17, 2021. | |||
| Description of the above-mentioned shareholder association or concerted action | N/A | |||
| Description of the above shareholders involved in entrusting / entrusted voting right and waiver of voting right | N/A | |||
| Shareholding of top 10 shareholders with unlimited sales conditions | ||||
| Shareholder's name | Number of shares with unlimited sales conditions held at the end of the reporting period | Share type | ||
| Share type | Quantity | |||
| Bank of Communications Co., Ltd.－Wanjia industry preferred hybrid securities investment fund (LOF) | 4,000,003 | RMB common share | 4,000,003 | |
| China CITIC Bank Co., Ltd.－Bank of Communications Schroeder new vitality flexible allocation of hybrid securities investment funds | 2,452,274 | RMB common share | 2,452,274 | |
| China Construction Bank Corporation－Bank of Communications Schroeder kernel driven hybrid securities investment funds | 1,745,117 | RMB common share | 1,745,117 | |
| Agricultural Bank of China Limited－Bank of Communications Schroeder regular payment double interest balanced hybrid securities investment funds | 1,163,214 | RMB common share | 1,163,214 | |
| Bank of China Limited－China Merchants Bank Fengying active allocation of hybrid securities investment funds | 1,091,669 | RMB common share | 1,091,669 |
| Bank of Communications－Huaxia blue chip core hybrid securities investment fund (LOF) | 1,010,428 | RMB common share | 1,010,428 |
| China Construction Bank Co., Ltd.－Invesco Great Wall environmental protection advantage stock securities investment fund | 890,273 | RMB common share | 890,273 |
| Bank of China Limited－Invesco Great Wall preferred hybrid securities investment funds | 785,054 | RMB common share | 785,054 |
| Agricultural Bank of China Limited－Wanjia GEM two-year regular opening of hybrid securities investment fund | 466,662 | RMB common share | 466,662 |
| China Merchants Bank Co., Ltd.－Invesco Great Wall growth pilot hybrid securities investment fund | 460,300 | RMB common share | 460,300 |
| Description of the association or concerted action between top 10 public shareholders with unlimited sales conditions, and between top 10 public shareholders with unlimited sales conditions and top 10 shareholders | N/A | ||
| Description of participation in securities margin trading business (if any) (see note 5) | N/A | ||
Whether the Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions agreed on a repurchasetransaction during the reporting period
□Yes √No
The Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions did not agree on a repurchasetransaction during the reporting period
2. Controlling shareholders of the Company
Nature of controlling shareholder: foreign holdingType of controlling shareholder: legal person
| Controlling shareholder's name | Legal Representative / Head of Unit | Date of establishment | Organization code | Main business |
| Winner Group Limited | Li Jianquan | April 8, 2003 | 124887 | Investment management |
| Equity of other domestic and foreign listed companies controlled and participated by controlling shareholders during the reporting period | None | |||
Change of controlling shareholders during the reporting period
□ Applicable √ Not applicable
No change in controlling shareholders during the reporting period.
3. Actual controller of the Company and person acting in concert
Nature of actual controller: foreign natural personType of actual controller: natural person
| Actual controller’s name | Relationship with actual controller | Nationality | Whether to obtain the right of residence in other countries or regions |
| Li Jianquan | Self | Hong Kong, China | No |
| Main occupations and positions | Director | ||
| Domestic and foreign listed companies that have held shares in the past 10 years | Winner Medical was listed on the US Over the Counter Bulletin Board on December 16, 2005, transferred to the New York Stock Exchange on October 8, 2009, transferred to the Nasdaq Stock Exchange on April 6, 2010, and delisted on December 26, 2012. Li Jianquan holds more than 50% of the voting rights of Winner Medical, forming actual control over Winner Medical. | ||
Changes in actual controller during the reporting period
□ Applicable √ Not applicable
No change in actual controller during the reporting period.Block diagram of property right and control relationship between the company and actual controller
The actual controller controls the company through trust or other asset management methods
□ Applicable √ Not applicable
4. Other legal person shareholders holding more than 10%
□ Applicable √ Not applicable
5. Restricted share reduction of controlling shareholders, actual controller, reorganizers and other commitmentsubjects
□ Applicable √ Not applicable
Section 7 Preferred Shares
□ Applicable √ Not applicable
No preferred shares of the Company during the reporting period.
Section 8 Convertible Bonds
□ Applicable √ Not applicable
No convertible bonds of the Company during the reporting period.
Section 9 Directors, Supervisors, Senior Management and EmployeesI. Equity changes of directors, supervisors and senior management
| Name | Position | Status of service | Gender | Age | Start date of tenure | End date of tenure | Number of shares held at the beginning of the period (shares) | Number of shares increased in current period (shares) | Number of shares decreased in current period (shares) | Other increase and decrease (shares) | Number of shares held at the end of the period (shares) |
| Li Jianquan | Chairman, general manager | Incumbent | Male | 64 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Fang Xiuyuan | Director, deputy general manager, chief financial officer | Incumbent | Male | 53 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Xu Xiaodan | Director | Incumbent | Female | 34 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Guo Zhenwei | Director | Incumbent | Male | 37 | June 28, 2018 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Liang Wenzhao | Independent director | Incumbent | Male | 51 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Zhou Xiaoxiong | Independent director | Incumbent | Male | 60 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Bi Qun | Independent director | Incumbent | Female | 51 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Liu Weiwei | Chairman of the board of supervisors | Incumbent | Male | 43 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Ye Yangjing | Supervisor | Incumbent | Female | 40 | June 28, 2018 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Wang Ying | Employee supervisor | Incumbent | Female | 39 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Yin Wenling | Deputy general manager | Incumbent | Male | 48 | June 28, 2018 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Chen Huixuan | Deputy general manager, secretary to the board of directors | Incumbent | Female | 39 | May 18, 2015 | June 27, 2021 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | -- | -- | -- | -- | 0 | 0 | 0 | 0 | 0 |
II. Change of directors, supervisors and senior management
□ Applicable √ Not applicable
III. Service statusProfessional background, main work experience and main responsibilities currently in the Company of current directors, supervisors and seniormanagement of the Company(I) The relevant information of the current directors of the Company is as follows:
Mr. Li Jianquan, born in 1957, Chinese, a permanent resident of the Hong Kong Special Administrative Region. College degree. In 2000, heestablished the brand of “Winner” and in 2009, the brand of “Purcotton”. He has been the chairman and general manager of the Company since theCompany is founded in 2000. Mr. Li Jianquan has been a visiting professor of Wuhan Textile University and a career development tutor ofInternational Business School of Sun Yat-sen University. At present, he is also the chairman and general manager of Shenzhen Purcotton Ltd, thechairman and general manager of PureH2B, the chairman of Qianhai Purcotton and Purcotton Lining, and the director of Winner Group, Glory RayHoldings Limited, Glory Ray Limited, Hong Kong Winner and Malaysia Winner; president of the medical dressings branch of China Chamber ofCommerce for Import and Export of Medicines and Health Products, vice president of Shenzhen Alumni Entrepreneurs Chamber of Commerce ofRenmin University of China, honorary president of Alumni Association of Wuhan Textile University, vice president of China Nonwovens & IndustrialTextiles Association and vice president of Shenzhen Quality Promotion Association. In 2006, Mr. Li Jianquan was awarded “Honorary Citizen ofHuanggang City” by the People's Government of Huanggang City, Hubei Province. In 2008, he won “District Head Award of 2005-2007 Science andTechnology Innovation award of Bao’an District of Shenzhen City” by the People's Government of Bao'an District of Shenzhen city. In 2011, he wasawarded “Special Contribution Award of China Industrial Textiles Industry” by China Nonwovens & Industrial Textiles Association. In 2014, he wonthe 2013 science and technology innovation award of Longhua New District of Shenzhen City - “Director Award of the New District ManagementCommittee” awarded by Longhua New District Management Committee. In 2016, he won the gold medal of Shenzhen Quality City awarded byShenzhen Quality City Promotion Association. In 2019, he won the first individual award of “Outstanding Contribution Talents” of Longhua Districtof Shenzhen City. In 2020, he won the 2020 China award of the Ernst & Young China Mainland Entrepreneur Award. In 2020, he was awarded thehonorary title of “Tribute to 40 Years of Special Economic Zone, Salutes 40 Brand People” and the 40th anniversary innovative and pioneeringfigures and advanced figures in Shenzhen Special Economic Zone by the Shenzhen municipal government.Mr. Fang Xiuyuan, born in 1968, Chinese, without permanent residency abroad; college degree. From July 1988 to April 1998, he served as the chiefof Finance Department of Hubei Medical and Health Products Import and Export Corporation; from May 1998 to January 1999, he was the managerof Finance Department of Zhuhai Powerbridge Technologies Co., Ltd.; since 2000, he has been the director, deputy general manager and chief
Winner Medical Co., Ltd. 2020 Annual Reportfinancial officer of Winner Medical Co., Ltd. and its predecessor. At present, Mr. Fang Xiuyuan also serves as the director of Shenzhen Purcotton,Qianhai Purcotton, Huanggang Winner, Huanggang Cotton Industry, Chongyang Winner, Jiayu Winner, Jingmen Winner, Yichang Winner, TianmenWinner, Hong Kong Winner, Chengdu Winner Likang, Heyuan Winner, Wuhan Winner, PureH2B and Purcotton Lining; the executive partner ofKangsheng Investment, member of the Chinese People's Political Consultative Conference of Longhua District, Shenzhen City, vice chairman ofFederation of Industry and Commerce of Longhua District, Shenzhen City.Ms. Xu Xiaodan, born in 1987, Chinese, without permanent residency abroad; bachelor degree. From March 2010 to June 2011, she served assecretary of President Office of Winner Industries (Shenzhen) Co., Ltd.; from June 2011 to August 2013, she was the cotton purchasing manager ofWinner Industries (Shenzhen) Co., Ltd.; from August 2013 to January 2015, she was the purchasing manager of Procurement Department ofShenzhen Purcotton Ltd.; from January 2015 to February 2019, she served as the director of Commodity Center of Shenzhen Purcotton Ltd.; fromMay 2015 to now, she has been a director of Winner Medical Co., Ltd.; from March 2019 to January 2020, she served as the leader of the CommodityDigital Operation Project Team of Shenzhen Purcotton Ltd.; from February 2020 to now, she has been the director of Strategic Planning Center ofShenzhen Purcotton Ltd. At present, Ms. Xu Xiaodan is also a director of Heyuan Winner and Wuhan Winner.Mr. Guo Zhenwei, born in 1984, Chinese, without permanent residency abroad; bachelor degree of Central University of Finance and Economics,EMBA master degree of China Europe International Business School. From July 2007 to September 2009, he was senior auditor of Deloitte ToucheTohmatsu Limited; from September 2009 to July 2010, he was a researcher of China International Capital Corporation Limited; from July 2010 tonow, he has been working in Sequoia Capital China and is currently the managing director; from June 2018 to now, he has been a director of WinnerMedical Co., Ltd. At present, Mr. Guo Zhenwei is also a director of Shijiazhuang Junlebao Dairy Co., Ltd., Shanghai Baiqiu Network Technology Co.,Ltd., Lium Group Co., Ltd., Hangzhou Dahiti Science & Technology Co., Ltd., Deqing Jiajun Beverage Co., Ltd., Sichuan Vanov New Material Co.Ltd., Shanghai Shouquanzhai E-commerce Co., Ltd., LOHO Holding Inc., New Dynamics China Holding Company, Shanghai Ruishu ElectronicCommerce Co., Ltd., Genki Forest Technology Group Holdings Limited and a supervisor of Shanghai Qiyao Automobile Technology Co., Ltd.Mr. Zhou Xiaoxiong, born in 1961, Chinese, without permanent residency abroad; master degree of Tsinghua University. From August 1983 toAugust 1986, he worked in the Planning Department of Guangdong Branch of the People’s Bank of China; from September 1986 to September 1989,he was the deputy manager of the Business Department of Guangdong Securities Corporation; from October 1989 to January 1992, he served asdeputy section chief of Shenzhen Branch Office of Bank of China; from February 1992 to May 1993, he was the manager of Securities Department ofShenzhen International Trust and Investment Corporation of Bank of China; from June 1993 to December 1996, he was deputy general manager ofShenzhen International Trust Consulting Corporation of Bank of China; from January 1997 to February 2002, he served as the director of BranchManagement Office and Fund Custody Office of Shenzhen Branch of Bank of China; from March 2002 to January 2005, he was the president ofZhongshan Securities Co., Ltd.; from May 2005 to July 2020, he served as the legal representative and chairman of J.P. Morgan Chase Futures Co.Ltd.; since May 2015, he has been an independent director of Winner Medical Co., Ltd. Mr. Zhou Xiaoxiong was the chairman of Shenzhen MingdeZhiyuan Investment Management Co., Ltd. and the legal representative of Guangdong Shanji Commemorative Coin Distribution Co., Ltd; at present,he also serves as the legal representative and chairman of Zhuhai Mailande Fund Management Co., Ltd., the legal representative and executivedirector of Shanghai Wendun Investment Consulting Co., Ltd. and Shanghai Wendun Investment Co., Ltd., a director of Shanghai MailandeIndustrial Development Co., Ltd., J.P.Morgan Securities (China) Co., Ltd., Sunwoda Electronic Co., Ltd., Guangzhou Nansha Financial HoldingGroup Co., Ltd. and Zhuhai Yibai International Wine Trading Center Co., Ltd., an independent director of China Boton Group Co., Ltd. and ShenzhenEllassay Fashion Co., Ltd., the general representative of Dinghua Tonglu Value Venture Capital (Xi'an) Enterprises, a professional master industrytutor of School of Finance of Renmin University of China, a member of International Committee of China Futures Association, a member of StrategicCommittee and Agricultural Products Committee of Dalian Commodity Exchange, the honorary president of Alumni Association of RenminUniversity of China in Shenzhen City.Mr. Liang Wenzhao, born in 1970, Chinese, without permanent residency abroad; EMBA of China Europe International Business School. FromJanuary 1993 to December 2002, he was a senior manager of Arthur Andersen LLP; from January 2003 to December 2016, he was a general managerof Shenzhen Youlian Shijun Enterprise Management Consulting Co., Ltd.; from May 2015 to now, he has been an independent director of WinnerMedical Co., Ltd.; from December 2016 to now, he has been the executive director of Shenzhen Youlian Shijun Enterprise Management ConsultingCo., Ltd. Mr. Liang Wenzhao was an independent director of Shenzhen Weiguang Biological Products Co., Ltd. and Shenzhen Unilumin Group Co.,Ltd.; at present, he also serves as the chairman of Shenzhen Qianhai Hejun Investment Fund Management Co., Ltd., an executive director of
Winner Medical Co., Ltd. 2020 Annual ReportShenzhen Youlian Shijun Enterprise Management Consulting Co., Ltd., a director of Shenzhen Autoway Electric Technologies Co., Ltd. and SpecturmMaterials Co., Ltd., an independent director of Shenzhen SonoScape Biomedical Technology Co., Ltd., China Calxon Group Co., Ltd., ShenzhenBreo Technology Co., Ltd. and Phograin Technology (Shenzhen) Co., Ltd., and a supervisor of South China Biomedical Materials (Shenzhen) Co.,Ltd.Ms. Bi Qun, born in 1970, Chinese, without permanent residency abroad; MBA degree of Fudan University and University of Washington. From July1992 to December 1995, he served as customer manager of Guangzhou Guangxu Advertising Co., Ltd.; from December 1995 to September 1997, hewas the brand manager of Colgate-Palmolive Co., Ltd.; from September 1997 to January 1999, he was the marketing manager of Shenzhen TaitaiPharmaceutical Co., Ltd.; from February 1999 to May 2003, he was the marketing manager of Pepsi Beverage Co., Ltd.; from May 2003 to August2005, he was the marketing manager of Kodak China Limited; from August 2005 to February 2006, he was the general manager of marketing andsales of China Travel Service Hong Kong ManGo Co., Ltd.; from March 2006 to March 2011, he was the Asia Pacific Marketing Director of CostaCruise Lines; from October 2011 to December 2014, he was vice president of global marketing of DFS Group; since May 2015, he has been anindependent director of Winner Medical Co., Ltd.; since April 2016, he has been the legal representative and executive director of Shanghai BiranCulture Communication Co., Ltd. At present, Ms. Bi Qun is also a supervisor of Guangzhou Jiashitang Advertising Co., Ltd.
(II) The relevant information of the current supervisors of the Company is as follows:
Mr. Liu Weiwei, born in 1978, Chinese, without permanent residency abroad; college degree. From July 1997 to December 2000, he was theplanning manager of Gansu East Asia Advertising Company; from April 2001 to December 2003, he was the director of Human ResourcesDepartment of Shenzhen Huihua Group; from April 2004 to December 2015, he served as deputy manager, manager and director of HumanResources Department of Winner Medical Co., Ltd. and its predecessor; from September 2010 to December 2015, he was the director of HumanResources Department of Shenzhen Purcotton Ltd.; since May 2015, he has been the chairman of the board of supervisors of Winner Medical Co.,Ltd.; since December 2015, he has been the director of the Administration Center of Winner Medical Co., Ltd. At present, Mr. Liu Weiwei also servesas the director of Shenzhen Purcotton, Qianhai Purcotton, Huanggang Winner, Huanggang Cotton Industry, Chongyang Winner, Jiayu Winner,Tianmen Winner, Yichang Winner, Jingmen Winner, Wuhan Winner, Mifu Trading and Purcotton Lining.Ms. Wang Ying, born in 1982, Chinese, without permanent residency abroad; bachelor degree. From January 2013 to May 2014, he was the managerof Foreign Trade Department of Winner Industries (Shenzhen) Co., Ltd.; from May 2014 to July 2016, he served as deputy director of InternationalTrade Department of Winner Medical Co., Ltd. and its predecessor; since May 2015, he has been the employee supervisor of Winner Medical Co.,Ltd.; from July 2016 to December 2017, he was the director of Marketing Department of Winner Medical Co., Ltd.; from September 2017 to February2018, he was the rotating CEO of Winner Medical Co., Ltd.; since January 2018, he has been the director and deputy general manager of ShenzhenPureH2B Technology Co., Ltd. Ms. Wang Ying used to be a customer complaint handler and planning purchaser of Winner Industries (Shenzhen) Co.,Ltd.; at present, she also serves as the executive partner of Kangxin Investment and the supervisor of Heyuan Winner.Ms. Ye Yangjing, born in 1981, Chinese, without permanent residency abroad; master degree. From July 2004 to July 2008, she was theadministrative assistant of OCT Group Co., Ltd.; since July 2008, she has been the investment director of Shenzhen Capital Group Co.,Ltd.; sinceJune 2018, she has been the supervisor of Winner Medical Co., Ltd. At present, Ms. Ye Yangjing also serves as the director and managing director ofShenzhen Hongtu Peacock Venture Investment Co., Ltd., and the supervisor of Shenzhen Chipscreen Biosciences Co., Ltd., Makeblock Co., Ltd. andShenzhen Hongtu Talent Investment Fund Management Co., Ltd.
(III) The relevant information of the current senior managers of the Company is as follows:
Mr. Li Jianquan, please refer to “(I) directors” in this section for details of his resume.Mr. Fang Xiuyuan, please refer to “(I) directors” in this section for details of his resume.Mr. Yin Wenling, born in 1973, Chinese, without permanent residency abroad; bachelor degree of Shenyang University of Technology. From July1996 to February 1997, he was an engineer in Hanyang Special Automobile Factory of Hubei Automobile Group; from March 1997 to January 1999,he was a quality engineer and workshop manager of Guangdong Whirlpool Microwave Products Co., Ltd.; from January 1999 to July 2002, he was a
Winner Medical Co., Ltd. 2020 Annual Reportdirector of the Material Section of Upe Electronics (Shenzhen) Co., Ltd.; from July 2002 to March 2011, he was the production manager and planningand logistics director of Shenzhen Mindray Bio-Medical Electronics Co., Ltd.; from March 2011 to August 2012, he was a director of supply chainsystem of Shenzhen Landwind Industry Co., Ltd.; from August 2012 to February 2014, he was a vice president of operations of Dohia Co., Ltd.; fromJanuary 2014 to June 2019, he was a supervisor of Shenzhen Yima Software Co., Ltd.; from July 2014 to October 2015, he was a general managerof Manufacturing Center of Shenzhen Emp Electronic Technology Co., Ltd.; since October 2015, he has been a deputy general manager and vicepresident of production of Winner Medical Co., Ltd. At present, Mr. Yin Wenling is also the chairman and manager of Heyuan Winner. Mr. YinWenling was once rated as a high-level talent in Longhua District, Shenzhen City.Ms. Chen Huixuan, born in 1982, Chinese, without permanent residency abroad; master degree in Finance, University of Glasgow, UK. FromFebruary 2007 to June 2009, she was an analyst assistant of Brean Murray, Carret & Co.; from September 2009 to May 2015, she served as a managerof Investment Management Department and a specialist of Investor Relations Department of Winner Industriesies (Shenzhen) Co., Ltd.; since May2015, she has been the secretary of the board of directors and deputy general manager of Winner Medical Co., Ltd. At present, Ms. Chen Huixuan isalso the executive partner of Kanglong Investment and the director of Chengdu Winner Likang.
Service status in the shareholder unit
√Applicable □ Not applicable
| Name of staff | Shareholder unit name | Position held in shareholder unit | Start date of tenure | End date of tenure | Whether to receive remuneration or allowance in the shareholder unit |
| Li Jianquan | Winner Group Limited | Director | April 8, 2003 | No | |
| Fang Xiuyuan | Shenzhen Kangsheng Investment Partnership (limited partnership) | Executive partner | May 2, 2013 | No | |
| Chen Huixuan | Shenzhen Kanglong Investment Partnership (limited partnership) | Executive partner | May 2, 2013 | No | |
| Wang Ying | Shenzhen Kangxin Investment Partnership (limited partnership) | Executive partner | May 2, 2013 | No | |
| Ye Yangjing | Shenzhen Capital Group Co.,Ltd. | Investment director | July 1, 2008 | Yes | |
| Description of service status in the shareholder unit | None | ||||
Service status in other unit
√Applicable □ Not applicable
| Name of staff | Other unit name | Position held in other unit | Start date of tenure | End date of tenure | Whether to receive remuneration or allowance in other unit |
| Li Jianquan | Glory Ray Holdings Limited | Director | April 11, 2012 | No | |
| Li Jianquan | Glory Ray Limited | Director | May 4, 2012 | No | |
| Li Jianquan | Shenzhen Purcotton Ltd. | Chairman, | December 7, | No |
| general manager | 2009 | ||||
| Li Jianquan | Shenzhen Qianhai Purcotton E-commerce Co., Ltd. | Chairman | July 21, 2015 | No | |
| Li Jianquan | Winner Medical Malaysia Co., Ltd. | Director | July 17, 2013 | No | |
| Li Jianquan | Winner Medical (Hong Kong) Limited | Director | January 14, 2008 | No | |
| Li Jianquan | Shenzhen PureH2B Technology Co., Ltd. | Chairman, general manager | January 25, 2018 | No | |
| Li Jianquan | Shenzhen Cotton Lining Technology Innovation Co., Ltd. | Director | July 9, 2019 | No | |
| Fang Xiuyuan | Shenzhen Purcotton Ltd. | Director | December 7, 2009 | No | |
| Fang Xiuyuan | Shenzhen Qianhai Purcotton E-commerce Co., Ltd. | Director | July 21, 2015 | No | |
| Fang Xiuyuan | Winner Medical (Huanggang) Co., Ltd. | Director | January 14, 2005 | No | |
| Fang Xiuyuan | Huanggang Winner Cotton Industry Co., Ltd. | Director | October 18, 2010 | No | |
| Fang Xiuyuan | Winner Medical (Chongyang) Co., Ltd. | Director | November 13, 2001 | No | |
| Fang Xiuyuan | Winner Medical (Jiayu) Co., Ltd. | Director | February 20, 2001 | No | |
| Fang Xiuyuan | Winner Medical (Jingmen) Co., Ltd. | Director | December 15, 1995 | No | |
| Fang Xiuyuan | Yichang Winner Textile Weaving Co., Ltd. | Director | April 22, 1999 | No | |
| Fang Xiuyuan | Winner Medical (Tianmen) Co., Ltd. | Director | February 23, 2001 | No | |
| Fang Xiuyuan | Winner Medical (Heyuan) Co., Ltd. | Director | May 18, 2016 | No | |
| Fang Xiuyuan | Winner Medical (Wuhan) Co., Ltd. | Director | January 23, 2017 | No | |
| Fang Xiuyuan | Winner Medical (Hong Kong) Limited | Director | January 14, 2008 | No | |
| Fang Xiuyuan | Chengdu Winner Likang Medical Products Co., Ltd. | Director | May 31, 2009 | No | |
| Fang Xiuyuan | Shenzhen PureH2B Technology Co., Ltd. | Director | January 25, 2018 | No | |
| Fang Xiuyuan | Shenzhen Cotton Lining Technology Innovation Co., Ltd. | Director | July 9, 2019 | No | |
| Xu Xiaodan | Winner Medical (Heyuan) Co., Ltd. | Director | May 18, 2016 | No | |
| Xu Xiaodan | Winner Medical (Wuhan) Co., Ltd. | Director | January 23, 2017 | No | |
| Liu Weiwei | Shenzhen Purcotton Ltd. | Supervisor | January 27, 2016 | No |
| Liu Weiwei | Shenzhen Qianhai Purcotton E-commerce Co., Ltd. | Supervisor | July 21, 2015 | No | |
| Liu Weiwei | Winner Medical (Huanggang) Co., Ltd. | Supervisor | July 21, 2015 | No | |
| Liu Weiwei | Huanggang Winner Cotton Industry Co., Ltd. | Supervisor | September 24, 2015 | No | |
| Liu Weiwei | Winner Medical (Chongyang) Co., Ltd. | Supervisor | February 29, 2016 | No | |
| Liu Weiwei | Winner Medical (Jiayu) Co., Ltd. | Supervisor | February 29, 2016 | No | |
| Liu Weiwei | Winner Medical (Tianmen) Co., Ltd. | Supervisor | March 1, 2016 | No | |
| Liu Weiwei | Yichang Winner Textile Weaving Co., Ltd. | Supervisor | March 1, 2016 | No | |
| Liu Weiwei | Winner Medical (Wuhan) Co., Ltd. | Supervisor | January 23, 2017 | No | |
| Liu Weiwei | Winner Medical (Jingmen) Co., Ltd. | Supervisor | March 4, 2016 | No | |
| Liu Weiwei | Shenzhen PureH2B Technology Co., Ltd. | Supervisor | January 25, 2018 | No | |
| Liu Weiwei | Shenzhen Cotton Lining Technology Innovation Co., Ltd. | Supervisor | July 9, 2019 | No | |
| Liu Weiwei | Mifu (Shanghai) Trading Co., Ltd. | Supervisor | March 16, 2018 | No | |
| Wang Ying | Winner Medical (Heyuan) Co., Ltd. | Supervisor | May 18, 2016 | No | |
| Wang Ying | Shenzhen PureH2B Technology Co., Ltd. | Director, deputy general manager | January 25, 2018 | No | |
| Yin Wenling | Winner Medical (Heyuan) Co., Ltd. | Chairman, manager | May 18, 2016 | No | |
| Chen Huixuan | Chengdu Winner Likang Medical Products Co., Ltd. | Director | May 1, 2018 | No | |
| Ye Yangjing | Shenzhen Chipscreen Biosciences Co., Ltd. | Supervisor | March 24, 2018 | March 23, 2021 | No |
| Ye Yangjing | Makeblock Co., Ltd. | Supervisor | November 21, 2017 | No | |
| Ye Yangjing | Shenzhen Hongtu Peacock Venture Investment Co., Ltd. | Director, general manager | July 15, 2015 | No | |
| Ye Yangjing | Shenzhen Hongtu Talent Investment Fund Management Co., Ltd. | Supervisor | January 4, 2017 | No | |
| Guo Zhenwei | Sequoia Capital China | Director, general manager | October 1, 2010 | Yes | |
| Guo Zhenwei | Deqing Jiajun Beverage Co., Ltd. | Director | April 22, 2015 | No | |
| Guo Zhenwei | Sichuan Vanov New Material Co. Ltd. | Director | December 5, | No |
| 2017 | |||||
| Guo Zhenwei | Shanghai Shouquanzhai E-commerce Co., Ltd. | Director | July 13, 2018 | No | |
| Guo Zhenwei | LOHO Holding Inc. | Director | July 2, 2018 | No | |
| Guo Zhenwei | Shanghai Qiyao Automobile Technology Co., Ltd. | Supervisor | May 27, 2016 | No | |
| Guo Zhenwei | New Dynamics China Holding Company | Director | September 2, 2019 | No | |
| Guo Zhenwei | Shijiazhuang Junlebao Dairy Co., Ltd. | Director | March 16, 2020 | No | |
| Guo Zhenwei | Shanghai Baiqiu Network Technology Co., Ltd. | Director | February 18, 2020 | No | |
| Guo Zhenwei | Lium Group Co., Ltd. | Director | January 14, 2020 | No | |
| Guo Zhenwei | Hangzhou Dahiti Science & Technology Co., Ltd. | Director | May 21, 2020 | No | |
| Guo Zhenwei | Genki Forest Technology Group Holdings Limited | Director | December 1, 2020 | No | |
| Guo Zhenwei | Shanghai Ruishu Electronic Commerce Co., Ltd. | Director | August 26, 2020 | No | |
| Zhou Xiaoxiong | Shanghai Mailande Industrial Development Co., Ltd. | Director | May 2, 2005 | No | |
| Zhou Xiaoxiong | J.P. Morgan Chase Futures Co. Ltd. | Chairman | May 2, 2005 | No | |
| Zhou Xiaoxiong | J.P.Morgan Securities (China) Co., Ltd. | Director | August 22, 2019 | No | |
| Zhou Xiaoxiong | China Boton Group Co., Ltd. | Independent (non-executive) director | November 25, 2005 | Yes | |
| Zhou Xiaoxiong | Sunwoda Electronic Co., Ltd. | Director | September 10, 2008 | Yes | |
| Zhou Xiaoxiong | Shanghai Wendun Investment Consulting Co., Ltd. | Executive director | July 1, 2011 | No | |
| Zhou Xiaoxiong | Shanghai Wendun Investment Co., Ltd. | Executive director | June 1, 2010 | No | |
| Zhou Xiaoxiong | Zhuhai Mailande Fund Management Co., Ltd. | Chairman | August 1, 2013 | Yes | |
| Zhou Xiaoxiong | Guangdong Juzhongyuan Industrial Co., Ltd. | Supervisor | November 1, 2016 | January 29, 2021 | No |
| Zhou Xiaoxiong | Shenzhen Ellassay Fashion Co., Ltd. | Independent director | January 9, 2018 | January 5, 2024 | Yes |
| Zhou Xiaoxiong | Zhuhai Yibai International Wine Trading Center Co., Ltd. | Director | November 26, 2013 | No | |
| Zhou Xiaoxiong | Guangzhou Nansha Financial Holding Group | Director | July 4, 2019 | Yes |
| Co., Ltd. | |||||
| Liang Wenzhao | Shenzhen Youlian Shijun Enterprise Management Consulting Co., Ltd. | Executive director | May 31, 2016 | No | |
| Liang Wenzhao | Shenzhen SonoScape Biomedical Technology Co., Ltd. | Independent director | April 1, 2015 | January 14, 2021 | Yes |
| Liang Wenzhao | China Calxon Group Co., Ltd. | Independent director | September 26, 2016 | October 30, 2022 | Yes |
| Liang Wenzhao | Shenzhen Breo Technology Co., Ltd. | Independent director | April 1, 2020 | April 1, 2023 | Yes |
| Liang Wenzhao | Phograin Technology (Shenzhen) Co., Ltd. | Independent director | August 21, 2019 | Yes | |
| Liang Wenzhao | Shenzhen Qianhai Hejun Investment Fund Management Co., Ltd. | Chairman | February 20, 2017 | No | |
| Liang Wenzhao | Shenzhen Autoway Electric Technologies Co., Ltd. | Director | October 8, 2018 | Yes | |
| Liang Wenzhao | Specturm Materials Co., Ltd. | Director | June 10, 2019 | No | |
| Liang Wenzhao | South China Biomedical Materials (Shenzhen) Co., Ltd. | Supervisor | April 15, 2020 | No | |
| Bi Qun | Shanghai Biran Culture Communication Co., Ltd. | Executive director | April 23, 2016 | Yes | |
| Bi Qun | Guangzhou Jiashitang Advertising Co., Ltd. | Supervisor | December 19, 2016 | No | |
| Description of service status in other unit | None | ||||
Punishment of current directors, supervisors and senior management of the Company and those who left during the reporting period by securitiesregulators in recent three years
□ Applicable √ Not applicable
IV. Remuneration of Directors, Supervisors and Senior Management
Decision making procedures, determination basis and actual payment of remuneration of directors, supervisors and senior managementThe remuneration of directors, supervisors and senior managers consists of wages, allowances and bonuses. The Company's board ofdirectors has a remuneration and assessment committee, which is responsible for formulating performance evaluation standards, procedures, systems,and main schemes and systems of rewards and punishments. The remuneration plans of directors, supervisors and senior managers have all gonethrough the corresponding deliberation procedures in accordance with the Articles of Association, Remuneration Management System and othercorporate governance systems.Remuneration of directors, supervisors and senior management during the reporting period
Unit: RMB ’0,000
| Name | Position | Gender | Age | Status of service | Total pretax | Whether to get |
| remuneration received from the Company | remuneration from related parties of the Company | |||||
| Li Jianquan | Chairman, general manager | Male | 64 | Incumbent | 397.38 | No |
| Fang Xiuyuan | Director, deputy general manager, chief financial officer | Male | 53 | Incumbent | 172.28 | No |
| Xu Xiaodan | Director | Female | 34 | Incumbent | 59.64 | No |
| Guo Zhenwei | Director | Male | 37 | Incumbent | 0 | Yes |
| Liang Wenzhao | Independent director | Male | 51 | Incumbent | 9.17 | Yes |
| Bi Qun | Independent director | Female | 51 | Incumbent | 9.17 | Yes |
| Zhou Xiaoxiong | Independent director | Male | 60 | Incumbent | 9.17 | Yes |
| Liu Weiwei | Chairman of the board of supervisors | Male | 43 | Incumbent | 80.59 | No |
| Ye Yangjing | Supervisor | Female | 40 | Incumbent | 0 | No |
| Wang Ying | Employee supervisor | Female | 39 | Incumbent | 81.9 | No |
| Yin Wenling | Deputy general manager | Male | 48 | Incumbent | 128.28 | No |
| Chen Huixuan | Deputy general manager, secretary to the board of directors | Female | 39 | Incumbent | 63.27 | No |
| Total | -- | -- | -- | -- | 1,010.85 | -- |
Equity incentive granted to directors and senior management of the Company during the reporting period
√Applicable □ Not applicable
Unit: share
| Name | Position | Number of exercisable shares durin | Number of shares exercised during the reporting period | Exercise price of shares exercised during the reporting period (RMB / | Market price at the end of the reporting period (RMB / | Number of restricted shares held at the beginning of the | Number of shares unlocked in the current period | Number of new restricted shares granted during the reporting | Grant price of restricted shares (RMB / share) | Number of restricted shares held at the end of the period |
| g the reporting period | share) | share) | period | period | ||||||
| Li Jianquan | Chairman, general manager | 0 | 0 | 0 | 166 | 0 | 0 | 80,000 | 72.50 | 80,000 |
| Fang Xiuyuan | Director, deputy general manager, chief financial officer | 0 | 0 | 0 | 166 | 0 | 0 | 50,000 | 72.50 | 50,000 |
| Yin Wenling | Deputy general manager | 0 | 0 | 0 | 166 | 0 | 0 | 40,000 | 72.50 | 40,000 |
| Xu Xiaodan | Director | 0 | 0 | 0 | 166 | 0 | 0 | 30,000 | 72.50 | 30,000 |
| Chen Huixuan | Secretary to the board of directors, deputy general manager | 0 | 0 | 0 | 166 | 0 | 0 | 30,000 | 72.50 | 30,000 |
| Total | -- | 0 | 0 | -- | -- | 0 | 0 | 230,000 | -- | 230,000 |
| Remark (if any) | On December 18, 2020, the Company held the 17th meeting of the second board of directors and the 11th meeting of the second board of supervisors respectively, and decided to grant 5.833 million restricted shares to 1036 eligible incentive objects on December 18, 2020 as the grant date of incentive plan. After the incentive objects meet the corresponding attribution conditions, they will be assigned by stages according to the agreed proportion. For details, please refer to relevant announcements disclosed on the website (http://www.cninfo.com.cn) by the Company on December 22, 2020. | |||||||||
V. Company Employees
1. Number of employees, professional composition and education background
| Number of employees in the parent company (person) | 1,589 |
| Number of employees in main subsidiaries (person) | 10,800 |
| Total number of employees (person) | 12,389 |
| Total number of employees receiving salary in the current period (person) | 12,412 |
| Number of retired employees whose expenses need to be borne by the parent company and major subsidiaries (person) | 85 |
| Professional composition | |
| Professional composition categories | Number of professionals (person) |
| Production personnel | 6,560 |
| Sales personnel | 3,417 |
| Technical personnel | 1,213 |
| Financial personnel | 108 |
| Administrative personnel | 1,091 |
| Total | 12,389 |
| Education background | |
| Education background categories | Number (person) |
| Master degree or above | 85 |
| Bachelor | 1,333 |
| Bachelor degree or below | 10,971 |
| Total | 12,389 |
2. Pay policy
The Company has established a diversified distribution system according to contribution, post, skill and performance, taking into account market leveland industry trend, striving to provide all employees with competitive salary and various benefits. Through flexible bonus policies such as projectbonus, customer development bonus and special contribution bonus, the Company can timely motivate employees’ contribution and achievements;through the annual bonus plan, annual excess reward plan, etc., it feedback the annual contribution and growth of employees to the Company,continuing to create a positive and enterprising atmosphere; and through the shareholding plan, it let the employees who have made positivecontributions to the enterprise share the medium and long-term development achievements of the enterprise.The company establishes an EMT (Executive Management Team) system. As the highest decision-making body for remuneration and performance,EMT supervises the implementation of various remuneration policies and examines the rationality and scientificity of employees’ performance andremuneration policies.
3. Training plan
Winner Medical always focuses on the introduction and cultivation of high-skilled talents, establishes talent echelon, constantly optimizes thestructure of human resources to ensure that it matches the business strategy. Through the internal evaluation, training and development mode ofmanagement and technology dual channels, it provides multi-channel and multi-level qualification system for all technical R & D personnel, andpromotes the continuous improvement and development of technical R & D personnel in the professional field. It carries out cooperation in“production, study and research”, introduces and trains professional and technical talents, and improves the comprehensive quality and professionalability of the talent team.In order to continuously improve the professional knowledge, professional level and comprehensive quality of employees, build an excellententerprise staff team, establish a learning organization, enhance the core competitiveness of the Company, it orderly carries out various trainings,standardizes the training work of the Company, and formulates a series of training systems. At the end of each year, it carries out the survey and
Winner Medical Co., Ltd. 2020 Annual Reportsummary of the overall needs of the training of the next year, and makes overall planning for the group. All the competent units propose annualtraining plans within the scope of their jurisdiction according to the work needs and the development needs of employees, and submit them to higherlevel authority and responsible units, and finally connect with the group’s Human Resources Management Department; The group’s HumanResources Management Department collects training needs through interviews, training plan collection and questionnaire survey, etc., and formulatesannual training plans based on the group's annual strategic objectives, business plans, talent development plans, etc; it covers the new employees’induction training, professional skills training, management leadership training, etc.The training for new employees is divided into social recruitment training for new employees and “spring seedling training” for fresh graduates.For the new graduates, there are systematic spring seedling training plans, from military training to workshop practice, product introduction,workplace knowledge, mentors’ guidance and comprehensive training. In order to improve the working skills of in-service employees, a series oftraining, such as cultural concept, professional skills, management skills, promotion and post adaptation, are carried out in their daily work. Accordingto the categories, they are divided into three categories: general training, management training and professional training. In general courses, yoga,flower arrangement, workplace ability improvement, parent-child reading, handmade and other courses are arranged to improve the happiness ofemployees. In order to receive the latest information in the professional field, improve and consolidate professional business skills, professionalcourses will arrange a combination of external training and internal training according to the needs of each post. For professional quality system andlegal system, the professional level of employees is improved through external training learning, and then internal transfer training. For themanagement, according to the enterprise strategy and actual needs, external lecturers are invited to provide guidance every year to improvemanagement skills.
4. Labor outsourcing
□ Applicable √ Not applicable
Section 10 Corporate governanceI. Basic State of Corporate Governance
The Company strictly complies with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, theCode of Corporate Governance for Listed Companies, the Shenzhen Stock Exchange GEM Listing Rules, the Standard Operation Guidelines forListed Companies of Shenzhen Stock Exchange, and other relevant laws and regulations promulgated by the CSRC and Shenzhen Stock Exchange,and formulates the Articles of Association and other internal control rules and regulations to standardize the Company's behavior. The governancestructure of the Company conforms to the relevant normative documents of the CSRC on the governance of listed companies.
1. Shareholders and general meeting of shareholders
In strict accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Rules ofShareholders' Meeting of Listed Companies, the Articles of Association and the Rules of Procedure of Shareholders' Meeting, the Companystandardizes the procedures of convening, holding and voting, etc. of the general meeting of shareholders, treats all investors equally, and enablesthem to fully exercise their rights to ensure the rights and interests of minority shareholders. The Company employs lawyers to attend the generalmeeting of shareholders as nonvoting delegates and issue legal opinions on the holding and voting procedures of the general meeting of shareholders,fully respecting and safeguarding the legitimate rights and interests of all shareholders.
2. Company and controlling shareholders, actual controller
The Company has independent and complete main business and independent management ability, independent from the controlling shareholdersand actual controllers in personnel, assets, business, management organization and financial accounting system, and can independently operate,independently manage and independently bear responsibilities and risks. The controlling shareholders and actual controllers of the Company canexercise their rights and undertake corresponding obligations in accordance with the law. During the reporting period, there was no behavior directlyor indirectly interfering in the Company's decision-making and business activities and using its controlling position to infringe on the interests ofother shareholders beyond the authorization of the general meeting of shareholders and the board of directors, which had no adverse impact on thecorporate governance structure and independence.
3. Directors and board of directors
The directors of the Company do not have the circumstances that they are not allowed to be directors of the Company as stipulated in Article 146 ofthe Company Law. Their appointment and removal strictly comply with the approval procedures of the board of directors and the general meeting ofshareholders, and there is no conflict with relevant laws, regulations or the Articles of Association. All directors work strictly and diligently duringtheir tenure, can continuously pay attention to the Company's operating conditions, actively participate in relevant training, and improve the standardoperation level; actively participate in the board meeting, give full play to their own professional expertise, make prudent decisions and safeguard theinterests of the Company and the majority of shareholders.The convening and holding procedures of the board meeting of the Company meet the requirements of relevant regulations; the contents ofprevious board meeting minutes are true, accurate, complete and under safe preservation; the resolutions of the meetings are fully, accurately andtimely disclosed. Under the board of directors, there is a strategy committee, a nomination committee, a remuneration and assessment committee andan audit committee.
4. Supervisors and board of supervisors
The supervisors of the Company do not have the circumstances that they are not allowed to be supervisors of the Company as stipulated in Article 146of the Company Law. Their qualifications meet the relevant requirements of the Articles of Association. The procedures for convening, holding andvoting of the meetings of the board of supervisors of the Company conform to the Rules of Procedure of Board of Supervisors.The supervisors of the Company are able to exercise the functions and powers of the board of supervisors and fulfill their duties diligently.
5. Performance evaluation and incentive and restraint mechanisms
Through performance evaluation, the Company can effectively make a comprehensive evaluation on each employee, and further understands each
Winner Medical Co., Ltd. 2020 Annual Reportemployee's work ability and expertise, so as to effectively adjust the appropriate position and achieve the goal of performance evaluation. TheCompany is gradually improving its performance evaluation mechanism. The remuneration of senior and middle management is linked to theCompany's operating performance indicators. The Company has established an enterprise performance evaluation and incentive system. Theperformance evaluation standards and evaluation procedures of directors, supervisors and senior managers are fair and transparent. Their income islinked to the Company's operating performance. The appointment of senior managers is open and transparent, complying with the provisions of lawsand regulations.
6. Information disclosure and transparency
During the reporting period, the Company disclosed the Company's information truthfully, accurately, completely, timely and fairly in strictaccordance with the requirements of relevant laws and regulations, Articles of Association and Management System of Information Disclosure Affairs.The Company has designated China Securities Journal, Shanghai Securities News, Securities Times and Securities Daily as the designated papermedia for information disclosure of the Company, and http://www.cninfo.com.cn is the website specified for the information disclosure to ensure thatall shareholders have fair access to the Company’s information.
7. Investor relations management
In accordance with the requirements of relevant laws and regulations and Investor Relations Management System, the Company designates thesecretary of the board of directors as the person in charge of investor relations management, responsible for coordinating investor relations, receivingshareholders' visits, answering investors' inquiries, providing investors with the information disclosed by the Company, etc. The Company responds toinvestors' inquiries through telephone, e-mail, investor relations interactive platform, investor reception day and other forms, which strengthensinformation communication, promotes benign interaction with investors, and effectively improves the transparency of the Company.
8. Stakeholder
The Company fully respects and safeguards the legitimate rights and interests of relevant stakeholders, realizes the coordination and balance ofinterests of the shareholders, employees, doctors and patients, society and other parties, pays attention to environmental protection and activelyparticipates in public welfare undertakings while realizing the sustainable and healthy development of the Company and the interests of shareholders.
9. Establishment and implementation of internal audit system
An audit committee is set up under the board of directors to establish an internal audit system, and is responsible for the communication,supervision, meeting organization and verification of the Company's internal and external audit. The Internal Audit Department under the auditcommittee is the daily office. Under the leadership of the audit committee, it independently exercises its functions and powers to inspect andsupervise the establishment and implementation of the Company's internal control system, the authenticity and integrity of the Company's financialinformation, and the efficiency and effect of business activities.Whether there is significant difference between the actual situation of corporate governance and the normative documents on listed corporategovernance issued by China Securities Regulatory Commission
□Yes √No
There is no significant difference between the actual situation of corporate governance and the normative documents on listed corporate governanceissued by China Securities Regulatory Commission.II. Independence of Company from its controlling shareholders in terms of business, personnel, assets,institutions and finance
Since its establishment, the Company has standardized its operation in accordance with the Company Law, Securities Law and other relevant laws andregulations as well as the requirements of the Articles of Association, established and improved the corporate governance structure, completelyseparated from the existing shareholders in business, assets, personnel, organizations and finance, and has a complete business system and the abilityto operate independently in the market.(I) Asset independenceThe Company has independent and complete assets with clear ownership, independent production system, auxiliary production system and supportingfacilities, and has legal ownership of plants, land, equipment, trademarks, patents, non-patented technology and other assets related to production and
operation. It has complete control over all the assets of the Company, and there is no behavior of controlling shareholders and actual controllersoccupying the assets of the Company.(II) Personnel independenceThe Company has signed labor contracts with its employees, has independent labor, personnel, salary and welfare systems, and maintainsindependence with its controlling shareholders, actual controllers and other enterprises under their control. The Company has established a soundcorporate governance structure, and the directors, supervisors and senior managers are legally selected in strict accordance with the Company Law,Articles of Association and other relevant provisions. The general manager, deputy general manager, financial chief, secretary of the board of directorsand other senior managers of the Company do not hold any other positions except directors, supervisors and limited partners in the controllingshareholders, actual controllers and other enterprises controlled by them, and do not receive salary in the controlling shareholders, actual controllersand other enterprises controlled by them. The financial personnel of the Company do not work part-time in the controlling shareholders, actualcontrollers and other enterprises controlled by them.(III) Financial independenceThe Company has set up an independent financial department, equipped with full-time financial personnel, and has established an independentfinancial accounting system. The Company can make financial decisions independently, and has a standardized financial accounting system andinternal control system, such as internal financial management system for branches and subsidiaries. There is no situation of controlling shareholdersinterfering in the use of the Company's funds. The Company has an independent bank account and does not share the bank account with thecontrolling shareholders, actual controllers and other enterprises controlled by them. As an independent tax payer, the Company makes tax returns andfulfills its payment obligations independently in accordance with the law. There is no situation of mixed tax payment with the controlling shareholders,actual controllers and other enterprises controlled by them. The financial operation of the Company is independent of the controlling shareholders,actual controllers and other enterprises controlled by them.(IV) Organization independenceIn strict accordance with the Company Law, Articles of Association and other relevant provisions, the Company has established and improved thegeneral meeting of shareholders, the board of directors, the board of supervisors, the management department and the corresponding rules ofprocedure of the three meetings, and formed a perfect corporate governance structure and standardized operation system. According to thedevelopment needs of production and operation, the Company has set up corresponding office and production and operation organizations, andindependently exercise the operating management authority, and has complete procurement, R & D, production, sales systems and supportingdepartments. The Company's production, operation and office are strictly separated from the controlling shareholders, actual controllers and otherenterprises controlled by them, and there is no mixed operation or joint office with the controlling shareholders, actual controllers and otherenterprises controlled by them.(V) Business independenceThe Company has the corresponding qualifications required for operation, independent and complete business system, information system andmanagement system, etc. necessary to engage in operating business, and independent and complete R & D, production capacity, procurement andsales business systems. The business of the Company is independent of the controlling shareholders, actual controllers and other enterprises controlledby them. There is no dependence on the controlling shareholders, actual controllers and other enterprises controlled by them. There is no horizontalcompetition or unfair related transaction with the controlling shareholders, actual controllers and other enterprises controlled by them.
III. Horizontal competition
□ Applicable √ Not applicable
Winner Medical Co., Ltd. 2020 Annual ReportIV. Information about the annual general meeting of shareholders and extraordinary general meetingof shareholders held during the reporting period
1. General meeting of shareholders during the reporting period
| Meeting session | Meeting type | Investor participation proportion | Convening date | Date of disclosure | Disclosure index |
| The 1st Extraordinary General Meeting of Shareholders in 2020 | Extraordinary general meeting of shareholders | 100.00% | February 14, 2020 | ||
| Annual general meeting of shareholders in 2019 | Annual general meeting of shareholders | 100.00% | April 15, 2020 | ||
| The 2nd Extraordinary General Meeting of Shareholders in 2020 | Extraordinary general meeting of shareholders | 100.00% | June 15, 2020 | ||
| The 3rd Extraordinary General Meeting of Shareholders in 2020 | Extraordinary general meeting of shareholders | 100.00% | July 23, 2020 | ||
| The 4th Extraordinary General Meeting of Shareholders in 2020 | Extraordinary general meeting of shareholders | 100.00% | August 15, 2020 | ||
| The 5th Extraordinary General Meeting of Shareholders in 2020 | Extraordinary general meeting of shareholders | 88.33% | October 29, 2020 | October 30, 2020 | Announcement No.: 2020-015 Disclosure website: http://www.cninfo.com.cn) |
| The 6th Extraordinary General Meeting of Shareholders in 2020 | Extraordinary general meeting of shareholders | 89.80% | December 16, 2020 | December 15, 2020 | Announcement No.: 2020-030 Disclosure website: http://www.cninfo.com.cn) |
2. The preferred shareholders with voting rights restored request an extraordinary general meeting ofshareholders
□ Applicable √ Not applicable
V. Performance of duties by independent directors during the reporting period
1. Attendance of independent directors at the board meetings and the general meeting of shareholders
| Name of independent director | Times of attending the board meetings during this reporting period | Times of attending the board meetings on site | Times of attending the board meetings by means of communication | Times of attending the board meetings by proxy | Times of absences from the board meetings by proxy | Whether he has not attended two consecutive board meetings in person | Times of attending the general meeting of shareholders |
| Zhou Xiaoxiong | 11 | 1 | 10 | 0 | 0 | No | 7 |
| Liang Wenzhao | 11 | 1 | 10 | 0 | 0 | No | 7 |
| Bi Qun | 11 | 0 | 11 | 0 | 0 | No | 7 |
Explanation of not attending the board meeting in person for two consecutive times
2. Objections made by independent directors on relevant matters
Whether the independent director raises any objection to the relevant matters of the Company
□Yes √No
During the reporting period, the independent directors did not raise any objection to the relevant matters of the Company.
3. Other description on the performance of duties by the independent directors
Whether the relevant suggestions of the independent director to the Company have been adopted
□Yes √No
Explanation of the relevant suggestions of the independent director to the Company have or have not been adoptedDuring the reporting period, the independent directors did not raise any objection to the relevant matters of the Company.
VI. Performance of duties by special committees under the board of directors during the reportingperiodDuring the reporting period, the Company's subordinate committees actively performed their duties and carried out their work as follows:
1. Performance of the audit committee: during the reporting period, the audit committee of the board of directors of the Company fully played the roleof review and supervision in accordance with the relevant provisions of the Articles of Association and the Rules of Procedure of Audit Committee.The audit committee is mainly responsible for reviewing the Company's financial information, internal control system, supervision of theimplementation of internal audit system, and the communication between internal audit and external audit. During the reporting period, the auditcommittee held three meetings to review periodic reports, appointment of audit institution, and internal control, etc.
2. Performance of the remuneration and assessment committee: during the reporting period, the remuneration and assessment committee of the boardof directors of the Company conscientiously performed its duties in accordance with the relevant provisions of the Articles of Association and theRules of Procedure of Remuneration and Assessment Committee, and was responsible for supervising the implementation of the remuneration systemof the Company. During the reporting period, the remuneration and assessment committee held three meetings to review the remunerationmanagement system of directors, supervisors and senior managers of the Company and deliberate the 2020 restricted stock incentive plan, put forwardreasonable suggestions, and promoted the Company to further improve the systematicness and scientificity of the Company’s remuneration system onthe basis of standardized operation.
3. Performance of the strategy committee: during the reporting period, the strategy committee of the board of directors of the Company analyzed anddiscussed the operating status, development prospects and investment plans of the Company based on the actual situation of the Company incombination with the industry development trend and development stage of the Company, so as to provide suggestions for the future developmentdirection of the Company. During the reporting period, the strategy committee held three meetings to discuss the Company’s development strategy
Winner Medical Co., Ltd. 2020 Annual Reportand business plan, phase II investment of Hubei Winner (Yangluo), and the expansion project of Jiayu Winner, etc.
4. Performance of nomination committee: during the reporting period, the nomination committee of the board of directors of the Company activelyperformed its duties, fully understood the education background, professional experience, professional quality and diligence of the Company’sexisting directors, general managers and other senior managers, and evaluated the performance of the Company's directors, general manager and othersenior managers and review the need of replacing the directors, general manager and other senior managers. During the reporting period, thenomination committee held one meeting to review the performance of the Company’s directors, general manager and other senior managers in 2020.VII. Work of board of supervisorsDoes the board of supervisors find any risks in the supervision activities of the Company during the reporting period
□Yes √No
The board of supervisors of the Company has no objection to the supervisory matters during the reporting period.VIII. Evaluation and incentive of senior managers
Based on the Performance Management System, the Company carries out scientific performance appraisal for senior managers, implementsthe salary system of combining basic annual salary and performance annual salary appraisal for senior managers, and establishes the performanceappraisal and incentive and constraint mechanism linking senior managers' salary with the Company’s performance. The Company carries out thework reporting activities and performance appraisal of senior managers every year, and determines the remuneration scheme according to theyear-end appraisal results.IX. Internal control evaluation report
1. Details of significant internal control defects discovered during the reporting period
√ Yes □ No
| Details of significant internal control defects discovered during the reporting period |
| According to the identification of significant internal control defects of the Company's financial report, there are no significant internal control defects of financial report on the base date of the internal control evaluation report. The board of directors believes that the Company has maintained effective internal control over financial report in all major aspects in accordance with the requirements of the enterprise's internal control standard system and relevant regulations. According to th identification of significant internal control defects of the Company's non-financial report, the company has not found any significant internal control defects of non-financial report on the base date of the internal control evaluation report. From the base date of the internal control evaluation report to the issue date of the internal control evaluation report, there are no factors affecting the effectiveness evaluation conclusion of internal control. |
2. Internal control self-evaluation report
| Disclosure date of full text of internal control evaluation report | April 20, 2021 |
| Disclosure index of full text of internal control evaluation report | 2020 Internal Control Self-evaluation Report of Winner Medical Co., Ltd. (http://www.cninfo.com.cn) |
| The proportion of the total assets of the unit included in the scope of evaluation in the total assets of the Company's consolidated financial statements | 96.90% | |
| The proportion of the Revenue of the unit included in the scope of evaluation in the Revenue of the Company's consolidated financial statements | 86.57% | |
| Defect identification standard | ||
| Class | Financial reports | Non-financial reports |
| Qualitative standard | Significant defect: 1) The control environment is invalid; 2) The directors, supervisors and senior managers of the Company commit fraud and cause significant losses and adverse effects to the enterprise; 3) The certified public accountant finds that there is material misstatement in the current financial report, which is not found by the internal control in the process of operation; 4) The supervision of the enterprise audit committee and the internal audit institution over the internal control is invalid. Major defect: 1) Failure to select and apply accounting policies in accordance with generally accepted accounting principles; 2) No anti-fraud procedures and control measures have been established; 3) There is no corresponding control mechanism established or no implementation of and no corresponding compensatory control for the accounting treatment of non-routine or special transactions; 4) There are one or more defects in the control of the financial reporting process at the end of the period, and it can not reasonably guarantee the prepared financial statements achieve the true and accurate goal. Common defect: Other internal control defects that do not constitute significant defects or | Significant defect: lack of democratic decision-making process; the decision-making process leads to major errors, the important business lacks system control or is systematically invalid, and lack of effective compensatory control; the loss of middle and senior managers and senior technicians is serious; the results of internal control evaluation, especially the significant defects, have not been rectified; other situations that have a significant negative impact on the Company. Major defect: democratic decision-making process exists but is not perfect; the decision-making process leads to general errors; there are defects in important business systems or system; the loss of business personnel in key positions is serious; the results of internal control evaluation, especially the major defects, have not been rectified; other situations that have a large negative impact on the Company. Common defects: the decision-making process is inefficient; the general business systems or system has defects; the loss of business personnel in general positions is serious; general defects have not been rectified. |
| major defects. | ||
| Quantitative standards | Significant defects: 1. potential misstatement of Revenue ≥ 2% of the total Revenue in the consolidated financial statement; 2. potential misstatement of total profit ≥ 5% of the total profit in consolidated financial statement; 3. potential misstatement of total assets ≥ 2% of the total assets in consolidated statement. Major defects: 1. 1% of the Revenue in the consolidated financial statement ≤ potential misstatement of Revenue ＜ 2% of the Revenue in the consolidated financial statement; 2. 2% of the total profit in the consolidated financial statement ≤ potential misstatement of the total profit < 5% of the total profit in the consolidated financial statement; 3. 1% of the total assets in the consolidated financial statement ≤ potential misstatement of total assets < 2% of the total assets in the consolidated financial statement. Common defects: 1. potential misstatement of Revenue < 1% of the total Revenue in the consolidated financial statement; 2. potential misstatement of total profit < 2% of the total profit in consolidated financial statement; 3. potential misstatement of total assets < 1% of the total assets in consolidated statement. When the potential misstatement caused by an internal control defect affects multiple indexes, the nature of the defect shall be determined according to the principle of which is lower. (the financial index values mentioned in the above quantitative standards are the data from audited consolidated statement of the Company in the latest year) | Significant defects: the amount of direct economic loss accounted for 5% or more of the total profit in the audited consolidated financial statement of the previous year; Major defects: the amount of direct economic loss accounted for 2% (included) to 5% of the total profit in the audited consolidated financial statement of the previous year; Common defects: the amount of direct economic loss is less than 2% of the total profit in the audited consolidated financial statement of the previous year |
| Number of significant defects in financial report | 0 | |
| Number of significant defects in non-financial report | 0 | |
| Number of major defects in financial report | 0 | |
| Number of major defects in non-financial report | 0 | |
Winner Medical Co., Ltd. 2020 Annual ReportX. Internal control audit report or authentication report
Internal control assurance report
| Deliberations in the internal control assurance report | |
| We believe that your Company has maintained effective internal control related to financial statements in all major aspects on December 31, 2020 in accordance with the Basic Norms of Enterprise Internal Control and relevant regulations issued by the Ministry of Finance and other four ministries and commissions. This conclusion is formed under the inherent limitations indicated in the assurance report. | |
| Disclosure of internal control assurance report | Disclosure |
| Disclosure date of full text of internal control assurance report | April 20, 2021 |
| Disclosure index of full text of internal control assurance report | 2020 Internal Control Assurance Report of Winner Medical Co., Ltd. (http://www.cninfo.com.cn) |
| Type of opinion of internal control assurance report | Standard unqualified opinions |
| Whether there are significant defects in non-financial reports | No |
Whether the accounting firm issues an internal control assurance report with non-standard opinions
□Yes √No
Whether the internal control assurance report issued by the accounting firm is consistent with the self-evaluation report of the board of directors
√ Yes □ No
Section 11 Corporate BondsWhether the Company has bonds publicly issued and listed on the stock exchange that have not expired or expired but not paid in full on the date ofapproval of the annual reportNo
Section 12 Financial ReportI. Audit Report
| Type of audit opinion | Standard unqualified opinions |
| Date of signing of audit report | April 16, 2021 |
| Name of audit institution | BDO China Shu Lun Pan CPAs |
| Document number of audit report | XKSBZ [2021] No.ZI10154 |
| Name of certified public accountants | Chen Qiong, Gao Junlei |
Main body of audit reportAudit Report
XKSBZ [2021] No.ZI10154To all shareholders of Winner Medical Co., Ltd.:
I. Audit opinionWe have audited the accompanying financial statements of Winner Medical Co., Ltd. (hereinafter referred to "Winner Medical"), including theconsolidated and parent company balance sheet as of December 31, 2020, consolidated and parent company income statement, consolidated andparent company cash flow statement and consolidated and parent company statement of change in equity for the year 2020 and notes to financialstatements.In our opinion, the attached financial statements of Winner Medical have been prepared in accordance with the provisions of the AccountingStandards for Business Enterprises and give a true and fair view of the consolidated and parent company financial position as of December 31, 2020and the consolidated and parent company financial performance and cash flows for the year 2020 in all significant terms.II. Basis for audit opinionWe conducted our audit in accordance with the Standards on Auditing for Certified Public Accountants. The “Responsibility of certified publicaccountants for audit of financial statements” in the audit report further states our responsibility under the Standards. We were independent of WinnerMedical and fulfill other responsibilities in terms of professional ethics according to the code of professional ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.III. Key audit itemsThe key audit items are the matters that we consider the most important to audit the current financial statements according to our professionaljudgment. These items shall be dealt with in the context of an audit of the financial statements as a whole and the formation of audit opinions, and wedo not express an opinion on these items separately.The key audit items we identified in the audit are summarized as follows:
| Key audit items | How is the item handled in the audit | |
| Existence of monetary funds and tradable financial assets | ||
| Please refer to Notes III, (X) and Notes V, (I), (II) to the consolidated financial statements. On December 31, 2020, the balance of Winner Medical's monetary funds and tradable financial assets was about RMB | Our main audit procedures for the existence of monetary funds and tradable financial assets include: 1. Understand the key internal controls related to the existence of monetary funds and tradable financial assets, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of the relevant | |
| 8.294 billion, accounting for 63.79% of the total assets, which is important to the financial statements. Therefore, we identify the existence of Cash and cash equivalents and tradable financial assets as key audit item. | internal controls; 2. Obtain the bank account statements and check with the book balance. Obtain the bank reconciliation statements for the items with differences, understand the nature of the reconciliation items, and test the major reconciliation items; 3. Implement confirmation procedures for monetary funds and tradable financial assets; 4. Check large amounts of monetary funds; inspect product specifications and purchase receipts for tradable financial assets; 5. Obtain corporate credit reports and check whether there are pledge guarantee matters related to monetary funds; 6. Implement the bank settlement account information inquiry procedure to confirm the accuracy and completeness of the bank settlement account provided to us by the management. | |
| Recognition of Revenue | ||
| For details of the accounting policies for income recognition and the analysis of income, please refer to Notes III, (XXVII) and Notes V, (XXXVI) to the consolidated financial statements. The income of Winner Medical mainly comes from the sales business of medical consumables, consumer goods and cotton non-woven. The Revenue of current period is RMB 12.534 billion, about 2.74 times that of the previous period. Among them, the income of medical consumables accounts for a significant proportion of the total Revenue, accounting for about 70%. The income of medical consumables is one of the main performance indicators of Winner Medical, and the income of medical consumables in the current period has increased sharply year on year. Therefore, we identify the income recognition as the key audit item. | Our main audit procedures for the Revenue recognition of Winner Medical's medical consumables include: 1. Understand the key internal controls related to the recognition of income, evaluate the design of these controls, determine whether they are implemented, and test the operation effectiveness of the relevant internal controls; 2. Check the major sales contracts, understand the terms or conditions of the major contracts, and evaluate whether the income recognition policy conforms to the provisions of the Accounting Standards for Business Enterprises; 3. Implement substantive analysis procedures for income and gross profit margin according to major products, identify whether there are significant or abnormal fluctuations, and find out the causes of fluctuations; 4. Combine with the confirmation of accounts receivable, and confirm the sales volume of the current period to the main customers by sampling; 5. For domestic sales income, check supporting documents related to income recognition by sampling, including sales contract, order, sales invoice, delivery note and customer receipt, etc.; for export income, check supporting documents such as sales contract, export declaration form, bill of landing by sampling; 6. Carry out cutoff test on the income recognized before and after the balance sheet date to evaluate whether the income is recognized in the appropriate period. | |
| Accounting of fixed assets and construction in progress | |
| Please refer to Notes III, (XVI), (XVII) and Notes V, (XI), (XII) to the consolidated financial statements. On December 31, 2020, the net fixed assets in the consolidated financial statements of Winner Medical was RMB 1.401 billion, accounting for RMB 10.77% of the total assets, and the net construction in progress was RMB 61.3833 million, accounting for RMB 0.47% of the total assets; | Our main audit procedures for the accounting of fixed assets and construction in progress of Winner Medical include: 1. On the basis of sampling, check the progress of important fixed assets and construction in progress to determine whether they exist, and pay attention to whether there are idle or damaged fixed assets; 2. Select samples of fixed assets and construction in progress increased or decrease in current year, and check supporting documents such as contracts, invoices, acceptance certificates, collection or payment orders, etc.; 3. Check the ownership or control of fixed assets; |
| Fixed assets and construction in progress are an important part of the consolidated balance sheet of Winner Medical. The time point when the construction in progress reaches the predetermined usable condition and transfer into the fixed assets, the method of depreciation calculation of the fixed assets, the judgment of the useful life of the fixed assets and the net realizable value of the fixed assets will impact the book value of the fixed assets and construction in progress, and they are of importance to the consolidated financial statements. | 4. Check whether the depreciation policies and methods comply with the standards, whether the estimated service life and estimated net residual value are reasonable, and calculate whether the depreciation is correct; 5. On the basis of sampling, check the date of acceptance report, check debugging and production records, and judge the appropriateness of the time point when the construction in progress is transferred into fixed assets. |
IV. Other information
The management of Winner Medical (hereinafter referred to as the management) is responsible for other information, including the informationcovered in Winner Medical’s annual report for 2020, but excluding the financial statements and our audit report.Our audit opinion on the financial statements does not cover other information and we does not express any form of verification conclusions on otherinformation.Combined with our audit of the financial statements, it’s our responsibility to read other information. In this process, we shall consider whethermaterial inconsistency or material misstatement of other information with the financial statements or the situation understood by us in the auditprocess.Based on the work that has been executed by us, we should report the fact of material misstatement confirmed in other information. We have nothingto report in this regard.
V. Responsibility of management and government for the financial statements
The management is responsible for preparing the financial statements in accordance with the provisions of the Accounting Standards for BusinessEnterprises and giving a true and fair view; designing, implementing and maintaining necessary internal control, so that the financial statements arefree from material misstatement, whether due to fraud or error.When preparing the financial statements, the management is responsible for evaluating the going-concern ability of Winner Medical, disclosing thematters related to the going-concern (if applicable) and using the going-concern assumption, unless the management plans to liquidate SpectrumChemical or stop operation or no other realistic options.The government is responsible for supervising the financial reporting process of Winner Medical.
VI. Responsibility of certified public accountants for audit of financial statements
Our goal is to obtain reasonable guarantee on inexistence of the material misstatement of the financial statements whether due to fraud or error and toissue an audit report including audit opinion. Reasonable guarantee is high level guarantee, but it cannot guarantee that a material misstatement of theaudit executed according to the auditing standards will always be found. Misstatement may be caused by fraud or error. If the reasonable expectedmisstatements may affect the economic decision made by the financial statement user according to the financial statements, whether individually orcollectively, the misstatement is generally believed material.We made professional judgment and maintained professional skepticism in the audit process according to the auditing standards. We also performedthe following:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and implement auditprocedures to address these risks, and obtain sufficient and appropriate audit evidence as the basis for audit opinion. Since the fraud may involvecollusion, forge, intentional omission, false statement or above internal control, the risk of material misstatement caused by fraud is higher than that
Winner Medical Co., Ltd. 2020 Annual Reportcaused by error.
(2) Understand internal control related to the audit in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the internal control.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relevant disclosure.(IV) Draw a conclusion about the appropriateness of the going-concern assumption used by the management. Meanwhile, draw a conclusion about themajor uncertainty of the matters or circumstances possibly resulting in major concerns about the going-concern ability of Winner Medical accordingto the audit evidence obtained. If we draw a conclusion that major uncertainty exists, the auditing standards require us to request the statement user tonotice relevant disclosure in the financial statements in the audit report; in case of insufficient disclosure, we should issue a modified audit report. Ourconclusion is made on the basis of the information available as of the audit report date. However, the future matters or circumstances may result ingoing concern failure of Winner Medical.(V) Evaluate the overall presentation (including disclosure), structure and content of the financial statements and evaluate whether the financialstatements give a true and fair view of relevant transactions and matters.(VI) Obtain adequate and appropriate audit evidence for the financial information of Winner Medical entity or business activities to express anopinion on the consolidated financial statements. We are responsible for guiding, supervising and implementing the group audit and take fullresponsibility for the audit opinions.We communicate with the governance on the planned audit scope, time arrangement and major audit findings, including the internal control defectsidentified by us in the audit and worthing attention.We also provide the governance with a statement of compliance with the ethical requirements relating to our independence and communicate with thegovernance with respect to all relations and other matters that may reasonably be considered to affect our independence and the relevant precautions(if applicable).From the items communicated with the governance, we determine which items are most important to the audit of current financial statements and thusconstitute the key audit items. We describe these items in our audit report, unless the disclosure of these matters is prohibited by law or regulation, or,in rare circumstances, we determine that we should not communicate the items in our audit report if it is reasonably expected that the negativeconsequences of communicating an item outweigh the benefits in the public interest.
BDO China Shu Lun Pan Certified Public Accountants LLP Chinese Certified Public Accountant: Chen Qiong (Project Partner)
Special general partnership
Chinese Certified Public Accountant: Gao Junlei
Shanghai, China April 16, 2021
II. Financial StatementsUnit of statements in financial notes: RMBI. Consolidated Balance SheetPrepared by: Winner Medical Co., Ltd.
Winner Medical Co., Ltd. 2020 Annual ReportDecember 31, 2020
Unit: yuan
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Cash and cash equivalents | 4,162,539,245.78 | 480,838,765.63 |
| Deposit reservation for balance | ||
| Lending funds | ||
| tradable financial assets | 4,131,178,589.44 | |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 844,317,708.12 | 416,345,676.13 |
| Amounts receivable financing | 18,182,662.70 | 8,456,356.50 |
| Advances to suppliers | 124,031,239.05 | 96,760,732.96 |
| Premiums receivables | ||
| Reinsurance accounts receivable | ||
| Provision of cession receivable | ||
| Other receivables | 458,174,652.72 | 595,894,600.20 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Redemptory Cash and cash equivalents for sale | ||
| Inventory | 1,216,486,940.21 | 992,411,173.86 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due within a year | ||
| Other current assets | 35,184,227.09 | 83,881,183.43 |
| Total current assets | 10,990,095,265.11 | 2,674,588,488.71 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 13,424,230.41 | 8,858,476.15 |
| Other equity instrument investments | ||
| Other non-current financial assets |
| Investment real estates | ||
| Fixed assets | 1,400,749,050.00 | 1,274,733,960.96 |
| Construction in progress | 61,383,340.97 | 187,808,853.01 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 208,325,103.79 | 131,657,103.01 |
| Development expenditure | ||
| Goodwill | ||
| Long-term unamortized expenses | 121,335,007.33 | 165,474,142.92 |
| Deferred income tax assets | 143,132,351.08 | 69,356,697.91 |
| Other non-current assets | 63,807,415.75 | 18,996,656.91 |
| Total non-current assets | 2,012,156,499.33 | 1,856,885,890.87 |
| Total assets | 13,002,251,764.44 | 4,531,474,379.58 |
| Current liabilities | ||
| Short-term debt | 150,071,416.66 | 120,000,000.00 |
| Borrowings from central bank | ||
| Borrowing funds | ||
| tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 29,418,100.00 | 173,023,352.30 |
| Accounts payable | 726,577,306.94 | 562,774,410.51 |
| Advance from customers | 32,695,399.53 | |
| Contract liabilities | 530,188,257.63 | |
| Financial assets sold for repurchase | ||
| Deposits from customers and interbank | ||
| Acting trading securities | ||
| Acting underwriting securities | ||
| Payroll payable | 169,957,077.81 | 99,793,347.80 |
| Taxes payable | 444,381,369.49 | 47,134,987.40 |
| Other payables | 352,543,008.89 | 142,607,932.48 |
| Including: Interest payable | 289,799.65 | |
| Dividends payable | ||
| Fees and commissions payable |
| Dividend payable for reinsurance | ||
| Liabilities held for sales | ||
| Non-current liabilities due within one year | 8,977,342.14 | |
| Other current liabilities | 23,638,266.47 | |
| Total current liabilities | 2,426,774,803.89 | 1,187,006,772.16 |
| Non-current liabilities | ||
| Reserve fund for insurance contracts | ||
| Long-term loans | 134,210,746.07 | |
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term payroll payable | ||
| Estimated liabilities | 591,513.81 | |
| Deferred income | 94,921,260.87 | 46,117,344.20 |
| Deferred income tax liabilities | 12,165,608.24 | |
| Other non-current liabilities | ||
| Total non-current liabilities | 107,086,869.11 | 180,919,604.08 |
| Total liabilities | 2,533,861,673.00 | 1,367,926,376.24 |
| Owner's equity: | ||
| Capital stock | 426,492,308.00 | 376,492,308.00 |
| Other equity instruments | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Capital reserve | 4,481,709,983.24 | 948,913,284.10 |
| Less: treasury stock | ||
| Other comprehensive income | -1,111,035.08 | 44,623.87 |
| Special reserve | ||
| Surplus reserve | 420,212,778.13 | 116,855,107.20 |
| General risk provision | ||
| Undistributed profit | 5,126,630,011.14 | 1,718,075,177.67 |
| Total owners' equities attributable to the owners of parent company | 10,453,934,045.43 | 3,160,380,500.84 |
| Minority equity | 14,456,046.01 | 3,167,502.50 |
| Total owners' equities | 10,468,390,091.44 | 3,163,548,003.34 |
| Total liabilities and owners' equities | 13,002,251,764.44 | 4,531,474,379.58 |
Legal representative: Li Jianquan Head of accounting work: Fang Xiuyuan Head of accounting body:
Wu Kezhen
2. Balance sheet of parent company
Unit: yuan
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Cash and cash equivalents | 3,669,286,043.43 | 190,247,936.40 |
| tradable financial assets | 3,779,510,798.34 | |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 679,644,839.39 | 285,214,296.07 |
| Amounts receivable financing | 26,281,743.01 | 11,197,742.51 |
| Advances to suppliers | 1,141,185,179.88 | 818,374,053.49 |
| Other receivables | 361,160,139.37 | 507,620,873.69 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventory | 244,264,320.15 | 80,096,665.13 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due within a year | ||
| Other current assets | 2,986,600.60 | 507,766.36 |
| Total current assets | 9,904,319,664.17 | 1,893,259,333.65 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 738,074,914.56 | 733,509,160.30 |
| Other equity instrument investments | ||
| Other non-current financial assets | ||
| Investment real estates |
| Fixed assets | 47,677,210.41 | 39,730,361.07 |
| Construction in progress | 625,889.08 | 3,273,398.46 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 11,093,821.43 | 12,968,794.77 |
| Development expenditure | ||
| Goodwill | ||
| Long-term unamortized expenses | 4,270,865.79 | 1,620,299.14 |
| Deferred income tax assets | 18,761,956.53 | 7,243,483.93 |
| Other non-current assets | 7,420,450.61 | 4,228,187.85 |
| Total non-current assets | 827,925,108.41 | 802,573,685.52 |
| Total assets | 10,732,244,772.58 | 2,695,833,019.17 |
| Current liabilities | ||
| Short-term debt | 120,071,416.66 | 60,000,000.00 |
| tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 8,757,000.00 | 71,789,226.76 |
| Accounts payable | 734,959,933.53 | 263,943,071.72 |
| Advance from customers | 6,184,697.51 | |
| Contract liabilities | 483,370,540.77 | |
| Payroll payable | 57,086,457.61 | 20,788,121.24 |
| Taxes payable | 332,551,933.15 | 16,238,975.65 |
| Other payables | 261,840,719.70 | 70,782,736.10 |
| Including: Interest payable | 79,750.00 | |
| Dividends payable | ||
| Liabilities held for sales | ||
| Non-current liabilities due within one year | 5,000,000.00 | |
| Other current liabilities | 14,855,171.12 | |
| Total current liabilities | 2,013,493,172.54 | 514,726,828.98 |
| Non-current liabilities | ||
| Long-term loans | ||
| Bonds payable |
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 22,798,583.10 | 4,453,201.48 |
| Deferred income tax liabilities | 1,426,619.75 | |
| Other non-current liabilities | ||
| Total non-current liabilities | 24,225,202.85 | 4,453,201.48 |
| Total liabilities | 2,037,718,375.39 | 519,180,030.46 |
| Owner's equity: | ||
| Capital stock | 426,492,308.00 | 376,492,308.00 |
| Other equity instruments | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Capital reserve | 4,507,116,745.59 | 974,320,046.45 |
| Less: treasury stock | ||
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserve | 411,397,111.21 | 108,039,440.28 |
| Undistributed profit | 3,349,520,232.39 | 717,801,193.98 |
| Total owners' equities | 8,694,526,397.19 | 2,176,652,988.71 |
| Total liabilities and owners' equities | 10,732,244,772.58 | 2,695,833,019.17 |
3. Consolidated Statement of Income
Unit: yuan
| Item | Year 2020 | Year 2019 |
| I. Total Revenue | 12,533,945,946.63 | 4,574,625,915.60 |
| Including: Revenue | 12,533,945,946.63 | 4,574,625,915.60 |
| Interest revenue | ||
| Premium earned | ||
| Fee and commission income | ||
| II. Total cost | 7,829,145,023.94 | 3,966,093,342.21 |
| Including: Cost | 5,070,422,301.76 | 2,211,926,535.06 |
| Interest expenditure | ||
| Fee and commission expense | ||
| Surrender value | ||
| Net payments for insurance claims | ||
| Net reserve fund extracted for insurance liability contracts | ||
| Bond insurance expense | ||
| Reinsurance costs | ||
| Taxes and surcharges | 116,569,221.35 | 39,551,408.65 |
| Sales expenses | 1,575,163,912.49 | 1,355,767,449.04 |
| Administrative expenses | 436,965,446.22 | 197,456,021.51 |
| R&D expenses | 411,383,173.80 | 155,193,227.21 |
| Financial expenses | 218,640,968.32 | 6,198,700.74 |
| Including: interest expenditure | 3,614,778.86 | 12,450,315.25 |
| Interest revenue | 23,340,834.75 | 1,887,734.45 |
| Plus: other incomes | 70,291,282.76 | 22,490,743.11 |
| Income from investment (loss expressed with “-”) | 21,585,123.16 | -13,510,668.49 |
| Including: Income from investment of joint venture and cooperative enterprise | 4,565,754.26 | 1,685,447.16 |
| Income from derecognition of financial assets measured at amortized cost | ||
| Exchange gain (loss expressed with “-”) | ||
| Net exposure hedging gain (loss expressed with “-”) | ||
| Income from fair value changes (loss expressed with “-”) | 11,178,589.44 | 10,815,100.00 |
| Credit impairment losses (loss expressed with “-”) | -35,941,692.83 | -25,841,207.36 |
| Assets impairment losses (loss expressed with “-”) | -240,186,749.52 | -22,393,999.77 |
| Income from disposal of assets (loss expressed with “-”) | 9,765.86 | 61,678,502.30 |
| III. Operating profits (loss expressed with “-”) | 4,531,737,241.56 | 641,771,043.18 |
| Plus: Non-operating income | 4,227,507.56 | 3,789,637.85 |
| Less: non-operating expenditure | 33,505,825.07 | 7,146,485.01 |
| IV. Total profits (total loss expressed with “-”) | 4,502,458,924.05 | 638,414,196.02 |
| Less: Income tax expenses | 679,909,863.81 | 91,214,979.69 |
| V. Net profits (net loss expressed with “-”) | 3,822,549,060.24 | 547,199,216.33 |
| (I) Classified by business continuity | ||
| 1. Net profits from ongoing operation (net loss expressed with “-”) | 3,822,549,060.24 | 547,199,216.33 |
| 2. Net profits from discontinuing operation (net loss expressed with “-”) | ||
| (II) Classified by ownership | ||
| 1. Net profits attributable to shareholders of parent company | 3,810,412,504.40 | 546,293,677.91 |
| 2. Minority interest income | 12,136,555.84 | 905,538.42 |
| VI. Net amount of other comprehensive income after tax | -2,003,671.28 | 187,711.19 |
| Net amount of other comprehensive income after tax attributed to parent company owners | -1,155,658.95 | 85,200.03 |
| (I) Other comprehensive income that can't be reclassified into profit and loss | ||
| 1. Remeasure the variation of net indebtedness or net asset of defined benefit plan | ||
| 2. Other comprehensive income that can't be reclassified into profit and loss in the invested enterprise under equity method | ||
| 3. Fair value change of other equity instrument investments | ||
| 4. Fair value change of enterprise credit risks | ||
| 5. Other | ||
| (II) Other comprehensive income that will be reclassified into profit and loss | -1,155,658.95 | 85,200.03 |
| 1. Other comprehensive income that will be reclassified into profit and loss in the invested enterprise under equity method | ||
| 2. Fair value change of other debt investments |
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Translation reserve | -1,155,658.95 | 85,200.03 |
| 7. Other | ||
| Net amount of other comprehensive income after tax attributed to minority shareholders | -848,012.33 | 102,511.16 |
| VII. Total comprehensive income | 3,820,545,388.96 | 547,386,927.52 |
| Total comprehensive income attributed to parent company owners | 3,809,256,845.45 | 546,378,877.94 |
| Total comprehensive income attributed to minority shareholders | 11,288,543.51 | 1,008,049.58 |
| VIII. Earnings per share | ||
| (I) Basic earnings per share | 9.80 | 1.45 |
| (II) Diluted earnings per share | 9.79 | 1.45 |
In case of business combination involving enterprises under common control in current period, the net profits achieved by the merged party beforecombination were RMB 0.00 and achieved by the merged party in previous period were RMB 0.00.Legal representative: Li Jianquan Head of accounting work: Fang Xiuyuan Head of accounting body:
Wu Kezhen
4. Income statement of parent company
Unit: yuan
| Item | Year 2020 | Year 2019 |
| I. Revenue | 8,890,110,957.62 | 1,414,317,280.61 |
| Subtract: Cost | 4,323,934,957.16 | 1,040,031,300.50 |
| Taxes and surcharges | 69,354,151.33 | 5,520,928.57 |
| Sales expenses | 266,259,515.24 | 100,336,412.96 |
| Administrative expenses | 203,762,696.05 | 90,317,113.64 |
| R&D expenses | 268,121,590.13 | 48,222,051.81 |
| Financial expenses | 212,244,708.29 | 582,357.10 |
| Including: interest expenditure | 2,683,843.27 | 6,751,919.43 |
| Interest revenue | 21,135,753.14 | 966,992.39 |
| Plus: other incomes | 18,520,087.24 | 9,997,408.06 |
| Income from investment (loss expressed with “-”) | 19,125,074.95 | 184,605,438.11 |
| Including: Income from investment of joint venture and cooperative enterprise | 4,565,754.26 | 1,685,447.16 |
| Income from derecognition of financial assets measured at amortized cost (loss expressed with “-”) | ||
| Net exposure hedging gain (loss expressed with “-”) | ||
| Income from fair value changes (loss expressed with “-”) | 9,510,798.34 | |
| Credit impairment losses (loss expressed with “-”) | -30,463,822.73 | -25,598,506.86 |
| Assets impairment losses (loss expressed with “-”) | -7,066,883.80 | -2,213,424.38 |
| Income from disposal of assets (loss expressed with “-”) | 15,447.79 | 61,712,812.71 |
| II. Operating profit (loss to be filled out with the minus sign "-") | 3,556,074,041.21 | 357,810,843.67 |
| Plus: Non-Revenue | 106,996.35 | 138,270.04 |
| Less: non-operating expenditure | 3,619,487.52 | 1,325,618.42 |
| III. Total profit (total loss to be filled out with the minus sign "-") | 3,552,561,550.04 | 356,623,495.29 |
| Less: Income tax expenses | 518,984,840.70 | 22,419,654.17 |
| IV. Net profit (net loss to be filled out with the minus sign "-") | 3,033,576,709.34 | 334,203,841.12 |
| (I) Net profits from going concern (net loss expressed with “-”) | 3,033,576,709.34 | 334,203,841.12 |
| (II) Net profits from discontinuing operation (net loss expressed with “-”) | ||
| V. Net amount of other comprehensive income after tax | ||
| (I) Other comprehensive income that can't be reclassified into profit and loss | ||
| 1. Remeasure the variation of net indebtedness or net asset of defined benefit plan | ||
| 2. Other comprehensive income that can't be reclassified into profit and loss |
| in the invested enterprise under equity method | ||
| 3. Fair value change of other equity instrument investments | ||
| 4. Fair value change of enterprise credit risks | ||
| 5. Other | ||
| (II) Other comprehensive income that will be reclassified into profit and loss | ||
| 1. Other comprehensive income that will be reclassified into profit and loss in the invested enterprise under equity method | ||
| 2. Fair value change of other debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Translation reserve | ||
| 7. Other | ||
| VI. Total comprehensive income | 3,033,576,709.34 | 334,203,841.12 |
| VII. Earnings per share | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated Statement of Cash Flow
Unit: yuan
| Item | Year 2020 | Year 2019 |
| I. Cash flow from financing activities: | ||
| Cash from selling goods or offering labor | 13,080,026,126.33 | 4,995,329,584.98 |
| Net increase of customer deposit and deposit from other banks | ||
| Net increase of borrowings from central bank | ||
| Net increase of borrowing funds from |
| other financial institutions | ||
| Cash from obtaining original insurance contract premium | ||
| Cash received from insurance premium of original insurance contract | ||
| Net increase of deposit and investment of insured | ||
| Cash from interest, handling charges and commissions | ||
| Net increase of borrowing funds | ||
| Net increase of repurchase of business funds | ||
| Net cash from acting trading securities | ||
| Refund of tax and levies | 243,877,727.20 | 75,567,135.13 |
| Other cash received related to operating activities | 182,982,841.99 | 89,530,291.98 |
| Subtotal of cash inflow from operating activities | 13,506,886,695.52 | 5,160,427,012.09 |
| Cash paid for selling goods or offering labor | 6,321,166,011.43 | 2,880,740,937.53 |
| Net increase of customer loans and advances | ||
| Net increase of amount due from central bank and interbank | ||
| Cash paid for original insurance contract claims payment | ||
| Net increase of lending funds | ||
| Cash paid for interest, handling charges and commissions | ||
| Cash paid for policy dividend | ||
| Cash paid to and for employees | 1,010,260,597.27 | 784,127,462.02 |
| Taxes and fees paid | 819,152,009.87 | 395,050,897.12 |
| Other cash paid related to operating activities | 588,811,789.56 | 500,735,149.54 |
| Subtotal of cash outflow from operating activities | 8,739,390,408.13 | 4,560,654,446.21 |
| Net cash flow from operating activities | 4,767,496,287.39 | 599,772,565.88 |
| II. Cash flow from investment activities: | ||
| Cash from investment withdrawal | 4,308,736,771.86 | 1,178,150,000.00 |
| Cash from investment income | 17,019,368.90 | 1,417,602.35 |
| Net cash from disposal of fixed assets, intangible assets and other long-term assets | 246,308,685.62 | 34,364,294.60 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Other cash received related to investment activities | 0.00 | 8,064,000.00 |
| Subtotal of cash inflow from investment activities | 4,572,064,826.38 | 1,221,995,896.95 |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long term assets | 573,264,209.18 | 446,901,151.81 |
| Cash paid for investment | 8,428,736,771.86 | 1,178,150,000.00 |
| Net cash received from reinsurance business | ||
| Net cash paid for obtaining subsidiaries and other business units | ||
| Other cash paid related to investment activities | 0.00 | 16,613,718.00 |
| Subtotal of cash outflow from investment activities | 9,002,000,981.04 | 1,641,664,869.81 |
| Net cash flow from investing activities | -4,429,936,154.66 | -419,668,972.86 |
| III. Cash flow from financing activities: | ||
| Receipts from equity securities | 3,593,348,396.23 | |
| Including: Cash received from subsidies’ absorption of minority shareholders’ investment | ||
| Cash received from borrowings | 150,000,000.00 | 434,210,746.07 |
| Other cash received related to financing activities | 0.00 | 2,079,450.00 |
| Subtotal of cash inflow from financial activities | 3,743,348,396.23 | 436,290,196.07 |
| Cash repayments of amounts borrowed | 259,210,746.07 | 474,589,600.00 |
| Cash paid for distribution of dividends or profits and for interest expenses | 102,333,161.85 | 56,944,486.97 |
| Including: Dividends and profits paid | 1,436,176.00 |
| by subsidiaries to minority shareholders | ||
| Other cash paid related to financing activities | 33,727,072.53 | 3,154,098.91 |
| Subtotal of cash outflow from financial activities | 395,270,980.45 | 534,688,185.88 |
| Net cash flow from financing activities | 3,348,077,415.78 | -98,397,989.81 |
| IV. Impact of exchange rate movements on cash and cash equivalents | 4,927,426.22 | 1,948,657.74 |
| V. Net increase of cash and cash equivalents | 3,690,564,974.73 | 83,654,260.95 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 459,169,719.65 | 375,515,458.70 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 4,149,734,694.38 | 459,169,719.65 |
6. Cash flow statement of parent company
Unit: yuan
| Item | Year 2020 | Year 2019 |
| I. Cash flow from financing activities: | ||
| Cash from selling goods or offering labor | 8,971,990,210.35 | 1,409,456,037.64 |
| Refund of tax and levies | 241,763,249.24 | 64,036,355.19 |
| Other cash received related to operating activities | 79,920,248.95 | 73,996,845.01 |
| Subtotal of cash inflow from operating activities | 9,293,673,708.54 | 1,547,489,237.84 |
| Cash paid for selling goods or offering labor | 4,793,815,703.96 | 1,296,749,679.20 |
| Cash paid to and for employees | 210,111,491.64 | 140,600,402.37 |
| Taxes and fees paid | 319,415,360.21 | 29,708,121.75 |
| Other cash paid related to operating activities | 399,817,457.85 | 63,206,681.47 |
| Subtotal of cash outflow from operating activities | 5,723,160,013.66 | 1,530,264,884.79 |
| Net cash flow from operating activities | 3,570,513,694.88 | 17,224,353.05 |
| II. Cash flow from investment activities: | ||
| Cash from investment withdrawal | 3,251,480,000.00 | 672,600,000.00 |
| Cash from investment income | 14,559,320.69 | 182,919,990.95 |
| Net cash from disposal of fixed assets, intangible assets and other long-term assets | 235,274,618.02 | 30,740,721.12 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Other cash received related to investment activities | ||
| Subtotal of cash inflow from investment activities | 3,501,313,938.71 | 886,260,712.07 |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long term assets | 105,223,806.25 | 8,042,793.44 |
| Cash paid for investment | 7,021,480,000.00 | 702,700,000.00 |
| Net cash paid for obtaining subsidiaries and other business units | ||
| Other cash paid related to investment activities | ||
| Subtotal of cash outflow from investment activities | 7,126,703,806.25 | 710,742,793.44 |
| Net cash flow from investing activities | -3,625,389,867.54 | 175,517,918.63 |
| III. Cash flow from financing activities: | ||
| Receipts from equity securities | 3,593,348,396.23 | |
| Cash received from borrowings | 120,000,000.00 | 210,000,000.00 |
| Other cash received related to financing activities | 2,079,450.00 | |
| Subtotal of cash inflow from financial activities | 3,713,348,396.23 | 212,079,450.00 |
| Cash repayments of amounts borrowed | 65,000,000.00 | 364,589,600.00 |
| Cash paid for distribution of dividends or profits and for interest expenses | 101,192,176.61 | 49,839,198.13 |
| Other cash paid related to financing activities | 33,727,072.53 | 3,154,098.91 |
| Subtotal of cash outflow from financial activities | 199,919,249.14 | 417,582,897.04 |
| Net cash flow from financing activities | 3,513,429,147.09 | -205,503,447.04 |
| IV. Impact of exchange rate movements on cash and cash equivalents | 27,669,067.86 | 1,912,652.74 |
| V. Net increase of cash and cash equivalents | 3,486,222,042.29 | -10,848,522.62 |
| Plus: Balance of cash and cash | 183,064,001.14 | 193,912,523.76 |
| equivalents at the beginning of the period | ||
| Plus: Balance of cash and cash equivalents at the beginning of the period | 3,669,286,043.43 | 183,064,001.14 |
7. Consolidated statement of change in equity
Current amount
Unit: yuan
| Item | Year 2020 | ||||||||||||||
| Owners' equities attributable to the owners of parent company | Minority equity | Total owners' equities | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| I. Ending balance in previous year | 376,492,308.00 | 948,913,284.10 | 44,623.87 | 116,855,107.20 | 1,718,075,177.67 | 3,160,380,500.84 | 3,167,502.50 | 3,163,548,003.34 | |||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Prior period error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Other | |||||||||||||||
| II. Beginning balance in current year | 376,492,308.00 | 948,913,284.10 | 44,623.87 | 116,855,107.20 | 1,718,075,177.67 | 3,160,380,500.84 | 3,167,502.50 | 3,163,548,003.34 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 50,000,000.00 | 3,532,796,699.14 | -1,155,658.95 | 303,357,670.93 | 3,408,554,833.47 | 7,293,553,544.59 | 11,288,543.51 | 7,304,842,088.10 | |||||||
| (I) Total comprehensive income | -1,155,658.95 | 3,810,412,504.40 | 3,809,256,845.45 | 11,288,543.51 | 3,820,545,388.96 | ||||||||||
| (II) Owner’s invested and decreased capital | 50,000,000.00 | 3,532,796,699.14 | 3,582,796,699.14 | 3,582,796,699.14 | |||||||||||
| 1. Common stock invested by the owner | 50,000,000.00 | 3,508,849,271.20 | 3,558,849,271.20 | 3,558,849,271.20 | |||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | 23,947,427.94 | 23,947,427.94 | 23,947,427.94 | ||||||||||||
| 4. Other | |||||||||||||||
| (III) Profit distribution | 303,357,670.93 | -401,857,670.93 | -98,500,000.00 | -98,500,000.00 | |||||||||||
| 1. Withdrawal of surplus reserves | 303,357,670.93 | -303,357,670.93 | |||||||||||||
| 2. Withdrawal of general risk preparation | |||||||||||||||
| 3. Distribution of owners (or shareholders) | -98,500,000.00 | -98,500,000.00 | -98,500,000.00 | ||||||||||||
| 4. Other | |||||||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 2. Earned surplus transfer to paid-in |
| capital (or capital stock) | |||||||||||||||
| 3. Earned surplus covering the deficit | |||||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | |||||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Draw in this current | |||||||||||||||
| 2. Use in this current | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 426,492,308.00 | 4,481,709,983.24 | -1,111,035.08 | 420,212,778.13 | 5,126,630,011.14 | 10,453,934,045.43 | 14,456,046.01 | 10,468,390,091.44 |
Last term amount
Unit: yuan
| Item | 2019 | ||||||||||||||
| Owners' equities attributable to the owners of parent company | Minority equity | Total owners' equities | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Other | Subtotal | |||||
| Preferred stock | Perpetual bond | Other | |||||||||||||
| I. Ending balance in previous year | 376,492,308.00 | 948,913,284.10 | -40,576.16 | 83,434,723.09 | 1,248,201,883.87 | 2,657,001,622.90 | 3,595,628.92 | 2,660,597,251.82 | |||||||
| Plus: | |||||||||||||||
| Changes in accounting policies | |||||||||||||||
| Prior period error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Other | |||||||||||||||
| II. Beginning balance in current year | 376,492,308.00 | 948,913,284.10 | -40,576.16 | 83,434,723.09 | 1,248,201,883.87 | 2,657,001,622.90 | 3,595,628.92 | 2,660,597,251.82 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 85,200.03 | 33,420,384.11 | 469,873,293.80 | 503,378,877.94 | -428,126.42 | 502,950,751.52 | |||||||||
| (I) Total comprehensive income | 85,200.03 | 546,293,677.91 | 546,378,877.94 | 1,008,049.58 | 547,386,927.52 | ||||||||||
| (II) Owner’s invested and decreased capital | |||||||||||||||
| 1. Common stock invested by the owner | |||||||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | |||||||||||||||
| 4. Other | |||||||||||||||
| (III) Profit | 33,420, | -76,420 | -43,000 | -1,436,1 | -44,436, |
| distribution | 384.11 | ,384.11 | ,000.00 | 76.00 | 176.00 | ||||||||||
| 1. Withdrawal of surplus reserves | 33,420,384.11 | -33,420,384.11 | |||||||||||||
| 2. Withdrawal of general risk preparation | |||||||||||||||
| 3. Distribution of owners (or shareholders) | -43,000,000.00 | -43,000,000.00 | -1,436,176.00 | -44,436,176.00 | |||||||||||
| 4. Other | |||||||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 3. Earned surplus covering the deficit | |||||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | |||||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Draw in this current | |||||||||||||||
| 2. Use in this |
| current | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 376,492,308.00 | 948,913,284.10 | 44,623.87 | 116,855,107.20 | 1,718,075,177.67 | 3,160,380,500.84 | 3,167,502.50 | 3,163,548,003.34 |
8. Statement of change in equity of parent company
Current amount
Unit: yuan
| Item | Year 2020 | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equities | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| I. Ending balance in previous year | 376,492,308.00 | 974,320,046.45 | 108,039,440.28 | 717,801,193.98 | 2,176,652,988.71 | |||||||
| Plus: Changes in accounting policies | ||||||||||||
| Prior period error correction | ||||||||||||
| Other | ||||||||||||
| II. Beginning balance in current year | 376,492,308.00 | 974,320,046.45 | 108,039,440.28 | 717,801,193.98 | 2,176,652,988.71 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 50,000,000.00 | 3,532,796,699.14 | 303,357,670.93 | 2,631,719,038.41 | 6,517,873,408.48 | |||||||
| (I) Total comprehensive income | 3,033,576,709.34 | 3,033,576,709.34 | ||||||||||
| (II) Owner’s invested and decreased capital | 50,000,000.00 | 3,532,796,699.14 | 3,582,796,699.14 | |||||||||
| 1. Common stock | 50,000,0 | 3,508,849 | 3,558,849,2 | |||||||||
| invested by the owner | 00.00 | ,271.20 | 71.20 | |||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | 23,947,427.94 | 23,947,427.94 | ||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | 303,357,670.93 | -401,857,670.93 | -98,500,000.00 | |||||||||
| 1. Withdrawal of surplus reserves | 303,357,670.93 | -303,357,670.93 | ||||||||||
| 2. Distribution of owners (or shareholders) | -98,500,000.00 | -98,500,000.00 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Internal transfer of owner’s equity | ||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 3. Earned surplus covering the deficit | ||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | ||||||||||||
| 5. Carryforward |
| retained earnings of other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Draw in this current | ||||||||||||
| 2. Use in this current | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 426,492,308.00 | 4,507,116,745.59 | 411,397,111.21 | 3,349,520,232.39 | 8,694,526,397.19 |
Last term amount
Unit: yuan
| Item | 2019 | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Other | Total owners' equities | |||
| Preferred stock | Perpetual bond | Other | ||||||||||
| I. Ending balance in previous year | 376,492,308.00 | 974,320,046.45 | 74,619,056.17 | 460,017,736.97 | 1,885,449,147.59 | |||||||
| Plus: Changes in accounting policies | ||||||||||||
| Prior period error correction | ||||||||||||
| Other | ||||||||||||
| II. Beginning balance in current year | 376,492,308.00 | 974,320,046.45 | 74,619,056.17 | 460,017,736.97 | 1,885,449,147.59 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 33,420,384.11 | 257,783,457.01 | 291,203,841.12 | |||||||||
| (I) Total comprehensive income | 334,203,841.12 | 334,203,841.12 | ||||||||||
| (II) Owner’s invested and decreased capital | ||||||||||||
| 1. Common stock invested by the owner | ||||||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | ||||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | 33,420,384.11 | -76,420,384.11 | -43,000,000.00 | |||||||||
| 1. Withdrawal of surplus reserves | 33,420,384.11 | -33,420,384.11 | ||||||||||
| 2. Distribution of owners (or shareholders) | -43,000,000.00 | -43,000,000.00 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Internal transfer of owner’s equity | ||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 3. Earned surplus covering the |
| deficit | ||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | ||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Draw in this current | ||||||||||||
| 2. Use in this current | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 376,492,308.00 | 974,320,046.45 | 108,039,440.28 | 717,801,193.98 | 2,176,652,988.71 |
III. Basic status of Company
1. Company profile
Winner Medical Co., Ltd. (hereinafter referred to as the “the Company” or “our company”), formerly known as Winner IndustriesWinner Industries(Shenzhen) Co., Ltd. (hereinafter referred to as “Winner Industries”), is a wholly foreign-owned enterprise established on August 24, 2000 with theapproval of Shenzhen Municipal Administration for Industry and Commerce. The original business license number of the Company is: Q.D.Y.S.Z.ZiNo. 307199. The original registered capital is HKD 30 million, and the total investment is HKD 60 million. The Company is wholly owned by WinnerInternational Trading Corporation. The registered capital was invested in three phases. On April 2, 2001, the registered capital of HKD 18,023,154.30was invested in monetary funds, which was verified by the capital verification report (Z.T.Z.T. No.Y2001-1133) of Zhuhai Zhongtuo ZhengtaiAccounting Firm. The business scope of the original company is: the production and operation of sanitary materials, dressings and their products,medical clothing, textiles, non-woven products and moulded packaging (excluding the products subject to national export license management).On May 18, 2001, the board of directors of the Company decided to increase the registered capital from HKD 30.00 million to HKD 60.00 million,and the total investment from HKD 60.00 million to HKD 120.00 million, which was paid in three installments since the date of registration of theCompany. On June 5, 2001, the Company obtained the changed business license of the enterprise legal person issued by Shenzhen Municipal Bureaufor Industry and Commerce and amended the Articles of Association accordingly.As of December 21, 2001, it has received the second installment of the registered capital paid by Winner International Trading Corporation. WinnerInternational Trading Corporation contributed HKD 31,445,194.91 in monetary funds, and this investment was verified by Shenzhen ZhongpengCertified Public Accountants, Ltd. (S.P.K.Y. Zi [2002] No.037 capital verification report). As of February 21, 2002, it has received the thirdinstallment of the registered capital totaling HKD 6,005,722.20 paid by Winner International Trading Corporation, including HKD 3,665,722.20 in
Winner Medical Co., Ltd. 2020 Annual Reportcurrency and HKD 2,340,000.00 in kind. This investment was verified by Shenzhen Lishang Certified Public Accountants Co., Ltd. (S.L.S.Y. Zi[2002] No.039 capital verification report).On October 8, 2002, the board of directors of the Company decided to increase the Company’s registered capital from HKD 60.00 million to HKD
70.00 million, and the total investment from HKD 120.00 million to HKD 134.00 million. On December 10, 2002, the Company obtained thechanged business license of the enterprise legal person issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articlesof Association accordingly. As of May 27, 2003, it has received the fourth installment of the registered capital totaling HKD 14,525,928.59 paid by(Hong Kong) Winner International Trading Corporation. This capital increase was verified by Shenzhen Yuehua Certified Public Accountants Co., Ltd.(S.Y.H.Y. Zi [2003] No.339 capital verification report).On May 25, 2003, with the approval of the board of directors of the Company, the shareholder Winner International Trading Corporation signed theEquity Transfer Agreement with Winner Group Limited, under which Winner International Trading Corporation transferred 100% of its equity toWinner Group Limited. On July 28, 2003, the Company obtained the changed business license of the enterprise legal person issued by ShenzhenMunicipal Bureau for Industry and Commerce and amended the Articles of Association accordingly.On June 8, 2006, the board of directors of the Company decided to increase the Company’s registered capital from HKD 70.00 million to HKD
126.00 million, and the total investment from HKD 134.00 million to HKD 270.00 million. The newly increased registered capital was investedwithin half a year after the registration of the change. On June 30, 2006, the Company obtained the changed business license of the enterprise legalperson issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Association accordingly.As of August 30, 2006, the Company transferred undistributed profits HKD 49,423,804.00 to paid-in capital, and the paid-in capital after the changewas HKD 119,423,804.00. This capital increase was verified by the Shenzhen Branch of Beijing Zhonglian Certified Public Accountants Co., Ltd.(Z.L.S.S.Y. Zi [2007] No.043 capital verification report).On December 2, 2006, the board of directors of the Company decided to change the original investment period of the shareholders from June 30, 2006to December 31, 2006 into June 30, 2006 to June 30, 2007. On December 6, 2006, the Company was approved by General Administration forIndustry and Commerce of Shenzhen to change its type of enterprise from a wholly foreign-owned enterprise into a limited liability company (whollyowned by foreign legal person) and change its business term.As of March 15, 2007, the Company transferred undistributed profits HKD 6,576,196.00 to paid-in capital, and the cumulative paid-in capital after thechange was HKD 126.00 million. This capital increase was verified by Shenzhen Hengping Certified Public Accountants Co., Ltd. (S.H.P.W.Y. Zi[2007] No.0004 capital verification report). On August 5, 2007, the Company obtained the changed business license of the enterprise legal personissued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Association accordingly. The registration number waschanged from Q.D.Y.S.Z. Zi No. 307199 to 440306503230896.On June 8, 2009, the board of directors of the Company decided to add sterilization technology services to the business scope. On June 30, 2009, theCompany obtained the changed business license of the enterprise legal person issued by Shenzhen Municipal Bureau for Industry and Commerce andamended the Articles of Association accordingly.On April 1, 2010, the board of directors of the Company decided to increase the Company’s registered capital from HKD 126.00 million to HKD
192.00 million, and the total investment from HKD 270.00 million to HKD 380.00 million. The increased amount of the registered capital wascontributed by the original shareholders in cash in foreign currency.As of June 18, 2010, it has received the registered capital totaling USD 8,473,500.00 (equivalent to HKD 66,000,653.75) paid by Winner GroupLimited. This capital increase was verified by Shenzhen Hengping Certified Public Accountants LLP (S.H.P.S. (W.) Y. Zi [2010] No.13 capitalverification report). On July 2, 2010, the Company obtained the changed business license of the enterprise legal person issued by ShenzhenAdministration for Market Regulation (since September 9, 2009, Shenzhen Municipal Bureau for Industry and Commerce has been integrated intoShenzhen Administration for Market Regulation) and amended the Articles of Association accordingly.On April 27, 2011, with the approval of General Administration for Industry and Commerce of Shenzhen, the Company changed its residence fromNo. 1 Wenjian Avenue, Bulong Road, Longhua Street, Baoan District, Shenzhen City to Winner Industrial Park beside Bulong Road, Longhua Street,Baoan District, Shenzhen City.On February 20, 2013, the board of directors of the Company decided and agreed to increase the Company’s registered capital by HKD 4,271,300.The registered capital after the change was HKD 19,6271,300, and the total investment was still HKD 380.00 million.
Winner Medical Co., Ltd. 2020 Annual ReportThe shareholder, Winner Group Limited made capital contribution with its equity in the six enterprises. The equity contribution is as follows:
| Name of invested entity | Proportion (%) | Book value of equity contribution net assets (RMB 10,000) | Amount of equity contribution (RMB 10,000) | Amount included in capital surplus (RMB 10,000) | Amount of equity contribution (Convert to HKD 10,000) |
| （a） | （b） | （c）=（a）-（b） | （d）=（b）* conversion exchange rate | ||
| Winner Medical (Chongyang) Co., Ltd. (formerly known as “Chongyang Winner Medical Textile Co., Ltd.”) | 100.00 | 3,232.93 | 32.33 | 3,200.60 | 39.94 |
| Winner Medical (Jiayu) Co., Ltd. (formerly known as “Jiayu Winner Medical Textile Co., Ltd.”) | 100.00 | 3,520.95 | 35.21 | 3,485.74 | 43.50 |
| Winner Medical (Jingmen) Co., Ltd. (formerly known as “Jingmen Winner Medical Textile Co., Ltd.”) | 100.00 | 2,527.24 | 25.27 | 2,501.97 | 31.22 |
| Yichang Winner Textile Weaving Co., Ltd. | 100.00 | 1,800.69 | 18.01 | 1,782.68 | 22.25 |
| Winner Medical (Huanggang) Co., Ltd. | 75.00 | 19,729.30 | 197.29 | 19,532.01 | 243.76 |
| Winner Medical (Tianmen) Co., Ltd. (formerly known as “Hubei Winner Textile Co., Ltd.”) | 100.00 | 3,760.89 | 37.61 | 3,723.28 | 46.46 |
| Total | 34,572.00 | 345.72 | 34,226.28 | 427.13 |
After the capital increase, the original shareholders still have 100% of the Company's equity, and the above six companies become the Company'ssubsidiaries. On July 25, 2013, the Company obtained the changed business license of the enterprise legal person issued by Shenzhen MunicipalBureau for Industry and Commerce and amended the Articles of Association accordingly. This capital increase was verified by the Shenzhen Branchof Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi [2013] No.102 capital verification report).On September 2, 2013, the board of directors of the Company decided to increase the Company’s registered capital by HKD 18,068,200. Theregistered capital after the change was HKD 214,339,500, and the total investment was still HKD 380.00 million. The new investment was subscribedby Shenzhen Kangsheng Investment Partnership (limited partnership) (hereinafter referred to as the “Kangsheng Investment”), Shenzhen KangxinInvestment Partnership (limited partnership) (hereinafter referred to as the “Kangxin Investment”), Shenzhen Kanglong Investment Partnership(limited partnership) (hereinafter referred to as the “Kanglong Investment”) with HKD 10,322,400, HKD 4,414,500 and HKD 3,331,300 respectively.After the completion of the capital increase, the Company’s ownership structure was changed as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 19,627.13 | 91.5703 |
| Kangsheng Investment | 1,032.24 | 4.8159 |
| Kangxin Investment | 441.45 | 2.0596 |
| Kanglong Investment | 333.13 | 1.5542 |
| Total | 21,433.95 | 100.0000 |
On October 17, 2013, the Company obtained the changed business license of the enterprise legal person issued by Shenzhen Administration forMarket Regulation and amended the Articles of Association accordingly. This capital increase was verified by Shenzhen Hengping Certified PublicAccountants LLP (S.H.P.S.Y. Zi [2013] No.035 capital verification report).On October 26, 2013, the board of directors of the Company decided to change its residence from Winner Industrial Park beside Bulong Road,Longhua Street, Baoan District, Shenzhen City to Winner Industrial Park, No. 660 Bulong Road, Longhua New District, Shenzhen City. OnNovember 4, 2013, the Company completed the industrial and commercial registration of changes, obtained the changed business license of theenterprise legal person issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Association accordingly.On July 1, 2014, the board of directors of the Company decided and agreed to increase the Company’s registered capital by HKD 3646,600. Theregistered capital after the change was HKD 217,986,100, and the total investment was still HKD 380.00 million. The capital increase was made bythe original shareholder, Kangsheng Investment, which subscribed HKD 3,646,600 with RMB 13.585 million, and the increased registered capitalwas paid in two installments. After the completion of the capital increase, the Company’s ownership structure was changed as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 19,627.13 | 90.0385 |
| Kangsheng Investment | 1,396.90 | 6.4082 |
| Kangxin Investment | 441.45 | 2.0251 |
| Kanglong Investment | 333.13 | 1.5282 |
| Total | 21,798.61 | 100.0000 |
On July 24, 2014, the Company obtained the changed business license of the enterprise legal person issued by Shenzhen Administration for MarketRegulation and amended the Articles of Association accordingly. This capital increase was verified by Shenzhen Hengping Certified PublicAccountants LLP (S.H.P.S.Y. Zi [2014] No.030 and S.H.P.S.Y. Zi [2015] No.003 capital verification reports.On July 28, 2014, the board of directors of the Company decided to agree that the shareholder of the Company, Wenjian Group Limited, wouldtransfer its 2.9503% equity of the Company to Kangxin Investment, Kanglong Investment, and the newly introduced shareholder, Shenzhen KangliInvestment Partnership (limited partnership) (hereinafter referred to as “Kangli Investment”). After the completion of the equity transfer, theCompany’s ownership structure was changed as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 18,984.01 | 87.0882 |
| Kangsheng Investment | 1,396.90 | 6.4082 |
| Kangxin Investment | 740.83 | 3.3985 |
| Kanglong Investment | 447.37 | 2.0523 |
| Kangli Investment | 229.50 | 1.0528 |
| Total | 21,798.61 | 100.0000 |
On August 29, 2014, the Company obtained the changed business license of the enterprise legal person issued by Shenzhen Administration for MarketRegulation and amended the Articles of Association accordingly.On September 28, 2014, the board of directors of the Company decided and agreed to increase the Company’s registered capital by HKD 22,550,300.The registered capital after the change was HKD 240,536,400, and the total investment was still HKD 380.00 million. The new registered capital wassubscribed by Beijing Sequoia Xinyuan Equity Investment Center (limited partnership) (hereinafter referred to as “Sequoia Xinyuan”) with RMB
300.00 million. After the completion of the capital increase, the Company’s ownership structure was changed as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 18,984.01 | 78.9236 |
| Kangsheng Investment | 1,396.90 | 5.8074 |
| Kangxin Investment | 740.83 | 3.0800 |
| Kanglong Investment | 447.37 | 1.8599 |
| Kangli Investment | 229.50 | 0.9541 |
| Sequoia Xinyuan | 2,255.03 | 9.3750 |
| Total | 24,053.64 | 100.0000 |
As of October 31, 2014, it has received RMB 300.00 million from Sequoia Xinyuan in monetary funds. On November 6, 2014, the Company obtainedthe changed business license of the enterprise legal person issued by Shenzhen Administration for Market Regulation and amended the Articles ofAssociation accordingly. This capital increase was verified by the Shenzhen Branch of Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y.Zi [2014] No.087 capital verification report).On April 30, 2015, through the resolution of the board of directors of the Company, with February 28, 2015 as the base date, Winner Industries waswholly changed into a limited liability Company, with a registered capital of RMB 368 million. In accordance with the provisions of the SponsorshipAgreement and Articles of Association, the shareholders converted their audited net assets as of February 28, 2015 of RMB 1,058,194,956.32 into368 million shares at a ratio of 1:0.3478, par value of each share was RMB 1, and the total share capital was RMB 368 million and held separately bythe original shareholders in accordance with their original proportions; the remaining RMB 690,194,956.32 was included in the capital surplus (due tothe change of calculation policy of Company’s receivables bad debt provision during the reporting period, the audited net assets of the Company as ofthe base date of share reform were adjusted to RMB 1,050,812,354.45, and the corresponding share conversion ratio was adjusted to 1: 0.3502). OnJune 4, 2015, with the approval of Economy, Trade and Information Commission of Shenzhen Municipality, Winner Industries was wholly changedinto a limited liability company, renamed as “Winner Medical Co., Ltd.”, and obtained the business license of enterprise legal person with theregistration number of 440306503230896.On May 28, 2018, after voted through and approved by the extraordinary general meeting of shareholders, the Company agreed to increase theregistered capital by RMB 8,492,308, with the registered capital after the change of RMB 376,492,308. The new registered capital was subscribed byShenzhen Capital Group Co.,Ltd. (hereinafter referred to as “SCGC”) with RMB 300.00 million. After the completion of the capital increase, theCompany’s ownership structure was changed as follows:
| Investor | Amount of contribution (RMB 10,000) | Proportion (%) |
| Winner Group Limited | 29,043.8848 | 77.1434 |
| Kangsheng Investment | 2,137.1232 | 5.6764 |
| Kangxin Investment | 1,133.4400 | 3.0105 |
| Kanglong Investment | 684.4432 | 1.8179 |
| Kangli Investment | 351.1088 | 0.9326 |
| Sequoia Xinyuan | 3,450.0000 | 9.1635 |
| SCGC | 849.2308 | 2.2556 |
| Total | 37,649.2308 | 100.0000 |
As of June 13, 2018, it has received RMB 300.00 million from SCGC in monetary funds. On June 15, 2018, Shenzhen Administration for MarketRegulation issued the Notice of Change (Filing) (No.: 21801665051) on this change and approved the capital increase. The Company amended theArticles of Association in respect of the above matters. This capital increase was verified by BDO China Shu Lun Pan Certified Public AccountantsLLP (X.K.S.B.Zi [2018] No.ZI10525 capital verification report).On February 28, 2018, the Company obtained the renewed business license of the enterprise legal person issued by Shenzhen Administration forMarket Regulation with the unified social credit code 91440300723009295R.
On August, 18, 2020, after the reply of China Securities Regulatory Commission on Approval of the Registration of the Initial Public Offering ofWinner Medical Co., Ltd. (Z.J.X.K. [2020] No.1822), the Company issued 50 million RMB ordinary shares to the public, which was listed on theShenzhen Stock Exchange on September 17, 2020. Upon completion of the issuance, the registered capital of the Company was RMB 426,492,308.The Company belongs to textile industry.
Business term: sustainable operation.Business scope: production and operation of class II, III 6864 medical hygiene materials, medical biological materials, dressings and products,medical clothing, protective articles, textiles, non-woven products and molded packaging (the above products do not include the goods subject tonational export license administration) and related products, disposable consumables and molded packaging; engaging in wholesale, import andexport, retail (including online sales) and other related ancillary businesses of all Class I medical devices, all Class II medical devices (excluding invitro diagnostic reagents), Class III medical devices: medical hygiene materials and dressings, medical suture materials and adhesives, medicalpolymer materials and products (except disposable transfusion apparatus (needle)), general diagnostic instruments, medical cold treatment, lowtemperature, refrigerating equipment and tools, cotton household articles, cotton clothing, cotton costume, cotton spun laced non-woven fabric and itsmanufactured products, cotton, disinfection products, daily necessities, cosmetics, protective equipment and instruments and meters (if it does notinvolve goods subject to state trading, or involves goods subject to quotas, license management and other special provisions, it shall apply inaccordance with relevant regulations of the state); provide the technical consulting, technical services and after-sales services of above-mentionedproducts; sterilization technical services (if it needs to obtain relevant qualifications to operate, it shall apply in accordance with relevant regulations);enterprise management consulting, business information consulting, economic information consulting, warehouse services (excluding hazardouschemicals, precursor chemicals, refined oil and other dangerous goods), own property leasing (it can be operated only with the legal real estateownership certificate under the company's name). The above business scope does not include the items subject to special administrative measures foraccess stipulated by the state, and those involving the record and licensing qualifications need to obtain the relevant certificates before operation.Corporate domicile: Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City.
The financial statements were approved by the Board of Directors of the Company on April 16, 2021.
2. Scope of consolidated financial statements
As of December 31, 2020, the subsidiaries in the consolidated financial statements of the Company are as follows:
Subsidiary nameWinner Medical (Jingmen) Co., Ltd. (hereinafter referred to as “Jingmen Winner”)
| Winner Medical (Jingmen) Co., Ltd. (hereinafter referred to as “Jingmen Winner”) |
| Yichang Winner Textile Weaving Co., Ltd. (hereinafter referred to as “Yichang Winner”) |
| Winner Medical (Tianmen) Co., Ltd. (hereinafter referred to as “Tianmen Winner”) |
| Winner Medical (Chongyang) Co., Ltd. (hereinafter referred to as “Chongyang Winner”) |
| Winner Medical (Jiayu) Co., Ltd. (hereinafter referred to as “Jiayu Winner”) |
| Winner Medical (Hong Kong) Limited (hereinafter referred to as “Hong Kong Winner”) |
| Huanggang Winner Cotton Industry Co., Ltd. (hereinafter referred to as “Huanggang Cotton”) |
| Winner Medical (Huanggang) Co., Ltd. (hereinafter referred to as “Huanggang Winner”) |
| Shenzhen Purcotton Ltd. (hereinafter referred to as “Shenzhen Purcotton”) |
| Guangzhou Purcotton Medical Technology Co., Ltd. (hereinafter referred to as “Guangzhou Purcotton”) |
| Beijing Purcotton Ltd. (hereinafter referred to as “Beijing Purcotton”) |
| Shanghai Purcotton Ltd. (hereinafter referred to as “Shanghai Purcotton”) |
| Shenzhen Qianhai Purcotton E-commerce Co., Ltd. (hereinafter referred to as “Qianhai Purcotton”) |
| Winner Medical Malaysia Co., Ltd. (hereinafter referred to as “Malaysia Winner”) |
| Winner Medical (Heyuan) Co., Ltd. 1* (hereinafter referred to as “Heyuan Winner”) |
| Winner Medical (Wuhan) Co., Ltd. 2* (hereinafter referred to as “Wuhan Winner”) (former name: Hubei Winner Medical Co., Ltd.) |
| Shenzhen PureH2B Technology Co., Ltd. 3* (hereinafter referred to as “PureH2B”) |
| Mifu (Shanghai) Trading Co., Ltd. 4* (hereinafter referred to as “Mifu Shanghai”) |
| Shenzhen Cotton Lining Technology Innovation Co., Ltd. 5* (hereinafter referred to as “Cotton Lining”) |
1*: Heyuan Winner was established on May 18, 2016.2*: Wuhan Winner was established on January 23, 2017, which former name was Hubei Winner Medical Co., Ltd. (abbreviated as “Hubei Winner”).On August 28, 2020, Hubei Winner was renamed as Winner Medical (Wuhan) Co., Ltd.3*: PureH2B was established on January 25, 2018.4*: Mifu Shanghai was established on March 16, 2018.5*: Cotton Lining was established on July 9, 2019.6*: Huanggang Purcotton was established on September 27, 2020.
The scope of the consolidated financial statements for this reporting period and its changes are detailed in the notes “VIII. Consolidation scopechanges” and “IX. Interests in other entities”.
IV. Preparation Basis of Financial Statements
1. Preparation basis
This financial statement is prepared in accordance with the Accounting Standard for Business Enterprises--Basic Standard issued by the Ministry ofFinance, various special accounting standards, guideline for application of accounting standard for business enterprises, ASBE interpretations andother relevant regulations (hereinafter collectively referred to as “Accounting Standard for Business Enterprises”) and No.15 of Compilation Rules forInformation Disclosure by Companies Offering Securities to the Public-- General Provisions of Financial Reports issued by China SecuritiesRegulatory Commission.
2. Going concern
There are no events affecting the Company's going-concern ability and it is expected that the Company will be able to operate as a going concernwithin the next 12 months. The Company's financial statements are prepared on the basis of the assumption of going concern.V. Significant accounting policy and accounting estimateSpecific accounting policy and accounting estimate:
The following significant accounting policy and accounting estimate of the Company are formulated in accordance with the Accounting Standards forBusiness Enterprises. The business not mentioned is implemented in accordance with the relevant accounting policies in the Accounting Standards forBusiness Enterprises.
1. Statement on complying with corporate accounting standards
These financial statements comply with the requirements of the Accounting Standards for Business Enterprises issued by the Ministry of Finance, andtruly and completely reflect the consolidated and parent company financial position of the Company on December 31, 2020 and the businessperformance and cash flows of the Company in 2020.
2. Accounting period
The fiscal year of the Company runs from January 1 to December 31 of each calendar year.
3. Operating cycle
The operating cycle of the Company is 12 months.
4. Reporting currency
The Reporting currencyof the Company is RMB.
5. Accounting treatment of business combination involving enterprises under and not under common controlBusiness combination involving enterprises under the same control: the assets and liabilities acquired by the merging party in the businesscombination (including the goodwill formed by the final controlling party by purchasing the merged party) shall be measured on the basis of the bookvalue of the assets and liabilities of the merged party in the consolidated financial statements of the final controlling party on the merger date. Thedifference between the book value of the net assets obtained and the consideration paid for the combination (or total par value of issued shares) isadjusted against capital reserve (capital stock premium); if the capital reserve (capital stock premium) is not sufficient to absorb the difference, theretained earnings shall be adjusted.Business combination not involving enterprises under common control: the cost of combination is the fair value of the assets paid, liabilities incurredor assumed and equity securities issued by the acquirer on the acquiring date for acquisition of the control right of the acquiree. If the cost ofcombination is greater than the share of the fair value of the acquiree's identifiable net assets acquired in the combination, the difference is recognizedas goodwill; if the cost of combination is less than the share of the fair value of the acquiree's identifiable net assets acquired in the combination, thedifference is included in the profit and loss of the current period. The acquiree's identifiable assets, liabilities and contingent liabilities obtained by theacquirer in the combination meeting the recognition conditions are measured at fair value on the acquiring date.The directly related expenses incurred for the business combination are included in the profit and loss of the current period; the transaction costsassociated with the issue of equity or debt securities for the business combination are included in the initially recognized amounts of the equity or debtsecurities.
6. Methods for preparing consolidated financial statements
1). Consolidation scope
The consolidation scope of the consolidated financial statements is determined on a control basis and includes the Company and all subsidiaries.Control means that the Company has the power over the invested entity, enjoys variable returns by participating in the relevant activities of theinvested entity, and has the ability to use the power to influence the amount of returns.
2). Consolidation procedures
The Company regards the whole enterprise group as an accounting entity and prepares consolidated financial statements in accordance with unifiedaccounting policies to reflect the overall financial position, operating results and cash flow of the enterprise group. The impact of internal transactions
between the Company and its subsidiaries and between the subsidiaries are offset. If the internal transaction indicates that impairment loss hasoccurred to relevant assets, such loss shall be recognized in full. If the accounting policies and the accounting periods adopted by the subsidiaries areinconsistent with those of the Company, necessary adjustments shall be made in accordance with the accounting policies and the accounting periodsof the Company when preparing the consolidated financial statements.The minority shareholders' share of the subsidiary's owners' equity, current net profit and loss and current comprehensive income shall be separatelylisted under the owners' equity item in the consolidated balance sheet, under the net profit item and under the total comprehensive income item in theconsolidated income statement. If the current loss shared by the minority shareholders of the subsidiary exceeds their share in the owner's equity ofthe subsidiary at the beginning of the period, the minority equity shall be offset by the balance.
(1) Increase of subsidiaries or business
During the reporting period, if subsidiaries or business are increased due to business combination involving enterprises under the same control, theoperating results and cash flow from the beginning of the current period to the end are incorporated into the consolidated financial statements, and theopening balance in the consolidated financial statements and the related items in comparative statements are adjusted, which shall be regarded that thereporting subject after combination has been existed since the initial control point of the ultimate controlling party.If the invested party under the same control is controlled by the additional investment and other reasons, the equity investment held before obtainingthe control of the merged party, and the relevant profits and losses, other comprehensive income and other net assets and other net assets changesbetween the date of acquisition of the original equity and the date on which the merging party and the merged party are under the same control(whichever is later) and the merger date shall offset the period of between the opening retained earnings or current profits and losses in thecomparative reporting period.During the reporting period, if subsidiaries or business are increased due to business combination of enterprises not under the same control, it shall beincluded in the consolidated financial statements as of the acquisition date on the basis of the fair value of all identifiable assets, liabilities andcontingent liabilities determined on the acquisition date.If it is able to exercise control over the invested entity that is not under the same control due to additional investment or other reasons, the equity heldby the acquiree before the acquisition date shall be re-measured according to the fair value of the equity on the acquisition date, and the differencebetween the fair value and the book value shall be included into the current investment income. Other comprehensive income, which can bereclassified into profit and loss in the future, and other changes in owners' equity under the equity method as related to the acquiree's equity heldbefore the acquisition date are converted to the investment income of the current period as of the acquisition date.
(2) Disposal of subsidiary
① General disposal method
When the Company loses the control right over the invested entity due to disposal of part of the equity investment or other reasons, the residualequity investment after the disposal shall be re-measured at its fair value on the date of losing the control right. The difference between the sum ofthe consideration acquired by disposal of the equity and the fair value of the residual equity, minus the sum of the share of the net assets of theoriginal subsidiary continuously calculated from the acquisition date or the merging date and the goodwill according to the original shareholdingratio, shall be included in the investment income in the period of lose of the control right. Other comprehensive income related to the equityinvestment of the original subsidiary that can be reclassified into profit and loss in the future, and other changes in owners' equity under the equitymethod are converted to the investment income in the period of lose of the control right.
② Disposal of subsidiary by steps
For disposal of the equity investment in the subsidiary by steps through multiple transactions till loss of the control right, the terms, conditions andeconomic impact of the disposal on each transaction in respect of the equity investment of the subsidiary are subject to one or more of the followingcircumstances, which generally indicate that the multiple transactions are package deals:
ⅰ. The transactions were entered into simultaneously or with consideration of their mutual influence;ⅱ. These transactions as a whole can only achieve a complete business result;ⅲ. The occurrence of one transaction depends on the occurrence of at least one other transaction;ⅳ. A transaction is not economical alone, but economic when considered with other transactions.If each transaction belongs to a package deal, each transaction shall be subject to accounting treatment as a deal for disposal of subsidiary and loss of
Winner Medical Co., Ltd. 2020 Annual Reportthe control right; the difference between the disposal price and the share of net assets of the subsidiary corresponding to the disposal of investmentbefore the loss of control right is recognized as other comprehensive income in the consolidated financial statements and transferred into the currentprofit and loss in the period of loss of control right.If each transaction does not belong to a package deal, the equity investment of the subsidiary shall be subject to accounting treatment without loss ofcontrol right before losing the control right; and accounting treatment shall be carried out in accordance with the general disposal method of thesubsidiary when losing the control right.
(3) Purchase of the minority equity of the subsidiaries
The difference between the long-term equity investment obtained due to the purchase of minority equity and the share of the net assets to be enjoyedand continuously calculated from the acquisition date or merging date according to the increased shareholding ratio is adjusted against the capitalstock premium in the capital reserve in the consolidated balance sheet; if the capital stock premium in the capital reserve is not sufficient to offset thedifference, the retained earnings shall be adjusted.
(4) Partial disposal of equity investment in subsidiaries without loss of control right
The difference between the disposal price and the disposal of long-term equity investment and the share of the net assets to be enjoyed andcontinuously calculated from the acquisition date or merging date, is adjusted against the capital stock premium in the capital reserve in theconsolidated balance sheet; if the capital stock premium in the capital reserve is not sufficient to offset the difference, the retained earnings shall beadjusted.
7. Joint venture arrangements classification and Co-operation accounting treatmentThe joint venture arrangement is divided into joint management and joint venture.Joint management means the joint venture arrangement in which the joint venture parties enjoy the assets and assumes the liabilities related to thearrangement.The Company confirms the following items related to the share of interests in the joint operation:
(1) Recognize the assets held solely by the Company and the assets jointly held according to the share of the Company;
(2) Recognize the liabilities undertaken solely by the Company and the liabilities jointly undertaken according to the share of the Company;
(3) Recognize the income generated from the sale of the Company’s share of the joint operation output;
(4) Recognize the income generated from the sale of outputs of the joint operation according to the share of the Company;
(5) Recognize the expenses incurred separately and the expenses incurred in joint operation according to the share of the Company.The Company's investment in the joint venture shall be accounted by the equity method. See Note "III. (XV) Long-term equity investment" fordetails.
8. Determining standards of cash and cash equivalents
Cash represents the Company’s cash on hand and the deposit readily available for payment. Cash equivalents represent the short-term, highly liquidinvestments that are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value.
9. Foreign currency transaction and foreign currency statement translation
1. Foreign currency transaction
Foreign currency transaction adopts the spot exchange rate on the date of the transaction as the conversion exchange rate to convert the foreigncurrency amount into RMB for reporting.At the balance sheet date, the balance of foreign currency monetary items are converted by using the spot exchange rates at the balance sheet date.Exchange differences arising therefrom are recognized in current profit and loss, except the exchange differences related to a specific-purposeborrowing denominated in foreign currency that qualify for capitalization are treated according to the capitalization of borrowing costs.
2. Conversion of financial statements denominated in foreign currencies
The asset and liability items in the foreign currency balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among theowner's equity items, except the ones as “undistributed profits”, others shall be translated at the spot exchange rate at the time when they are incurred.The income and expense items in the income statement are converted at the spot rate on the date of transaction.When disposing of the overseas operation, the balance of the financial statements denominated in foreign currencies related to the overseas operationshall be transferred from the owner's equity item to the profit and loss of the disposal period.
10. Financial instruments
The Company recognizes a financial asset, financial liability or equity instrument when becoming a party of the financial instrument contract.
1. Classification of financial instruments
According to the Company's business model of managing financial assets and the contractual cash flow characteristics of financial assets, thefinancial assets are classified at the initial recognition as: financial assets measured at the amortized cost, financial assets measured at fair value ofwhich changes are recorded into other comprehensive income, and financial assets at fair value of which changes are recorded in current profit andloss.The Company classifies the financial assets that meet the following conditions and are not designated to be measured at fair value and whose changesare recorded into the profits and losses of the current period as financial assets measured at the amortized cost:
- The business model is aimed at collecting contract cash flows;- The contract cash flow is only the payment of the principal and interest based on the outstanding principal amount.The Company classifies the financial assets that meet the following conditions and are not designated to be measured at fair value and whose changesare recorded into the profits and losses of the current period as financial assets measured at fair value of which changes are recorded into othercomprehensive income (debt instrument):
- The business model is aimed at collecting contract cash flows and the sale of such financial assets;- The contract cash flow is only the payment of the principal and interest based on the outstanding principal amount.For non-trading equity instrument investments, the Company may, at the time of initial recognition, irrevocably designate them as financial assetsmeasured at fair value of which changes are recorded into other comprehensive income (equity instrument). The designation is made on a singleinvestment basis and the related investments meet the definition of an equity instrument from an issuer's perspective.Except the above financial assets measured at the amortized cost and the financial assets measured at fair value of which changes are recorded intoother comprehensive income, the Company classifies all other financial assets as financial assets at fair value of which changes are recorded in currentprofit and loss. Upon initial recognition, if accounting mismatches can be eliminated or significantly reduced, the Company can irrevocably designatethe financial assets that should have been classified as those measured at the amortized cost or measured at fair value of which changes are recordedinto other comprehensive income as the financial assets measured at fair value of which changes are recorded in current profit and loss.Financial liabilities are classified at the initial recognition as: financial liabilities measured at fair value of which changes are recorded in currentprofit and loss and financial liabilities measured at the amortized cost.Financial liabilities that meet one of the following conditions may be designated at the initial recognition as the financial liabilities measured at fairvalue of which changes are recorded in current profit and loss.
1) This designation can eliminate or significantly reduce accounting mismatches.
2) Manage and conduct performance evaluation of the financial liability portfolio or financial assets and financial liability portfolio on the basis of fairvalue according to the enterprise risk management or investment strategy set forth in the official written documents, and report to the keymanagement personnel within the enterprise on this basis.
3) The financial liability contains embedded derivatives that need to be split separately.
2. Recognition basis and measurement method of financial instruments
(1) Financial assets measured at the amortized cost
The financial assets measured at the amortized costs include bills receivable, accounts receivable, other receivables, long-term receivables, debt
Winner Medical Co., Ltd. 2020 Annual Reportinvestment, etc., which shall be initially measured at fair value, and the relevant transaction expenses are included in the initial recognized amount;the receivables excluding major financing components and the accounts receivable that the Company decides not to consider the financingcomponents of less than one year shall be initially measured at the contract transaction price.The interest calculated by the effective interest rate method during the holding period is recorded into the current profit and loss.Upon recovery or disposal, the difference between the price obtained and the book value of the financial assets shall be recorded into the current profitor loss.
(2) Financial assets measured at fair value of which changes are recorded into other comprehensive income (debt instrument)Financial assets measured at fair value of which changes are recorded into other comprehensive income (debt instrument), including receivablesfinancing and other debt investments, are initially measured at fair value and related transaction costs are included in the initial recognized amount.The financial asset is subsequently measured at its fair value, and changes in the fair value are recorded in other comprehensive income, except theinterest, impairment loss or gains and exchange gain and loss calculated by the effective interest rate method.Upon the de-recognition, the accumulated gains or losses previously recorded in other comprehensive income will be transferred from othercomprehensive income to current profit and loss.
(3) Financial assets measured at fair value of which changes are recorded into other comprehensive income (equity instrument)Financial assets measured at fair value of which changes are recorded into other comprehensive income (equity instrument), including other equityinstrument investment, are initially measured at fair value and related transaction costs are included in the initial recognized amount. Such financialassets are subsequently measured at the fair value and the change in the fair value is recorded into other comprehensive income. The dividendsobtained are recorded in current profit and loss.Upon the de-recognition, the accumulated gains or losses previously recorded in other comprehensive income will be transferred from othercomprehensive income to retained earnings.
(4) Financial assets measured with fair value and with the changes included in current profit and lossFinancial assets measured at fair value of which changes are recorded in current profit and loss, including tradable financial assets, derivativefinancial assets, other non-current financial assets, etc., are initially measured at fair value and related transaction expenses are recorded in currentprofit and loss. Such financial assets are subsequently measured at the fair value and the change in the fair value is recorded into current profit andloss.
(5) Financial liabilities measured with fair value and with the changes included in current profit and lossFinancial liabilities measured at fair value of which changes are recorded in current profit and loss, including tradable financial liabilities, derivativefinancial liabilities, etc., are initially measured at fair value and related transaction expenses are recorded in current profit and loss. Such financialliabilities are subsequently measured at the fair value and the change in the fair value is recorded into current profit and loss.Upon the de-recognition, the difference between its book value and the consideration paid is recorded in current profit and loss.
(6) Financial liabilities measured at the amortized cost
Financial liabilities measured at amortized cost, including short-term borrowings, notes payable, accounts payable, other payables, long-termborrowings, bonds payable and long-term payables, are initially measured at fair value, and related transaction expenses are included in the initialrecognized amount.The interest calculated by the effective interest rate method during the holding period is recorded into the current profit and loss.Upon the de-recognition, the difference between the consideration paid and the book value of such financial liability is recorded in current profit andloss.
3. De-recognition and transfer of financial assets
The Company shall derecognize the financial assets if one of the following conditions is satisfied:
- Termination of the contractual right to collect the cash flow of financial assets;
Winner Medical Co., Ltd. 2020 Annual Report- The financial assets have been transferred, and almost all the risks and remuneration in its ownership have been transferred to the transferee;- The financial assets have been transferred, and while the Company has neither transferred nor retained virtually all of the risks and remuneration inthe ownership of the financial assets, it has not retained control of the financial assets.In the event of a financial asset transfer, if almost all the risks and remuneration in the ownership of the financial asset are retained, the recognition ofthe financial asset will not be terminated.The principle of substance over form is adopted when judging whether the transfer of financial assets meets the above conditions for de-recognition offinancial assets.The Company divides the transfer of financial assets into the whole transfer of financial assets and the partial transfer of financial assets. If the overalltransfer of the financial asset meets the de-recognition conditions, the difference between the following two amounts shall be recorded into the currentprofits and losses:
(1) The book value of the transferred financial asset;
(2) The sum of the consideration received from the transfer and the cumulative amount of the fair value changes originally included in owner’s equitydirectly (where the financial asset involved in the transfer is measured at fair value and the change is recorded in other comprehensive income (debtinstrument)).If the partial transfer of the financial asset meets the de-recognition conditions, the book value of the overall transferred financial asset is distributedbetween the derecognized and non-derecognized part according to the relative fair value and the difference between the following two amounts isincluded in current profit and loss:
(1) The book value of derecognized part;
(2) Sum of the consideration of the derecognized part and the amount of corresponding derecognized part in the total fair value changes originallyincluded in owner’s equity directly (where the financial asset involved in the transfer is measured at fair value and the change is recorded in othercomprehensive income (debt instrument)).If the transfer of the financial asset does not meet the conditions of de-recognition, such financial asset shall continue to be recognized and theconsideration received shall be recognized as a financial liability.
4. De-recognition of financial liabilities
Where the current obligation of a financial liability has been discharged in whole or in part, such financial liability or part thereof shall bederecognized; if the Company enters into an agreement with the creditor to replace the existing financial liabilities by assuming new financialliabilities, and the contract terms of the new financial liabilities and the existing financial liabilities are substantially different, the Company shallderecognize the existing financial liabilities and recognize the new financial liabilities at the same time.If all or part of the contract terms of the existing financial liabilities are substantially modified, the existing financial liability or part thereof shall bederecognized, and the financial liabilities after the modification shall be recognized as new financial liabilities.When a financial liability is derecognized in whole or in part, the difference between the book value of the derecognized financial liability and theconsideration paid (including non-cash asset transferred out or the new financial liability undertaken) is recorded in current profit and loss.If the Company repurchases part of the financial liability, it shall allocate the overall book value of the financial liability on the repurchase dateaccording to the relative fair value of the continuing recognition part and the de-recognition part. The difference between the book value allocated tothe derecognized part and the consideration paid (including non-cash asset transferred out or the liability undertaken) is recorded in current profit andloss.
5. Fair value determination method of financial assets and financial liabilities
The fair value of a financial instrument with an active market shall be recognized based on the quotation in the active market. The fair value of afinancial instrument without an active market shall be recognized by means of valuation techniques. Upon valuation, the Company adopts valuationtechniques applicable to the current situation and supported by sufficient available data and other information, selects input values consistent with theasset or liability characteristics considered by market participants in the transaction of related assets or liabilities, and gives priority to relevantobservable input values. The Company uses non-observable input values only when relevant observable input values cannot be obtained or are notpracticable to obtain.
6. Test method and accounting treatment method of financial assets impairment
Winner Medical Co., Ltd. 2020 Annual ReportThe Company estimates the expected credit losses of financial assets measured at amortized cost, financial assets measured at fair value of whichchanges are recorded into other comprehensive income (debt instrument) and financial guarantee contracts on a single or combined basis.The Company calculates the probabilistic weighted amount of the present value of the difference between the cash flows receivable under thecontracts and the cash flows expected to be received and recognizes the expected credit loss, taking into account reasonable and evidentialinformation concerning past events, current conditions and projections of future economic conditions, and weighting the risk of default.If the credit risks of such financial instrument have increased significantly since the initial recognition, the Company shall measure its loss provisionaccording to the amount equivalent to the expected credit loss in the entire duration of such financial instrument. If the credit risks of such financialinstrument have not increased significantly since the initial recognition, the Company shall measure the loss provision according to the amountequivalent to the expected credit loss of such financial instrument in the next 12 months. The amount of the increase or reversal of the loss provisionresulting therefrom shall be recorded into the current profit and loss as an impairment loss or profit.By comparing the risk of default of financial instruments on the balance sheet date with the risk of default on the initial recognition date, theCompany determines the change of the default risk during the expected duration of the financial instruments, so as to assess whether the credit risks offinancial instruments have significantly increased since the initial recognition. In general, the Company will consider that the credit risks of thefinancial instrument has increased significantly if it is more than 30 days overdue, unless there is conclusive evidence that the credit risks of suchfinancial instrument have not increased significantly since the initial recognition.If the credit risks of the financial instrument is low on the balance sheet date, the Company considers that the credit risks of the financial instrumenthave not increased significantly since the initial recognition.If there is objective evidence that a certain financial asset has suffered credit impairment, the Company shall make provision for the impairment of thefinancial asset on an individual basis.For receivables and contract assets formed by transactions regulated by Accounting Standards for Business Enterprises No.14 - Revenue (2017), theCompany always measures its loss provision at an amount equivalent to the expected credit loss over the entire duration, whether or not it containsmajor financing components.For lease receivable, the Company shall always measure its loss provision according to the amount equivalent to the expected credit loss within theentire duration.If the Company no longer reasonably expects that the contract cash flow of a financial asset can be recovered in whole or in part, it will directly writedown the book balance of such financial asset.
11. Notes receivable
See 12. Accounts receivable.
12. Accounts receivable
For notes receivable and accounts receivable, whether or not they contain major financing components, the Company always measures its lossprovision at an amount equivalent to the expected credit loss over the entire duration, and the increase or reversal amount of the loss provision thusformed is recorded into the current profit and loss as impairment loss or gain.For notes receivable, the Company shall always measure its loss provision according to the amount equivalent to the expected credit loss within theentire duration. Based on the credit risk characteristics of notes receivable, it is divided into different portfolios:
| Item | Basis for recognition of combination and accrual method of provision for bad debt |
| Banker's acceptance bill | If the acceptor is a bank with higher credit rating (such as large state-owned commercial banks and listed joint-stock commercial banks), no provision for bad debts shall be made; if the acceptor is another bank or financial company, the expected credit loss is analyzed based on historical information and judged whether it is necessary to make provision for bad debts. |
| Trade acceptance | If the acceptor is a non-financial institution, its division is the same as that of accounts receivable (if accounts receivable are transferred to notes receivables, the age of accounts is calculated continuously). |
The Company combines the notes receivable-trade acceptance, accounts receivable (except in the consolidation) and prepayments with similar creditrisk characteristics (aging), and estimates the proportion of bad debt provision for notes receivable-trade acceptance, accounts receivable andprepayments based on all reasonable and informed information, including forward-looking information, as follows:
| Aging | Accruing proportion of accounts receivable (%) | Accruing proportion of trade acceptance (%) | Accruing proportion of prepaid accounts (%) |
| Within 1 year (including 1 year) | 5 | 5 | 0 |
| 1-2 years | 10 | 10 | 0 |
| 2-3 years | 30 | 30 | 50 |
| 3-4 years | 50 | 50 | 100 |
| 4-5 years | 80 | 80 | 100 |
| More than 5 years | 100 | 100 | 100 |
If there is objective evidence that a certain note receivable, account receivable or prepayment has incurred credit impairment, the Company shallmake a provision for bad debts for the note receivable or account receivable or prepayment separately and recognize the expected credit loss.
13. Receivables financing
See 10. Financial instruments.
14. Other receivables
Recognition method and accounting treatment method of the expected credit loss of other receivablesFor the measurement of impairment loss of other receivables other than accounts receivable and notes receivable (including other receivables,long-term receivables, etc.), it shall be treated by referring to the “V. 10. Financial instruments 6) Test method and accounting treatment method offinancial assets impairment (excluding receivables)”.
15. Inventory
1. Classification and cost of inventories
The inventories are classified as raw materials, low priced and easily worn articles, merchandise inventory, work in progress, goods shipped in transit,goods processed by commission, wrappage, etc.Inventories are initially measured at cost. The inventory cost includes procurement costs, processing costs, and other expenses incurred to bring theinventory to its current location and condition.
2. Valuation method of delivered inventory
The sales of purchased finished products are priced according to the moving weighted average method at the time of shipment; the sales ofself-produced products are priced according to the standard cost method at the time of shipment, and the difference between the actual cost and thestandard cost shall be apportioned according to the inventory and sales ratio at the end of the period.
3. Recognition basis of net realizable value of different types of inventories
The inventories shall be measured on the balance sheet date according to the cost of inventories or net realizable value, whichever is lower. If the cost
Winner Medical Co., Ltd. 2020 Annual Reportof the inventories is higher than the net realizable value, the inventory falling price reserves shall be withdrawn. The net realizable value ofinventories is the amount of the estimated sale price of the inventories subtracted by the estimated cost about to occur in completion, estimated sellingexpenses and related taxes in daily activities.For the finished products, merchandise inventory, materials for sale and other merchandise inventories directly used for sale, the net realizable valueis recognized by the amount of the estimated sale price of the inventories subtracted by the estimated selling expenses and related taxes in normalproduction and operation process; for the material inventory required to be processed, the net realizable value is recognized by the amount of theestimated sale price of the finished products subtracted by the estimated cost about to occur in completion, estimated selling expenses and relatedtaxes in normal production and operation process; for the inventories held to perform the sales contract or labor contract, the net realizable value iscalculated on the basis of contract price. If the number of the inventories held is greater than the quantity ordered in the sales contract, the netrealizable value of the excessive inventories is calculated on the basis of general sale price.If the influence factors writing down the inventory value before have disappeared after withdrawal of the inventory falling price reserves, resulting inthe net realizable value of the inventories higher than the book value, the amount written down is reversed within the originally withdrawn amount ofinventory falling price reserves and the amount reversed is included in current profits and losses.
4. Inventory system of the inventories
The perpetual inventory system is adopted.
5. Amortization methods of low priced and easily worn articles and wrappage
(1) The 50-50 amortization method is adopted for low-value consumables;
(2) the packaging adopts the one-time write-off method.
16. Contract assets
Accounting policies as of January 1, 2020Methods and standards for the recognition of contract assetsThe Company lists the contractual assets or contractual liabilities in the balance sheet according to the relationship between performance obligationsand customer payment. The Company's rights to receive consideration for the transfer of goods or services to the customer (and such rights are subjectto factors other than the passage of time) are listed as contractual assets. The contractual assets and contractual liabilities under the same contract arelisted in the net amount. The rights that the Company owns and unconditionally (depending only on the passage of time) to collect consideration fromthe customer are listed separately as receivables.Recognition method and accounting treatment method of the expected credit loss of contractual assetsFor the recognition methods and accounting treatment methods of the expected credit loss of the contract assets, please refer to Note “V. 10. FinancialInstruments 6.Test method and accounting treatment method of financial assets impairment (excluding receivables) ".
17. Contract cost
Accounting policies as of January 1, 2020Contract cost includes the contract performance cost and the contract acquisition cost.If the cost incurred by the Company for the performance of the contract is not within the scope of relevant standards for inventory, fixed assets orintangible assets, it shall be recognized as an asset as a contract performance cost when the following conditions are met:
? The cost is directly related to a current or anticipated contract.? The cost increases the Company’s future resources to meet its performance obligations.? The cost is expected to be recoverable.If the Company is expected to recover the incremental cost incurred in acquiring the contract,it shall be recognized as an asset as the contractacquisition cost.Assets related to contract costs are amortized on the same basis as income recognition of goods or services related to the asset; however, if theamortization period of the contract acquisition cost is less than one year, the Company shall record it into the current profit and loss when it is
incurred.If the book value of an asset related to the contract cost is higher than the difference between the following two items, the Company shall draw animpairment provision for the excess portion and recognize it as the assets impairment loss:
1. Remaining consideration expected to be obtained as a result of the transfer of the goods or services related to the asset;
2. The costs is estimated and to be incurred for the transfer of the relevant goods or services.
If the factors of impairment in the previous period change so that the difference above is higher than the book value of the asset, the Company shallreverse the withdrawn impairment provision and include it into the current profit and loss, but the book value of the reversed asset shall not exceedthe book value of such asset on the reversal date if the impairment provision is not withdrawn.
18. Assets held for sales
If the book value of an asset is recovered mainly through the sale (including the non-monetary assets exchange of commercial nature) rather thancontinuous use of a non-current asset or disposal group, such asset is classified as an asset held for sale.The Company classifies non-current assets or disposal groups as held for sale if they meet the following conditions simultaneously:
(1) Immediately available for sale under current conditions in accordance with the usual practice of selling such type of assets or disposal groups insimilar transactions;
(2) The sale is highly likely, that is, the Company has resolved a sale plan and obtained a firm purchase commitment, and the sale is expected to becompleted within one year. Where the relevant provisions require the approval of the relevant authority or regulatory authority of the Company beforethe sale, the approval has been obtained.Where it is classified as non-current assets (not including financial assets and deferred income tax assets, the assets formed by the employeecompensation) or disposal groups held for sale, if its book value is higher than the net amount of the fair value minus the selling expense, the bookvalue is written down to the net amount of the fair value minus the selling expense, the amount written down is recognized as the assets impairmentloss and included in the current profit and loss. The provision for impairment of available for sale assets is withdrawn.
19. Debt investment
See 10. Financial instruments.
20. Other debt investments
See 10. Financial instruments.
21. Long-term receivables
N/A
22. Long-term equity investment
1. Criteria for determining joint control and significant influence
Joint control refers to the joint control over an arrangement in accordance with the relevant agreement, and the related activities of the arrangementcan only be decided upon the unanimous consent of the parties sharing the control. Where the Company and other joint venture parties jointlyexercise joint control over the invested entity and enjoy rights over the net assets of the invested entity. The invested entity shall be the joint ventureof the Company.Significant influence means the power to participate in the formulation of financial and operating decisions of the invested entity, but not the power tocontrol or jointly control the formulation of these policies together with other parties. If the Company is able to exert significant influence on the
Winner Medical Co., Ltd. 2020 Annual Reportinvested entity, the invested entity is a joint venture of the Company.
2. Recognition of initial investment cost
(1) Long-term equity investment formed by business combination
For the long-term equity investment in a subsidiary formed by business combination under common control, the share of the book value of theowner’s equity of the combining party in the consolidated financial statements of the final controlling party, on the combination date, is regarded asthe initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the book value ofpaid consideration shall adjust the capital stock premium in capital reserve. If the capital stock premium in capital reserve is insufficient to offset, theretained earnings shall be adjusted. Where it implements the control upon the invested entity under the same control due to additional investment orother reasons, the difference between the initial investment cost of the long-term equity investment recognized according to the above principle andthe sum of the book value of the long-term equity investment before the combination plus the book value of the new consideration for the acquisitionof further shares on the merging date shall adjust the capital stock premium. If the capital stock premium is insufficient to offset, the retained earningsshall be offset.For the long-term equity investment in a subsidiary formed by business combination not under common control, the combined cost recognized on theacquisition date is regarded as the initial cost of the long-term equity investment. Where it implements the control upon the invested entity not underthe same control due to additional investment and other reasons, the sum of the book value of the original equity investment plus the new investmentcost is taken as the initial investment cost.
(2) Long-term equity investment acquired by means other than business combination
If the long-term equity investment is acquired by means of cash payment, the initial investment cost shall be the purchase price actually paid.If the long-term equity investment is acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securitiesissued.
3. Subsequent measurement and recognition methods of profits and losses
(1) Long-term equity investment checked by cost method
The long-term equity investment made by the Company in its subsidiaries adopts the cost method, unless the investment meets the conditions ofholding for sale. Except for cash dividends or profits already declared but not yet paid that are included in the price or consideration actually paidupon acquisition of the investment, the Company recognize the investment income in current period in accordance with the attributable share of cashdividends or profit distributions declared by the invested entity.
(2) Long-term equity investment checked by equity method
The long-term equity investment of joint ventures and cooperative enterprises shall be calculated by the equity method. The initial investment cost ofthe long-term equity investment is not adjusted if it is greater than the difference between the fair value share of the net identifiable assets of theinvested entity in the investment; if the initial investment cost of the long-term equity investment is less than the difference between the fair valueshare of the net identifiable assets of the invested entity in the investment, it is recorded in current profit and loss and the cost of the long-term equityinvestment is adjusted.The Company recognizes the investment income and other comprehensive income according to its share of net profit or loss and othercomprehensive income of the invested entity, and adjusts the boot value of the long-term equity investment accordingly; the Company decreases thebook value of the long-term equity investment accordingly in accordance with the share of the profit distribution or cash dividends declared by theinvested entity; for changes in owner’s equity of the invested entity other than those arising from its net profit or loss, other comprehensive incomeand profit distribution (abbreviated as “other changes in owner’s equity”), the Company adjusts the book value of the long-term equity investmentand records in the owner’s equity.Upon recognizing the share of the net profit and loss, other comprehensive income and other changes in owner's equity of the invested entity, it shallbe recognized after adjusting the net income and other comprehensive income of the invested entity on the basis of the fair value of the identifiablenet assets of the invested entity when obtaining the investment, and in accordance with the Company's accounting policies and accounting periods.The profits and losses of unrealized internal transactions between the Company and joint ventures, cooperative enterprises shall be calculatedaccording to the proportion that should be enjoyed by the Company and shall be offset. On this basis, investment income shall be recognized, exceptthat the assets invested or sold constitute business. The unrealized internal deal loss between the Company and the invested entity is recognized in
Winner Medical Co., Ltd. 2020 Annual Reportfull amount if attributable to the assets impairment loss.The net loss incurred by the Company to the cooperative enterprise or joint venture, except for the liability for additional loss, shall be written downto zero by the book value of long-term equity investment and other long-term equity substantially constituting the net investment in the cooperativeenterprise or joint venture. If the cooperative enterprise or joint venture achieves the net profits in the later periods, the Company recovers torecognize the gain sharing amount after making up for the unrecognized loss sharing amount with the gain sharing amount.
(3) Disposal of long-term equity investment
On disposal of the long-term equity investment, the balance between the book value of the equity disposed of and the actual price obtained ischarged to current profit and loss.If part of the long-term equity investment is disposed of by the equity method, and the remaining equity is still accounted by the equity method, theother comprehensive income recognized by the original equity method shall be carried forward on the same basis as the relevant assets or liabilitiesdirectly disposed of by the invested entity at the corresponding proportion, and the changes in other owners' equity shall be carried forward to thecurrent profit and loss on a proportional basis.If the joint control or significant influence on the invested entity is lost due to the disposal of equity investment or other reasons, othercomprehensive income of the original equity investment recognized by the equity method shall be subject to accounting treatment through adoptingthe basis for the direct disposal of relevant assets or debts when the equity method is terminated. Other changes in owners' equity will be transferredto current profit and loss when the equity method is terminated.If the Company loses its control rights over the invested entity due to the disposal of part of the equity investment, when preparing individualfinancial statement, in case of the residual equity with joint control or significant influence on the invested entity, the Company shall calculate andadjust the residual equity with equity method as upon obtaining. Other comprehensive income recognized before the acquisition of the control rightof the invested entity shall be carried forward proportionately on the same basis as the direct disposal of relevant assets or liabilities by the investedentity, and other changes in owners' equity recognized by the equity method shall be carried forward proportionately to the current profit and loss. Ifthe residual equity cannot exercise joint control or exert significant influence on the invested entity, it shall be recognized as financial assets, thedifference between its fair value and book value on the date of loss of control shall be included in the current profit and loss, and all othercomprehensive income and other changes in owner’s equity recognized before obtaining the control right of the invested entity shall be carriedforward.If the deals for disposal of the subsidiary’s equity investment by steps through several times of transaction until the loss of the control right belong toa package deal, the deals shall be subject to accounting treatment as a deal for disposal of the equity investment in the subsidiary and loss of thecontrol right; the difference between each disposal price and the book value of the long-term equity investment corresponding to the equity disposedof before the loss of control right is, in individual financial statements, recognized as other comprehensive income and then transferred into thecurrent profit and loss in the period of loss of control right. If it does not belong to a package deal, each deal shall be accounted for separately.
23. Investment real estates
Measurement mode of Investment real estatesN/A
24. Fixed assets
(1) Recognition conditions
The fixed assets refer to the tangible assets which are held for production of goods, provision of labor, lease or operating management and whoseservice life exceeds a fiscal year. The fixed assets can be recognized when meeting the following conditions:
(1) The expected economic benefits related to the fixed assets are likely to flow to the enterprise;
(2) The cost of the fixed assets can be reliably measured.
Winner Medical Co., Ltd. 2020 Annual ReportThe fixed assets are initially measured according to the cost (and the influence of the expected disposal cost factors). Subsequent expenditure relatedto fixed assets, if the economic benefits related may flow in and the cost can be reliably measured, is included in the fixed asset cost; and the bookvalue of the replaced part is derecognized; all other subsequent expenditures are recorded into current profit and loss when incurred.
(2) Depreciation method
Depreciation of fixed assets is calculated by straight-line depreciation method and the depreciation rate is determined according to the category,expected useful life and expected net residual rate of the fixed assets. For fixed assets with provision for impairment, the amount of depreciation shallbe recognized in future periods according to the book value after deducting the provision for impairment and based on the usable life. If thecomponents of the fixed assets have different useful life or provide economic benefits for the Company in different ways, the depreciation iscalculated respectively by different depreciation rates or depreciation methods.The fixed assets leased by financial leasing shall adopt the depreciation policy consistent with the own fixed assets. Where it can be reasonablydetermined that the ownership of the leased assets can be acquired upon the expiration of the lease term, depreciation shall be calculated andwithdrawn within the service life of the leased assets; where it is impossible to reasonably determine that the ownership of the leased assets can beacquired upon the expiration of the lease term, the depreciation shall be calculated and withdrawn within a shorter period of the lease term and theservice life of the leased assets.The depreciation method, Expected service life, ratio of remaining value and yearly depreciation of various fixed assets are as follows:
(3) Recognition basis, valuation and depreciation methods of fixed assets under financing leaseIf one of the following conditions is stipulated in the lease agreement between the Company and the lessor, it shall be recognized as the assetsacquired under finance leases:
(1) The ownership of the leased assets will belong to the Company upon the expiration of the lease term;
(2) The Company has the option to purchase the asset, and the purchase price is much lower than the fair value of the asset when exercising theoption;
(3) The lease period accounts for most of the service life of the leased asset;
(4) There is no significant difference between the present value of the minimum lease payment on the beginning date of the lease and the fair value ofthe asset.
(5) The property of the leased asset is special. If no major transformation is made, only the lessee can use it.Upon commencement of the lease term, the Company takes the lower of the fair value of the leased asset on the lease commencement date and thepresent value of the minimum lease payment as the entry value of the leased asset, and the minimum lease payment as the entry value of the long-termpayables, and their balance as the unrecognized finance fees.
| Class | Depreciation method | Expected service life | Residual rate | Yearly depreciation |
| Houses and building | Straight-line depreciation | 10-35 | 10.00 | 2.57-9.00 |
| Machinery equipment | Straight-line depreciation | 2-15 | 10.00 | 6.00-45.00 |
| Transportation equipment | Straight-line depreciation | 3-10 | 10.00 | 9.00-30.00 |
| Electronic equipment and office equipment, etc. | Straight-line depreciation | 2-10 | 10.00 | 9.00-45.00 |
(4) Disposal of fixed assets
When the fixed assets are disposed of or cannot generate economic benefits through expected use or disposal, the fixed assets arederecognized. The income from sale, transfer, scrap or damage disposal of fixed assets is included in current profits and losses afterdeducting the book value and related taxes.
25. Construction in progress
The construction in progress is measured according to the actual cost incurred. Actual costs include construction costs, installation costs, borrowingcosts eligible for capitalization, and other expenses necessary to bring the construction in progress to a predetermined usable state. When theconstruction in progress reaches the intended serviceable condition. it is transferred into fixed assets and begin to withdraw the depreciation since thenext month.
26. Borrowing costs
1. Recognition principle of capitalization of borrowing costs
If the borrowing costs incurred by the Company can be directly attributed to the purchase, construction or production of the assets eligible forcapitalization, they shall be capitalized and recorded into the cost of the relevant assets; other borrowing costs shall be recognized as expensesaccording to the amount incurred at the time of occurrence and shall be recorded into the current profit and loss.Assets meeting the capitalization conditions refer to the fixed assets, investment real estates, inventories and other assets which can reach the intendedusable or marketable status only after quite a long time of construction or production activities.
2. Capitalization period of borrowing costs
Capitalization period refers to the period from the time point at which borrowing costs begin to be capitalized to the time point at which borrowingcosts cease to be capitalized, excluding the period during which the capitalization of borrowing costs is suspended.Capitalization begins when borrowing costs meet the following conditions:
(1) Asset expenditures have been incurred, including expenditures incurred in the form of cash payment, transfer of non-cash assets or undertakinginterest-bearing liabilities for the purchase and construction of or production of assets eligible for capitalization;
(2) Borrowing costs have been incurred;
(3) The purchase, construction or production activities which are necessary to prepare the asset for its intended use or sale have started.When the purchase, construction or production of assets that meet the capitalization conditions reach the predetermined usable or marketable state, thecapitalization of borrowing costs shall cease.
3. Capitalization suspension period
If the assets that meet the capitalization conditions are abnormally interrupted in the process of purchase and construction or production, and theinterruption period is more than 3 consecutive months, the capitalization of borrowing costs shall be suspended; if the interruption is necessary for thepurchase, construction or production of the assets that meet the capitalization conditions to reach the predetermined usable state or marketable state,the borrowing costs shall continue to be capitalized. The borrowing costs incurred during the interruption period are recognized as the current profitand loss, until the borrowing costs continue to be capitalized after the purchase and construction or the production activities of the assets are restarted.
4. Calculation method of capitalization rate and capitalization amount of borrowing costs
For the specific borrowing for the purchase and construction or production of assets eligible for capitalization, the capitalization amount of borrowingcosts shall be recognized by the borrowing costs actually occurring in the current period of specific borrowing, minus the amount of the interestincome obtained by depositing the unused borrowing funds in the bank or the investment income obtained by making temporary investment.For the general borrowing occupied for the purchase, construction or production of assets that meet the capitalization conditions, the amount of
Winner Medical Co., Ltd. 2020 Annual Reportborrowing expenses to be capitalized for the general borrowing shall be calculated and recognized according to the weighted average of theaccumulated asset expenditure exceeding the specific borrowing multiplied by the capitalization rate of the general borrowing occupied. Thecapitalization rate is calculated and recognized according to the weighted average effective interest rate of the general borrowing.During the capitalization period, the difference between the exchange of the principal and interest of the specific foreign currency borrowing shall becapitalized and recorded into the cost of the assets eligible for capitalization. The exchange difference arising from the principal and interest offoreign currency borrowings other than specific foreign currency borrowing is recorded into the current profit and loss.
27. Biological assets
NA
28. Oil and gas assets
NA
29. Right-of-use assets
NA
30. Intangible assets
(1) Valuation method, service life and impairment test
1. Pricing methods for intangible assets
(1) The intangible assets are initially measured according to the cost;
The costs of purchased intangible assets include the purchase price, related taxes as well as other expenses incurred to make the assets reach theintended serviceable conditions and attributable to the assets.
(2) Subsequent measurement
The Company analyzes and judges the useful life of the intangible assets when obtaining.The intangible assets with limited useful life are amortized within the period when the intangible assets bring economic benefits to the Company; theintangible assets that cannot be expected to bring economic benefits to the Company are deemed to have uncertain life and are not amortized.
2. Estimation of useful life of intangible assets with limited life
| Item | Expected useful life | Basis |
| Land use right | 50 years | Term of use specified in the land-use right certificate |
| Software use right | 2-8 years | Useful life estimated by the management |
| Trademark right | 5-10 years | Benefit period specified in the certificate of trademark use |
| Patent right | 5-10 years | Benefit period specified in the certificate of patent use |
| Franchised use right | 3 years | Term of use stipulated in the contract |
3. Basis for judging intangible assets with uncertain service life and the procedures for reviewing their service lifeDuring this reporting period, the Company has no intangible assets with uncertain service life.
(2) Accounting policy of expenditure for internal research and development
1. Specific criteria for dividing research stage and development stage
The expenditure of the Company's internal R&D projects is classified into the expenditure at the research stage and the expenditure at thedevelopment stage.Research stage: the stage of original, planned investigation and research activities to acquire and understand new scientific or technical knowledge,etc.Development stage: the stage in which research or other knowledge is applied to a plan or design to produce new or substantially improved materials,devices, products, etc., prior to commercial production or use.
2. Specific conditions for the capitalization of expenditures in the development stage
The expenditure at the research stage is charged to the current profit and loss in occurrence. The expenditure at the development stage can berecognized as intangible assets only when meeting the following conditions and charged to the current profit and loss if not meeting the followingconditions:
(1) Technically feasible to complete the intangible assets, so that they can be used or sold;
(2) It is intended to finish and use or sell the intangible assets;
(3) Ways of intangible assets to generate economic benefits, including those can prove that the products generated by the intangible assets can be soldor the intangible assets themselves can be sold and prove that the intangible assets to be used internally are useful;
(4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies,financial resources and other resources; and
(5) The development expenditures of the intangible assets can be reliably measured.
If the expenditure at the research stage and the expenditure at the development stage cannot be distinguished, the R&D expenditure incurred is fullycharged to the current profit and loss.
31. Long-term assets impairment
Long-term assets such as long-term equity investment, fixed assets, construction in progress, intangible assets with limited service life, and oil and gasassets, which show signs of impairment on the balance sheet date, shall be subject to impairment tests. If the impairment test results show thatrecoverable amount of the asset is below its book value, the provision for impairment is withdrawn according to the balance and charged to theimpairment loss. The recoverable amount is determined according to the higher of the net amount of the assets fair value subtracted by the disposalcosts and the present value of the expected future cash flow of the assets. The provision for impairment of assets is calculated and recognized on thebasis of single asset. The Company recognizes the recoverable amount of the asset group based on the asset group to which the asset belongs if therecoverable amount of the single asset is difficult to estimate. An asset group is the smallest group of assets that can generate cash inflowsindependently.The goodwill formed due to business combination, intangible assets with uncertain service life and intangible assets that have not yet reached theusable state shall be subject to impairment test at least at the end of each year regardless of whether there are signs of impairment.The Company conducts the goodwill impairment tests. For the book value of the goodwill formed due to business combination, it shall be apportionedto the relevant asset group by a reasonable method from the date of purchase; if it is difficult to apportion to the relevant asset group, it shall beapportioned to the relevant asset group combination. The relevant asset group or asset group combination is an asset group or asset group combinationthat can benefit from the synergies of business combination.When conducting impairment test on the relevant asset group or asset group combination containing goodwill, if there are signs of impairment in the
Winner Medical Co., Ltd. 2020 Annual Reportasset group or asset group combination related to goodwill, conduct impairment test on the asset group or asset group combination without goodwillat first, calculate the recoverable amount and recognize the corresponding impairment loss compared with the relevant book value. Then conduct animpairment test on the asset group or asset group combination containing goodwill to compare its book value with the recoverable amount. If therecoverable amount is less than the book value, the amount of impairment loss shall first offset the book value of goodwill amortized to the assetgroup or asset group combination, and then offset the book value of other assets proportionally according to the proportion of the book value of assetsother than goodwill in the asset group or asset group combination. The above impairment loss of assets will not be reserved in subsequent accountingperiods once recognized.
32. Long-term unamortized expenses
Long-term unamortized expenses refer to the expenses that have occurred but shall be burdened in current period and later periods with theapportionment period more than one year.Amortization method: long-term unamortized expenses are amortized on an average basis over the benefit period.
33. Contract liabilities
Accounting policies as of January 1, 2020The Company lists the contractual assets or contractual liabilities in the balance sheet according to the relationship between performance obligationsand customer payment. The obligations of the Company to transfer goods or provide services to customers for which consideration has been receivedor receivable are listed as contractual liabilities. The contractual assets and contractual liabilities under the same contract are listed in the net amount.
34. Employee compensation
(1) Short-term compensation accounting method
The Company recognizes the short-term compensation incurred actually during the accounting period when the employees provide services for theCompany as the liabilities and includes in current profits and losses or related asset costs.For the social insurance premiums and housing funds paid by the Company for the employees as wells as the labor union expenditure and personneleducation fund withdrawn according to the provisions, the corresponding employee compensation amount is recognized according to the stipulatedaccruing basis and accruing proportion during the accounting period when the employees provide services for the Company.The employee welfare expenses incurred by the Company shall be recorded into the current profit and loss or relevant asset cost according to theactual amount when actually incurred, and the non-monetary welfare shall be measured at its fair value.
(2) Post-employment benefits accounting method
(1) Defined contribution plan
The Company pays the basic endowment insurance and unemployment insurance for the employees according to relevant provisions of the localgovernment, calculates the amount payable according to local payment base and proportion in the accounting period when the employees provideservices for the Company, recognizes the amount payable as the liabilities and includes in current profits and losses or related asset costs. In addition,the Company has also participated in the corporation pension plan / supplementary pension insurance fund approved by the relevant departments ofthe state. The Company pays the fees to the pension plan / local social security institution according to a certain proportion of the total employeewages and includes corresponding expenses in current profits and losses or related asset costs.
(2) Defined benefit plan
The Company attributes the welfare obligations generated from the defined benefit plan to the period when the employees provide services by theformula recognized according to the expected cumulative welfare unit method and includes in current profits and losses or related asset costs.
Winner Medical Co., Ltd. 2020 Annual ReportThe deficit or surplus formed from the present value of the defined benefit plan obligation subtracted by the fair value of the defined benefit planassets is recognized as a net liability or net asset of the defined benefit plan. In case of surplus in the defined benefit plan, the Company measures thenet assets of the defined benefit plan according to the lower of the surplus and asset upper limits of the defined benefit plan.All defined benefit plan obligations, including the obligations for payment within 12 months after the end of the expected annual reporting period inwhich the employees provide services, are discounted according to the national debts matching the defined benefit plan obligatory term and currencyor the market return of the high-quality corporation bonds active in the market on the balance sheet date.The service costs generated from the defined benefit plan and the net interest of the net liabilities or net assets of the defined benefit plan are includedin current profits and losses or related asset costs; the changes from re-measurement of the net liabilities or net assets of the defined benefit plan areincluded in other comprehensive income and not written back to the profits and losses in subsequent accounting period. Upon the termination of theoriginal defined benefit plan, the part originally recorded into other comprehensive income within the scope of rights and interests shall be carriedforward to undistributed profit.In the settlement of the defined benefit plan, the settlement profits or losses are recognized according to the balance between the present value of thedefined benefit plan obligation and the settlement price recognized on the settlement date.
(3) Termination benefits accounting method
When providing dismission welfare, the Company shall recognize the employee compensation liabilities arising from the dismission welfare andrecord it in the current profit and loss whenever is earlier below: when the Company fails to unilaterally withdraw the dismission welfare due totermination of labor relation plan or downsizing suggestions; when the Company recognizes the costs or expenses related to restructuring involvingpayment of dimission welfare.
(4) Other long-term employee benefits accounting method
NA
35. Lease liabilities
Not applicable.
36. Estimated liabilities
The estimated liabilities are recognized when the obligation related to contingencies meets the following conditions simultaneously:
(1) The obligation is the current obligation undertaken by the Company;
(2) Performance of the obligation is likely to lead to the outflow of economic benefits;
(3) The amount of the obligation can be reliably measured.
The estimated liabilities are initially measured at the best estimate of the expenditure required to perform the relevant current obligations.In recognizing the best estimate, factors such as risk, uncertainty and time value of money related to contingencies are taken into account. If the timevalue of money has a significant impact, the best estimate is determined by discounting the relevant future cash outflows.If there is a continuous range of expenditure required and the probability of various outcomes within this range is the same, the best estimate isrecognized according to the middle value within this range; in other cases, the best estimates are handled as follows:
? When a contingency involves a single item, the best estimate is recognized by the most possible amount.? When a contingency involves more than one item, the best estimate is recognized according to a variety of possible outcomes and relatedprobabilities.When all or some of the expenses necessary for the liquidation of an estimated liabilities is expected to be compensated by a third party, thecompensation shall be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. Besides, the amount
recognized for the reimbursement shall not exceed the book value of the estimated liabilities.The Company reviews the book value of the estimated liabilities on the balance sheet date, and if there is conclusive evidence that the book valuecannot reflect the current best estimate, it shall adjust the book value according to the current best estimate.
37. Share-based payment
The Company's share-based payment refers to a transaction in which the company grants equity instruments or undertakes equity-instrument-basedliabilities in return for services from employee or other parties. The Company's share-based payments shall consist of equity-settled share-basedpayments and cash-settled share-based payments.
1. Equity-settled share-based payments and equity instruments
Where the equity-settled share-based payment is exchanged for the services provided by the employee, it shall be measured at the fair value of theequity instrument granted to the employee. For share-based payment transactions with exercisable rights immediately after the grant, it shall beincluded in the relevant costs or expenses in accordance with the fair value of the equity instrument on the grant date, and the capital reserves shall beincreased accordingly. For the share-based payment transaction where the service within the waiting period is completed after the grant or specifiedperformance conditions are met, on every balance sheet date of the waiting period, the Company shall include the service obtained at the currentperiod into relevant costs or expenses according to the fair value of the grant date on the basis of the best estimate of the number of equity instrumentswith exercisable rights, and increase the capital reserve accordingly.If the terms of the equity-settled share-based payment are modified, the services acquired are recognized at least in terms of the unmodified terms. Inaddition, any modification that increases the fair value of the equity instrument granted, or that is beneficial to the employee at the date ofmodification, recognizes an increase in the acquisition of services.During the waiting period, if the granted equity instrument is canceled, the company will treat the canceled equity instrument as the acceleratedexercise of power, and immediately include the balance that shall be recognized in the remaining waiting period into the current profit and loss, andsimultaneously confirm the capital reserve. However, if a new equity instrument is granted and the new equity instrument granted is deemed to be areplacement for the cancelled equity instrument on the grant date, the granted replacement equity instrument will be handled in the same manner asany amendment to the terms and conditions of the original equity instrument.
2. Cash-settled share-based payments and equity instruments
The share-based payment settled by cash will be measured according to the fair value of the liability confirmed basing on the shares borne by thecompany and other equity instruments. For share-based payment transactions with exercisable rights immediately after the grant, the Company shallinclude it in the relevant costs or expenses in accordance with the fair value of the equity instrument on the grant date, and the liabilities shall beincreased accordingly. If the rights can only be exercised after the situation that service within the waiting period is completed and set performance isachieved, the service obtained in the current period, according to the fair value of the liabilities borne by the Company, and basing on the bestestimate for the condition of exercising rights, will be recorded into relevant costs or expenses on each and every balance sheet date during thewaiting period, and correspondingly recorded into the liabilities. Each and every balance sheet date and settlement before relevant liability settlement,the fair value of liability will be remeasured, of which changes occurred will be counted into the current period.
38. Preferred shares, perpetual bonds and other financial instruments
At the time of initial recognition, the Company classifies the financial instrument or its components as a financial asset, financial liability or equityinstrument based on the terms of the contract and the economic substance reflected in the issued preferred stock / perpetual bond, and not solely inlegal form.In case that the financial instrument such as perpetual bond / preferred stock issued by the Company meet one of the following conditions, it, in wholeor in part thereof, is classified as financial liabilities at the time of initial recognition:
(1) There are contractual obligations which the Company cannot unconditionally avoid fulfilling by delivering cash or other financial assets;
(2) It contains contractual obligations of delivering a variable number of its own equity instruments for settlement;
(3) It contains derivative instrument (such as equity transfer, etc.) that is settled with its own equity, and such derivative instrument does not exchangea fixed number of its own equity instruments for a fixed amount of cash or other financial assets for settlement;
(4) There are contract clauses that indirectly form contractual obligations;
(5) When the issuer liquidates, the perpetual bonds are in the same order of liquidation as the ordinary bonds and other debts issued by the issuer.In case that the financial instrument such as perpetual bond / preferred stock issued by the Company does not meet one of the above conditions, it, inwhole or in part thereof, is classified as equity instrument at the time of initial recognition:
39. Income
Accounting policies for income recognition and measurementAccounting policies as of January 1, 2020
1. Accounting policies for income recognition and measurement
The Company has fulfilled its contractual obligation to recognize income when the customer acquires control of the relevant goods or services.Obtaining control of the relevant goods or services is the ability to dominate the use of the goods or services and gain almost all economic benefitsfrom them.If the contract contains two or more performance obligations, the Company shall, on the commencement date of the contract, apportion thetransaction price to each individual performance obligation according to the relative proportion of the individual selling price of the goods or servicescommitted by each individual performance obligation. The Company's income shall be measured according to the transaction price apportioned toeach individual performance obligation.The transaction price means the amount of consideration that the Company is expected to be entitled to collect for the transfer of goods or services tothe customer, excluding payments collected on behalf of third parties and amounts expected to be returned to the customer. The Company determinesthe transaction price in accordance with the terms of the contract and in combination with its past practices, and in determining the transaction price, ittakes into account the impact of variable consideration, material financing elements in the contract, non-cash consideration, consideration payable tocustomers and other factors. The Company determines the transaction price including the variable consideration by an amount not exceeding theamount of accumulated recognized income which is highly unlikely to be materially reversed when the relevant uncertainty is eliminated. If there is amaterial financing component in the contract, the Company shall determine the transaction price based on the amount payable in cash when thecustomer acquires control of the goods or services, and shall amortize the difference between the transaction price and the contract consideration bythe effective interest method during the contract period.If one of the following conditions is satisfied, it shall be deemed to have performed its performance obligation within a certain period of time;otherwise, it shall be deemed to have performed its performance obligation at a certain time point:
? The customer obtains and consumes the economic benefits arising from the Company’s performance at the same time of the Company’sperformance.? The customer can control the goods under construction during the Company’s performance.? The goods produced by the Company during the performance are of irreplaceable use, and the Company shall be entitled to receive payment for theaccumulated part of the performance completed so far during the whole contract period.For the performance obligations performed within a certain period of time, the Company shall recognize the income in accordance with theperformance progress during that period, except where the performance progress cannot be reasonably determined. Taking into account the nature ofthe goods or services, the Company will use the output method or input method to determine the performance schedule. If the performance schedulecannot be reasonably determined and the cost already incurred is expected to be compensated, the Company shall recognize the income according tothe cost already incurred until the performance schedule can be reasonably determined.For performance obligations performed at a certain time point, the Company recognizes income at the time point when the customer acquires controlof the relevant goods or services. In determining whether the customer has acquired control of goods or services, the Company considers thefollowing indications:
? The Company has the current collection right for the goods or services, that is, the customer has the current payment obligation for the goods or
Winner Medical Co., Ltd. 2020 Annual Reportservices.? The Company has transferred legal ownership to the goods to the customer, that is, the customer has legal ownership of the goods.? The Company has physically transferred the goods to the customer, that is, the customer has physically possessed the goods.? The Company has transferred the main risk and remuneration in the ownership of the goods to the customer, that is, the customer has acquired themain risk and remuneration in the ownership of the goods.? The customer has accepted the goods or services, etc.
Accounting policies before January 1, 2020
1. Specific judgment criteria for income recognition time of goods sold
General principles of recognition of income from selling goods:
(1) The Company has transferred the main risks and rewards on the property in the goods to the buyer;
(2) The Company neither retains the right to continue to manage related to the property, nor effectively controls goods that have been sold;
(3) The income amount can be measured reliably;
(4) Related economic benefits are likely to flow to the Company;
(5) The costs related, incurred or to be incurred can be measured reliably.
Specific principles of recognition of income from selling goods:
(1) General foreign sales: recognize the income after commodity inspection, customs declaration and shipment of goods (the company’s exportincome settlement mainly adopts FOB and CIF methods). For a very small number of other settlement methods, such as for those adopting EXWterms, the buyer designates carrier door-to-door delivery as the time point of recognition of product sales revenue; for those adopting FCA terms, thedelivery of products to the carrier designated by the buyer shall be the time point of recognition of product sales revenue; for those adopting theDDP/DDU terms, the delivery of products to the destination designated by the buyer shall be the time point of recognition of product sales revenue).
(2) General domestic sales: the recognition time of sales revenue is based on the customer’s confirmation of receipt (that is, the income is recognizedafter the customer signs for the receipt, but if the contract stipulates that acceptance is needed, the income will be recognized after acceptance by thecustomer).
(3) E-commerce business (B2C): the recognition time of sales revenue is based on the customer’s confirmation of the completion of the transaction(i.e., the income is recognized when the customer initiatively confirms receipt of the goods on the e-commerce platform and when the e-commerceplatform automatically confirms receipt of the goods within a certain period of time after delivery, whichever is earlier).
(4) Store sales model: sales revenue is recognized according to settlement time and price (that is, the income is recognized after the store salespersonreceives payment and delivers the goods to the customer).
(5) Consignment mode: the Company delivers the goods to the place designated by the agent, and recognizes the income after receiving the sales listand checking it according to the time of reconciliation agreed in the contract.
2. Basis of recognition of income from transferring the asset use right
The economic benefits associated with the transaction may flow to the Company and the income amount can be measured reliably. The income fromtransferring the asset use right is recognized respectively according to following conditions:
(1) The interest income amount is recognized according to the time when others use the Company’s Cash and cash equivalents and the effectiveinterest rate.
(2) The royalty revenue amount is recognized according to the chargeable time and methods stipulated in relevant contracts or agreements.Differences in income recognition accounting policies caused by different business modes for the same businessNot applicable.
40. Government subsidies
1. Type
Winner Medical Co., Ltd. 2020 Annual ReportGovernment subsidies refer to the monetary assets or non-monetary assets obtained free of charge by the Company from the government, and areclassified into asset related government subsidies and the income related government subsidies.Government subsidies related to assets refer to the government subsidies obtained by the Company for the purchase and construction of long-termassets or the formation of long-term assets by other means. Government subsidies related to income refer to government subsidies in addition togovernment subsidies related to assets.The Company's classifying government subsidies as related to assets is subject to the following specific criteria: the government documents clearlystipulate the use of funds, and the expected use direction of the funds is expected to form related assets;The Company's classifying government subsidies as related to income is subject to the following specific criteria: the government documents do notstipulate the use purpose, and the expected use direction of the funds is to supplement working capital;If the subsidy object is not clearly specified in the government documents, the judgment basis for the Company to classify the government subsidy asrelated to assets or related to income is as follows: except that the Company designates its purpose as related to assets, it will be included in thecurrent profit and loss.
2. Recognition time point
Government subsidies will be recognized when the conditions attached to them are met and received by the Company.
3. Accounting treatment
The government subsidies related to assets write down the book value of the relevant assets or is recognized as deferred income. If it is recognized asdeferred income, it shall be recorded into the current profit and loss by stages in accordance with reasonable and systematic methods during theservice life of the relevant assets (if it is related to the daily activities of the Company, it shall be recorded into other income; those not related to thedaily activities of the Company shall be included in non-operating-income);If the government subsidy related to the income is used to compensate the Company's related costs, expenses or losses in the following period, it shallbe recognized as deferred income and recorded into the current profit and loss during the period of recognition of the relevant costs, expenses orlosses (if it is related to the Company's daily activities, it shall be recorded into other income; if it is not related to the daily activities of the Company,it shall be included in non-operating income) or write down relevant costs, expenses or losses; those used to compensate the relevant costs, expensesor losses incurred by the Company shall be directly recorded into the current profit and loss (if it is related to the daily activities of the Company shallbe recorded into other income; if it is not related to the daily activities of the Company, it shall be included in non-operating income or write downrelevant costs, expenses or losses.The interest subsidy on policy-based preferential loans obtained by the Company shall be accounted for under the following two conditions:
(1) If the finance department allocates the interest subsidy fund to the lending bank, and the lending bank provides the loan to the Company at thepolicy-based preferential interest rate, the Company shall take the loan amount actually received as the entry value of the borrowing, and calculate therelevant borrowing cost in accordance with the loan principal and the policy-based preferential interest rate.
(2) If the finance department allocates the interest subsidy fund directly to the Company, the Company will offset the corresponding interest subsidyagainst the related borrowing costs.
41. Deferred income tax assets and deferred income tax liabilities
The income tax includes current income tax and deferred income tax. Except for the income tax arising from the business combination and thetransaction or item directly booked into the owners’ equity (including other comprehensive income), the Company will record the current income taxand deferred income tax into the current profit and loss.Deferred income tax assets and deferred income tax liabilities shall be calculated and recognized on the basis of the difference (temporary difference)between the tax basis of the assets and liabilities and their book value.For the deferred income tax assets recognized through deductible temporary difference, it is limited to the amount of taxable income which is likely tobe obtained to offset the deductible temporary difference in the future period. For the deductible loss and tax deduction that can be carried forward to
Winner Medical Co., Ltd. 2020 Annual Reportthe subsequent year, the corresponding deferred income tax assets are recognized within the limit of the future taxable income amount that is possiblyobtained to deduct the deductible loss and tax deduction.For taxable temporary differences, except in special circumstances, the deferred income tax liability is recognized.Special circumstances in which deferred income tax assets or deferred income tax liabilities are not recognized include:
? Initial recognition of goodwill;? Transaction or item that is neither a business combination nor does it affect accounting profit and taxable income (or deductible loss) at the time ofoccurrence.For the taxable temporary difference related to the investment of the subsidiaries, associated enterprises and joint ventures, relevant deferred incometax liabilities are not recognized, unless the Company can control the temporary difference write-back time and the temporary difference willprobably not be written back in the foreseeable future. For the deductible temporary difference related to the investment of the subsidiaries, jointventures and cooperative enterprises, deferred income tax assets are recognized when it is likely to write back the temporary difference in theforeseeable future or to obtain the income tax payable used to offset the deductible temporary difference in the future.The deferred income tax assets and deferred income tax liabilities are measured on the balance sheet date according to the tax law and the applicabletax rate in the period of expected recovery of relevant assets of liquidation of relevant liabilities.On the balance sheet date, the Company reviews the book value of the deferred income tax assets. If it is likely not to obtain sufficient income taxpayable to deduct the interests of the deferred income tax assets in the future, the book value of the deferred income tax assets is written down. If it islikely to obtain sufficient income tax payable, the amount written down is written back.When the Company has the legal right to settle with net amount and intends to settle with net amount or obtain the assets and liquidate the liabilitiessimultaneously, the income tax assets and income tax liabilities in the current period are presented by the net amount after offset.On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are listed in net amount after offset when both of thefollowing conditions are met:
? The tax payer has the legal right to settle the current income tax assets and current income tax liabilities on a net basis;? The deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax collection andmanagement department from the same subject of tax payment or from different subjects of tax payment but the subject of tax payment involvedintends to settle the current income tax assets and liabilities with the net amount or obtain the assets and liquidate the liabilities simultaneouslyin each future important period when the deferred income tax assets and liabilities are written back.
42. Lease
(1) Accounting treatment method of operating lease
(1) The rental fee paid by the Company for the leased assets shall be apportion on a straight-line basis throughout the lease period without deductingthe rent-free period and shall be included in the current expenses. The initial direct expenses paid by the Company in connection with the leasetransaction are included in the current expenses.When the lessor of the asset bears the lease-related expenses that should be borne by the Company, the Company shall deduct such expenses from thetotal rent, apportion the deducted rent expenses in the lease term and record them into the current expenses.
(2) The rental fee charged by the Company for the leased assets shall be apportion on a straight-line basis throughout the lease period withoutdeducting the rent-free period and shall be recognized as lease-related income. The initial direct expenses paid by the Company in connection with thelease transaction shall be included in the current expenses; if the amount is large, it will be capitalized and recorded into the current income by stagesaccording to the same basis as the lease-related income recognition throughout the lease period.When the Company bears the lease-related expenses that should be borne by the leasee, the Company shall deduct such expenses from the total rentalincome, apportion them according to the deducted rental expenses during the lease period.
(2) Accounting treatment method of finance lease
(1) Assets acquired under finance leases: upon commencement of the lease term, the Company takes the lower of the fair value of the leased asset onthe lease commencement date and the present value of the minimum lease payment as the entry value of the leased asset, and the minimum leasepayment as the entry value of the long-term payables, and their balance as the unrecognized finance fees. The Company adopts the effective interestrate method to amortize the unrecognized financing costs within the period of the asset lease and record them into financial expenses. The initialdirect expenses incurred by the Company shall be included in the value of the leased assets.
(2) Assets rent out under finance leases: upon commencement of the lease, the Company recognizes the difference between the sum of the receivablefinance lease amount and the unguaranteed residual value and its present value as unrealized financing income, and recognizes it as rental income ineach period in which the rent is received in the future. The initial direct expenses incurred by the Company in connection with the leasing transactionshall be included in the initial measurement of the finance lease receivable, and the amount of income recognized during the lease term shall bereduced.
43. Other significant accounting policy and accounting estimate
1. Discontinued operationDiscontinued operation is a separate component that meets one of the following conditions and has been disposed of orclassified into the held for sale category by the Company:
(1) The component represents an independent principal business or an independent principal area of operation;
(2) The component is part of an associated plan proposed to dispose of an independent principal business or an independent principal area ofoperation;
(3) The component is a subsidiary acquired exclusively for resale.
2. Hedge accounting
(1) Classification of hedging
1) A fair value hedge refers to a hedge of the fair value change risk of an asset or liability that has been recognized and a certain commitment that hasnot been recognized (except foreign exchange risk).
2) A cash flow hedge refers to a hedge of the risk of changes in cash flow arising from a particular type of risk relating to a recognized asset orliability, an anticipated transaction that is likely to occur, or the foreign exchange risk contained in an unrecognized firm commitment.
3) A hedge of net investment in overseas operations refers to a hedge of foreign exchange risks of net investment of overseas operations. Netinvestment in overseas operations refers to the equity share of the enterprise in the net assets of overseas operations.
(2) Designation of hedging relationship and identification of hedging effectiveness
At the beginning of the hedging relationship, the Company has a formal designation of the hedging relationship and has prepared formal writtendocuments on the hedging relationship, risk management objectives and hedging strategies. The documents specify the nature and quantity of thehedging instrument, the nature and quantity of the hedged items, the nature of the hedged risk, type of hedging, and the Company's evaluation of theeffectiveness of the hedging instrument. Hedging effectiveness refers to the degree to which the change in the fair value or cash flow of the hedginginstrument can offset the change in the fair value or cash flow of the hedged item caused by the hedged risk.The Company continuously evaluates the effectiveness of hedging and judges whether the hedging meets the requirements of hedging accounting foreffectiveness during the accounting period in which the hedging relationship is designated. If it is not satisfied, the hedging relationship shall beterminated.The application of hedge accounting shall meet the following requirements for the effectiveness of hedging:
1) There is an economic relationship between the hedged item and the hedging instrument.
2) In the value changes caused by the economic relationship between the hedged item and the hedging instrument, the influence of credit risk does notplay a dominant role.
3) Adopting the appropriate hedge ratio will not cause the imbalance between the relative weight of the hedged item and the hedging instrument, thusgenerating accounting results inconsistent with the hedge accounting objectives. If the hedge ratio is no longer appropriate, but the hedging riskmanagement objectives have not changed, the number of hedged items or hedging instruments shall be adjusted to make the hedge ratio meet therequirements of effectiveness again.
(3) Hedge accounting treatment methods
1) Fair value hedging
Changes in the fair value of hedge derivative instruments are recorded in the current profit and loss. Changes formed by the fair value of the hedgeditem due to the hedging risk shall be included in the current profit and loss, and the book value of the hedged item shall be adjusted simultaneously.For fair value hedging related to financial instruments measured at amortized cost, the adjustments to the book value of the hedged item are amortizedduring the remaining period between the adjustment to the due date and recorded in the current profit and loss. Amortization under the effectiveinterest rate method may commence immediately after the book value adjustment and shall not be later than the adjustment of fair value changes inthe termination of hedging risks by the hedged item.If the hedged item is terminated, the unamortized fair value is recognized as the current profit and loss.Where the hedged item is a firm commitment that has not been recognized, the accumulative change in the fair value of the firm commitment causedby the hedging risk is recognized as an asset or liability, and the relevant gains or losses are recorded into the current profits and losses. Changes inthe fair value of hedging instruments are also recorded in the current profit and loss.
2) Cash flow hedging
The part of the gain or loss of the hedging instrument that belongs to the effective hedging shall be directly recognized as other comprehensiveincome, while the part that belongs to the invalid hedging shall be recorded into the current profit and loss.If the hedged transaction affects the current profit and loss, such as when the hedged financial income or financial expense is recognized or when theexpected sale occurs, the amount recognized in other comprehensive income will be transferred to the current profit and loss. If a hedged item is thecost of a non-financial asset or non-financial liability, the amount originally recognized in other comprehensive income amount is transferred out andrecorded into the amount of initial recognition of the non-financial asset or non-financial liability (or the amount originally recognized in othercomprehensive income is transferred out during the same period as the non-financial asset or non-financial liability affecting the profit and loss, andrecorded into the current profit and loss).If the expected transaction or firm commitment is not expected to occur, the accumulated gains or losses of the hedging instrument previouslyrecorded in other comprehensive income are transferred out and recorded in the current profit and loss. If the hedging instrument has expired, beensold, the contract terminated or exercised (but not replaced or renewed), or the designation of the hedging relationship is withdrawn, the amountpreviously recorded in other comprehensive income is not transferred out until the anticipated transaction or firm commitment affects the currentprofit or loss.
3) Hedging of net investment in overseas operations
The hedging of net investment in overseas operations, including the hedging of monetary items that are part of the net investment, shall be treatedsimilarly to the cash flow hedging. In the gain or loss of the hedging instrument, the part that is recognized as effective hedging is recorded in othercomprehensive income, while the part that is invalid hedging is recognized as current profit and loss. When disposing of overseas operations, anyaccumulated gains or losses previously recorded in other comprehensive income will be transferred out and recorded into current profit and loss.
3. Segmental reporting
The Company determines the operating segments based on the internal organizational structure, management requirements and internal reportingsystem, and determines the reporting segments based on the operating segments and discloses the information of the segments.Operating segments refer to the components of the Company that meet the following conditions at the same time: (1) The component is able togenerate revenue and incur expenses in its daily activities; (2) The management of the Company can regularly evaluate the operating results of thecomponent to determine the allocation of resources to it and evaluate its performance; (3) The Company can obtain relevant accounting informationsuch as the financial position, operating results and cash flow of the component. If two or more operating segments have similar economiccharacteristics and meet certain conditions, they may be merged into one operating segment.
44. Significant accounting policy and accounting estimate change
(1) Changes in significant accounting policies
√Applicable □ Not applicable
| Content and reasons of changes in accounting policies | Approval procedures | Remark |
(1) Implement the Accounting Standards for Enterprises No.14–Revenues (revised in 2017) (hereinafter referred to as "new revenue standards")The Ministry of Finance revised the Accounting Standards for Enterprises No.14–Revenues in 2017. The revised standards stipulate that the retainedearnings and other relevant items in the financial statements at the beginning of the year shall be adjusted according to the cumulative influencenumber during the first implementation of the standards, and the information of comparable periods shall not be adjusted.The Company has implemented the new revenue standards since January 1, 2020. According to the standards, the Company only adjusted the retainedearnings and other related items in the financial statements at the beginning of 2020 for the cumulative influence number of contracts that have notbeen completed on the first implementation date, and does not make any adjustment of the comparative financial statements. The main influencesafter the execution of the standards are as follows:
| Content and reasons of changes in accounting policies | Approval procedures | Affected report item | Affected amount in balance on January 1, 2020 | |
| Consolidation | Parent company | |||
| New income standards | Approval of board of directors | Advance from customers | -32,695,399.53 | -6,184,697.51 |
| Contract liabilities | 32,313,636.28 | 5,721,857.36 | ||
| Other current liabilities | 5,544,602.17 | 462,840.15 | ||
| Other current assets | 593,982.97 | |||
| Non-current liabilities due within one year | -3,977,342.14 | |||
| Estimated liabilities | -591,513.81 | |||
Compared to the original income standards, the impact of the implementation of the new income standards on the items related to the 2020 financialstatements is as follows (increase/decrease) :
| Affected balance sheet items | Affected amount in balance on December 31, 2020 | |
| Consolidation | Parent company | |
| Advance from customers | -532,662,068.02 | -498,225,711.89 |
| Contract liabilities | 530,188,257.63 | 483,370,540.77 |
| Other current liabilities | 23,638,266.47 | 14,855,171.12 |
| Other current assets | 1,449,440.77 | |
| Non-current liabilities due within one year | -18,398,679.23 |
| Estimated liabilities | -1,316,336.08 |
| Affected income statement items | Amount affected on the amounts incurred in 2020 | |
| Consolidation | Parent company | |
| Cost | 306,585,454.73 | 65,526,824.51 |
| Sales expenses | -306,585,454.73 | -65,526,824.51 |
(2) Implementation of the Interpretation of Accounting Standards for Business Enterprises No.13On December 10, 2019, the Ministry of Finance issued the Interpretation of Accounting Standards for Business Enterprises No.13 (CK [2019] No.21,hereinafter referred to as "Interpretation No.13"), which took effect on January 1, 2020 and does not require retrospective adjustment.
① Identification of related parties
Interpretation No.13 defines the following situations as related parties: cooperative enterprises or joint ventures between an enterprise and othermember units of its enterprise group (including parent company and subsidiary company); the joint venture of the enterprise and other cooperativeenterprises or joint ventures of the enterprise. In addition, Interpretation No.13 also makes it clear that two or more enterprises that are onlysignificantly affected by one party do not constitute related parties, and adds that joint ventures include joint ventures and their subsidiaries, andcooperative enterprises include cooperative enterprises and their subsidiaries.
② Definition of business
Explanation No. 13 perfects the three elements of business composition, refines the judgment conditions of business composition, and introduces theselection of "concentration test" to simplify the judgment of whether the combination obtained under different control constitutes business to a certainextent.Since January 1, 2020, the Company has implemented Interpretation No.13, and the comparative financial statements have not been adjusted. Theimplementation of Interpretation No.13 has no impact on the Company's financial position and operating results.
(3) Implementation of the Interim Provisions on Accounting Treatment for Carbon Emission TradingOn December 16, 2019, the Ministry of Finance issued the Interim Provisions on Accounting Treatment for Carbon Emission Trading (CK [2019]No.22), which is applicable to relevant enterprises in key emission units that carry out carbon emission trading business in accordance with theInterim Measures for Administration of Carbon Emission Trading (hereinafter referred to as key emission enterprises). Such provisions come intoforce on January 1, 2020, and key emission enterprises shall apply the regulation by adopting the future applicable method.Since January 1, 2020, the Company has implemented such provisions, and the comparative financial statements have not been adjusted. Theimplementation of such provisions has little impact on the Company's financial position and operating results.
(4) Implement the Provisions on Accounting Treatment of Rent Concession Related to COVID-19
On June 19, 2020, the Ministry of Finance issued the Provisions on Accounting Treatment of Rent Concession Related to COVID-19 (C.K. [2020] No.10), which came into force on June 19, 2020, allowing enterprises to adjust the relevant rent concessions that occurred between January 1 and theimplementation date of this regulation. According to the regulation, enterprises can choose to adopt the simplified method for rent concession directlycaused by COVID-19, such as rent remission and deferred payment.The Company adopts the simplified method for accounting treatment of all rent concessions that fall within the applicable scope of this provision andmakes corresponding adjustments to the relevant rent concessions that occur between January 1 2020 and, the date when this provision comes intoeffect.As the lessee, the Company adopts the simplified method to deal with the related rent concession, writing off sales expenses of the current periodtotaling RMB 25,685,341.83.
(2) Significant accounting estimate change
□ Applicable √ Not applicable
(3) Adjustment of relevant items in financial statements at the beginning of the implementation year as a result of first implementation ofnew income standards and new lease standards from 2020Applicable
Winner Medical Co., Ltd. 2020 Annual ReportWhether to adjust the balance sheet accounts at the beginning of the year
√ Yes □ No
Consolidated Balance Sheet
Unit: yuan
| Item | December 31, 2019 | January 1, 2020 | Adjusted figure |
| Current assets: | |||
| Cash and cash equivalents | 480,838,765.63 | 480,838,765.63 | 0.00 |
| Deposit reservation for balance | |||
| Lending funds | |||
| tradable financial assets | |||
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 416,345,676.13 | 416,345,676.13 | 0.00 |
| Amounts receivable financing | 8,456,356.50 | 8,456,356.50 | 0.00 |
| Advances to suppliers | 96,760,732.96 | 96,760,732.96 | 0.00 |
| Premiums receivables | |||
| Reinsurance accounts receivable | |||
| Provision of cession receivable | |||
| Other receivables | 595,894,600.20 | 595,894,600.20 | 0.00 |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Redemptory Cash and cash equivalents for sale | |||
| Inventory | 992,411,173.86 | 992,411,173.86 | 0.00 |
| Contract assets | |||
| Assets held for sales | |||
| Non-current assets due within a year | |||
| Other current assets | 83,881,183.43 | 84,475,166.40 | 593,982.97 |
| Total current assets | 2,674,588,488.71 | 2,675,182,471.68 | 1,856,885,890.87 |
| Non-current assets: | |||
| Loans and advances | |||
| Debt investment | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 8,858,476.15 | 8,858,476.15 | 0.00 |
| Other equity instrument investments | |||
| Other non-current financial assets | |||
| Investment real estates | |||
| Fixed assets | 1,274,733,960.96 | 1,274,733,960.96 | 0.00 |
| Construction in progress | 187,808,853.01 | 187,808,853.01 | 0.00 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 131,657,103.01 | 131,657,103.01 | 0.00 |
| Development expenditure | |||
| Goodwill | |||
| Long-term unamortized expenses | 165,474,142.92 | 165,474,142.92 | 0.00 |
| Deferred income tax assets | 69,356,697.91 | 69,356,697.91 | 0.00 |
| Other non-current assets | 18,996,656.91 | 18,996,656.91 | 0.00 |
| Total non-current assets | 1,856,885,890.87 | 1,856,885,890.87 | 0.00 |
| Total assets | 4,531,474,379.58 | 4,532,068,362.55 | 593,982.97 |
| Current liabilities | |||
| Short-term debt | 120,000,000.00 | 120,000,000.00 | 0.00 |
| Borrowings from central bank | |||
| Borrowing funds | |||
| tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 173,023,352.30 | 173,023,352.30 | 0.00 |
| Accounts payable | 562,774,410.51 | 562,774,410.51 | 0.00 |
| Advance from customers | 32,695,399.53 | 0.00 | -32,695,399.53 |
| Contract liabilities | 32,313,636.28 | 32,313,636.28 | |
| Financial assets sold for repurchase | |||
| Deposits from customers and interbank | |||
| Acting trading securities | |||
| Acting underwriting securities | |||
| Payroll payable | 99,793,347.80 | 99,793,347.80 | 0.00 |
| Taxes payable | 47,134,987.40 | 47,134,987.40 | 0.00 |
| Other payables | 142,607,932.48 | 142,607,932.48 | 0.00 |
| Including: Interest payable | 289,799.65 | 289,799.65 | 0.00 |
| Dividends payable | |||
| Fees and commissions payable | |||
| Dividend payable for reinsurance | |||
| Liabilities held for sales | |||
| Non-current liabilities due within one year | 8,977,342.14 | 5,000,000.00 | -3,977,342.14 |
| Other current liabilities | 5,544,602.17 | 5,544,602.17 | |
| Total current liabilities | 1,187,006,772.16 | 1,188,192,268.94 | 1,185,496.78 |
| Non-current liabilities | |||
| Reserve fund for insurance contracts | |||
| Long-term loans | 134,210,746.07 | 134,210,746.07 | 0.00 |
| Bonds payable | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term payroll payable | |||
| Estimated liabilities | 591,513.81 | 0.00 | -591,513.81 |
| Deferred income | 46,117,344.20 | 46,117,344.20 | 0.00 |
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 180,919,604.08 | 180,328,090.27 | -591,513.81 |
| Total liabilities | 1,367,926,376.24 | 1,368,520,359.21 | 593,982.97 |
| Owner's equity: | |||
| Capital stock | 376,492,308.00 | 376,492,308.00 | 0.00 |
| Other equity instruments | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Capital reserve | 948,913,284.10 | 948,913,284.10 | 0.00 |
| Less: treasury stock | |||
| Other comprehensive income | 44,623.87 | 44,623.87 | 0.00 |
| Special reserve | |||
| Surplus reserve | 116,855,107.20 | 116,855,107.20 | 0.00 |
| General risk provision | |||
| Undistributed profit | 1,718,075,177.67 | 1,718,075,177.67 | 0.00 |
| Total owners' equities attributable to the owners of parent company | 3,160,380,500.84 | 3,160,380,500.84 | 0.00 |
| Minority equity | 3,167,502.50 | 3,167,502.50 | 0.00 |
| Total owners' equities | 3,163,548,003.34 | 3,163,548,003.34 | 0.00 |
| Total liabilities and owners' equities | 4,531,474,379.58 | 4,532,068,362.55 | 593,982.97 |
Adjustment descriptionNA
Balance sheet of parent company
Unit: yuan
| Item | December 31, 2019 | January 1, 2020 | Adjusted figure |
| Current assets: | |||
| Cash and cash equivalents | 190,247,936.40 | 190,247,936.40 | 0.00 |
| tradable financial assets | |||
| Derivative financial assets |
| Notes receivable | |||
| Accounts receivable | 285,214,296.07 | 285,214,296.07 | 0.00 |
| Amounts receivable financing | 11,197,742.51 | 11,197,742.51 | 0.00 |
| Advances to suppliers | 818,374,053.49 | 818,374,053.49 | 0.00 |
| Other receivables | 507,620,873.69 | 507,620,873.69 | 0.00 |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventory | 80,096,665.13 | 80,096,665.13 | 0.00 |
| Contract assets | |||
| Assets held for sales | |||
| Non-current assets due within a year | |||
| Other current assets | 507,766.36 | 507,766.36 | 0.00 |
| Total current assets | 1,893,259,333.65 | 1,893,259,333.65 | 0.00 |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 733,509,160.30 | 733,509,160.30 | 0.00 |
| Other equity instrument investments | |||
| Other non-current financial assets | |||
| Investment real estates | |||
| Fixed assets | 39,730,361.07 | 39,730,361.07 | 0.00 |
| Construction in progress | 3,273,398.46 | 3,273,398.46 | 0.00 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 12,968,794.77 | 12,968,794.77 | 0.00 |
| Development expenditure | |||
| Goodwill |
| Long-term unamortized expenses | 1,620,299.14 | 1,620,299.14 | 0.00 |
| Deferred income tax assets | 7,243,483.93 | 7,243,483.93 | 0.00 |
| Other non-current assets | 4,228,187.85 | 4,228,187.85 | 0.00 |
| Total non-current assets | 802,573,685.52 | 802,573,685.52 | 0.00 |
| Total assets | 2,695,833,019.17 | 2,695,833,019.17 | 0.00 |
| Current liabilities | |||
| Short-term debt | 60,000,000.00 | 60,000,000.00 | 0.00 |
| tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 71,789,226.76 | 71,789,226.76 | 0.00 |
| Accounts payable | 263,943,071.72 | 263,943,071.72 | 0.00 |
| Advance from customers | 6,184,697.51 | 0.00 | -6,184,697.51 |
| Contract liabilities | 5,721,857.36 | 5,721,857.36 | |
| Payroll payable | 20,788,121.24 | 20,788,121.24 | 0.00 |
| Taxes payable | 16,238,975.65 | 16,238,975.65 | 0.00 |
| Other payables | 70,782,736.10 | 70,782,736.10 | 0.00 |
| Including: Interest payable | 79,750.00 | 79,750.00 | 0.00 |
| Dividends payable | |||
| Liabilities held for sales | |||
| Non-current liabilities due within one year | 5,000,000.00 | 5,000,000.00 | 0.00 |
| Other current liabilities | 462,840.15 | 462,840.15 | |
| Total current liabilities | 514,726,828.98 | 514,726,828.98 | 0.00 |
| Non-current liabilities | |||
| Long-term loans | |||
| Bonds payable | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term payroll payable |
| Estimated liabilities | |||
| Deferred income | 4,453,201.48 | 4,453,201.48 | 0.00 |
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 4,453,201.48 | 4,453,201.48 | 0.00 |
| Total liabilities | 519,180,030.46 | 519,180,030.46 | 0.00 |
| Owner's equity: | |||
| Capital stock | 376,492,308.00 | 376,492,308.00 | 0.00 |
| Other equity instruments | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Capital reserve | 974,320,046.45 | 974,320,046.45 | 0.00 |
| Less: treasury stock | |||
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 108,039,440.28 | 108,039,440.28 | 0.00 |
| Undistributed profit | 717,801,193.98 | 717,801,193.98 | 0.00 |
| Total owners' equities | 2,176,652,988.71 | 2,176,652,988.71 | 0.00 |
| Total liabilities and owners' equities | 2,695,833,019.17 | 2,695,833,019.17 | 0.00 |
Adjustment descriptionNA
(4) Retrospective adjustment of early comparative data description as a result of first implementation of new income standards or new leasestandards from 2020
□ Applicable √ Not applicable
45. Other
NA
Winner Medical Co., Ltd. 2020 Annual ReportVI. Taxes
1. Main tax categories and tax rates
| Tax category | Taxation basis | Tax rate |
| Added value tax | Calculate the substituted money on VAT on the basis of the income from selling goods and taxable services according to the tax law. After deduction of the withholdings on VAT allowed to deduct in current period, the balance is the VAT payable | 13%、9%、6%、3% |
| Consumption tax | N/A | N/A |
| Urban maintenance and construction tax | Actual paid value added tax (including the exemption part) and consumption tax | 7%、5% |
| Corporate income tax | Levied by income tax payable | 25%、20%、16.5%、15% |
| Education surcharge | Actual paid value added tax (including the exemption part) and consumption tax | 3% |
Some stores of Shenzhen Purcotton, Guangzhou Purcotton, Beijing Purcotton, Shanghai Purcotton and Cotton Lining are small-scale taxpayers, andVAT is levied at the rate of 3.00%. The VAT rate of stores for non-small-scale taxpayers will be 13.00% in 2020, and 6.00% or 3% (small-scaletaxpayers) VAT rate will be applied to some stores providing catering services. The books sold in Shenzhen Purcotton since 2019 will be exemptedfrom VAT according to Article 2 of the Notice on the Continuation of the Preferred Policies on Value-added Tax of Cultural Promotion (C.S. [2018]No. 53) of Ministry of Finance and State Taxation Administration.The VAT rate of 13.00% will be applied to the goods sold by the Company and other general taxpayer subsidiaries in 2020. The Company and someof its subsidiaries have the right to import and export, and the VAT on export products is subject to the export tax rebate policy of “exemption, creditand refund”.The VAT generated by the consulting service income of the Company is levied at the rate of 6.00%, while the VAT generated by the warehousingservice income of Huanggang Winner is levied at the rate of 6.00%.If there are taxpayers with different enterprise income tax rates, the disclosure statement shall present
| Name of taxpayer | Income tax rate |
| The Company, Huanggang Winner | 15.00% |
| Winner Medical (Tianmen) | 15.00% |
| Winner Medical (Jingmen) | 15.00% |
| Winner Medical (Chongyang) | 15.00% |
| Winner Medical (Jiayu) | 15.00% |
| Qianhai Purcotton | 15.00% |
| Winner Medical (Hong Kong) | 16.50% |
| Mifu Shanghai | 20.00% |
2. Tax preference
(1) On October 16, 2018, according to the Notice on Publicizing the List of First Batch of High-tech Enterprises to be Identified in Shenzhen in 2018issued by the Leading Group Office of National High-tech Enterprise Accreditation Administration, the Company passed the High-tech EnterpriseQualification Reexamination (Certificate No. GR201844200237). From 2018 to 2020, its corporate income tax can still be paid at the preferential rateof 15.00%.
(2) According to the Notice on Publicizing the List of the Second Batch of High-tech Enterprises to be Identified in Hubei Province in 2019,Huanggang Winner was identified as the second batch of high-tech enterprises with the certificate number GR201942002414. During the period from2019 to 2021, Huanggang Winner can pay corporate income tax at the preferential tax rate of 15.00%.
(3) Qianhai Purcotton was established on July 21,2015, with its domicile located in Shenzhen Qianhai Shenzhen-Hong Kong Cooperation Zone.According to the Notice of Enterprise Income Tax Preferential Policies and Preferential Directory in Shenzhen Qianhai Shenzhen-Hong Kong ModernService Industry Cooperation Zone of Hengqin New Fujian Pingtan Comprehensive Experimental Area (C.S. [2014] No. 26) issued by the Ministry ofFinance and State Taxation Administration, Qianhai Purcotton pays its enterprise income tax at the tax rate of 15.00%.
(4) According to the Notice on Publicizing the List of First Batch of High-tech Enterprises to be Identified in Hubei Province in 2018 issued by theLeading Group Office of National High-tech Enterprise Accreditation Administration on November 15, 2018, Jingmen Winner obtained the High-techEnterprise Certificate (Certificate No. GR201842001123) on November 15, 2018. From 2018 to 2020, its corporate income tax can still be paid at thepreferential rate of 15.00%.
(5) According to the Notice on Publicizing the List of Second Batch of High-tech Enterprises to be Identified in Hubei Province in 2018 issued by theLeading Group Office of National High-tech Enterprise Accreditation Administration on November 30, 2018, Tianmen Winner obtained the High-techEnterprise Certificate (Certificate No. GR201842001959) on November 30, 2018. From 2018 to 2020, its corporate income tax can still be paid at thepreferential rate of 15.00%. According to the Notice on Publicizing the List of Second Batch of High-tech Enterprises to be Identified in HubeiProvince in 2018 on November 30, 2018, Chongyang Winner and Jiayu Winner obtained the High-tech Enterprise Certificates (Certificate No.GR201842001585, GR201842002393) on November 30, 2018. From 2018 to 2020, its corporate income tax can still be paid at the preferential rate of
15.00%.
(6) Mifu Shanghai was established on March 16, 2018 and registered in Pudong New Area, Shanghai City. According to the Notice on Implementingthe Preferential Tax Reduction Policy for Small and Micro-sized Enterprises (C.S. [2019] No. 13) issued by the Ministry of Finance and StateTaxation Administration, the taxable income of Mifu Shanghai in 2020 shall not exceed RMB 1 million, which shall be reduced by 25% and includedinto the taxable income, and the corporate income tax shall be paid at the tax rate of 20%.
3. Other
NAVII. Notes to Items in Consolidated Financial Statements1 Cash and cash equivalents
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Cash on hand | 49,287.18 | 74,459.31 |
| Bank deposit | 4,149,685,407.20 | 452,016,020.55 |
| Other Cash and cash equivalents | 12,804,551.40 | 28,748,285.77 |
| Total | 4,162,539,245.78 | 480,838,765.63 |
| Where: total amount deposited abroad | 95,608,086.45 | 8,199,596.63 |
| Total amount of funds with restrictions on use due to mortgage, pledge or freeze | 12,804,551.40 | 21,669,045.98 |
Other descriptionThe details of the Company's monetary funds which are restricted by the use of mortgage, pledge or freeze, and which are held abroad and subject torestrictions on the repatriation of funds are as follows:
| Item | Closing Balance | Closing balance of the previous year |
| Bank acceptance deposit*1 | 17,330,824.31 | |
| Letter of Credit deposit*2 | 6,958,192.79 | 145,673.48 |
| Performance bond*3 | 2,369,198.81 | 727,733.82 |
| Other restricted monetary fund balances*4 | 3,477,159.80 | 3,464,814.37 |
| Total | 12,804,551.40 | 21,669,045.98 |
*1The bank acceptance deposit is the deposit made by the Company and Shenzhen Purcotton for the issuance of bank acceptance bills.*2Letter of Credit deposit is the deposit made by Winner Medical (Tianmen) and Winner Medical (Wuhan) for international and domesticLetters of Credit.*3Performance bond is the deposit made by Winner Medical (Hong Kong) for transactions with customers.*4 The balance of other restricted monetary funds refers to the balance of special deposit accounts for restricted non-budget units openedby Shenzhen Purcotton in accordance with the regulations of prepaid card issuance formulated by the Ministry of Commerce.
2. tradable financial assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Financial assets measured with fair value and with the changes included in current profit and loss | 4,131,178,589.44 | 0.00 |
| Including: | ||
| Other | 3,931,178,589.44 | 0.00 |
| Trust products | 200,000,000.00 | |
| Including: | ||
| Total | 4,131,178,589.44 |
Other description:
Other components of tradable financial assets include: the invested principal of structural deposit is RMB 3,920,000,000.00 and its fair value changeincome is RMB 10,375,900.71, and the fair value change income from future foreign exchange settlement is RMB 802,688.73.
3. Derivative financial assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
Winner Medical Co., Ltd. 2020 Annual ReportOther description:
4. Notes receivable
(1) Classified presentation of notes receivable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Bank acceptance bill | 0.00 | 0.00 |
| Trade acceptance | 0.00 | 0.00 |
Unit: yuan
| Class | Closing Balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Including: | ||||||||||
| Including: | ||||||||||
Provision for bad debt by single item:
Unit: yuan
| Name | Closing Balance | |||
| Book balance | Provision for bad debt | Accruing proportion | Reasons for provision | |
Provision for bad debt by combination:
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
Description of the basis for determining the combination:
If the bad debt provision of notes receivable is withdrawn according to the general model of expected credit loss, please refer to the disclosure methodof other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Other | |||
Where the amount of bad debt provision recovered or reversed is important:
□ Applicable √ Not applicable
(3) Notes receivable pledged by the Company at the end of the period
Unit: yuan
| Item | Pledged amount at the end of the period |
(4) Notes receivable endorsed or discounted by the Company at the end of the period and not expired yet on the balance sheet date
Unit: yuan
| Item | Amount with recognition terminated at the end of the period | Amount with recognition not terminated at the end of the period |
(5) Notes transferred to accounts receivable by the Company at the end of the period due to failure of the drawer to perform
Unit: yuan
| Item | Amount transferred to accounts receivable at the end of the period |
Other description
(6) Notes receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important notes receivable:
Unit: yuan
| Unit name | Nature of notes receivable | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from related transactions |
Description of write-off notes receivable:
5. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
| Class | Closing Balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Accounts receivable of provision for bad debt | 0.00 | 0.00% | 0.00 | 0.00% | 0.00 | |||||
| by single item | ||||||||||
| Including: | ||||||||||
| Accounts receivable of provision for bad debt by combination | 888,816,011.14 | 100.00% | 44,498,303.02 | 5.01% | 844,317,708.12 | 438,328,847.67 | 100.00% | 21,983,171.54 | 5.02% | 416,345,676.13 |
| Including: | ||||||||||
| Total | 888,816,011.14 | 100.00% | 44,498,303.02 | 5.01% | 844,317,708.12 | 438,328,847.67 | 100.00% | 21,983,171.54 | 5.02% | 416,345,676.13 |
1) There is no accounts receivable of provision for bad debt by single item at the end of this reporting period. 2) Provision for bad debt bycombination: aging analysis method
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 1 year (including 1 year) | 888,730,796.94 | 44,436,539.90 | 5.00% |
| 1~2 years (including 2 years) | 14,640.46 | 1,464.04 | 10.00% |
| 2~3 years (including 3 years) | 404.54 | 121.36 | 30.00% |
| 3~4 years (including 4 years) | 0.00 | 0.00 | 50.00% |
| 4~5 years (including 5 years) | 49,957.40 | 39,965.92 | 80.00% |
| More than 5 years | 20,211.80 | 20,211.80 | 100.00% |
| Total | 888,816,011.14 | 44,498,303.02 | -- |
Description of the basis for determining the combination:
On December 31, 2020, the Company reviewed the appropriateness of the provision for bad debts of receivables in the previous year according to thehistorical bad debt loss, and believed that the default probability has a strong correlation with the aging of accounts, and the account age is still a signof whether the credit risk of the company's receivables has significantly increased. Therefore, the Company’s credit risk loss on December 31, 2020 isestimated based on the aging of accounts and estimated at the original loss ratio.
3) If the bad debt provision of accounts receivable is withdrawn according to the general model of expected credit loss, please refer to the disclosuremethod of other receivables to disclose the relevant information of bad debt provision:
√Applicable □ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Book balance |
| Within 1 year (including 1 year) | 888,730,796.94 |
| 1~2 years | 14,640.46 |
| 2~3 years | 404.54 |
| More than 3 years | 70,169.20 |
| 3~4 years | 0.00 |
| 4~5 years | 49,957.40 |
| More than 5 years | 20,211.80 |
| Total | 888,816,011.14 |
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Other | |||
| Provision for bad debt of accounts receivable | 21,983,171.54 | 25,618,053.44 | 3,102,921.96 | 44,498,303.02 | ||
| Total | 21,983,171.54 | 25,618,053.44 | 3,102,921.96 | 44,498,303.02 | ||
Where the amount of bad debt provision recovered or reversed is important:
Unit: yuan
| Unit name | Amount recovered or reversed | Recovery way |
(3) Accounts receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important accounts receivable:
Unit: yuan
| Unit name | Nature of accounts receivable | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from related transactions |
Description of write-off accounts receivable:
(4) Accounts receivable with top 5 ending balances by debtor
Unit: yuan
| Unit name | Ending balance of accounts receivable | Proportion in total other ending balance of accounts receivable | Ending balance of bad debt provision |
| First | 115,020,642.43 | 12.94% | 5,751,111.87 |
| Second | 76,914,029.76 | 8.65% | 3,845,701.49 |
| Third | 64,377,731.84 | 7.24% | 3,218,886.59 |
| Fourth | 62,170,558.45 | 6.99% | 3,108,527.93 |
| Fifth | 39,301,127.15 | 4.42% | 1,965,056.36 |
| Total | 357,784,089.63 | 40.24% |
(5) Accounts receivable derecognized due to transfer of financial assets
NA
(6) Amount of assets and liabilities formed by transferring accounts receivable and continuing involvementNAOther description:
NA
6. Receivables financing
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Notes receivable - banker's acceptance bill | 18,182,662.70 | 8,456,356.50 |
| Total | 18,182,662.70 | 8,456,356.50 |
Changes in the increase and decrease of receivables financing and changes in the fair value in the current period
□ Applicable √ Not applicable
If the impairment provision of receivables financing is withdrawn according to the general model of expected credit loss, please refer to the disclosuremethod of other receivables to disclose the relevant information of impairment provision:
□ Applicable √ Not applicable
Other description:
Notes receivable endorsed or discounted by the Company at the end of the period and not expired yet on the balance sheet date
| Item | December 31, 2020 | December 31, 2019 | ||
| Amount with recognition terminated at the end of the period | Amount with recognition not terminated at the end of the period | Amount with recognition terminated at the end of the period | Amount with recognition not terminated at the end of the period | |
| Banker's acceptance bill | 18,706,652.69 | 4,525,816.87 | 36,757,253.08 | 5,413,701.04 |
| Total | 18,706,652.69 | 4,525,816.87 | 36,757,253.08 | 5,413,701.04 |
The Company shall terminate recognition at the time of endorsement transfer or discount of the bank acceptance bill held by a bank with higher creditrating, and shall continue to recognize the notes receivable at the time of endorsement transfer or discount of the bank acceptance bill held by a bankwith general credit rating, and terminate recognition at the time of payment upon maturity.
7. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: yuan
| Aging | Closing Balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 124,030,319.05 | 100.00% | 96,630,514.58 | 99.87% |
| 1~2 years | 920.00 | 130,218.38 | 0.13% | |
| Total | 124,031,239.05 | -- | 96,760,732.96 | -- |
Reasons for non-timely settlement of important advances from customers with the aging more than 1 year:
There is no important advances aged for more than one year during this reporting period.
(2) Advances to suppliers with top 5 ending balances by prepayment object
| Advance object | Closing Balance | Proportion in total ending balance of advances (%) |
| First | 32,848,006.51 | 26.48 |
| Second | 31,943,782.68 | 25.75 |
| Third | 6,812,002.72 | 5.49 |
| Fourth | 6,042,920.40 | 4.87 |
| Fifth | 3,600,000.00 | 2.90 |
| Total | 81,246,712.31 | 65.49 |
Other description:
8. Other receivables
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Other receivables | 458,174,652.72 | 595,894,600.20 |
| Total | 458,174,652.72 | 595,894,600.20 |
(1) Interest receivable
1) Classification of interest receivable
Unit: yuan
| Item | Closing Balance | Beginning balance |
2) Important overdue interest
Unit: yuan
| Borrower | Closing Balance | Overdue time | Overdue reason | Whether there is impairment and its judgment basis |
Other description:
NA
3) Provision for bad debt
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable
Unit: yuan
| Project (or invested unit) | Closing Balance | Beginning balance |
2) Important dividends receivable with the aging more than 1 year
Unit: yuan
| Project (or invested unit) | Closing Balance | Aging | Reason for non-recovery | Whether there is impairment and its judgment basis |
3) Provision for bad debt
□ Applicable √ Not applicable
Other description:
NA
(3) Other receivables
1) Other receivables classified by nature
Unit: yuan
| Nature of payment | Ending book balance | Beginning book balance |
| Compensation for investment and construction project of Heyuan Winner | 387,655,320.00 | 522,655,320.00 |
| Margin and deposit | 98,537,244.23 | 87,293,594.09 |
| Export drawback | 7,809,612.57 | 6,611,507.46 |
| Employee pretty cash | 2,496,966.71 | 2,613,102.67 |
| IPO intermediary fee | 4,005,057.90 | |
| Other | 6,013,308.92 | 3,942,526.66 |
| Total | 502,512,452.43 | 627,121,108.78 |
2) Provision for bad debt
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2020 | 31,012,508.58 | 214,000.00 | 31,226,508.58 | |
| Balance on January 1,2020 in the current period | —— | —— | —— | —— |
| - Carried over to Stage 3 | -3,500.00 | 3,500.00 | ||
| Accrual in current period | 21,310,118.73 | 311,867.86 | 21,621,986.59 | |
| Reversal in current period | -8,195,425.24 | -8,195,425.24 | ||
| Write off in current period | -315,270.22 | -315,270.22 | ||
| Balance on December 31, 2020 | 44,123,702.07 | 214,097.64 | 44,337,799.71 |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Book balance |
| Within 1 year (including 1 year) | 46,756,536.69 |
| 1~2 years | 410,806,976.37 |
| 2~3 years | 39,047,249.05 |
| More than 3 years | 5,901,690.32 |
| 3~4 years | 3,678,024.40 |
| 4~5 years | 844,595.09 |
| More than 5 years | 1,379,070.83 |
| Total | 502,512,452.43 |
3) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Other | |||
| Provision for bad debts of other receivables | 31,226,508.58 | 21,621,986.59 | 8,195,425.24 | 315,270.22 | 44,337,799.71 | |
| Total | 31,226,508.58 | 21,621,986.59 | 8,195,425.24 | 315,270.22 | 44,337,799.71 | |
NAWhere the amount of bad debt provision reversed or recovered is important:
Unit: yuan
| Unit name | Amount reversed or recovered | Recovery way |
NA
4) Other receivables actually written off at the current period
Unit: yuan
| Item | Amount written off |
| Other receivables actually written off | 315,270.22 |
Write-off of important other receivables:
Unit: yuan
| Unit name | Nature of other receivables | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from related transactions |
Description of write-off of other receivables
5) Other receivables with top 5 ending balances by debtor
Unit: yuan
| Unit name | Nature of payment | Closing Balance | Aging | Proportion in total other ending balance receivable | Ending balance of bad debt provision |
| First | Receivables related to Heyuan project | 387,655,320.00 | 1~2 years | 77.14% | 38,765,532.00 |
| Second | Security deposit | 5,088,270.42 | Within 1 year | 1.01% | 254,413.52 |
| Third | Deposit | 1,633,486.45 | Within 1 year: RMB | 0.33% | 81,674.32 |
| 211,486.45 1-2 years: RMB 1,422,000.00 | |||||
| Fourth | Deposit | 1,420,550.00 | Within 1 year: RMB 68,030.00 1-2 years: RMB 53,040.00; 2-3 years: RMB 1,299,480.00 | 0.28% | 71,027.50 |
| Fifth | Deposit | 1,060,622.00 | Within 1 year: RMB 8,000.00; 1-2 years: RMB 1,052,622.00 | 0.21% | 53,031.10 |
| Total | -- | 396,858,248.87 | -- | 78.97% | 39,225,678.44 |
6) Accounts receivable involving government subsidies
Unit: yuan
| Unit name | Name of government subsidy project | Closing Balance | Ending aging | Estimated collection time, amount and basis |
7) Other receivables derecognized due to transfer of financial assets
8) Amount of assets and liabilities formed by transferring other receivables and continuing involvementOther description:
9. Inventory
Does the Company need to follow the disclosure requirements of real estate industryNo
(1) Inventory classification
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Inventory falling price reserves or provision for impairment of contract performance costs | Book value | Book balance | Inventory falling price reserves or provision for impairment of contract performance costs | Book value | |
| Raw materials | 376,925,094.86 | 8,304,812.08 | 368,620,282.78 | 171,872,652.39 | 4,027,026.07 | 167,845,626.32 |
| Work in process | 131,194,111.13 | 4,032,195.26 | 127,161,915.87 | 78,313,267.23 | 1,326,649.69 | 76,986,617.54 |
| Merchandise inventory | 772,693,263.07 | 136,714,538.94 | 635,978,724.13 | 733,865,398.37 | 18,413,979.35 | 715,451,419.02 |
| Semi-finished products shipped in transit | 76,790,690.31 | 76,790,690.31 | 19,513,436.58 | 19,513,436.58 | ||
| Low priced and easily worn articles | 8,170,543.67 | 235,216.55 | 7,935,327.12 | 12,614,074.40 | 12,614,074.40 | |
| Total | 1,365,773,703.04 | 149,286,762.83 | 1,216,486,940.21 | 1,016,178,828.97 | 23,767,655.11 | 992,411,173.86 |
(2) Inventory falling price reserves and provision for impairment of contract performance costs
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amount decreased in current period | Closing Balance | ||
| Accrual | Other | Reversal | Write-off | |||
| Raw materials | 4,027,026.07 | 29,058,626.71 | 15,570,225.07 | 9,210,615.63 | 8,304,812.08 | |
| Work in process | 1,326,649.69 | 5,051,820.23 | 217,047.57 | 2,129,227.09 | 4,032,195.26 | |
| Merchandise inventory | 18,413,979.35 | 123,792,910.94 | 786,018.50 | 4,706,332.85 | 136,714,538.94 | |
| Low priced and easily worn articles | 235,216.55 | 235,216.55 | ||||
| Total | 23,767,655.11 | 158,138,574.43 | 16,573,291.14 | 16,046,175.57 | 149,286,762.83 | |
(3) Description of ending balance of inventory containing the capitalized amount of borrowing costsNA
(4) Description of current amortization amount of contract performance cost
NA
10. Contract assets
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
Amount and reason of significant change in the book value of contract assets in current period:
Unit: yuan
| Item | Amount of change | Reason for change |
If the bad debt provision of contract assets is accrued according to the general model of expected credit loss, please refer to the disclosure method ofother receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
Provision for impairment of contract assets in current period
Unit: yuan
| Item | Accrual in current period | Reversal in current period | Write off/verification in current period | Reasons |
Other description:
11. Assets held for sales
Unit: yuan
| Item | Ending book balance | Provision for impairment | Ending book value | Fair value | Estimated disposal cost | Estimated disposal time |
Other description:
12. Non-current assets due within a year
Unit: yuan
| Item | Closing Balance | Beginning balance |
Important debt investments/other debt investments
Unit: yuan
| Debt item | Closing Balance | Beginning balance | ||||||
| Book value | Coupon rate | Actual rate | Maturity date | Book value | Coupon rate | Actual rate | Maturity date | |
Other description:
13. Other current assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Return cost receivable | 1,449,440.77 | 593,982.97 |
| VAT input tax to be deducted / uncertified input tax | 31,138,563.62 | 51,968,081.39 |
| Prepaid corporate income tax | 3,377,953.50 | |
| Unamortized expenses | 2,595,244.40 | 28,535,148.54 |
| Other | 978.30 | |
| Total | 35,184,227.09 | 84,475,166.40 |
Other description:
14. Debt investment
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
Important debt investments
Unit: yuan
| Debt item | Closing Balance | Beginning balance | ||||||
| Book value | Coupon rate | Actual rate | Maturity date | Book value | Coupon rate | Actual rate | Maturity date | |
Provision for impairment
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1,2020 in the current period | —— | —— | —— | —— |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Other description:
15. Other debt investments
Unit: yuan
| Item | Beginning balance | Accrued interest | Fair value change in current period | Closing Balance | Cost | Accumulated fair value change | Accumulated provision for loss recognized in other comprehensive income | Remark |
Important other debt investments
Unit: yuan
| Other debt item | Closing Balance | Beginning balance | ||||||
| Book value | Coupon rate | Actual rate | Maturity date | Book value | Coupon rate | Actual rate | Maturity date | |
Provision for impairment
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1,2020 in the current period | —— | —— | —— | —— |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Other description:
16. Long-term receivables
(1) Long-term receivables
Unit: yuan
| Item | Closing Balance | Beginning balance | Discount rate range | ||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | ||
Impairment of provision for bad debt
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1,2020 in the current period | —— | —— | —— | —— |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
(2) Long-term receivables derecognized due to transfer of financial assets
(3) Amount of assets and liabilities formed by transferring long-term receivables and continuing involvementOther description
17. Long-term equity investment
Unit: yuan
| Invested unit | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end | |||||||
| Further investment | Capital reduction | Investment gains and losses | Adjustment of other comprehen | Changes in other equity | Declared payment of cash | Provision for impairment | Other | ||||
| recognized by the equity method | sive income | dividends or profits | of period | ||||||||
| I. Cooperative enterprise | |||||||||||
| II. Joint venture | |||||||||||
| Chengdu Winner | 8,858,476.15 | 4,565,754.26 | 13,424,230.41 | ||||||||
| Subtotal | 8,858,476.15 | 4,565,754.26 | 13,424,230.41 | ||||||||
| Total | 8,858,476.15 | 4,565,754.26 | 13,424,230.41 | ||||||||
Other description
18. Other equity instrument investments
Unit: yuan
| Item | Closing Balance | Beginning balance |
Itemized disclosure of the current non-trading equity instrument investment
Unit: yuan
| Project name | Recognized dividend income | Accumulated gains | Accumulated losses | Amount of other comprehensive income transferred into retained income | Reasons for designating to be measured at fair value and its changes are recorded into other comprehensive income | Reasons for other comprehensive income transferring into retained income |
Other description:
19. Other non-current financial assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
20. Investment real estates
(1) Investment real estates using cost measurement mode
□ Applicable √ Not applicable
(2) Investment real estates using fair value measurement mode
□ Applicable √ Not applicable
(3) Investment real estates without certificate of title
Unit: yuan
| Item | Book value | Reasons for not obtaining the certificate of title |
Other descriptionNA
21. Fixed assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Fixed assets | 1,400,749,050.00 | 1,274,733,960.96 |
| Total | 1,400,749,050.00 | 1,274,733,960.96 |
(1) Fixed assets
Unit: yuan
| Item | Houses and building | Machinery equipment | Transportation equipment | Electronic equipment and office equipment, etc. | Total |
| I. Original book value | |||||
| 1. Beginning balance | 917,096,198.69 | 776,813,050.70 | 17,208,612.86 | 86,514,127.38 | 1,797,631,989.63 |
| 2. Amount increased in current period | 30,364,268.99 | 341,241,793.70 | 4,437,212.65 | 23,719,986.08 | 399,763,261.42 |
| (1) Purchase | 20,623,249.22 | 114,043,284.68 | 4,437,212.65 | 22,301,739.99 | 161,405,486.54 |
| (2) Transfer from construction in progress | 9,741,019.77 | 227,198,509.02 | 1,418,246.09 | 238,357,774.88 | |
| (3) Increase by business combination | |||||
| 3. Amount decreased in current period | 21,073,912.61 | 53,773,373.40 | 1,205,506.77 | 17,277,910.59 | 93,330,703.37 |
| (1) Disposal or scrap | 21,073,912.61 | 53,773,373.40 | 1,205,506.77 | 17,277,910.59 | 93,330,703.37 |
| 4. Ending balance | 926,386,555.07 | 1,064,281,471.00 | 20,440,318.74 | 92,956,202.87 | 2,104,064,547.68 |
| II. Accumulated depreciation | |||||
| 1. Beginning balance | 171,108,500.88 | 278,713,982.31 | 10,343,300.97 | 48,314,743.54 | 508,480,527.70 |
| 2. Amount increased in current period | 37,322,273.03 | 97,466,703.29 | 1,504,247.81 | 11,342,756.68 | 147,635,980.81 |
| (1) Withdraw | 37,322,273.03 | 97,466,703.29 | 1,504,247.81 | 11,342,756.68 | 147,635,980.81 |
| 3. Amount decreased in current period | 11,764,354.14 | 32,227,742.77 | 1,061,770.41 | 14,293,159.96 | 59,347,027.28 |
| (1) Disposal or scrap | 11,764,354.14 | 32,227,742.77 | 1,061,770.41 | 14,293,159.96 | 59,347,027.28 |
| 4. Ending balance | 196,666,419.77 | 343,952,942.83 | 10,785,778.37 | 45,364,340.26 | 596,769,481.23 |
| III. Provision for impairment | |||||
| 1. Beginning balance | 6,487,993.77 | 7,927,935.85 | 1,571.35 | 14,417,500.97 | |
| 2. Amount increased in current period | 43,171,294.29 | 53,617,371.05 | 0.00 | 372,393.05 | 97,161,058.39 |
| (1) Withdraw | 43,171,294.29 | 53,617,371.05 | 372,393.05 | 97,161,058.39 | |
| 3. Amount decreased in current period | 1,761,998.25 | 3,268,973.31 | 0.00 | 1,571.35 | 5,032,542.91 |
| (1) Disposal or scrap | 1,761,998.25 | 3,268,973.31 | 1,571.35 | 5,032,542.91 | |
| 4. Ending balance | 47,897,289.81 | 58,276,333.59 | 0.00 | 372,393.05 | 106,546,016.45 |
| IV. Book value | |||||
| 1. Ending book value | 681,822,845.49 | 662,052,194.58 | 9,654,540.37 | 47,219,469.56 | 1,400,749,050.00 |
| 2. Beginning book value | 739,499,704.04 | 490,171,132.54 | 6,865,311.89 | 38,197,812.49 | 1,274,733,960.96 |
(2) Fixed assets that are temporarily idle
Unit: yuan
| Item | Original book value | Accumulated depreciation | Provision for impairment | Book value | Remark |
| Machinery equipment | 5,006,776.81 | 3,432,027.59 | 92,215.73 | 1,482,533.49 | |
| Total | 5,006,776.81 | 3,432,027.59 | 92,215.73 | 1,482,533.49 |
(3) Fixed assets under financing lease
Unit: yuan
| Item | Original book value | Accumulated depreciation | Provision for impairment | Book value |
(4) Fixed assets leased out by operating lease
Unit: yuan
| Item | Ending book value |
(5) Fixed assets without certificate of title
Unit: yuan
| Item | Book value | Reasons for not obtaining the certificate of title |
| Tianmen Winner Medical Building | 17,758,434.17 | The formalities have not yet been completed |
| Main plant of Phase II of Tianmen Winner | 15,540,441.37 | The formalities have not yet been completed |
| Tianmen Winner grey cloth warehouse | 1,081,081.08 | The formalities have not yet been completed |
| Other | 1,262,082.30 | The formalities have not yet been completed |
Other description
(6) Liquidation of fixed assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description
22. Construction in progress
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Construction in progress | 61,383,340.97 | 187,808,853.01 |
| Total | 61,383,340.97 | 187,808,853.01 |
(1) Construction in progress
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Tianmen infrastructure project | 3,103,139.22 | 3,103,139.22 | ||||
| Chongyang Winner engineering project | 3,920,741.93 | 3,920,741.93 | 3,135,504.37 | 3,135,504.37 | ||
| Jiayu Winner engineering project | 206,839.83 | 206,839.83 | 480,809.19 | 480,809.19 | ||
| Yichang infrastructure project | 829,816.92 | 829,816.92 | ||||
| Jingmen infrastructure project | 11,748,247.37 | 11,748,247.37 | ||||
| Wuhan Winner engineering project | 25,508,709.25 | 25,508,709.25 | 9,632,902.40 | 9,632,902.40 | ||
| Other equipment to be installed and sporadic projects | 17,526,254.29 | 1,460,407.84 | 16,065,846.45 | 174,559,637.05 | 174,559,637.05 | |
| Total | 62,843,748.81 | 1,460,407.84 | 61,383,340.97 | 187,808,853.01 | 187,808,853.01 | |
(2) Current changes in major projects under construction
Unit: yuan
| Project name | Budget number | Beginning balance | Amount increased in current period | Amount carried forward to fixed assets in current period | Other decreases in current period | Closing Balance | Proportion of total project input to the budget | Progress of works | Accumulated amount of interest capitalization | Including: interest capitalization funds in the current period | Interest capitalization rate in the current period | Source of funds |
| Jingmen Winner office dormitory building | 21,000,000.00 | 11,654,612.45 | 11,654,612.45 | 55.50% | 70.00% | Other | ||||||
| Wuhan Winner | 110,000,000.00 | 105,648,953.29 | 287,538.76 | 105,936,492.05 | 96.31% | 100.00% | 1,277,916.07 | 187,313.32 | 5.49% | Other |
| Trützschler spunlace import equipment installation project | ||||||||||||
| Wuhan Winner phase II infrastructure comprehensive project | 14,069,724.78 | 14,069,724.78 | 14,069,724.78 | 100.00% | 100.00% | Other | ||||||
| Wuhan Winner imported spunlace equipment supporting project | 15,700,000.00 | 15,651,888.57 | 650,801.77 | 16,302,690.34 | 103.84% | 100.00% | 1,318,701.25 | 323,656.60 | 5.39% | Other | ||
| Total | 160,769,724.78 | 121,300,841.86 | 26,662,677.76 | 136,308,907.17 | 11,654,612.45 | -- | -- | 2,596,617.32 | 510,969.92 | -- |
(3) Provision for impairment of construction in progress in current year
Unit: yuan
| Item | Current accrued amount | Reason for accrual |
| Equipment to be installed | 1,460,407.84 | Project on hold |
| Total | 1,460,407.84 | -- |
Other description
(4) Engineering materials
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
Other description:
23. Productive biological assets
(1) Productive biological assets using cost measurement mode
□ Applicable √ Not applicable
(2) Productive biological assets using fair value measurement mode
□ Applicable √ Not applicable
24. Oil and gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
Unit: yuan
| Item | Total |
Other description:
26. Intangible assets
(1) Intangible assets
Unit: yuan
| Item | Land use right | Patent right | Nonpatented technology | Trademark right | Software use right | Franchised use right | Total |
| I. Original book value | |||||||
| 1. Beginning balance | 129,778,826.14 | 1,589,657.86 | 1,728,043.82 | 44,987,755.55 | 10,228,226.53 | 188,312,509.90 | |
| 2. Amount increased in current period | 85,719,681.92 | 2,058,034.41 | 87,777,716.33 | ||||
| (1) Purchase | 85,719,681.92 | 2,058,034.41 | 87,777,716.33 | ||||
| (2) Internal R&D | |||||||
| (3) Increase by business |
| combination | |||||||
| 3. Amount decreased in current period | 16,020.00 | 17,452.83 | 2,269,121.08 | 2,302,593.91 | |||
| (1) Disposal | 16,020.00 | 17,452.83 | 2,269,121.08 | 2,302,593.91 | |||
| 4. Ending balance | 215,498,508.06 | 1,573,637.86 | 1,710,590.99 | 44,776,668.88 | 10,228,226.53 | 273,787,632.32 | |
| II. Accumulated amortization | |||||||
| 1. Beginning balance | 20,304,966.94 | 1,021,087.65 | 1,635,425.41 | 26,590,991.80 | 7,102,935.09 | 56,655,406.89 | |
| 2. Amount increased in current period | 2,923,499.57 | 121,736.63 | 43,485.08 | 4,774,984.89 | 3,125,291.44 | 10,988,997.61 | |
| (1) Withdraw | 2,923,499.57 | 121,736.63 | 43,485.08 | 4,774,984.89 | 3,125,291.44 | 10,988,997.61 | |
| 3. Amount decreased in current period | 16,020.00 | 17,452.83 | 2,148,403.14 | 2,181,875.97 | |||
| (1) Disposal | 16,020.00 | 17,452.83 | 2,148,403.14 | 2,181,875.97 | |||
| 4. Ending balance | 23,228,466.51 | 1,126,804.28 | 1,661,457.66 | 29,217,573.55 | 10,228,226.53 | 65,462,528.53 | |
| III. Provision for impairment | |||||||
| 1. Beginning balance | |||||||
| 2. Amount increased in current period | |||||||
| (1) Withdraw |
| 3. Amount decreased in current period | |||||||
| (1) Disposal | |||||||
| 4. Ending balance | |||||||
| IV. Book value | |||||||
| 1. Ending book value | 192,270,041.55 | 446,833.58 | 49,133.33 | 15,559,095.33 | 208,325,103.79 | ||
| 2. Beginning book value | 109,473,859.20 | 568,570.21 | 92,618.41 | 18,396,763.75 | 3,125,291.44 | 131,657,103.01 |
The proportion of intangible assets formed through internal R & D of the Company in the balance of intangible assets at the end of current period:
0.00%
(2) Land use right without certificate of title
Unit: yuan
| Item | Book value | Reasons for not obtaining the certificate of title |
Other description:
27. Development expenditure
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amount decreased in current period | Closing Balance | ||||
| Internal development expenditure | Other | Recognized as intangible assets | Transfer to current profit and loss | |||||
| Total | ||||||||
Other description
28. Goodwill
(1) Original book value of goodwill
Unit: yuan
| invested entity | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| name or goodwill forming matter | Formed by business combination | Disposal | ||||
| Business combination not under common control - Acquisition of Malaysia Winner | 2,681,232.09 | 2,681,232.09 | ||||
| Total | 2,681,232.09 | 2,681,232.09 |
(2) Provision for impairment of goodwill
Unit: yuan
| invested entity name or goodwill forming matter | Beginning balance | Increase in current period | Decrease in current period | Closing Balance | ||
| Accrual | Disposal | |||||
| Business combination not under common control - Acquisition of Malaysia Winner | 2,681,232.09 | 2,681,232.09 | ||||
| Total | 2,681,232.09 | 2,681,232.09 | ||||
Information relating to the asset group or asset group combination of goodwillExplain the goodwill impairment test process, key parameters (such as forecast period growth rate at the present value of expected future cash flow,steady period growth rate, profit margin, discount rate, forecast period, etc.) and recognition method of goodwill impairment loss:
Impact of goodwill impairment testsOther description
29. Long-term unamortized expenses
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amortization amount in current period | Other decreases | Closing Balance |
| Decoration cost | 12,488,705.10 | 11,851,752.98 | 7,755,131.06 | 16,585,327.02 | |
| Decoration expenses for operating leased fixed assets | 148,369,647.77 | 43,128,732.04 | 86,748,699.50 | 104,749,680.31 | |
| Right to use of cloud server and cloud database | 4,615,790.05 | 4,615,790.05 |
| Total | 165,474,142.92 | 54,980,485.02 | 99,119,620.61 | 121,335,007.33 |
Other description
30. Deferred income tax assets and deferred income tax liabilities
(1) Unoffset deferred income tax assets
Unit: yuan
| Item | Closing Balance | Beginning balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for impairment of assets | 342,367,005.23 | 65,132,073.97 | 91,394,664.34 | 16,548,521.25 |
| Unrealized profit of internal transaction | 218,425,773.62 | 33,265,658.66 | 80,813,782.47 | 12,442,122.80 |
| Deductible loss | 91,373,086.80 | 20,778,878.65 | 131,089,600.55 | 32,532,211.09 |
| Dismission welfare | 2,318,903.48 | 347,835.52 | 2,345,403.48 | 351,810.52 |
| Deferred income | 94,921,260.87 | 15,374,283.41 | 46,117,344.20 | 6,949,826.64 |
| Member points | 16,282,017.02 | 4,070,504.26 | ||
| Expected return | 1,316,336.08 | 329,084.02 | 591,513.81 | 147,878.45 |
| Advertising expenses in excess of the tax deductible limit | 256,467.28 | 64,116.82 | 1,537,308.62 | 384,327.16 |
| Equity incentive fee | 25,132,771.81 | 3,769,915.77 | ||
| Total | 792,393,622.19 | 143,132,351.08 | 353,889,617.47 | 69,356,697.91 |
(2) Unoffset deferred income tax liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Changes in fair value of tradable financial assets | 11,178,589.44 | 1,754,263.42 | ||
| Depreciation of fixed assets | 59,458,724.22 | 10,411,344.82 | ||
| Total | 70,637,313.66 | 12,165,608.24 | ||
(3) Deferred income tax assets or liabilities presented as net amount after offset
Unit: yuan
| Item | Ending offset amount of deferred income tax assets and liabilities | Ending balance of deferred income tax assets and liabilities after offset | Beginning offset amount of deferred income tax assets and liabilities | Beginning balance of deferred income tax assets and liabilities after offset |
| Deferred income tax assets | 143,132,351.08 | 69,356,697.91 | ||
| Deferred income tax liabilities | 12,165,608.24 |
(4) Details of unrecognized deferred income tax assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Deductible loss | 100,460,644.28 | 7,050,463.87 |
| Provision for impairment of assets and amortization of depreciation | 5,508,170.07 | 171.86 |
| Total | 105,968,814.35 | 7,050,635.73 |
(5) Deductible losses on unrecognized deferred income tax assets will expire in the following year
Unit: yuan
| Year | Closing balance | Beginning amount | Remark |
| 2022 | 305,751.35 | ||
| 2023 | 23,804,062.08 | ||
| 2024 | 31,489,882.74 | ||
| 2025 | 38,128,355.56 | ||
| No maturity date | 6,732,592.55 | 7,050,463.87 | |
| Total | 100,460,644.28 | 7,050,463.87 | -- |
Other description:
31. Other non-current assets
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Advance project payment / equipment purchase payment / advance store engineering and | 63,807,415.75 | 63,807,415.75 | 18,996,656.91 | 18,996,656.91 | ||
| decoration payment | ||||||
| Total | 63,807,415.75 | 63,807,415.75 | 18,996,656.91 | 18,996,656.91 |
Other description:
32. Short-term borrowing
(1) Classification of short-term borrowing
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Guaranteed borrowing | 150,000,000.00 | 120,000,000.00 |
| Borrowing interest | 71,416.66 | |
| Total | 150,071,416.66 | 120,000,000.00 |
Description of classification of short-term borrowingDescription of classification of short-term borrowingYear 2020
1. On February 5, 2020, Shenzhen Winner signed a loan agreement (0400000014-2019 Longhua (B.) Zi No.0029; 0400000014-2019 Longhua (B.) ZiNo.0030) with Longhua Sub-branch of Industrial and Commercial Bank of China; the loan amount is RMB 50 million; the loan term is from February5, 2020 to February 5, 2021; the loan interest rate is 2.5%; Qianhai Purcotton, Shenzhen Purcotton and Li Jianquan provide guarantee for such loan,and have signed the maximum amount guarantee contract (0400000014-2019 Longhua (B.) Zi No.0029; 0400000014-2019 Longhua (B.) Zi No.0030;0400000014-2019 Longhua (B.) No.0031). As of December 31, 2020, the loan has not been repaid.
2. On February 17, 2020, Shenzhen Winner signed a loan agreement (2020 Z.Z.Y.H.B.Zi No.0027) with Longhua Sub-branch of Bank of China; therelevant credit extension agreement number is 2020 Z.Z.Y.H.E.X.Zi No.0027; the loan amount is RMB 20 million; the loan term is from February 17,2020 to February 17, 2021; the loan interest rate is 1.8%; Li Jianquan provides guarantee for such loan, and has signed the maximum amountguarantee contract (2020 Z.Z.Y.H.B.Zi No.0027). As of December 31, 2020, the loan has not been repaid.
3. On February 14, 2020, Shenzhen Winner signed a loan agreement (No.4430202001100002554) with China Development Bank; the loan amount isRMB 50 million; the loan term is from February 14, 2020 to February 14, 2021; the loan interest rate is 2%; Shenzhen Purcotton provides guaranteefor such loan, and has signed the maximum amount guarantee contract. As of December 31, 2020, the loan has not been repaid.
4. On February 13, 2020, Chongyang Winner signed a loan agreement (0181800301-2020 (Chongyang) No.00015) with Chongyang CountySub-branch of Industrial and Commercial Bank of China; the loan amount is RMB 30 million.; the loan term is from February 13, 2020 to February12, 2021; the loan interest rate is 2.5% without relevant mortgage guarantee. As of December 31, 2020, the loan has not been repaid.
(2) Short-term borrowing unpaid overdue
The total amount of overdue short-term borrowings at the end of the period is RMB 0.00, of which the important overdue short-term borrowings areas follows:
Unit: yuan
| Borrower | Closing Balance | Borrowing interest rate | Overdue time | Overdue interest rate |
Other description:
33. Tradable financial liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Including: | ||
| Including: |
Other description:
34. Derivative financial liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
35. Notes payable
Unit: yuan
| Type | Closing Balance | Beginning balance |
| Banker's acceptance bill | 29,418,100.00 | 173,023,352.30 |
| Total | 29,418,100.00 | 173,023,352.30 |
The total amount of notes payable due and have not been paid at the end of current period is RMB 0.00.
36. Accounts payable
(1) Presentation of accounts payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Within 1 year (including 1 year) | 711,659,249.43 | 550,429,812.75 |
| 1~2 years (including 2 years) | 10,837,529.41 | 7,723,263.63 |
| 2~3 years (including 3 years) | 977,275.13 | 3,730,982.69 |
| More than 3 years | 3,103,252.97 | 890,351.44 |
| Total | 726,577,306.94 | 562,774,410.51 |
(2) Important accounts payable with the aging more than 1 year
Unit: yuan
| Item | Closing Balance | Reasons for failure of payment or carryover |
Other description:
Winner Medical Co., Ltd. 2020 Annual ReportAs of December 31, 2020, there is no important accounts payable with the aging more than 1 year.
37. Advances from customers
(1) Presentation of advance from customers
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Total | 0.00 |
(2) Important advances from customers with the aging more than 1 year:
Unit: yuan
| Item | Closing Balance | Reasons for failure of payment or carryover |
38. Contract liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Customer consideration received | 513,906,240.61 | 28,793,864.47 |
| Member points | 16,282,017.02 | 3,519,771.81 |
| Total | 530,188,257.63 | 32,313,636.28 |
Amount and reasons for significant changes in book value during the reporting period
Unit: yuan
| Item | Amount of change | Reason for change |
39. Payroll payable
(1) Presentation of payroll payable
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| I. Short-term compensation | 93,788,283.02 | 1,049,200,730.50 | 983,532,376.65 | 159,456,636.87 |
| II. Welfare after dismission - defined contribution plan | 3,659,661.30 | 31,882,666.98 | 27,360,790.82 | 8,181,537.46 |
| III. Dismission welfare | 2,345,403.48 | 227,873.47 | 254,373.47 | 2,318,903.48 |
| Total | 99,793,347.80 | 1,081,311,270.95 | 1,011,147,540.94 | 169,957,077.81 |
(2) Presentation of short-term compensation
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Wages, bonuses, allowances and subsidies | 93,186,809.17 | 965,302,750.48 | 899,716,342.26 | 158,773,217.39 |
| 2. Employee welfare expenses | -51,100.00 | 33,944,892.51 | 33,757,371.51 | 136,421.00 |
| 3. Social insurance premium | 473,047.86 | 29,455,081.24 | 29,535,483.42 | 392,645.68 |
| Including: medical insurance premium | 423,985.52 | 26,844,444.04 | 27,035,622.17 | 232,807.39 |
| Industrial injury insurance premium | 21,412.08 | 612,223.46 | 527,077.25 | 106,558.29 |
| Birth insurance premium | 27,650.26 | 1,998,413.74 | 1,972,784.00 | 53,280.00 |
| 4. Housing fund | 178,994.00 | 16,837,826.89 | 17,010,028.89 | 6,792.00 |
| 5. Labor union expenditure and personnel education fund | 531.99 | 3,660,179.38 | 3,513,150.57 | 147,560.80 |
| Total | 93,788,283.02 | 1,049,200,730.50 | 983,532,376.65 | 159,456,636.87 |
(3) Presentation of defined contribution plans
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Basic endowment insurance | 3,605,444.25 | 30,948,413.66 | 26,489,490.00 | 8,064,367.91 |
| 2. Unemployment insurance premium | 54,217.05 | 934,253.32 | 871,300.82 | 117,169.55 |
| Total | 3,659,661.30 | 31,882,666.98 | 27,360,790.82 | 8,181,537.46 |
Other description:
40. Tax payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Added value tax | 18,181,804.05 | 5,604,947.55 |
| Corporate income tax | 415,529,360.40 | 36,920,287.61 |
| Individual income tax | 2,036,312.66 | 1,215,585.66 |
| Urban maintenance and construction tax | 2,884,475.60 | 786,892.99 |
| Housing property tax | 2,317,520.34 | 1,088,618.25 |
| Education surcharge and local education surcharge | 2,193,371.26 | 611,980.60 |
| Land use tax | 721,674.83 | 602,272.26 |
| Environmental protection tax | 27,808.56 | 54,770.07 |
| Stamp duty | 489,041.79 | 249,632.41 |
| Total | 444,381,369.49 | 47,134,987.40 |
Other description:
41. Other payables
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Interest payable | 289,799.65 | |
| Other payables | 352,543,008.89 | 142,318,132.83 |
| Total | 352,543,008.89 | 142,607,932.48 |
(1) Interest payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Interest of long-term borrowing which interest is paid by instalments and principal is repaid when due | 210,049.65 | |
| Interest payable of short-term borrowing | 79,750.00 | |
| Total | 289,799.65 |
Important overdue and unpaid interest:
Unit: yuan
| Borrower | Overdue amount | Overdue reason |
Other description:
(2) Dividends payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other explanations, including important dividends payable that have not been paid for more than 1 year, shall disclose the reasons for non-payment:
(3) Other payables
1) Other payables listed by nature
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Freight and other accrued expenses | 94,068,852.36 | 69,749,288.04 |
| Provision of commission | 68,139,060.51 | 11,631,145.72 |
| Margin and deposit | 154,311,464.02 | 51,229,552.21 |
| Intercourse | 14,357,347.93 | |
| Other | 21,666,284.07 | 9,708,146.86 |
| Total | 352,543,008.89 | 142,318,132.83 |
2) Important other payable with the aging more than 1 year
Unit: yuan
| Item | Closing Balance | Reasons for failure of payment or carryover |
| Shenzhen Galaxy Real Estate Development Co., Ltd. | 50,000,000.00 | Margin for industrial park renewal project |
| Total | 50,000,000.00 | -- |
Other description
42. Liabilities held for sales
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
43. Non-current liabilities due within 1 year
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Long-term borrowing due within one year | 5,000,000.00 | |
| Total | 5,000,000.00 |
Other description:
44. Other current liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Refund payable | 2,765,776.85 | 1,185,496.78 |
| Output tax to be transferred | 20,872,489.62 | 4,359,105.39 |
| Total | 23,638,266.47 | 5,544,602.17 |
Increase/decrease of short-term bonds payable:
Unit: yuan
| Name of bond | Book value | Issue date | Maturity of bond | Issue amount | Beginning balance | Current issue | Accrued interest at book value | Amortization of premium and discount | Current repayment | Closing Balance |
Other description:
45. Long-term borrowing
(1) Classification of long-term borrowing
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Guarantee + mortgage + pledge borrowing | 134,210,746.07 | |
| Total | 134,210,746.07 |
Description of classification of long-term borrowing:
On December 29, 2018, Hubei Winner signed a fixed assets loan contract with Wuhan Huaqiao Sub-branch of Bank of China Limited (No.2018X.Q.D.Zi No.WJ-001), the contract amount of which is RMB 300.00 million, and it withdrew RMB 52,046,101.78 on February 1, 2019, due onJanuary 31, 2025 with the interest rate of 5.488%; withdrew RMB 17,786,437.00 on March 26, 2019, due on January 31, 2025, with the interest rateof 5.39%; withdrew RMB 10,817,000.00 on May 13, 2019, due on January 31, 2025, with the interest rate of 5.39%; withdrew RMB 39,127,344.96on May 31, 2019, due on January 31, 2025, with the interest rate of 5.39%. It withdrew RMB 4,433,862.33 on July 15, 2019, due on January 31, 2025,with the interest rate of 5.39%. It withdrew RMB 10,000,000.00 on July 15, 2019, due on August 8, 2025, with the interest rate of 5.39%. TheCompany provides guarantee for such loan, and signed the guarantee contract (2018 X.Q.B.Zi No.WJ-001). Hubei Winner mortgaged the land useright and the construction in progress, and signed a mortgage contract (2018 X.Q.D.Zi No.WJ-001). Hubei Winner pledged the export tax rebatespecial account 561275585349, and signed the pledge contract (2018 X.Q.Z.Zi No.WJ-001). Hubei Winner pledged the revenue supervision account578175227994, and signed the pledge contract (2018 X.Q.Z.Zi No.WJ-002). As of December 31, 2020, the loan has been repaid.
Other descriptions, including interest rate range:
46. Bonds payable
(1) Bonds payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
(2) Increase and decrease of bonds payable (excluding preferred shares, perpetual bonds and other financial instruments classified asfinancial liabilities)
Unit: yuan
| Name of bond | Book value | Issue date | Maturity of bond | Issue amount | Beginning balance | Current issue | Accrued interest at book value | Amortization of premium and discount | Current repayment | Closing Balance | |
| Total | -- | -- | -- |
(3) Description of conditions and time of conversion of convertible corporate bonds
(4) Description of other financial instruments classified as financial liabilities
Basic information of the outstanding preferred shares, perpetual bonds and other financial instruments at the end of the periodTable of changes in outstanding financial instruments, such as preferred shares, perpetual bonds at the end of the period
Unit: yuan
| Outstanding financial instruments | The beginning of the period | Increase in current period | Decrease in current period | The end of the period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
Description of the basis for the classification of other financial instruments into financial liabilitiesOther description
47. Lease liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description
48. Long-term payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
(1) Long-term payables listed by nature
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
(2) Special accounts payable
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance | Causes |
Other description:
49. Long-term payroll payable
(1) Table of long-term payroll payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
(2) Changes in defined benefit plan
Present value of defined benefit plan obligations:
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Planned assets:
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Net liabilities (net assets) of defined benefit plan
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Description of the content of defined benefit plan and its related risks, impact on the Company's future cash flow, time and uncertainty:
Description of significant actuarial assumptions and sensitivity analysis results of defined benefit plan:
Other description:
50. Estimated liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance | Causes |
| Total | 0.00 | -- |
Other descriptions, including relevant important assumptions and estimation descriptions of important estimated liabilities:
51. Deferred income
Unit: yuan
| Item | Beginning balance | Increase in current | Decrease in current | Closing Balance | Causes |
| period | period | ||||
| Government subsidies | 46,117,344.20 | 55,555,000.00 | 6,751,083.33 | 94,921,260.87 | Government subsidies related to assets |
| Total | 46,117,344.20 | 55,555,000.00 | 6,751,083.33 | 94,921,260.87 | -- |
Projects involving government subsidies:
Unit: yuan
| Liability item | Beginning balance | Amount of additional subsidy in current period | Amount included in current non-operating income | Amount included in other income in current period | Amount offsetting the cost in the current period | Other changes | Closing Balance | Asset/income related |
| Subsidy of 2012 Provincial high-tech industry development special project - Huanggang Winner | 335,418.67 | 58,333.00 | 277,085.67 | Asset related | ||||
| Subsidy of 2014 Hubei provincial science and technology support plan project (the second batch) - Huanggang Winner | 862,500.00 | 150,000.00 | 712,500.00 | Asset related | ||||
| Subsidy for Huanggang Chibi Avenue demolition company planning change - Huanggang Winner | 2,588,310.00 | 105,645.31 | 2,482,664.69 | Asset related | ||||
| Technology Center R & D project | 1,858,201.48 | 803,030.75 | 1,055,170.73 | General subsidy |
| subsidy - Shenzhen Winner | ||||||||
| new medical bandage factory land acquisition land use right grant fee remission of Winner company in Pailou Town, Jingmen - Jingmen Winner | 650,290.00 | 20,320.00 | 629,970.00 | Asset related | ||||
| Subsidy funds for municipal government project infrastructure construction - Chongyang Winner | 9,683,962.50 | 413,550.00 | 9,270,412.50 | Asset related | ||||
| Park project construction in Yuyue Town - Jiayu Winner | 9,221,333.34 | 329,333.33 | 8,892,000.01 | Asset related | ||||
| 2015 Huanggang provincial budget investment plan, Huanggang Winner’s cotton spunlaced nonwoven (Line 8) extension project subsidy - | 345,000.00 | 60,000.00 | 285,000.00 | Asset related |
| Huanggang Winner | ||||||||
| 2014 Huanggang urban industrial development special fund subsidy - Huanggang Winner | 143,750.00 | 25,000.00 | 118,750.00 | Asset related | ||||
| 2014 Hubei provincial budget industrial fixed assets investment plan, 10 billion gauze pad expansion project subsidy - Tianmen Winner | 46,153.78 | 11,538.48 | 34,615.30 | Asset related | ||||
| Sewage treatment project award - Jiayu Winner | 1,395,000.00 | 77,500.00 | 1,317,500.00 | Asset related | ||||
| 2015 Tianmen industrial enterprise key technical transformation and expansion project subsidy - Tianmen Winner | 312,485.00 | 50,004.00 | 262,481.00 | Asset related | ||||
| 2015 urban industrial development special fund | 250,000.00 | 40,000.00 | 210,000.00 | Asset related |
| Automatic transformation of surgical consumables production line - Shenzhen Winner | 1,395,000.00 | 186,000.00 | 1,209,000.00 | Asset related | ||||
| 2016 Tianmen industrial key technical transformation and expansion project reward - Tianmen Winner | 362,489.00 | 50,004.00 | 312,485.00 | Asset related | ||||
| 2017 increase production and expansion equipment subsidy for Tianmen processing & trade - Tianmen Winner | 115,000.00 | 15,000.00 | 100,000.00 | Asset related | ||||
| Yichang gas boiler subsidy - Yichang Winner | 116,000.05 | 15,999.96 | 100,000.09 | Asset related | ||||
| Second batch of traditional industry transformation subsidy in 2017 - Huanggang Winner | 1,516,513.82 | 209,174.28 | 1,307,339.54 | Asset related | ||||
| 2017 cotton spunlaced non-woven fabric project with the | 554,717.06 | 79,245.27 | 475,471.79 | Asset related |
| production of 15,000 tons - Tianmen Winner | ||||||||
| Key technical transformation and expansion projects | 810,811.00 | 108,108.00 | 702,703.00 | Asset related | ||||
| Production line project with an annual output of 120 million bales of cotton fabric in 2017 - Tianmen Winner | 813,749.97 | 107,307.69 | 706,442.28 | Asset related | ||||
| Second batch of special funds for the transformation and upgrading of traditional industries - Yichang Winner | 206,250.04 | 24,999.96 | 181,250.08 | Asset related | ||||
| Technical innovation subsidy for the Purcotton Phase II Expansion Project - Jingmen Winner | 4,658,253.05 | 166,366.20 | 4,491,886.85 | Asset related | ||||
| Key technical transformation and expansion projects | 941,666.67 | 99,999.96 | 841,666.71 | Asset related | ||||
| 20180311 Subsidies for research, | 1,200,000.00 | 165,587.63 | 1,034,412.37 | Asset related |
| science and innovation on the technology of thermo-responsive self-curing wound regeneration and repair materials - Shenzhen Winner | ||||||||
| 2018 provincial traditional industry transformation and upgrading special funds for the second batch of liquidation block fund subsidies - Jiayu Winner | 1,444,761.90 | 52,857.14 | 1,391,904.76 | Asset related | ||||
| Subsidies for first batch of technological transformation award of industrial enterprises in 2018 - Chongyang Winner | 902,689.31 | 106,157.11 | 796,532.20 | Asset related | ||||
| Provincial traditional industry transformation and upgrading special funds for the first | 1,297,241.38 | 136,551.72 | 1,160,689.66 | Asset related |
| batch of block funds allocation plan in Tianmen City in 2019 - Tianmen Winner | ||||||||
| 2018 urban technical transformation fund of Huanggang City - Huanggang Winner | 472,222.22 | 55,555.52 | 416,666.70 | Asset related | ||||
| First batch of traditional subsidies in 2019 - Huanggang Winner | 1,210,000.00 | 121,000.00 | 1,089,000.00 | Asset related | ||||
| 2019 district technical improvement subsidy - Jingmen Winner | 407,573.96 | 29,112.36 | 378,461.60 | Asset related | ||||
| 2020 technical transformation project of Shenzhen COVID-19 epidemic prevention and control key material production enterprises - Shenzhen Winner (1*) | 20,000,000.00 | 500,000.00 | 19,500,000.00 | Asset related | ||||
| Municipal Economic and Information | 1,440,000.00 | 250,434.78 | 1,189,565.22 | Asset related |
| Bureau on the issuance of emergency material support system construction technical transformation special subsidy - Huanggang Winner | ||||||||
| Central government's budget special fund for municipal financial mask extension energy - Huanggang Winner | 320,000.00 | 37,647.06 | 282,352.94 | Asset related | ||||
| Production subsidy for COVID-19 epidemic prevention materials in 2020 - Huanggang Winner (2*) | 11,400,000.00 | 1,140,000.00 | 10,260,000.00 | Asset related | ||||
| 2019 district technical improvement subsidy - Jingmen Winner | 410,000.00 | 22,363.65 | 387,636.35 | Asset related | ||||
| 2019 special fund project of the transformation and upgrading | 750,000.00 | 26,785.71 | 723,214.29 | Asset related |
| of traditional industries - Jiayu Winner | ||||||||
| Surgical gown production line project subsidy - Chongyang Winner (3*) | 4,000,000.00 | 288,288.29 | 3,711,711.71 | Asset related | ||||
| Funds subsidy for purchasing epidemic prevention equipment in key enterprises of "Three Batches" - Chongyang Winner (4*) | 5,590,000.00 | 46,974.79 | 5,543,025.21 | Asset related | ||||
| Project on implementing the technical reformation policy of “Zero Land” in Wuhan and the municipal industrial investment and technical transformation special fund project of Bureau for Science, Technology and Economic Information Technology of Xinzhou District - Hubei Winner | 8,000,000.00 | 291,144.35 | 7,708,855.65 | Asset related |
| (5*) | ||||||||
| Subsidy of COVID-19 epidemic prevention and control materials production enterprise for capacity expansion & technical upgrading project - Hubei Winner (6*) | 3,645,000.00 | 274,163.03 | 3,370,836.97 | Asset related | ||||
| Total | 46,117,344.20 | 55,555,000.00 | 6,751,083.33 | 94,921,260.87 | Asset related |
Other description:
Projects involving government subsidies:
1* According to the document of Shenzhen and Shenzhen Industrial and Information Technology Bureau “Notice on the Proposal of Funding Planfor Technical Transformation Project of Key Material Manufacturers for COVID-19 Epidemic Prevention and Control in Shenzhen in 2020”, “WinnerMedical Nursing Mask Production Expansion” Project funds of RMB 20 million was received by Shenzhen Winner on September 29, 2020. Theamortization of the project will begin in October 2020, and the amortization period will be 10 years. As of December 31, 2020, the balance of deferredincome is RMB 19,500,000.00, and the amount amortized into the profit and loss of the current period is RMB 500,000.00.2* According to the document E.C.C.F. [2020] No.51, Finance Bureau of Hubei Huanggang Economic Development Zone allocated RMB 11.4million to Huanggang Winner in November 2020 as the special subsidy for the production of COVID-19 epidemic prevention materials, which wasused to purchase the melt-blown fabric production line. Since the project was consolidated on June 30, 2020 and the amortization period is 2 years,the amortization will be carried out within 20 months of the remaining life of the asset starting from November 2020. As of December 31, 2020, thebalance of deferred income is RMB 10,260,000.00, and the amount amortized into the profit and loss of the current period is RMB 1,140,000.00.3* According to the document of Chongyang County Bureau of Science, Technology and Economic Information Technology “Review Report on theNewly Introduced Operating Gown Production Line by Winner Company”, the construction and industrial development fund of the ManagementCommittee of Hubei Chongyang Economic Development Zone allocated RMB 4 million to Chongyang Winner in May 2020 for introducing medicaloperating gown production line. Since the project was consolidated in July 2019 and the amortization period is 10 years, the amortization will becarried out within 111 months of the remaining life of the asset starting from May 2020. As of December 31, 2020, the balance of deferred income isRMB 3,711,711.71, and the amount amortized into the profit and loss of the current period is RMB 288,288.29.4* According to the notice of the National Development and Reform Commission and the Ministry of Industry and Information Technology (F.G.T.Z.[2020] No.1323) on the investment plan within the central budget of the special project to expand the production of medical mask and other medicalmaterials (expansion and renovation of enterprises producing goods and materials for COVID-19 prevention and control), in December 2020,Chongyang Winner received a subsidy of RMB 5.59 million for the production line of epidemic prevention materials. Since the production line ofepidemic prevention materials was consolidated in November 2020 and the amortization period is 10 years, the amortization will be carried out within119 months of the remaining life of the asset. As of December 31, 2020, the balance of deferred income is RMB 5,543,025.21, and the amountamortized into the profit and loss of the current period is RMB 46,974.79.5* According to the document of Wuhan Economic and Information Technology Commission (W.J.X.T.Z. [2018] No.33) “about printing and issuing
Winner Medical Co., Ltd. 2020 Annual Reportthe Notice on the Implementation Rules of the Policies and Measures for Technical Transformation of “Zero Land” of Industrial Enterprises”, Bureaufor Science, Technology and Economic Information Technology of Xinzhou District, Wuhan City subsidized Wuhan “Zero Land” technicalreformation policy and municipal industrial investment and technical transformation special fund projects. Wuhan Winner purchased 6 assets and allhave been consolidated and depreciated within their respective service lives. Since Wuhan Winner received the subsidy of RMB 8 million in July2020, it is amortized within the remaining service life of the corresponding assets respectively. As of December 31, 2020, the balance of deferredincome is RMB 7,708,855.65, and the amount amortized into the profit and loss of the current period is RMB 291,144.35.6 * According to the document of Wuhan Economic and Information Technology Bureau (W.J.X.Z.X. [2020] No.16) on the notice of the WuhanEconomic and Information Technology Bureau on the implementation of policies and measures to support the operation and development of smalland medium-sized enterprises in response to the COVID-19, Bureau for Science, Technology and Economic Information Technology of XinzhouDistrict, Wuhan City implemented subsidies for the capacity expansion and technological upgrading projects of manufacturers of epidemic preventionand control materials. Hubei Winner purchased 9 assets in current period and all were consolidated in 2020, and were amortized by the straight-linemethod of all 9 assets. Since Wuhan Winner received the subsidy of RMB 3.645 million on December 25, 2020, it is amortized within the service lifeof the corresponding assets respectively. As of December 31, 2020, the balance of deferred income is RMB 3,370,836.97, and the amount amortizedinto the profit and loss of the current period is RMB 274,163.03.
52. Other non-current liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
53. Capital stock
Unit: yuan
| Beginning balance | Increase/decrease (+, -) | Closing Balance | |||||
| New issue of shares | Share donation | Share capital increase from reserved funds | Other | Subtotal | |||
| Total amount of shares | 376,492,308.00 | 50,000,000.00 | 50,000,000.00 | 426,492,308.00 | |||
Other description:
54. Other equity instruments
(1) Basic information of the outstanding preferred shares, perpetual bonds and other financial instruments at the end of the period
(2) Table of changes in outstanding financial instruments, such as preferred shares, perpetual bonds at the end of the period
Unit: yuan
| Outstanding financial instruments | The beginning of the period | Increase in current period | Decrease in current period | The end of the period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
Winner Medical Co., Ltd. 2020 Annual ReportThe increase and decrease of other equity instruments in current period, the reasons for the change, and the basis of relevant accounting treatment:
Other description:
55. Capital reserve
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| Capital premium (capital stock premium) | 948,913,284.10 | 3,508,849,271.20 | 4,457,762,555.30 | |
| Other capital surplus | 23,947,427.94 | 23,947,427.94 | ||
| Total | 948,913,284.10 | 3,532,796,699.14 | 4,481,709,983.24 |
Other description, including current increase/decrease and change reasons:
56. Treasury stock
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
Other description, including current increase/decrease and change reasons:
57. Other comprehensive income
Unit: yuan
| Item | Beginning balance | Amount incurred in current period | Closing Balance | |||||
| Amount before current income tax | Less: amount included in other comprehensive income in previous period transferred into profit and loss in current period | Less: amount included in other comprehensive income in previous period transferred into retained income in current period | Less: Income tax expenses | Attributable to the parent company after tax | Attributable to minority shareholders after tax | |||
| II. Other comprehensive income that will be reclassified into profit and loss | 44,623.87 | -2,003,671.28 | -1,155,658.95 | -848,012.33 | -1,111,035.08 | |||
| Balance arising from the translation of foreign currency | 44,623.87 | -2,003,671.28 | -1,155,658.95 | -848,012.33 | -1,111,035.08 | |||
| financial statements | ||||||||
| Total other comprehensive income | 44,623.87 | -2,003,671.28 | -1,155,658.95 | -848,012.33 | -1,111,035.08 |
Other explanations, including the adjustment of the effective part of the cash flow hedging gains and losses transferred to the initial recognizedamount of the hedged item:
58. Special reserve
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
Other description, including current increase/decrease and change reasons:
59. Surplus reserves
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| Statutory surplus reserves | 116,855,107.20 | 303,357,670.93 | 420,212,778.13 | |
| Total | 116,855,107.20 | 303,357,670.93 | 420,212,778.13 |
Description of surplus reserves, including current increase/decrease and change reasons:
60. Undistributed profit
Unit: yuan
| Item | Current period | Prior period |
| Undistributed profit at the end of previous period before adjustment | 1,718,075,177.67 | 1,248,201,883.87 |
| Undistributed profits at the beginning of the period after adjustment | 1,718,075,177.67 | 1,248,201,883.87 |
| Plus: Net profits attributable to the owners of parent company in the current period | 3,810,412,504.40 | 546,293,677.91 |
| Less: withdrawal legal surplus | 303,357,670.93 | 33,420,384.11 |
| Common stock dividends payable | 98,500,000.00 | 43,000,000.00 |
| Undistributed profits at the end of the period | 5,126,630,011.14 | 1,718,075,177.67 |
Details of undistributed profits at the beginning of the adjustment period:
1). Due to retroactive adjustment of Accounting Standards for Business Enterprises and relevant new regulations, RMB 0.00 of the undistributedprofit at the beginning of the period was affected.
2). Due to the change of accounting policy, RMB 0.00 of the undistributed profit at the beginning of the period was affected.
3). Due to the correction of major accounting errors, RMB 0.00 of the undistributed profit at the beginning of the period was affected.
4). Due to the change of consolidation scope caused by the same control, RMB 0.00 of the undistributed profit at the beginning of the period wasaffected.
5). RMB 0.00 of the undistributed profit at the beginning of the period was affected by the total amount of other adjustments.
61. Revenue and cost
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 12,437,774,260.04 | 5,013,032,168.77 | 4,512,360,708.21 | 2,177,246,049.94 |
| Other businesses | 96,171,686.59 | 57,390,132.99 | 62,265,207.39 | 34,680,485.12 |
| Total | 12,533,945,946.63 | 5,070,422,301.76 | 4,574,625,915.60 | 2,211,926,535.06 |
Whether the net profit deducting non-recurring profit and loss after audit is negative
□Yes √No
Income related information:
Unit: yuan
| Contract classification | Segment 1 | Segment 2 | Segment 3 | Total |
| Type of goods | 8,780,321,007.57 | 3,517,061,738.05 | 236,563,201.01 | 12,533,945,946.63 |
| Including: | ||||
| Main business | 8,684,149,320.98 | 3,517,061,738.05 | 236,563,201.01 | 12,437,774,260.04 |
| Other businesses | 96,171,686.59 | 96,171,686.59 | ||
| Classified by operating area | 8,780,321,007.57 | 3,517,061,738.05 | 236,563,201.01 | 12,533,945,946.63 |
| Including: | ||||
| Domestic sales | 2,882,050,981.67 | 3,517,061,738.05 | 156,857,847.59 | 6,555,970,567.31 |
| Overseas sales | 5,898,270,025.90 | 79,705,353.42 | 5,977,975,379.32 | |
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: |
Information related to performance obligations:
NoneInformation related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations signed but not yet performed or completed at the end of this reporting period isRMB 530,188,257.63, of which RMB 530,188,257.63 is expected to be recognized as income in 2021.Other description
62. Taxes and surcharges
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Urban maintenance and construction tax | 59,435,664.56 | 17,184,400.33 |
| Education surcharge | 26,320,395.32 | 7,885,283.56 |
| Housing property tax | 5,926,418.32 | 5,123,233.31 |
| Land use tax | 2,027,167.21 | 2,703,533.26 |
| Vehicle and vessel use tax | 14,323.60 | 15,588.60 |
| Stamp duty | 5,893,961.68 | 1,775,105.28 |
| Surcharge for local education | 16,589,229.97 | 4,666,190.92 |
| Environmental protection tax | 221,322.94 | 198,073.39 |
| Other | 140,737.75 | |
| Total | 116,569,221.35 | 39,551,408.65 |
Other description:
63. Selling expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 397,499,114.63 | 332,127,465.49 |
| Freight | 196,498,073.03 | |
| Travel expenses | 8,983,106.15 | 10,484,575.41 |
| Office communication costs | 15,438,257.66 | 7,250,547.58 |
| Sales commission | 285,232,187.12 | 108,043,777.92 |
| Insurance premiums | 7,140,391.33 | 3,574,782.66 |
| Depreciation and amortization | 92,468,599.20 | 52,988,533.78 |
| Advertising and promotion expenses | 372,944,041.90 | 268,623,712.41 |
| Rent | 294,980,913.63 | 316,591,949.73 |
| Material consumption | 11,464,378.72 | 9,795,929.74 |
| Water/electricity fee | 9,181,005.97 | 9,896,052.66 |
| Service fees | 9,840,472.61 | 377,528.78 |
| Other | 69,991,443.57 | 39,514,519.85 |
| Total | 1,575,163,912.49 | 1,355,767,449.04 |
Other description:
*1 According to Accounting Standards for Business Enterprises No.14 -- Revenue (revised 2017), transportation expenses shall be recognized as anasset and amortized on the same basis as commodity income recognition related to the asset, and shall be included in current profit and loss, carriedforward to cost, and shall not be directly included in selling expenses when incurred.*2 The other fees are mainly maintenance fee, sample fee, credit card large gateway service fee, credit card quick payment service fee, transaction
Winner Medical Co., Ltd. 2020 Annual Reportservice fee, etc.
64. Management costs
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 213,994,465.12 | 126,944,455.30 |
| Depreciation and amortization charge | 40,246,232.86 | 27,616,426.20 |
| Travel expenses | 3,925,947.37 | 2,882,510.67 |
| Office allowance | 7,898,820.35 | 4,634,549.42 |
| Consultant and intermediary service fees | 31,718,741.96 | 3,103,830.80 |
| Water/electricity fee | 4,996,195.22 | 3,791,793.63 |
| Communication expense | 13,327,325.02 | 5,646,372.32 |
| Maintenance cost | 41,219,106.78 | 6,577,438.96 |
| Car expense | 1,505,058.53 | 1,430,528.30 |
| Sewage charge | 1,114,788.48 | 361,151.54 |
| Material consumption | 28,768,975.44 | 3,216,789.58 |
| Software license royalty | 5,000,000.00 | |
| IPO cost | 15,551,190.73 | |
| Other | 27,698,598.36 | 11,250,174.79 |
| Total | 436,965,446.22 | 197,456,021.51 |
Other description:
65. Research and development expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 94,315,577.68 | 61,400,856.75 |
| Depreciation and amortization | 23,962,990.53 | 10,481,065.51 |
| Material | 229,378,046.60 | 69,144,432.63 |
| Water, electricity and other expenses | 8,322,848.41 | 8,982,833.93 |
| Other miscellaneous expenses | 55,403,710.58 | 5,184,038.39 |
| Total | 411,383,173.80 | 155,193,227.21 |
66. Financial expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Interest expenses | 3,614,778.86 | 12,450,315.25 |
| Less: Interest revenue | 23,340,834.75 | 1,887,734.45 |
| Less: Financial discount interest | 2,810,700.00 | 2,645,558.00 |
| Exchange gain or loss | 239,426,448.65 | -3,618,392.48 |
| Other | 1,751,275.56 | 1,900,070.42 |
| Total | 218,640,968.32 | 6,198,700.74 |
67. Other income
Unit: yuan
| Other sources of income | Amount incurred in current period | Amount incurred in previous period |
| Government subsidies | 70,291,282.76 | 22,490,743.11 |
| Total | 70,291,282.76 | 22,490,743.11 |
68. Income from investment
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Long-term equity investment gains measured by employing the equity method | 4,565,754.26 | 1,685,447.16 |
| Forward foreign exchange contract / cotton futures contract profit and loss | -16,613,718.00 | |
| Investment income from purchasing financial products | 17,019,368.90 | 1,417,602.35 |
| Total | 21,585,123.16 | -13,510,668.49 |
Other description:
69. Net exposure hedging gain
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Other description:
70. Gains from fair value change
Unit: yuan
| Sources of gains from fair value change | Amount incurred in current period | Amount incurred in previous period |
| Cotton futures contract | 10,815,100.00 | |
| Forward foreign exchange contract | 802,688.73 | |
| Structured deposit | 10,375,900.71 | |
| Total | 11,178,589.44 | 10,815,100.00 |
Other description:
71. Credit impairment loss
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Loss on bad debts of other receivables | -13,426,561.35 | -26,123,289.50 |
| Loss on bad debts of accounts receivable | -22,515,131.48 | 282,082.14 |
| Total | -35,941,692.83 | -25,841,207.36 |
Other description:
72. Assets impairment losses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| II. Inventory falling price loss and impairment loss of contract performance costs | -141,565,283.29 | -21,023,610.54 |
| V. Impairment loss of fixed assets | -97,161,058.39 | -1,370,389.23 |
| VII. Impairment loss of construction in progress | -1,460,407.84 | |
| Total | -240,186,749.52 | -22,393,999.77 |
Other description:
73. Income from disposal of assets
Unit: yuan
| Source of income from disposal of assets | Amount incurred in current period | Amount incurred in previous period |
| Gains from disposal of non-current assets | 15,447.79 | 61,678,502.30 |
| Including: Gains on disposal of fixed assets | 15,447.79 | |
| Loss on disposal of non-current assets | -5,681.93 | |
| Including: Loss on disposal of fixed assets | -5,681.93 | |
| Total | 9,765.86 | 61,678,502.30 |
74. Non-operating income
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | Amounts recorded in the non-recurring gains and losses of the current period |
| Government subsidies | 1,490,813.60 | 2,010,454.39 | 1,490,813.60 |
| Non-current assets scrap gains | 632,816.66 | 175,974.35 | 632,816.66 |
| Income from compensation or fines | 553,853.86 | 482,447.00 | 553,853.86 |
| Other | 1,550,023.44 | 1,120,762.11 | 1,550,023.44 |
| Total | 4,227,507.56 | 3,789,637.85 | 4,227,507.56 |
Government subsidies recorded in current profit and loss
Unit: yuan
| Subsidized project | Granting subject | Granting reason | Type of nature | Whether the subsidy affects the profit and loss of current year | Special subsidy or not | Amount incurred in current period | Amount incurred in previous period | Asset/income related |
| 2019 electricity sales subsidy - Jingmen Winner | Subsidy | No | No | 280,445.61 | Income related | |||
| Ten million tax project reward - Tianmen Winner | Reward | No | No | 527,000.00 | Income related | |||
| High-tech Enterprise Recognition Award - Chongyang Winner | Reward | No | No | 100,000.00 | Income related | |||
| Fiscal Tax Contribution Award for Industrial Enterprises - Chongyang Winner | Reward | No | No | 100,000.00 | Income related | |||
| Subsidy for the | Subsidy | No | No | 200,000.00 | Income related |
| elimination and transformation of small coal-fired boilers | ||||||||
| Social security subsidies for poor working people | Subsidy | No | No | 131,293.80 | Income related | |||
| County finance 2018 science and technology award funds - Jiayu Winner | Reward | No | No | 100,000.00 | Income related | |||
| 2018 pilot reward funds of integration of IT application with industrialization - Jingmen Winner | Reward | No | No | 100,000.00 | Income related | |||
| 2019 invisible champion enterprise award funds - Jingmen Winner | Reward | No | No | 200,000.00 | Income related | |||
| Evaluation reward of enterprise integration of IT application with industrialization -Tianmen Winner | Reward | No | No | 111,400.00 | Income related | |||
| Ten million tax project reward - Tianmen Winner | Reward | No | No | 300,000.00 | Income related |
| Fiscal Tax Contribution Award for Industrial Enterprises (2019) - Chongyang Winner | Reward | No | No | 100,000.00 | Income related | |||
| Enterprise transformation and upgrading award - Chongyang Winner | Reward | No | No | 100,000.00 | Income related | |||
| Social insurance subsidy of Finance Bureau - Chongyang Winner | Subsidy | No | No | 267,213.60 | Income related | |||
| Condolence payment of Huanggang COVID-19 Epidemic Prevention and Control Headquarters - HuanggangWinner | Subsidy | No | No | 100,000.00 | Income related | |||
| Other | No | No | 212,200.00 | 571,714.98 | Income related | |||
| Total | 1,490,813.60 | 2,010,454.39 |
Other description:
75. Non-operating expenditure
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | Amounts recorded in the non-recurring gains and losses of the current period |
| Loss on damage and scrap of non-current assets | 26,557,319.27 | 6,779,687.86 | 26,557,319.27 |
| Including: Loss on scrap of fixed assets | 26,557,319.27 | 4,348,226.86 | 26,557,319.27 |
| Loss on scrap of other long-term assets | 2,431,461.00 | ||
| External donations | 2,303,609.26 | 198,447.39 | 2,303,609.26 |
| Other | 4,644,896.54 | 168,349.76 | 4,644,896.54 |
| Total | 33,505,825.07 | 7,146,485.01 | 33,505,825.07 |
Other description:
76. Income tax expenses
(1) Income tax expense table
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Current income tax expenses | 740,992,371.76 | 109,908,881.34 |
| Deferred income tax expenses | -61,400,866.60 | -18,098,750.38 |
| Adjustment of the previous annual income tax amount in the current period | 318,358.65 | -595,151.27 |
| Total | 679,909,863.81 | 91,214,979.69 |
(2) Accounting profit and income tax expense adjustment process
Unit: yuan
| Item | Amount incurred in current period |
| Total profit | 4,502,458,924.05 |
| Income tax expenses calculated at the appropriate/applicable tax rate | 675,368,838.61 |
| Impact of different tax rates applied on subsidiaries | 11,657,003.67 |
| Impact of income tax before adjustment | 318,358.65 |
| Impact of non-deductible costs, expenses and losses | 1,506,913.53 |
| Impact of temporary difference or deductible losses on unrecognized deferred income tax assets in the current period | 26,492,203.59 |
| Impact of weighted deduction of R&D costs | -35,433,454.24 |
| Income tax expenses | 679,909,863.81 |
Other description
77. Other comprehensive income
See Note 57 for details.
78. Cash flow statement items
(1) Other cash received related to operating activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Deposit, margin and quality guarantee deposit received | 3,081,911.81 | 42,563,788.10 |
| Interest income received | 23,340,834.75 | 1,887,734.45 |
| Government subsidies received | 123,396,713.03 | 37,154,618.15 |
| Other | 33,163,382.40 | 7,924,151.28 |
| Total | 182,982,841.99 | 89,530,291.98 |
Explanation on other cash received related to operating activities:
*1: Other major items are the payment received from the third party.
(2) Other cash paid related to operating activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Management costs paid in cash | 157,769,645.84 | 53,958,181.53 |
| Selling expenses paid in cash | 405,213,437.73 | 390,860,784.36 |
| Deposit, margin and quality guarantee deposit paid | 19,754,562.48 | 46,554,634.59 |
| Bank handling charge | 1,751,275.56 | 1,900,070.42 |
| Other | 4,322,867.95 | 7,461,478.64 |
| Total | 588,811,789.56 | 500,735,149.54 |
Description of other cash paid related to operating activities
(3) Other cash received related to investment activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Futures margin changes | 8,064,000.00 | |
| Total | 0.00 | 8,064,000.00 |
Description of other cash received related to investment activities:
(4) Other cash paid related to investment activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Losses on forward foreign exchange contract / cotton futures investment | 16,613,718.00 | |
| Total | 0.00 | 16,613,718.00 |
Description of other cash paid related to investment activities:
(5) Other cash received related to financing activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Security deposit recovered | 2,079,450.00 | |
| Total | 0.00 | 2,079,450.00 |
Description of other cash received related to financing activities:
(6) Other cash paid related to financing activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Listing fees paid | 33,727,072.53 | 3,154,098.91 |
| Total | 33,727,072.53 | 3,154,098.91 |
Description of other cash paid related to financing activities:
79. Further information on cash flow statement
(1) Further information on cash flow statement
Unit: yuan
| Further information | Current amount | Last term amount |
| 1. Reconciliation from net profits to cash flows from operating activities | -- | -- |
| Net profit | 3,822,549,060.24 | 547,199,216.33 |
| Plus: Provision for impairment of assets | 276,128,442.35 | 48,235,207.13 |
| Depreciation of fixed assets, oil and gas assets and productive biological assets | 147,635,980.81 | 92,737,921.38 |
| Depreciation of Right-of-use assets | ||
| Amortization of intangible assets | 10,988,997.61 | 10,688,521.77 |
| Amortization of long-term deferred expenses | 99,119,620.61 | 51,682,506.47 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains expressed with “-”) | -9,765.86 | -61,678,502.30 |
| Loss on retirement of fixed assets (gains expressed with “-”) | 25,924,502.61 | 6,603,713.51 |
| Loss from fair value change (gains expressed with “-”) | -11,178,589.44 | -10,815,100.00 |
| Financial expenses (gains expressed with “-”) | -1,312,647.36 | 10,501,657.51 |
| Investment losses (gains expressed with “-”) | -21,585,123.16 | 13,510,668.49 |
| Decreased in deferred income tax assets (increase expressed with “-”) | -73,566,474.84 | -18,098,750.38 |
| Increase in deferred income tax liabilities (decrease expressed with “-”) | 12,165,608.24 | |
| Decrease in inventories (increase expressed with “-”) | -365,641,049.64 | -170,370,604.89 |
| Decrease in operating receivables (increase expressed with “-”) | -499,624,352.97 | -54,234,905.95 |
| Increase in operating payables (decrease expressed with “-”) | 1,272,381,877.68 | 127,307,732.65 |
| Other | 73,520,200.51 | 6,503,284.16 |
| Net cash flow from operating activities | 4,767,496,287.39 | 599,772,565.88 |
| 2. Significant investment and financing activities not involving cash deposit and withdrawal: | -- | -- |
| Conversion of debt into capital | ||
| Convertible bonds due within 1 year | ||
| Fixed assets under financing lease | ||
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Ending balance of cash | 4,149,734,694.38 | 459,169,719.65 |
| Less: Beginning balance of cash | 459,169,719.65 | 375,515,458.70 |
| Plus: Ending balance of cash equivalents | ||
| Less: Ending balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 3,690,564,974.73 | 83,654,260.95 |
(2) Net cash paid for obtaining subsidiaries in current period
Unit: yuan
| Amount | |
| Including: | -- |
| Including: | -- |
| Including: | -- |
Other description:
(3) Net cash from disposal of subsidiaries in current period
Unit: yuan
| Amount | |
| Including: | -- |
| Including: | -- |
| Including: | -- |
Other description:
(4) Composition of cash and cash equivalents
Unit: yuan
| Item | Closing Balance | Beginning balance |
| I. Cash | 4,149,734,694.38 | 459,169,719.65 |
| Including: cash on hand | 49,287.18 | 74,459.31 |
| Bank deposit readily available for payment | 4,149,685,407.20 | 448,551,206.18 |
| Other Cash and cash equivalents readily available for payment | 10,544,054.16 | |
| III. Balance of cash and cash equivalents at end of period | 4,149,734,694.38 | 459,169,719.65 |
Other description:
80. Notes to items in statement of owner's equity
State the name of "other" items and the amount of adjustment to the ending balance of previous year:
N/A
81. Assets with ownership or use rights restricted
Unit: yuan
| Item | Ending book value | Causes for restriction |
| Cash and cash equivalents | 12,804,551.40 | Balance of the margin and performance deposit deposited for handling international and |
| domestic letters of credit, and the special deposit accounts opened for restricted non-budget units by issuing prepaid cards | ||
| Total | 12,804,551.40 | -- |
Other description:
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: yuan
| Item | Ending balance in foreign currency | Conversion exchange rate | Ending balance converted to RMB |
| Cash and cash equivalents | -- | -- | 452,640,046.70 |
| Including: USD | 54,913,474.49 | 6.5249 | 358,304,929.70 |
| EUR | 58,696.70 | 8.0250 | 471,041.02 |
| HKD | 111,314,781.16 | 0.8416 | 93,682,519.82 |
| Yen | 688,747.00 | 0.0632 | 43,528.81 |
| Ringgit | 85,344.31 | 1.6173 | 138,027.35 |
| Accounts receivable | -- | -- | 377,940,921.13 |
| Including: USD | 55,416,942.73 | 6.5249 | 361,590,009.62 |
| EUR | 842,518.36 | 8.0250 | 6,761,209.84 |
| HKD | 11,355,650.55 | 0.8416 | 9,556,915.50 |
| Yen | 518,768.51 | 0.0632 | 32,786.17 |
| Long-term loans | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other receivables | 1,052,110.85 | ||
| Including: HKD | 1,247,941.95 | 0.8416 | 1,050,267.95 |
| Ringgit | 1,139.49 | 1.6173 | 1,842.90 |
| Accounts payable | 9,417,608.35 | ||
| Including: USD | 56,874.51 | 6.5249 | 371,100.49 |
| EUR | 94,496.00 | 8.0250 | 758,330.40 |
| HKD | 6,481,474.23 | 0.8416 | 5,454,808.71 |
| Ringgit | 1,751,912.91 | 1.6173 | 2,833,368.75 |
| Other payables | 67,074,719.53 | ||
| HKD | 78,841,243.22 | 0.8416 | 66,352,790.29 |
| Ringgit | 446,379.30 | 1.6173 | 721,929.24 |
Other description:
(2) Description of overseas operating entities, including for important overseas operating entities, the main overseas business place, recordingcurrency and selection basis shall be disclosed, and the reasons for changes in recording currency shall also be disclosed.
√Applicable □ Not applicable
83. Hedge
Disclose the qualitative and quantitative information of hedging items, related hedging instruments and hedged risks according to the hedgingcategory:
84. Government subsidies
(1) Basic information of government subsidies
Unit: yuan
| Type | Amount | Presented item | Amount recorded in current profit and loss |
| 1. Government subsidies related to assets | |||
| Technology Center R & D project subsidy - the Company | 12,420,000.00 | Deferred income | 803,030.75 |
| Automatic transformation of surgical consumables production line - the Company | 1,860,000.00 | Deferred income | 186,000.00 |
| 20180311 Subsidies for research, science and innovation on the technology of thermo-responsive self-curing wound regeneration and repair materials - the Company | 1,200,000.00 | Deferred income | 165,587.63 |
| Technical innovation subsidy for the Purcotton Phase II Expansion Project - Jingmen Winner | 4,755,300.00 | Deferred income | 166,366.20 |
| Key technical reform and expansion project (cotton spunlunge wipes production line project) - Tianmen Winner | 1,000,000.00 | Deferred income | 108,108.00 |
| Production line project with an annual output of 120 million bales of cotton fabric - Tianmen Winner | 930,000.00 | Deferred income | 107,307.69 |
| Provincial traditional industry transformation and upgrading special funds for the first batch of block funds allocation plan in Tianmen City in 2019 - Tianmen Winner | 1,320,000.00 | Deferred income | 136,551.72 |
| Subsidy funds for municipal government project infrastructure construction - Chongyang Winner | 12,406,500.00 | Deferred income | 413,550.00 |
| Subsidies for first batch of technological transformation award of industrial enterprises in 2018 - Chongyang Winner | 1,000,000.00 | Deferred income | 106,157.11 |
| Park project construction in Yuyue Town - Jiayu Winner | 9,880,000.00 | Deferred income | 329,333.33 |
| Subsidy for Huanggang Chibi Avenue demolition company planning change - Huanggang Winner | 3,169,359.20 | Deferred income | 105,645.31 |
| Subsidy of 2014 Hubei provincial science and technology support plan project (the second batch) - Huanggang Winner | 1,500,000.00 | Deferred income | 150,000.00 |
| Second batch of traditional industry transformation subsidy in 2017 - Huanggang Winner | 1,900,000.00 | Deferred income | 209,174.28 |
| First batch of traditional subsidies in 2019 - Huanggang Winner | 1,210,000.00 | Deferred income | 121,000.00 |
| 2020 technical transformation project of Shenzhen COVID-19 epidemic prevention and control key material production enterprises - the Company | 20,000,000.00 | Deferred income | 500,000.00 |
| Municipal Economic and Information Bureau on the issuance of emergency material support system construction technical transformation special subsidy - | 1,440,000.00 | Deferred income | 250,434.78 |
| Huanggang Winner | |||
| Production subsidy for COVID-19 epidemic prevention materials in 2020 - Huanggang Winner | 11,400,000.00 | Deferred income | 1,140,000.00 |
| Surgical gown production line project subsidy - Chongyang Winner | 4,000,000.00 | Deferred income | 288,288.29 |
| Project on implementing the technical reformation policy of “Zero Land” in Wuhan and the municipal industrial investment and technical transformation special fund project of Bureau for Science, Technology and Economic Information Technology of Xinzhou District - Hubei Winne | 8,000,000.00 | Deferred income | 291,144.35 |
| Subsidy of COVID-19 epidemic prevention and control materials production enterprise for capacity expansion & technical upgrading project - Hubei Winner | 3,645,000.00 | Deferred income | 274,163.03 |
| Other | 17,307,040.00 | Deferred income | 899,240.86 |
| Total | 120,343,199.20 | 6,751,083.33 | |
| 2. Government subsidies related to income | |||
| Market access certification incentive - the Company | 971,200.00 | Other incomes | 971,200.00 |
| Export credit insurance subsidy - the Company | 1,034,730.00 | Other incomes | 1,034,730.00 |
| Industrial special funds - Industrial steady growth - the Company | 2,294,000.00 | Other incomes | 2,294,000.00 |
| Enterprise synergistic support fund - the Company | 2,859,000.00 | Other incomes | 2,859,000.00 |
| Corporate R & D fund - the Company | 1,058,000.00 | Other incomes | 1,058,000.00 |
| Export credit insurance subsidy - the Company | 2,827,783.00 | Other incomes | 2,827,783.00 |
| Subsidies for the production of epidemic prevention and control materials - the Company | 2,110,000.00 | Other incomes | 2,110,000.00 |
| Subsidies for the production of key materials - the Company | 1,200,000.00 | Other incomes | 1,200,000.00 |
| Special fund for industrial development - the Company | 780,000.00 | Other incomes | 780,000.00 |
| Tax withholding and collection commission management - the Company | 404,828.12 | Other incomes | 404,828.12 |
| Cotton freight subsidy from Xinjiang - Huanggang Cotton | 654,400.00 | Other incomes | 654,400.00 |
| Attracting employment subsidies - Chongyang Winner | 650,000.00 | Other incomes | 650,000.00 |
| Epidemic overtime wage subsidy - Chongyang Winner | 2,320,000.00 | Other incomes | 2,320,000.00 |
| Epidemic electricity subsidy - Chongyang Winner | 1,205,627.98 | Other incomes | 1,205,627.98 |
| Staff skills improvement training subsidy - Chongyang Winner | 689,400.00 | Other incomes | 689,400.00 |
| Protective clothing cost increase subsidy - Chongyang Winner | 10,850,000.00 | Other incomes | 10,850,000.00 |
| Absorption of employment subsidies - Jiayu Winner | 988,000.00 | Other incomes | 988,000.00 |
| Cotton freight subsidy from Xinjiang - Huanggang Winner | 506,700.00 | Other incomes | 506,700.00 |
| Steady post subsidy - Huanggang Winner | 1,342,105.00 | Other incomes | 1,342,105.00 |
| Enterprise electricity subsidy - Huanggang Winner | 814,454.08 | Other incomes | 814,454.08 |
| Subsidy for replacing training with work - Huanggang Winner | 3,296,000.00 | Other incomes | 3,296,000.00 |
| Steady post subsidy - Huanggang Winner | 1,060,000.00 | Other incomes | 1,060,000.00 |
| Electricity subsidy - Hubei Winner | 1,033,353.82 | Other incomes | 1,033,353.82 |
| “Employment Guarantee” Salary subsidy - Hong Kong Winner | 801,101.93 | Other incomes | 801,101.93 |
| One-time absorption of employment subsidy - Jingmen Winner | 1,026,000.00 | Other incomes | 1,026,000.00 |
| Subsidy for industrial steady growth - Shenzhen Purcotton | 5,188,900.00 | Other incomes | 5,188,900.00 |
| Enterprise R & D funding program - Shenzhen Purcotton | 1,041,000.00 | Other incomes | 1,041,000.00 |
| 2020 municipal private and small and medium-sized enterprises innovation development and cultivation support plan - Shenzhen Purcotton | 800,000.00 | Other incomes | 800,000.00 |
| Municipal subsidy for Industrial growth stabilization measures - Shenzhen Purcotton | 3,640,000.00 | Other incomes | 3,640,000.00 |
| Subsidy for enterprises with intellectual property advantages - Shenzhen Purcotton | 500,000.00 | Other incomes | 500,000.00 |
| Electricity subsidy - Yichang Winner | 497,172.93 | Other incomes | 497,172.93 |
| Power subsidy for high-tech enterprises - Tianmen Winner | 494,600.00 | Other incomes | 494,600.00 |
| Cotton freight subsidy from Xinjiang in 2018 - Tianmen Winner | 464,400.00 | Other incomes | 464,400.00 |
| Stable post employment subsidy - Tianmen Winner | 462,000.00 | Other incomes | 462,000.00 |
| Financial discount interest | 5,456,258.00 | Financial expenses | 2,810,700.00 |
| Other | 9,166,256.17 | Other income / Non-operating income | 9,166,256.17 |
| Total | 67,841,713.03 | 67,841,713.03 |
(2) Return of government subsidies
□ Applicable √ Not applicable
85. Other
NAVIII. Consolidation scope changes
1. Business combination not under common control
(1) Business combination not under common control occurred in current period
Unit: yuan
| Name of the acquiree | Time of equity acquisition | Cost of equity acquisition | Equity acquisition ratio | Method of equity acquisition | Acquisition date | Basis for determination of acquisition date | Income of the acquiree from the acquisition date to the end of the period | Net profit of the acquiree from the acquisition date to the end of the period |
Other description:
Not applicable.
(2) Combination cost and goodwill
Unit: yuan
| Combination cost |
Determination method of fair value of combination cost, contingent consideration and explanation of its changes:
Not applicable.Main reasons for the formation of large amount of goodwill:
Not applicable.Other description:
Not applicable.
(3) Identifiable assets and liabilities of the acquiree on the acquisition date
Unit: yuan
| Fair value on the acquisition date | Book value on the acquisition date | |
Determination method of fair value of identifiable assets and liabilities:
Not applicable.Contingent liabilities of the acquiree incurred in business combinationNot applicable.Other description:
Not applicable.
(4) Gains or losses arising from remeasurement of equity held prior to the acquisition date at fair valueWhether there are transactions that realize the business combination step by step through multiple transactions and obtain control right during thereporting period
□Yes √No
(5) Relevant description of the combination consideration or the fair value of the identifiable assets and liabilities of the acquiree that cannotbe reasonably determined on the acquisition date or at the end of current period of the combinationNot applicable.
(6) Other description
Not applicable.
2. Business combination under common control
(1) Business combination under common control occurred in current period
Unit: yuan
| Name of merged party | Proportion of equity obtained in business combination | Basis of business combination under common control | Merger date | Basis for determination of merger date | Income of the combined party from the beginning of current period to the date of combination | Net profit of the combined party from the beginning of current period to the date of combination | Income of the combined party during the comparison period | Net profit of the combined party during the comparison period |
Other description:
Not applicable.
(2) Combination cost
Unit: yuan
| Combination cost |
Contingent consideration and explanation of its changes:
Not applicable.Other description:
Not applicable.
(3) Book value of assets and liabilities of the combined party on the date of combination
Unit: yuan
| Merger date | End of previous period | |
Contingent liabilities of the combined party incurred in business combinationNot applicable.Other description:
Not applicable.
3. Reverse purchase
Basic information of transaction, basis of transaction forming reverse purchase, whether the assets and liabilities retained by the listed companyconstitute business and their basis, determination of combination cost, amount and calculation of adjusted equity in accordance with equitytransaction:
Not applicable.
4. Disposal of subsidiary
Whether there is a single disposal of investment in subsidiaries, i.e. loss of control right
□Yes √No
Whether there is a situation that the investment in subsidiaries is disposed step by step through multiple transactions and the control right is lost incurrent period
□Yes √No
5. Change of merger scope for other reasons
Explain the changes in the scope of combination caused by other reasons (such as the establishment of new subsidiaries, liquidation of subsidiaries,etc.) and relevant information:
1. Huanggang Purcotton, the wholly-owned company of the Company, was established on September 27, 2020.
6. Other
NAIX. Interests in other entities
1. Interests in a subsidiary
(1) Composition of enterprise group
| Subsidiary name | Main operation site | Registration place | Business nature | Shareholding ratio | Way of obtaining | |
| Direct | Indirect | |||||
| Shenzhen Purcotton | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sale of Purcotton products | 100.00% | Establishment | |
| Beijing Purcotton | Beijing | Beijing | Sale of Purcotton products | 100.00% | Establishment | |
| Guangzhou Purcotton | Guangzhou City, Guangdong Province | Guangzhou City, Guangdong Province | Sale of Purcotton products | 100.00% | Establishment | |
| Shanghai Purcotton | Shanghai | Shanghai | Sale of Purcotton products | 100.00% | Establishment | |
| Qianhai Purcotton | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sale of Purcotton products | 100.00% | Establishment | |
| Winner Medical (Huanggang) | Huanggang City, Hubei Province | Huanggang City, Hubei Province | Production and sales of cotton spun laced non-woven fabric, medical consumables and Purcotton products | 100.00% | Business combination under common control | |
| Winner Medical (Jingmen) | Jingmen City, Hubei Province | Jingmen City, Hubei Province | Production and sales of medical consumables and Purcotton products | 100.00% | Business combination under common control | |
| Winner Medical (Chongyang) | Chongyang County, Hubei Province | Chongyang County, Hubei Province | Production and sales of medical consumables | 100.00% | Business combination under common control | |
| Winner Medical (Jiayu) | Jiayu County, Hubei Province | Jiayu County, Hubei Province | Production and sales of medical consumables and Purcotton products | 100.00% | Business combination under common control | |
| Winner Medical (Yichang) | Zhijiang City, Hubei Province | Zhijiang City, Hubei Province | Production and sales of medical gray cloth | 100.00% | Business combination under common control | |
| Winner Medical (Tianmen) | Tianmen City, Hubei Province | Tianmen City, Hubei Province | Production and sales of cotton spun laced non-woven fabric and Purcotton products | 100.00% | Business combination under common control | |
| Winner Medical (Hong Kong) | Hong Kong | Hong Kong | Sales of medical consumables and consumer goods | 60.00% | Business combination under common control | |
| Winner (Huanggang) Cotton | Huanggang City, Hubei Province | Huanggang City, Hubei Province | Cotton trade | 100.00% | Business combination under common control | |
| Winner Medical Malaysia | Malaysia | Malaysia | There is no actual business operation | 100.00% | Business combination not under common control | |
| Winner Medical | Heyuan City, | Heyuan City, | There is no actual | 100.00% | Establishment |
| (Heyuan) | Guangdong Province | Guangdong Province | business operation at present | |||
| Winner Medical (Wuhan) | Wuhan City, Hubei Province | Wuhan City, Hubei Province | Production and sterilization of cotton spun laced non-woven fabric and Purcotton products | 100.00% | Establishment | |
| PureH2B | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sales of personal care and other products | 100.00% | Establishment | |
| Mifu Shanghai | Shanghai | Shanghai | Import and domestic sales of cosmetics | 100.00% | Establishment | |
| Purunderwear | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sales of Cotton Lining products | 100.00% | Establishment | |
| Huanggang Purcotton | Huanggang City, Hubei Province | Huanggang City, Hubei Province | Sale of Purcotton products | 100.00% | Establishment |
Difference between the shareholding ratio and the voting right ratio in the subsidiary:
Not applicable.Basis for holding half or less of the voting rights but still controlling the invested entity, and holding more than half of the voting rights but notcontrolling the invested entity:
Not applicable.For the important structured entity included in the combination scope, the control basis is as follows:
Not applicable.Basis for determining whether the company is an agent or a principal:
Not applicable.Other description:
Not applicable.
(2) Important non-wholly owned subsidiary
Unit: yuan
| Subsidiary name | Minority shareholding ratio | Current profits and losses attributable to minority shareholders | Current dividends declared to minority shareholders | Ending balance of minority equity |
Difference between the shareholding ratio and the voting right ratio of the minority shareholders of the subsidiary:
Not applicable.Other description:
Not applicable.
(3) Main financial information of important non-wholly owned subsidiaries
Unit: yuan
| Subsidiary name | Closing Balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Unit: yuan
| Subsidiary name | Amount incurred in current period | Amount incurred in previous period | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flow from financing activities | Revenue | Net profit | Total comprehensive income | Cash flow from financing activities | |
Other description:
Not applicable.
(4) Major restrictions on the use of enterprise group assets and the settlement of enterprise group debtsNot applicable.
(5) Financial or other support provided to structured entity included in the consolidated financial statementsNot applicable.Other description:
Not applicable.
2. Control of the transaction of the subsidiary even if the owner's equity share in the subsidiary changes
(1) Description of changes in the owner's equity share in the subsidiary
Not applicable.
(2) Impact of transactions on minority shareholders' equity and owners' equities attributable to the owners of parent company
Unit: yuan
Other descriptionNot applicable.
3. Equity in joint venture arrangement or joint venture
(1) Important cooperative enterprises or joint ventures
| Name of cooperative enterprise or joint venture | Main operation site | Registration place | Business nature | Shareholding ratio | Accounting treatment method of investment in cooperative enterprises or joint ventures | |
| Direct | Indirect | |||||
Difference between the shareholding ratio and the voting right ratio in the cooperative enterprise or joint venture:
Not applicable.Basis for holding less than 20% of the voting rights but having a significant impact, or holding 20% or more of the voting rights but not having asignificant impact:
Not applicable.
(2) Major financial information of important cooperative enterprises
Unit: yuan
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
Other descriptionNot applicable.
(3) Major financial information of important joint ventures
Unit: yuan
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
Other descriptionNot applicable.
(4) Summary of financial information of unimportant cooperative enterprises and joint ventures
Unit: yuan
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
| Cooperative enterprise: | -- | -- |
| Total number of following items by shareholding | -- | -- |
| ratio | ||
| - Joint venture: | -- | -- |
| Total book value of investment | 13,424,230.41 | 8,858,476.15 |
| Total number of following items by shareholding ratio | -- | -- |
| - Net profit | 4,565,754.26 | 1,685,447.16 |
| - Total comprehensive income | 4,565,754.26 | 1,685,447.16 |
Other descriptionNot applicable.
(5) Significant restrictions on the ability of cooperative enterprises and joint ventures to transfer funds to the CompanyNot applicable.
(6) Excess losses of cooperative enterprise or joint venture
Unit: yuan
| Name of cooperative enterprise or joint venture | Accumulated unrecognized losses in the previous period | Unrecognized loss in current period (or net profit shared in current period) | Accumulated unrecognized losses at the end of current period |
Other descriptionNot applicable.
(7) Unconfirmed commitments related to investment in cooperative enterprise
Not applicable.
(8) Contingent liabilities related to investment in cooperative enterprise or joint venture
Not applicable.
4. Important pooling of interests
| Name of joint operation | Main operation site | Registration place | Business nature | Shareholding ratio / share enjoyed | |
| Direct | Indirect | ||||
Difference between the shareholding ratio or share enjoyed and the voting right ratio in joint operation:
Not applicable.If the joint operation is a separate entity, it shall be classified as the basis of joint operation:
Not applicable.Other descriptionNot applicable.
5. Equity in the structured entity that is not included in the consolidated financial statementsDescription of structured entity not included in the consolidated financial statementsNot applicable.
6. Other
NAX. Risks associated with financial instruments
The Company faces various financial risks in the process of operation: credit risk, market risk and liquidity risk. The board of directors ofthe Company is fully responsible for the determination of risk management objectives and policies and ultimately responsible for the riskmanagement objectives and policies, provided that the board of directors has authorized the Company’s internal audit department to designand implement procedures to ensure the effective implementation of risk management objectives and policies. The board reviews theeffectiveness of the procedures implemented and the reasonableness of risk management objectives and policies through monthly reportssubmitted by the internal audit supervisor.The overall objective of the Company’s risk management is to develop risk management policies to minimize risk without overly affectingthe Company' s competitiveness and strain capacity.
(一) Credit risk
Credit risk refers to the risk of financial loss to the Company due to the failure of the counterparty to fulfill its contractual obligations.The Company is mainly faced with the customer credit risk caused by credit sales. Prior to signing a new contract, the Company willassess the credit risk of a new customer, including external credit ratings and, in some cases, bank reference letter (when such informationis available). The Company sets a credit sales limit for each customer, which is the maximum amount that does not require additionalapproval.The Company ensures that the overall credit risk of the Company is under control by quarterly monitoring of the credit rating of existingcustomers and monthly review of the aging analysis of accounts receivable. When monitoring the credit risk of customers, they aregrouped according to their credit characteristics. Customers rated as “high risk” are placed on the Restricted Customer List and can only besold on credit for a future period with additional approval, or they must be required to pay in advance.
(二) Liquidity risk
Liquidity risk refers to the risk of capital shortage when the Company performs the obligation of settlement by cash payment or otherfinancial assets. The Company’s policy is to ensure that there is sufficient cash to pay the debt due. Liquidity risk is centrally controlled bythe Financial Department of the Company. By monitoring cash balances, securities that can be turned into cash at any time, and rollingforecasting of cash flows over the next 12 months, the Finance Department ensures that the Company hassufficient funds to repay its debts under all reasonable projections.The Company’s various financial liabilities are shown as follows in terms of undiscounted contract cash flows on maturity dates:
| Item | Closing Balance |
| Immediate repayment | Within 1 year | 1-2 years | 2-5 years | More than 5 years | Total | |
| Short-term debt | 150,071,416.66 | 150,071,416.66 | ||||
| Notes payable | 29,418,100.00 | 29,418,100.00 | ||||
| Accounts payable | 726,577,306.94 | 726,577,306.94 | ||||
| Other payables | 352,543,008.89 | 352,543,008.89 | ||||
| Total | 1,258,609,832.49 | 1,258,609,832.49 |
| Item | Closing balance of the previous year | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2-5 years | More than 5 years | Total | |
| Short-term debt | 120,000,000.00 | 120,000,000.00 | ||||
| Notes payable | 173,023,352.30 | 173,023,352.30 | ||||
| Accounts payable | 562,774,410.51 | 562,774,410.51 | ||||
| Other payables | 142,607,932.48 | 142,607,932.48 | ||||
| Long-term loans | 134,210,746.07 | 134,210,746.07 | ||||
| Non-current liabilities due within one year | 8,977,342.14 | 8,977,342.14 | ||||
| Total | 1,007,383,037.43 | 134,210,746.07 | 1,141,593,783.50 | |||
(三) Market risk
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial instruments fluctuates due to thechange of market price, including exchange rate risk, interest rate risk and other price risk.
1、 Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due to the change ofmarket interest rate.The interest rate risk that the Company faces mainly comes from the bank's long-term borrowing. The Company has no long-termborrowings for the current period.
2、 Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due to the change offoreign exchange rate.The Company matches foreign currency income with foreign currency expenditure as far as possible to reduce exchange rate risk.In addition, the Company may enter into forward foreign exchange contracts or currency exchange contracts to achieve thepurpose of avoiding the exchange rate risk. The exchange rate risk faced by the Company mainly come from financial assets and
Winner Medical Co., Ltd. 2020 Annual Reportfinancial liabilities denominated in USD / EUR / HKD / Yen / Ringgit, etc. The amounts of foreign currency financial assets andforeign currency financial liabilities converted into RMB are listed as follows:
| Item | 12/31/2020 | |||||
| US dollar | EUR | HKD | Yen | Ringgit | Total | |
| Foreign currency financial assets | ||||||
| Cash and cash equivalents | 358,304,929.70 | 471,041.02 | 93,682,519.82 | 43,528.81 | 138,027.35 | 452,640,046.70 |
| Accounts receivable | 361,590,009.62 | 6,761,209.84 | 9,556,915.50 | 32,786.17 | 377,940,921.13 | |
| Other receivables | 1,050,267.95 | 1,842.90 | 1,052,110.85 | |||
| Subtotal | 719,894,939.32 | 7,232,250.86 | 104,289,703.27 | 76,314.98 | 139,870.25 | 831,633,078.68 |
| Foreign currency financial liabilities | ||||||
| Accounts payable | 371,100.49 | 758,330.40 | 5,454,808.71 | 2,833,368.75 | 9,417,608.35 | |
| Other payables | 66,352,790.29 | 721,929.24 | 67,074,719.53 | |||
| Subtotal | 371,100.49 | 758,330.40 | 71,807,599.00 | 3,555,297.99 | 76,492,327.88 | |
| Net amount | 719,523,838.83 | 6,473,920.46 | 32,482,104.27 | 76,314.98 | -3,415,427.74 | 755,140,750.80 |
If the RMB appreciates or depreciates by 5% against USD / EUR / HKD / Yen / Ringgit, all other variables being held constant,the total comprehensive income of the Company will be reduced or increased by RMB 32,055,401.46. Management considers that5% is a reasonable reflection of the reasonable range of possible changes in RMB against foreign currencies.
3、 Other price risks
The Company does not hold equity investments in other listed companies.XI. Fair value disclosure
1. Ending fair value of assets and liabilities measured with fair value
Unit: yuan
| Item | Closing fair value | |||
| Measurement of fair value at first level | Measurement of fair value at second level | Measurement of fair value at third level | Total | |
| I. Continuous fair value measurement | -- | -- | -- | -- |
| (I) tradable financial assets | 3,931,178,589.44 | 200,000,000.00 | 4,131,178,589.44 | |
| 1. Financial assets measured with fair value and with the changes included in current profit and loss | 3,931,178,589.44 | 200,000,000.00 | 4,131,178,589.44 | |
| (1) Debt instrument investment | 3,931,178,589.44 | 200,000,000.00 | 4,131,178,589.44 | |
| (3) Derivative financial assets | ||||
| (VI) Others | ||||
| 1. Receivables financing | 18,182,662.70 | 18,182,662.70 | ||
| Total assets continuously measured at fair value | 3,949,361,252.14 | 200,000,000.00 | 4,149,361,252.14 | |
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Continuous and non-continuous measurement items of fair value at first level and recognition basis for market priceNot applicable.
3. Continuous and non-continuous measurement items of fair value at second level, qualitative and quantitative information on valuationtechniques adopted and important parametersNot applicable.
4. Continuous and non-continuous measurement items of fair value at third level, qualitative and quantitative information on valuationtechniques adopted and important parametersNot applicable.
5. Continuous measurement items of fair value at third level, adjustment information between opening and closing book value and sensitivityanalysis of unobservable parametersNot applicable.
6. For continuous measurement items of fair value, if there is a conversion between different levels in current period, the reasons for theconversion and the policies for determining the conversion time pointNot applicable.
7. Valuation technology change and reason of change in current period
Not applicable.
8. Fair value of financial assets and financial liabilities not measured at fair value
Not applicable.
9. Other
Not applicable.XII. Related parties and related transactions
1. Parent company of the Company
| Parent company name | Registration place | Business nature | Registered capital | Shareholding ratio of the parent company in the Company | Voting right ratio of the parent company in the Company |
| Winner Group Limited | Cayman Islands | Equity investment and management business | HKD 1,143,000.00 | 68.10% | 68.10% |
Parent company of the CompanyWinner Group Limited was incorporated in the Cayman Islands on April 8, 2003 with registration number 124887 and an authorized share capital of360,000,000.00 shares with a nominal value of HKD 1 per share. 1,143,000 shares have been issued. The registered address is Vistra (Cayman)Limited, P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman KY1-1205, Cayman Islands.The ultimate controlling party of the Company is Li Jianquan.Other description:
NA
2. Subsidiaries of the Company
See Note “IX. Interests in other entities”.
3. Cooperative enterprises and joint ventures
See the note “IX. Interests in other entities” for important cooperative enterprises or joint ventures of the Company.Other cooperative enterprises or joint ventures that made related party transactions with the Company in the current period, or formed the balance ofrelated party transactions with the Company in the previous periods are as follows:
| Name of cooperative enterprise or joint venture | Relationship with the Company |
| Chengdu Winner | Joint venture |
Other descriptionSummary of financial information of unimportant cooperative enterprises and joint ventures:
| Ending balance / amount in current period | Balance at the end of previous year / amount in previous period | |
| - Joint venture: |
| Chengdu Winner |
| Total book value of investment | 13,424,230.41 | 8,858,476.15 |
| Total number of following items by shareholding ratio | ||
| - Net profit | 4,565,754.26 | 1,685,447.16 |
| - Other comprehensive income |
| - - Total comprehensive income | 4,565,754.26 | 1,685,447.16 |
4. Situation of other related parties
| Name of other related parties | Relationship of other related parties with the Company |
| Sequoia Xinyuan | Shareholder of the Company, holding 8.09% of the Company’s shares |
| Kangsheng Investment | Shareholder of the Company, holding 5.01% of the Company’s shares |
| Kangxin Investment | Shareholder of the Company, holding 2.66% of the Company’s shares |
| SCGC | Shareholder of the Company, holding 1.99% of the Company’s shares |
| Kanglong Investment | Shareholder of the Company, holding 1.60% of the Company’s shares |
| Kangli Investment | Shareholder of the Company, holding 0.82% of the Company’s shares |
| Wuhan Zhuoling Packaging Co., Ltd. ((hereinafter referred to as “Wuhan Zhuoling”) | A company controlled by close family members of the Company’s key managers |
| Glory Ray Holdings Limited | A company controlled by the actual controller |
| Shenzhen Breo Technology Co., Ltd. (hereinafter referred to as “Breo”) | A company with the Company’s independent director Liang Wenzhao as an independent director |
| Shenzhen Ellassay Fashion Co., Ltd. (hereinafter referred to as “Ellassay”) | A company with the Company’s independent director Zhou Xiaoxiong as an independent director |
| Li Jianquan | Actual controller of the company |
| Xie Ping | Shareholder, indirectly holding 13.94% of the company’s shares |
| Li Xiaoyuan | Shareholder, indirectly holding 6.32% of the company’s shares |
| Fang Xiuyuan | Director, deputy general manager, chief financial officer |
| Xu Xiaodan | Director |
| Guo Zhenwei | Director |
| Liang Wenzhao | Independent director |
| Zhou Xiaoxiong | Independent director |
| Bi Qun | Independent director |
| Liu Weiwei | Chairman of the board of supervisors |
| Ye Yangjing | Supervisor |
| Wang Ying | Supervisor |
| Yin Wenling | Deputy general manager |
| Chen Huixuan | Deputy general manager, secretary to the board of directors |
| Song Haibo | Key technical personnel |
| Wang Huan | Key technical personnel |
Other description
5. Related transaction
(1) Related transaction of purchases and sales of goods, provision and acceptance of servicesPurchase of goods/acceptance of services
Unit: yuan
| Related party | Related transaction content | Amount incurred in current period | Approved transaction quota | Whether the transaction quota is exceeded | Amount incurred in previous period |
| Wuhan Zhuoling Packaging Co., Ltd. | Purchasing goods or services | 8,983,368.26 | 3,500,000.00 | Yes | 3,330,730.26 |
| Chengdu Winner | Purchasing goods or services | 356,964.47 | 250,000.00 | Yes | 227,018.82 |
| Breo | Purchasing goods or services | 107,172.57 | 150,000.00 | No | 146,205.32 |
| Total | 9,447,505.30 | 3,900,000.00 | 3,703,954.40 |
Selling commodities/offering labor
Unit: yuan
| Related party | Related transaction content | Amount incurred in current period | Amount incurred in previous period |
| Chengdu Winner | Selling goods or services | 6,870,744.20 | 1,525,839.15 |
| Ellassay | Selling goods or services | 1,407,141.59 | 1,449,528.18 |
| SCGC | Selling goods or services | 230,380.54 | 0.00 |
| Total | 8,508,266.33 | 2,975,367.33 |
Related transaction of purchases and sales of goods, provision and acceptance of servicesDuring the reporting period, the transaction volume between the Company and Wuhan Zhuoling Packaging Co., Ltd. and Chengdu Winner exceedingthe approved transaction amount was mainly due to the Company’s increased demand for packaging materials and other medical device products dueto the impact of the epidemic. During the reporting period, the total amount of the Company’s purchases to related parties was RMB 9,447,505.30,accounting for 0.20% of the total amount of purchases in this reporting period; the total sales to related parties was RMB 8,508,266.33, accounting for
0.07% of the total Revenue in this reporting period; all sales and purchases made by the Company and its affiliates are based on daily sales andpurchase requirements and the transaction prices are market prices.
(2) Associated fiduciary management/contracting and entrusted management/subcontractingEntrusted management / contracting of the Company:
Unit: yuan
| Name of entrusting party / subcontractor | Name of entrusting party / contractor | Entrusted / contracting asset type | Fiduciary / contracting start date | Fiduciary / contracting termination date | Pricing basis of fiduciary income / contracting income | Fiduciary income / contracting income recognized in current period |
Associated fiduciary / contractingNot applicable.Entrustment management / subcontracting of the Company:
Unit: yuan
| Name of entrusting party / subcontractor | Name of entrusting party / contractor | Entrusted / subcontracting asset type | Entrusted / subcontracting start date | Entrusted / subcontracting termination date | Pricing basis of fiduciary fee / subcontracting fee | Fiduciary fee / subcontracting fee recognized in current period |
Associated management / subcontractingNot applicable.
(3) Related-party lease
The Company as the lessor:
Unit: yuan
| Name of lessee | Type of leased assets | Lease income recognized in the current period | Lease income recognized in the previous period |
The Company as the lessee:
Unit: yuan
| Name of lessor | Type of leased assets | Lease fee recognized in the current period | Lease fee recognized in the previous period |
Related-party lease descriptionNot applicable.
(4) Related-party guarantee
The Company as the guarantor
Unit: yuan
| Secured party | Amount guaranteed | Guarantee start date | Guarantee maturity date | Whether the guarantee has been fulfilled |
| Winner Medical (Wuhan) | 300,000,000.00 | December 29, 2018 | February 28, 2020 | Yes |
| Shenzhen Purcotton | 150,000,000.00 | October 10, 2019 | October 31, 2020 | Yes |
| Shenzhen Purcotton | 200,000,000.00 | August 30, 2019 | August 30, 2020 | Yes |
The Company as the secured party
Unit: yuan
| Guarantor | Amount guaranteed | Guarantee start date | Guarantee maturity date | Whether the guarantee has been fulfilled |
| Li Jianquan, Shenzhen Purcotton | 5,000,000.00 | September 10, 2018 | September 10, 2020 | Yes |
| Qianhai Purcotton, Shenzhen Purcotton, Li Jianquan | 240,000,000.00 | October 10, 2019 | October 31, 2020 | Yes |
| Qianhai Purcotton, Shenzhen Purcotton, Li Jianquan | 50,000,000.00 | February 5, 2020 | February 5, 2021 | No |
| Li Jianquan | 20,000,000.00 | February 17, 2020 | February 17, 2021 | No |
| Shenzhen Purcotton | 200,000,000.00 | February 14, 2020 | February 14, 2021 | No |
Related-party guarantee* All the above guarantees include related party guarantees that have signed the guarantee agreements but have not actually borrowed loans.* Wuhan Winner has repaid the loan on February 28, 2020, with no further loan. The guarantee provided for Wuhan Winner by the Company has beenlifted accordingly.
(5) Related party loan at call
Unit: yuan
| Related party | Borrowing amount | Start date | Maturity date | Description |
| Borrowing | ||||
| Lending | ||||
(6) Asset transfer and debt restructuring of related party
Unit: yuan
| Related party | Related transaction content | Amount incurred in current period | Amount incurred in previous period |
(7) Key management personnel remuneration
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Key management personnel remuneration | 11,404,125.60 | 8,431,976.06 |
Note: The key management personnel include directors, supervisors, senior managers and core personnel.
(8) Other related transactions
NA
6. Accounts receivable and payable by related parties
(1) Receivables
Unit: yuan
| Project name | Related party | Closing Balance | Beginning balance | ||
| Book balance | Provision for bad debt | Book balance | Provision for bad debt | ||
| Accounts receivable | Chengdu Winner | 39,800.00 | 1,990.00 | 461,367.48 | 23,068.37 |
| Accounts receivable | Ellassay | 746,070.00 | 37,303.50 | 837,650.00 | 41,882.50 |
| Advances to suppliers | Breo | 59,198.00 | |||
(2) Payables
Unit: yuan
| Project name | Related party | Ending book balance | Beginning book balance |
| Accounts payable | Chengdu Winner | 67,630.00 | 7,870.11 |
| Accounts payable | Wuhan Zhuoling | 4,705,258.45 | 2,071,358.81 |
| Accounts payable | Breo | 51,511.50 | |
| Contract liabilities | Chengdu Winner | 1,193,017.20 | |
| Contract liabilities | SCGC | 29,486.73 | |
| Advance from customers | Chengdu Winner | 17,800.00 |
7. Related party commitment
NA
8. Other
NAXIII. Share-based payment
1. Overall status of share-based payment
√Applicable □ Not applicable
Unit: yuan
| Total amount of equity instruments granted by the company during the current period | 508,824,220.00 |
| Total amount of equity instruments exercised by the company during the current period | 0.00 |
| Total amount of equity instruments invalidated by the company during the current period | 0.00 |
| Range of the exercise price of the Company’s stock options outstanding at the end of the period and the remaining term of the contract | In case of the audited Revenue in 2021 ≥ RMB 12 billion, the ownership proportion at the Company level is 100%; in case of RMB 10 billion ≤ the audited Revenue in 2021 < RMB 12 billion, the ownership proportion at the Company level is 80%; in case of the audited business income in 2021 < RMB 10 billion, the restricted stock planned to be vested by the incentive object shall not be vested and become invalid. In case of the audited Revenue in 2022 ≥ the audited Revenue in 2021 * (1+30%), the ownership proportion at the Company level is 100%; in case of the audited Revenue in 2021 * (1+20%) ≤ the audited Revenue in 2022 < the audited Revenue in 2021 * (1+30%), the ownership proportion at the Company level is 80%; in case of the audited business income in 2022 < the audited Revenue in 2021 * (1+20%), the restricted stock planned to be vested by the incentive object shall not be vested and become invalid. |
| Range of the exercise price of the Company’s other equity instruments outstanding at the end of the period and the remaining term of the contract | None |
Other description
2020 Restricted Stock Incentive Plan
1. Number of restricted stock granted
On November 27, 2020, the Company held the 15th meeting of the second board of directors and the 9th meeting of the second board ofsupervisors, deliberated and passed the Proposal on the Company’s 2020 Restricted Stock Incentive Plan (Draft) and Its Abstract. OnDecember 15, 2020, the Company held the sixth extraordinary general meeting of shareholders in 2020 to deliberate and pass the Proposalon the Company’s 2020 Restricted Stock Incentive Plan (Draft) and Its Abstract. According to the above proposal, the number ofrestricted stock (Class II restricted stock) to be granted in this incentive plan is 6.5 million, and the underlying stock involved is A-sharecommon stock, accounting for about 1.52% of the total capital stock of the Company at the time of announcement of the draft incentiveplan. Among them, 5.9 million shares were granted for the first time, accounting for about 1.38% of the total capital stock of the Companyat the time of announcement of the draft incentive plan, and 90.77% of the total equity to be granted. 0.6 million shares were reserved to begranted, accounting for about 0.14% of the total capital stock of the Company at the time of announcement of the draft incentive plan, and
9.23% of the total equity to be granted. No more than 1,053 incentive objects will be granted at the first time, including directors, seniormanagers, and other persons deemed to need incentives by the board of directors.On December 18, 2020, the Company’s 17th meeting of the second board of directors and the 11th meeting of the second board ofsupervisors deliberated and adopted the Proposal on First Granting Restricted Stocks to Incentive Objects. In view of the fact that 17incentive objects gave up the restricted stock to be granted by the Company due to resignation or personal reasons, they no longer qualifiedfor the incentive conditions. According to the 2020 Restricted Stock Incentive Plan (Draft), the Company adjusted the incentive objectsand the number of grants. The number of incentive objects granted for the first time was adjusted from 1,053 to 1,036, and the totalnumber of restricted stock granted for the first time was adjusted from 5.90 million to 5.833 million.
2. Validity, grant date, vesting arrangement and lock-up period of this incentive plan
① The incentive plan shall be valid for no more than 48 months from the date of the first grant of restricted stock to the date when all therestricted stock granted to the incentive object is vested or invalidated.
② After the incentive plan is approved by the general meeting of shareholders of the Company, the board of directors shall determine thegrant date, and the grant date must be the trading day. The Company shall grant the restricted stock and complete the announcement within60 days after the approval of the general meeting of shareholders. If the Company fails to complete the above work within 60 days, theimplementation of this incentive plan will be terminated, and the restricted stock not granted will become invalid.The Company shall, within 12 months after the deliberation and approval of the incentive plan by the general meeting of shareholders,specify the incentive objects reserved for award; If the incentive objects are not specified for more than 12 months, the restricted stockcorresponding to the reserved part shall become invalid.
③ The vesting arrangement for the first grant of restricted stock in this incentive plan is shown in the following table:
| Vesting arrangement | Vesting period | Vesting ratio |
| First vesting period | From the first trading day of 17 months from the date of the first grant to the last trading day within 29 months from the date of the first grant | 50% |
| Second vesting period | From the first trading day of 29 months from the date of the first grant to the last trading day within 41 months from the date of the first grant | 50% |
If the restricted stock corresponding to the reserved part is granted within 2020, the vesting arrangement for granting restricted stocksreserved in this incentive plan is consistent with the vesting arrangement for the first grant of restricted stock.If the restricted stock corresponding to the reserved part is granted within 2021, the vesting arrangement for granting restricted stocksreserved in this incentive plan is shown in the following table:
| Vesting arrangement | Vesting period | Vesting ratio |
| First vesting period | From the first trading day of 12 months from the date of reserved granting to the last trading day within 24 months from the date of reserved granting | 50% |
| Second vesting period | From the first trading day of 24 months from the date of reserved granting to the last trading day within 36 months from the date of reserved granting | 50% |
If the incentive objects are directors and senior managers of the Company, the shares transferred each year during their term of office shallnot exceed 25% of the total number of the Company’s shares they hold; they shall not transfer the shares they hold within half a year afterleaving the Company.
2. Equity-settled share-based payments
√Applicable □ Not applicable
Unit: yuan
| Method for determining the fair value of equity instruments on the grant date | The fair value of the restricted stock is calculated using the Black-Scholes model option pricing formula; the fair value of other employee restricted stocks is determined by reference to the stock closing price on the grant date without taking into account the liquidity discount. |
| Basis for the determination of the number of viable equity instruments | None |
| Reasons for significant differences between the current and previous estimates | None |
| Accumulated amount of equity-settled share-based payments recorded in capital reserves | 23,738,249.61 |
| Total amount of expenses recognized by equity-settled share-based payments in current period | 23,738,249.61 |
Other descriptionNA
3. Share-based payment settled by cash
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
NA
5. Other
NAXIV. Commitment and contingencies
1. Important commitment issues
Important commitments on balance sheet date
(1) Operating lease commitment
According to the signed irreversible operating lease contract, the minimum lease payments payable by the Company after the balancesheet date are as follows:
| Remaining lease term | Minimum lease payments |
| Within 1 year | 229,475,754.93 |
| 1~2 years | 189,063,868.38 |
| 2~3 years | 132,529,407.11 |
| More than 3 years | 103,271,438.85 |
| Total | 654,340,469.27 |
(2) Large contract awarding contracts that have been signed and are in the process of being performed or to be performed and their financialimpact
As of December 31,2020, the outstanding large contracts between the Company or its subsidiaries signed and in the process of beingperformed or to be performed are as follows:
| Project name | Amount |
| Jingmen Winner - administrative logistics office building | 9,450,000.00 |
| Yichang Winner - air-jet loom | 7,350,000.00 |
| Tianmen Winner - spunlace seven thread - cotton cleaner and carding machine | 11,200,000.00 |
| TIanmen Winner - cotton e-commerce intelligent | 43,200,000.00 |
| three-dimensional warehouse | |
| Huanggang Winner - surrounded outer ear mask machine (1 mask body machine and 1 set earloop welding) | 3,886,000.00 |
| Wuhan Winner - phase II infrastructure comprehensive project | 8,035,600.00 |
| Total | 83,121,600.00 |
2. Contingencies
(1) Important contingencies on balance sheet date
The Company has no significant contingencies to be disclosed as of December 31, 2020.
(2) Explanation even if the Company has no important contingencies to be disclosed
The Company has no important contingencies to be disclosed.
3. Other
NAXV. Post-balance sheet events
1. Important non-adjustment items
Unit: yuan
| Item | Description | Influence number of financial position and operating results | Reasons for influence number cannot be estimated |
2. Profit distribution
The profit distribution plan for the reporting period deliberated and approved at the 19th meeting of the second board of directors of the Company isas follows:
Based on the total capital stock of 426,492,308 shares on December 31, 2020, the Company intends to pay out a cash dividend of RMB 18 (includingtax) for every 10 shares to all shareholders, for a total cash distribution of RMB 767,686,154.40.The proposal still needs deliberation and approved by the Company's annual general meeting of shareholders in 2020.
Unit: yuan
3. Sales return
The Company has no significant sales returns after the balance sheet date.
4. Other post-balance sheet events
XVI. Other important issues
1. Correction of previous accounting errors
(1) Retrospective restatement
Unit: yuan
| Content of accounting error correction | Processing procedures | Report item name of each affected comparison period | Cumulative influence number |
(2) Prospective application
| Content of accounting error correction | Approval procedures | Reason for adopting prospective application |
2. Debt restructuring
Not applicable.
3. Asset replacement
(1) Exchange of non-monetary assets
Not applicable.
(2) Other ssset replacement
Not applicable.
4. Pension plan
Not applicable.
5. Discontinued operationUnit: yuan
| Item | Income | Cost | Total profit | Income tax expenses | Net profit | Profit from discontinued operations attributable to the owners of parent company |
Other descriptionNot applicable.
6. Segment information
(1) Determination basis and accounting policy of reporting segment
According to the Company's internal organizational structure, management requirements and internal reporting system, three reporting segmentshave been determined, respectively: medical consumables, health consumer goods, cotton spun laced non-woven fabric. Reporting segments ofthe Company offers different products or services or operates in different regions. Since each segment requires different technologies ormarketing strategies, the management of the Company manages the operating activities of each reporting segment separately and regularlyevaluates the operating results of these reporting segments to determine the allocation of resources to them and evaluate their performance.The inter-segment transfer price is determined on the basis of the actual transaction price, and the expenses indirectly attributable to thesegments are distributed among the segments in proportion to the income (as determined by the Company). Assets are allocated according to theoperations of a segment and the location of the assets. Liabilities of a segment include liabilities attributable to that segment arising from theoperations of a segment. If expenses related to liabilities shared by multiple operating segments are allocated to those operating segments, suchshared liabilities are also allocated to those operating segments.
(2) Financial information of the reporting segment
Unit: yuan
| Item | Medical consumables (segment 1) | Healthy consumer goods (segment 2) | Cotton non-woven coil (segment 3) | Unallocated | Offset between segments | Total |
| Revenue | 8,780,321,007.56 | 3,517,061,738.06 | 236,563,201.01 | 12,533,945,946.63 | ||
| Cost | 3,336,695,726.84 | 1,575,848,274.82 | 157,878,300.10 | 5,070,422,301.76 | ||
| Assets impairment loss & credit impairment loss | 103,257,520.03 | 111,484,055.34 | 22,621,334.98 | 38,765,532.00 | 276,128,442.35 | |
| Depreciation expense and amortization expense | 44,948,371.16 | 100,132,692.03 | 11,596,759.40 | 156,677,822.59 | ||
| Operating profit / loss | 4,000,700,548.91 | 444,288,364.80 | 23,623,741.46 | 63,124,586.39 | 4,531,737,241.56 | |
| Non-operating income and expense | -29,278,317.51 | -29,278,317.51 | ||||
| Assets and liabilities | ||||||
| Total assets | 4,081,978,905.83 | 2,316,454,394.26 | 823,999,161.73 | 5,779,819,302.63 | 13,002,251,764.44 | |
| Total liabilities | 1,079,186,785.40 | 530,160,440.59 | 101,826,800.84 | 822,687,646.17 | 2,533,861,673.00 |
(3) If the Company has no reporting segments, or cannot disclose the total assets and total liabilities of each reporting segment, the reasonsshall be explainedNA
(4) Other description
NA
7. Other important transactions and matters affecting the decision-making of investors
1. Urban Renewal Project of Winner Industrial Park
(1) Project overview
On April 6, 2017, the Company and Shenzhen Xinghe Real Estate Development Co., Ltd. (hereinafter referred to as “Xinghe Real Estate”) signed theCooperation Agreement on Urban Renewal Project of Winner Industrial Park to apply for and implement the demolition and reconstruction of urbanrenewal and reconstruction of Winner Industrial Park in Longhua District, Shenzhen City (hereinafter referred to as “the Project”). The scope of landto be demolished for the Project is a state-owned land that has been transferred. The land parcel number is A819-0123. The land area is 29,064.49 m
,and the current use is industrial land. According to the statutory plan of [Pinus tabulaeformis area] of No.402-19&20&21, Baoan District, ShenzhenCity, the planned use of this land parcel is a second-class residential land. The land has been registered for title with a construction area of 36,625.89m
, used for office, plant and dormitory. The Company shall be the sole subject of rights to the said parcel and all the buildings (structures) andappendages thereon. At present, the above target land and part of the building are not mortgaged.
(2) Cooperation mode
The Company agrees to entrust the target land and building to Xinghe Real Estate for application for approval of the urban renewal unit plan, andaccepts the relocation compensation of Xinghe Real Estate according to the conditions agreed in this agreement. Xinghe Real Estate is responsible forall the work related to the declaration of renewal unit plan of the target land and building and implementation of urban renewal, responsible for therelocation compensation and demolition and reconstruction funds, and enjoys the interest in the renewal project as the single market implementer.After the renewal and reconstruction of the target land and buildings is approved by the urban renewal unit plan, the specific transformation anddevelopment intensity, planned purpose and indicators, etc. shall be discussed by Xinghe Real Estate with the Company in advance before the formalapplication for construction, but the final approval shall be subject to the relevant government departments.Xinghe Real Estate shall pay the cooperation consideration to the Company by paying the relocation compensation consideration to the Company.The Company voluntarily chooses the relocation compensation method that combines monetary compensation and property right exchange(relocation), including: 1) monetary compensation: RMB 400 million; 2) Property right exchange (relocation): the area of property right exchange(relocation) obtained by Party B shall be determined at 40% of the gross floor area for sale based on the gross floor area for sale determined in thefinal approval of the special planning of the renewal unit of this Project.During the transition period (i.e., the project is approved to enter the physical construction stage), Xinghe Real Estate will lease another completedoffice building project developed by it to the Company at a preferential price for its daily office use.
(3) Current progress
Up to now, Xinghe Real Estate has paid the first margin of RMB 50 million and the second advance compensation of RMB 100 million fordemolition to the Company according to the agreement. The project was announced in September 2019, and the project was approved in December2019. It is now in the stage of special planning. Subsequent progress will be made in accordance with the procedures stipulated by the government,and the specific progress will be subject to the government's approval.According to the agreement, if the project fails to obtain the approval of the renewal unit plan due to government policy or force majeure, either partyhas the right to terminate the contract, and the amount collected by the Company will be returned to Xinghe Real Estate without interest within 30days after the termination of the contract.
2. Heyuan investment and construction project
(1) Problem background
In 2016, under the guidance and promotion of Shenzhen Longhua District Committee and District Government, the Company plans to transfer part ofthe production and logistics functions to Heyuan Zijin Linjiang Industrial Park in response to the policy of supporting Heyuan City as a counterpart ofShenzhen City. In May 2016, the Company and the People’s Government of Zijin County of Heyuan City signed the Agreement on Investment andConstruction of Medical Package and Cotton Household Goods Production Project (hereinafter referred to as the “Investment Agreement”), with theconstruction land of the project covering 200,000 m
.After the agreement was signed and the Land Use Notice was obtained, the Company submitted the planning plan, project application and approvalform as required, and started the construction. In August 2016, Heyuan Winner obtained the Record Certificate of Enterprise Investment Projects inGuangdong Province issued by the Development and Reform Bureau of Zijin County. In June 2017, Environmental Protection Bureau of ZijinCounty issued the Approval on the Environmental Impact Report Form of the Construction Project of Winner Medical (Heyuan) Co., Ltd. Inaccordance with the agreement, the Zijin County Government assisted in obtaining a series of licenses such as state-owned land use right certificateand construction land planning permit.After the project was signed and started construction, the government required all construction projects under construction in Zijin Linjiang IndustrialPark to stop due to land conflicts between the project site and the planned Heyuan East Station of Jiangxi-Shenzhen High-speed Railway and theHigh-speed Railway New Town. Meanwhile, the relevant land use procedures were suspended.
(2) Current progress
In June 2019, the Regulatory Detailed Planning and Constructional Detailed Urban Design of the Core Area of Heyuan High-speed Railway NewTown was published to the public from June 22, 2019 to July 22, 2019. According to the final publicity content, it is determined that the square infront of Heyuan East Station of High-speed Railway, National Highway 205 and the High-speed Railway New Town overlap with Heyuan Winnerproject land.In October 2019, the Company signed a tripartite agreement with the People's Government of Zijin County and the Management Committee ofHeyuan Jiangdong New District to clarify the overall disposal plan. The land used for Heyuan Winner project and its above-ground buildings will berecovered by the People’s Government of Zijin County, and the three parties agree to determine the amount of compensation through arbitration. ThePeople’s Government of Zijin County paid RMB 30 million to the Company as the performance bond.In November 2019, International Arbitration Court of Ganjiang New District issued the award ((2019) G.G.Z.Zi No.095), which confirmed thetermination of the original Investment Agreement, and the People's Government of Zijin County shall bear the attorney fees, legal costs and otherexpenses totaling RMB 2,655,320.00. The land transfer deposit of RMB 3 million shall be returned to the Company and compensate for the economicloss of RMB 550 million. The People's Government of Zijin County shall pay 50% of the amount before December 31, 2019 and 50% beforeFebruary 29, 2020. As of December 31, 2020, the Company has received the land transfer deposit of RMB 3 million returned by the People'sGovernment of Zijin County and paid the compensation of RMB 165 million. The Company has also handed over the project land, above-groundbuildings, equipment and facilities and relevant supporting materials to the People's Government of Zijin County.
(3) Impact of this matter on the Company's operation
Heyuan Winner's business positioning is mainly the production, logistics and warehousing functions of medical package and cotton daily necessities.At present, the Company has transferred the production, logistics and warehousing functions of Purcotton daily necessities to the Company'ssubsidiary Hubei Winner, and the production of medical package has been transferred to the Company's subsidiary Chongyang Winner.Hubei Winner and Chongyang Winner have sufficient capacity to undertake the aforementioned production, logistics and warehousing businessoriginally intended to be undertaken by Heyuan Winner. The above matters of Heyuan Winner have not caused significant adverse impact on thenormal production and operation of the Company.
8. Other
NA
XVII. Notes on main items of parent company's financial statement
1. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
| Class | Closing Balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Including: | ||||||||||
| Accounts receivable of provision for bad debt by combination | 711,959,379.83 | 100.00% | 32,314,540.44 | 4.54% | 679,644,839.39 | 299,864,989.84 | 100.00% | 14,650,693.77 | 4.89% | 285,214,296.07 |
| Including: | ||||||||||
| Aging analysis combination | 644,741,680.92 | 90.56% | 32,314,540.44 | 5.01% | 612,427,140.48 | 291,771,659.35 | 97.30% | 14,650,693.77 | 5.02% | 277,120,965.58 |
| Other combination | 67,217,698.91 | 9.44% | 67,217,698.91 | 8,093,330.49 | 2.70% | 8,093,330.49 | ||||
| Total | 711,959,379.83 | 100.00% | 32,314,540.44 | 4.54% | 679,644,839.39 | 299,864,989.84 | 100.00% | 14,650,693.77 | 4.89% | 285,214,296.07 |
Provision for bad debt by single item:
Unit: yuan
| Name | Closing Balance | |||
| Book balance | Provision for bad debt | Accruing proportion | Reasons for provision | |
Provision for bad debt by combination: other combination - related parties within the group
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Other combination - related parties within the group | 67,217,698.91 | 0.00% | |
| Total | 67,217,698.91 | -- | |
Description of the basis for determining the combination:
According to the Company's accounting policy, the related parties within the group do not make provision for bad debts.Provision for bad debt by combination: aging analysis combination
Unit: yuan
| Name | Closing Balance |
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 1 year (including 1 year) | 644,257,387.17 | 32,212,869.36 | 5.00 |
| 1~2 years (including 2 years) | 413,720.01 | 41,372.00 | 10.00 |
| 2~3 years (including 3 years) | 404.54 | 121.36 | 30.00 |
| 4~5 years (including 5 years) | 49,957.40 | 39,965.92 | 80.00 |
| More than 5 years | 20,211.80 | 20,211.80 | 100.00 |
| Total | 644,741,680.92 | 32,314,540.44 | 5.01 |
Description for determining the basis of the combination: on December 31, 2020, the Company reviewed the appropriateness of the provision forbad debts of receivables in the previous year according to the historical bad debt loss, and believed that the default probability has a strong correlationwith the aging of accounts, and the account age is still a sign of whether the credit risk of the Company's receivables has significantly increased.Therefore, the Company's credit risk loss on December 31, 2020 is estimated based on the aging of accounts and estimated at the original loss ratio.If the bad debt provision of accounts receivable is withdrawn according to the general model of expected credit loss, please refer to the disclosuremethod of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Book balance |
| Within 1 year (including 1 year) | 709,214,052.12 |
| 1~2 years | 413,720.01 |
| 2~3 years | 1,772,102.18 |
| More than 3 years | 559,505.52 |
| 3~4 years | 489,336.32 |
| 4~5 years | 49,957.40 |
| More than 5 years | 20,211.80 |
| Total | 711,959,379.83 |
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Other | |||
| Provision for bad debt of accounts receivable | 14,650,693.77 | 17,663,846.67 | 32,314,540.44 | |||
| Total | 14,650,693.77 | 17,663,846.67 | 32,314,540.44 | |||
Where the amount of bad debt provision recovered or reversed is important:
Unit: yuan
| Unit name | Amount recovered or reversed | Recovery way |
NA
(3) Accounts receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important accounts receivable:
Unit: yuan
| Unit name | Nature of accounts receivable | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from related transactions |
Description of write-off accounts receivable:
NA
(4) Accounts receivable with top 5 ending balances by debtor
Unit: yuan
| Unit name | Ending balance of accounts receivable | Proportion in total other ending balance of accounts receivable | Ending balance of bad debt provision |
| First | 115,020,642.43 | 16.16% | 5,751,111.87 |
| Second | 72,386,966.52 | 10.17% | 3,619,348.33 |
| Third | 64,377,731.84 | 9.04% | 3,218,886.59 |
| Fourth | 39,301,127.15 | 5.52% | 1,965,056.36 |
| Fifth | 19,543,932.51 | 2.75% | 977,196.63 |
| Total | 310,630,400.45 | 43.64% |
(5) Accounts receivable derecognized due to transfer of financial assets
NA
(6) Amount of assets and liabilities formed by transferring accounts receivable and continuing involvementNAOther description:
NA
2. Other receivables
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Other receivables | 361,160,139.37 | 507,620,873.69 |
| Total | 361,160,139.37 | 507,620,873.69 |
(1) Interest receivable
1) Classification of interest receivable
Unit: yuan
| Item | Closing Balance | Beginning balance |
2) Important overdue interest
| Borrower | Closing Balance | Overdue time | Overdue reason | Whether there is impairment and its judgment basis |
Other description:
NA
3) Provision for bad debt
□ Applicable □√ Not Applicable to changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable
Unit: yuan
| Project (or invested unit) | Closing Balance | Beginning balance |
2) Important dividends receivable with the aging more than 1 year
Unit: yuan
| Project (or invested unit) | Closing Balance | Aging | Reason for non-recovery | Whether there is impairment and its judgment basis |
3) Provision for bad debt
□ Applicable √ Not applicable
Other description:
Not applicable.
(3) Other receivables
1) Other receivables classified by nature
Unit: yuan
| Nature of payment | Ending book balance | Beginning book balance |
| Compensation for investment and construction project of Heyuan Winner | 387,655,320.00 | 522,655,320.00 |
| Export drawback | 7,190,798.48 | 5,356,236.05 |
| Margin and deposit | 3,650,806.01 | 297,108.00 |
| Other | 1,528,756.45 | 1,285,367.93 |
| Employee pretty cash | 175,183.18 | 262,532.50 |
| IPO intermediary fee | 4,005,057.90 | |
| Total | 400,200,864.12 | 533,861,622.38 |
2) Provision for bad debt
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2020 | 26,240,748.69 | 26,240,748.69 | ||
| Balance on January 1,2020 in the current period | —— | —— | —— | —— |
| Accrual in current period | 18,551,781.92 | 18,551,781.92 | ||
| Reversal in current period | 5,751,805.86 | 5,751,805.86 | ||
| Balance on December 31, 2020 | 39,040,724.75 | 39,040,724.75 |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Book balance |
| Within 1 year (including 1 year) | 12,270,449.27 |
| 1~2 years | 387,905,076.99 |
| 2~3 years | 25,337.86 |
| Total | 400,200,864.12 |
3) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Other | |||
| Provision for bad debts of other receivables | 26,240,748.69 | 18,551,781.92 | 5,751,805.86 | 39,040,724.75 | ||
| Total | 26,240,748.69 | 18,551,781.92 | 5,751,805.86 | 39,040,724.75 | ||
NAWhere the amount of bad debt provision reversed or recovered is important:
Unit: yuan
| Unit name | Amount reversed or recovered | Recovery way |
NA
4) Other receivables actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important other receivables:
Unit: yuan
| Unit name | Nature of other receivables | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from related transactions |
Description of write-off of other receivablesNA
5) Other receivables with top 5 ending balances by debtor
Unit: yuan
| Unit name | Nature of payment | Closing Balance | Aging | Proportion in total other ending balance receivable | Ending balance of bad debt provision |
| First | Receivables related to | 387,655,320.00 | 1~2 years | 96.87% | 38,765,532.00 |
| Heyuan project | |||||
| Second | Security deposit | 2,544,135.21 | Within 1 year | 0.64% | 127,206.76 |
| Third | Margin / deposit | 275,906.59 | Within 1 year | 0.07% | 13,795.33 |
| Fourth | Margin / deposit | 260,000.00 | Within 1 year | 0.06% | 13,000.00 |
| Fifth | Margin / deposit | 169,730.00 | Within 1 year: RMB 58,462.65 1-2 years: RMB 111,267.35 | 0.04% | 8,486.50 |
| Total | -- | 390,905,091.80 | -- | 97.68% | 38,928,020.59 |
6) Accounts receivable involving government subsidies
Unit: yuan
| Unit name | Name of government subsidy project | Closing Balance | Ending aging | Estimated collection time, amount and basis |
Not applicable.
7) Other receivables derecognized due to transfer of financial assets
Not applicable.
8) Amount of assets and liabilities formed by transferring other receivables and continuing involvementNot applicable.Other description:
Not applicable.
3. Long-term equity investment
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiaries | 728,737,678.63 | 4,086,994.48 | 724,650,684.15 | 728,737,678.63 | 4,086,994.48 | 724,650,684.15 |
| Investment in associated enterprises and joint enterprises | 13,424,230.41 | 13,424,230.41 | 8,858,476.15 | 8,858,476.15 | ||
| Total | 742,161,909.04 | 4,086,994.48 | 738,074,914.56 | 737,596,154.78 | 4,086,994.48 | 733,509,160.30 |
(1) Investments in subsidiaries
Unit: yuan
| Invested unit | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end of period | |||
| Further investment | Capital reduction | Provision for impairment | Other | ||||
| Winner Medical (Huanggang) | 267,491,627.79 | 267,491,627.79 | |||||
| Winner Medical (Jingmen) | 27,242,761.31 | 27,242,761.31 | |||||
| Shenzhen Purcotton | 50,000,000.00 | 50,000,000.00 | |||||
| Winner Medical (Chongyang) | 33,629,806.08 | 33,629,806.08 | |||||
| Winner Medical (Jiayu) | 36,436,595.28 | 36,436,595.28 | |||||
| Winner Medical (Tianmen) | 39,697,276.28 | 39,697,276.28 | |||||
| Winner Medical (Hong Kong) | 1,456,720.00 | 1,456,720.00 | |||||
| Winner Medical (Yichang) | 18,595,897.41 | 18,595,897.41 | |||||
| Winner Medical Malaysia | 0.00 | 0.00 | 4,086,994.48 | ||||
| Winner Medical (Heyuan) | 100,000,000.00 | 100,000,000.00 | |||||
| Hubei Winner | 100,000,000.00 | 100,000,000.00 | |||||
| PureH2B | 50,000,000.00 | 50,000,000.00 | |||||
| Mifu Shanghai | 100,000.00 | 100,000.00 | |||||
| Total | 724,650,684.15 | 724,650,684.15 | 4,086,994.48 | ||||
(2) Investment in associated enterprises and joint enterprises
Unit: yuan
| Invested entity | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end | |||||||
| Further investment | Capital reduction | Investment gains and losses | Adjustment of other comprehen | Changes in other equity | Declared payment of cash | Provision for impairment | Other | ||||
| recognized by the equity method | sive income | dividends or profits | of period | ||||||||
| I. Cooperative enterprise | |||||||||||
| Subtotal | 0.00 | 0.00 | 0.00 | 0.00 | |||||||
| II. Joint venture | |||||||||||
| Chengdu Winner | 8,858,476.15 | 4,565,754.26 | 13,424,230.41 | 0.00 | |||||||
| Subtotal | 8,858,476.15 | 4,565,754.26 | 13,424,230.41 | 0.00 | |||||||
| Total | 8,858,476.15 | 4,565,754.26 | 13,424,230.41 | ||||||||
(3) Other description
NA
4. Revenue and cost
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 8,810,788,637.62 | 4,299,577,993.11 | 1,371,094,629.32 | 1,038,436,640.91 |
| Other businesses | 79,322,320.00 | 24,356,964.05 | 43,222,651.29 | 1,594,659.59 |
| Total | 8,890,110,957.62 | 4,323,934,957.16 | 1,414,317,280.61 | 1,040,031,300.50 |
Income related information:
Unit: yuan
| Contract classification | Segment 1 | Segment 2 | Total | |
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: |
Information related to performance obligations:
Not applicable.
Information related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations signed but not yet performed or completed at the end of this reporting period isRMB 530,188,257.63, of which RMB 530,188,257.63 is expected to be recognized as income in 2021.Other description:
Not applicable.
5. Income from investment
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Long-term equity investment income checked by cost method | 182,154,264.00 | |
| Long-term equity investment gains measured by employing the equity method | 4,565,754.26 | 1,685,447.16 |
| Investment income from purchasing financial products | 14,559,320.69 | 765,726.95 |
| Total | 19,125,074.95 | 184,605,438.11 |
6. Other
NAXVIII. Further information
1. Current non-recurring gain and loss statement
√Applicable □ Not applicable
Unit: yuan
| Item | Amount | Description |
| Profit and loss on disposal of non-current assets | -25,914,736.75 | |
| Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state | 74,592,796.36 | |
| In addition to the effective hedging business related to the company's normal business operations, the profit and loss from fair value changes arising from holding tradable financial assets, derivative financial assets, tradable financial liabilities, and derivative financial liabilities, as well as the investment income from disposal of tradable financial assets and derivative financial assets, tradable financial liabilities, derivative financial liabilities, and other debt investments | 28,197,958.34 |
| Income and expenditure other than those mentioned above | -4,844,628.50 | |
| Less: Amount affected by income tax | 12,117,518.33 | |
| Amount of minority shareholders' equity affected | 324,164.35 | |
| Total | 59,589,706.77 | -- |
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 on InformationDisclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from the non-recurrent profit and loss itemsenumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits andLosses.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Reporting profit | Weighted average return on net assets | Earnings Per Share | |
| Basic EPS (yuan/share) | Diluted EPS (yuan/share) | ||
| Net profit attributable to common shareholders of the Company | 64.68% | 9.80 | 9.79 |
| Net profit attributable to common shareholders of the Company after deduction of non-recurring profits and losses | 63.67% | 9.64 | 9.64 |
3. Differences in Accounting Data under Domestic and Foreign Accounting Standards
(1) Differences between net profits and net assets in financial statements disclosed according to the International Accounting Standards (IAS)and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
(2) Differences between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards andChinese Accounting Standards simultaneously
□ Applicable √ Not applicable
(3) Causes for differences in accounting data under domestic and foreign accounting standards. If the difference adjustment has been madeto the data audited by the overseas audit institution, the name of the overseas audit institution shall be indicatedNot applicable.
4. Other
NA
Section 13 Reference file directory(I) Financial statements containing signatures of the Company's legal representative, the head of accounting work, and the head of accounting body(accountant in charge) with seals.(II) The original audit reports with the seal of the accounting firm and the signatures and seals of the certified public accountants.(III) Original copies of the documents and announcement of the Company published on the website designated by the CSRC in the reporting period.(IV) The original copy of the 2020 Annual Report and its summary signed by the Company's legal representative and affixed with the Company'sofficial seal.(V) Other relevant materials.Reference files kept at: Securities Department.
In case of a divergence of the interpretation the Chinese version of the annual report shall prevail