Nanji E-commerce Co., Ltd.
Annual Report 2019
April 2020
南极电商股份有限公司
英文年报披露说明
南极电商股份有限公司（以下简称“本公司”）为了更好地服务越来越多的境外投资者，首次披露英文年报（以下简称“本报告”），旨在向境外投资者更详细地展示公司的经营与财务信息，传递公司的投资价值。
本次英文版年报翻译过程涉及众多消费品行业、电子商务行业和财务会计的专业术语，公司已努力确保年报原文内容得到准确的传递，但仍可能会存在不恰当之处。
本英文版年报译自中文版年报，在对中、英文版的理解上发生歧义时，以中文版为准。欢迎本英文年报的阅读者在发现问题或难以理解的内容时，发邮件至公司董事会秘书（caoyitang@nanjids.com）询问与交流，也帮助公司提升后续版本的翻译质量。我们诚挚地欢迎您的批评、指正与建议。
Nanji E-Commerce Co., Ltd.Disclosure Statement of the Annual Report (English Version)
Nanji E-Commerce Co., Ltd. (hereinafter as “the Company”) discloses the first annual report inEnglish (hereinafter as “the Report”) to better serve international investors, and aims tocomprehensively disclose the Company's business situation and financial information, and presentthe investment value of the Company to international investors.
As the Annual Report’s translation involves many professional terms of the consumer goods industry,E-commerce industry, and financial accounting, the Company has made great efforts to ensure theaccurate translation of the original content, but there may still be some mistranslations.
This English version is translated from the Chinese version. In case of any discrepancy between theChinese version and the English version, the Chinese version shall prevail. Any reader of the Reportis welcome to send an email to the Board Secretary (caoyitang@nanjids.com) for inquiry ifencountering any problems or incomprehensible contents, and at the same time help the Companyimprove the translation quality of subsequent reports. We sincerely welcome your criticism,correction, and suggestions.
Letter to Shareholders
In 2019, Nanji E-commerce Co., Ltd. (hereinafter referred to as "the Company") generated the operating revenueof RMB 3.907 billion, with a year-on-year increase of 16.52%, of which RMB 1.398 billion yuan was achieved byNanji Business Units (“NJBU”) , with a year-on-year increase of 34.66%. And with an increase of 36.06% year onyear, the net profit attributable to shareholders of the Company amounted to RMB 1.206 billion, of which RMB
1.099 billion was achieved by NJBU, with a year-on-year increase of 44.81%. At the same time, the Companyachieved the net operating cash flow of RMB 1.255 billion, with a year-on-year increase of 127.59%, of whichRMB 176.72 million was achieved by Timelink, with the net amount changed from negative to positive. In a word,the Company has maintained steady growth.In 2019, the Company further enhanced the business and management capabilities in eight aspects, includingthe consumer traffic, efficiency, value chain, data empowerment, organization, culture, sharing, and riskcontrol:
1. Traffic optimization: complied with the traffic rules of the E-commerce channels, promoted the large licensedstore strategy, and achieved better results;
2. Efficiency improvement: the product categories covered by the Company's brands focused on the products withmedium and high frequency of purchase, and the Company took advantage of the digital measures to achieve theprecise allocation of resources of suppliers and distributors, thus facilitating the rapid response of the supply chain;
3. Data empowerment: The Company made full use of the big data empowerment, and independently developedthe data management and business intelligence tools "Nanji Data Cloud" and "Nanji Middle Platform", centeringon the E-commerce platform;
4. Value chaining: 1) design empowerment: cooperated with the excellent design service companies to furtherenhance the Company's commodity image; 2) gallery sharing: established the abundant product-packaging andlogistics-packaging photo gallery for utilization by partners;
5. Organizational evolution: The Company established branches in various major industrial zones to provide thelicensed suppliers with one-to-one and inch-by-inch services in quality management, intellectual propertymanagement, packaging management, etc.;
6. Cultural self-motivation: The Company encouraged the employees and partners to find out their own valuepoints at the Company's platform to achieve the self-motivation and self-fulfillment through the employee worklogs, employee thoughts refinement, client ideas sharing meeting, study tour and other measures;
7. Risk control: The Company has established strategic cooperative relations with many third-party qualityinspection agencies to provide quality consultation, quality management training, sampling inspection, and otherservices for suppliers;
8. Value sharing: The Company has implemented the Stock Options Incentive Plan. In the first phase, 122employees were granted with 13,597,200 stock options in 2019. And allowing the employees to share the benefitsof the Company's growth is one of the sources of the Company's healthy and sustainable development.Since 2020, although the coronavirus epidemic at the beginning of the year has brought many challenges, theCompany, from top to bottom level, has been fighting hard to win the battle against the epidemic situation. We andour partners have responded actively and quickly and tried our best to create a safe and healthy work environment
for employees. Furthermore, we have sent the urgently needed goods and materials to the anti-epidemic areas andfulfilled our social responsibility. We believe that with the concerted efforts, we can definitely achieve the finalvictory.We will gradually launch new products in 2020. During the coronavirus pandemic, the Company launched the anti-bacterial and health products, such as “75% alcohol”. In addition, we have been actively expanding our new businessincluding the internet celebrity business, and have been more diverse and effective in the sales channel operations.We, on one hand, will train more licensed stores to perform the live streaming in stores, and on the other hand, willestablish a new supply chain system and a new portfolio of live streamers on Tik Tok and Kuaishou, combiningwith the live broadcasting product requirements.Therefore, there are both challenges and opportunities for our Company in the year of 2020. Although there arecertain uncertainties in the external environment, we will continue to enhance our business and managementcapabilities in eight aspects, including the traffic, efficiency, value chain, data empowerment, organization, culture,sharing, and risk control, and strive to build a world-class consumer goods giant!Many thanks to all shareholders for your trust, understanding, and support towards the management team of theCompany!
Nanji E-commerce Co., Ltd.Chairman: ZHANG Yuxiang
April 15, 2020
Table of Contents
Section 01 Important Notice, Table of Contents and Definitions ...... 6
Section 02 Company Profile and Key Financial Indicators ...... 9
Section 03 Business Overview of the Company ...... 16
Section 04 Management Discussion & Analysis ...... 32
Section 05 Important Matters ...... 68
Section 06 Changes in Shares and Information of Shareholders ...... 109
Section 07 Preferred Shares ...... 119
Section 08 Convertible Bonds ...... 120
Section 09 Directors, Supervisors, Senior Executives and Employees ...... 121
Section 10 Corporate Governance ...... 133
Section 11 Information on Corporate Bond ...... 141
Section 12 Financial Statements ...... 142
Section 13 List of Documents for Reference ...... 335
Section 01 Important Notice, Table of Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors, and seniorexecutives of the Company guarantee that the Annual Report is authentic, accurate, andcomplete, without any false record, misleading statement, or significant omission, andwill assume the joint and several legal liabilities.ZHANG Yuxiang, the Company’s legal representative and person in charge ofaccounting, and SHI Yiwei, the finance manager, jointly state that: they guarantee thatthe Financial Report of the Annual Report is authentic, accurate, and complete.All directors attended the Board Meeting for reviewing this Report.The forward-looking statements such as future plans and development strategies in thisAnnual Report shall not constitute a substantial commitment to investors by theCompany. The Company asks the investors to carefully read the full text of this AnnualReport, and pay special attention to "(III) Possible risks" of "IX. Prospect of theCompany's Future Development" in “Section 04 Management Discussion & Analysis”of this Annual Report.The Company's proposal for the distribution of profit reviewed and approved by thisMeeting of the Board of Directors is that: based on 2,437,913,476 shares, the Companywill distribute cash dividend of RMB 1.24 (tax inclusive) and 0 bonus share (taxinclusive) for every 10 shares to all shareholders, and increase 0 share for every 10shares to all shareholders by transferring the capital reserve.
Definitions
| Term | refers to | Description |
| China, PRC | refer to | The People’s Republic of China |
| Company, the Company, listed company, NJDS | refer to | Nanji E-commerce Co., Ltd., which is the parent company in law |
| Nanji Business Units, NJBU | refer to | The listed company’s entities other than Beijing Timelink Network Technology Co., Ltd. |
| Shanghai NJDS, NJDS (Shanghai) | refer to | Nanji E-Commerce (Shanghai) Co., Ltd., which is a wholly-owned subsidiary of the listed company, a subsidiary-in-law, and the main body for the preparation of the Company's financial statements |
| Fengnan Investment | refers to | Shanghai Fengnan Investment Center LLP |
| Xiaodai | refers to | Shanghai Xiaodai Finance Lease Co., Ltd. |
| Guangzhou XiEnEn, XiEnEn | refer to | Guangzhou XiEnEn Culture Communication Co., Ltd. |
| Timelink | refers to | Beijing Timelink Network Technology Co., Ltd. |
| Beijing Henri Jayer, Henri Jayer | refer to | Beijing Henri Jayer Technology Co., Ltd. |
| RAYAS | refers to | Xinjiang RAYAS Network Technology Co., Ltd. |
| VIVO | refers to | Vivo Mobile Communications Co., Ltd. |
| CCPL | refers to | CARTELO CROCODILE PTE LTD |
| GMV | refers to | Abbreviation of “Gross Merchandise Volume”, with the meaning of the transaction amount |
| APP | refers to | Abbreviation of Application, which generally refers to "the mobile phone software" |
| SKU | refers to | Abbreviation of “Stock Keeping Unit”, which refers to the smallest available unit of goods |
| H5 | refers to | Abbreviation of HTML5, which is the fifth version of HTML, with the full name of the "HyperText Markup Language" |
| Ali | refers to | "Tmall Mall", "Taobao.com" and other E-commerce trading platforms affiliated to Alibaba Network Technology Co., Ltd. |
| VIP.com | refers to | E-commerce trading platform affiliated to Vipshop (China) Co., Ltd. |
| JD.COM | refers to | E-commerce trading platform affiliated to Beijing Jingdong Century Trade Co., Ltd. |
| Social E-commerce | refers to | Social E-commerce platforms, such as PDD, Aikucun, Yunji, and Beidian. |
| Online | refers to | E-commerce sales channels, such as Ali, JD.COM, PDD, and VIP.com. |
| Offline | refers to | Traditional sales channels, such as offline stores, shopping mall counters, and supermarket channels. |
| CSRC | refers to | China Securities Regulatory Commission |
| Accounting Firm | refers to | RSM China CPA LLP (former name: Huapu Tianjian Certified Public Accountants LLP) |
| Reporting Period, the Reporting Period | refer to | Year 2019 |
| RMB, 10,000 RMB, 100 million RMB | refer to | RMB (yuan), RMB 10,000 yuan, RMB 100 million yuan |
Section 02 Company Profile and Key Financial IndicatorsI. Company Information
| Stock Abbreviation | NJDS | Stock Code | 002127 |
| Stock abbreviation changed (if any) | N/A | ||
| Listing stock exchange | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 南极电商股份有限公司 | ||
| Chinese abbreviation of the Company | 南极电商 | ||
| Name of the Company in foreign language (if any) | Nanji E-Commerce Co., LTD | ||
| Abbreviation of the name of the Company in foreign language (if any) | NJDS | ||
| Legal representative of the Company | ZHANG Yuxiang | ||
| Registered address | 8/F, Huiying Building, No.388 Dunhuang Road, Shengze Town, Wujiang District, Suzhou, Jiangsu | ||
| Postal code of the registered address | 215228 | ||
| Office address: | 7/F-10/F, Building 3, The Springs Center, No.99 Jiangwancheng Road, Yangpu District, Shanghai | ||
| Postal code of the registered address | 200438 | ||
| Company website | http://www.nanjids.com/ | ||
| nanjids@nanjids.com | |||
| Secretary of the Board of Directors | Representative of Securities Affaires | |
| Name | CAO Yitang | SHI Yuting |
| Address | 10/F, Building 3, The Springs Center, No.99 Jiangwancheng Road, Shanghai | 10/F, Building 3, The Springs Center, No.99 Jiangwancheng Road, Shanghai |
| Tel | 021-63461118-8122 | 021-63461118-8885 |
| Fax | 021-63460611 | 021-63460611 |
| caoyitang@nanjids.com | shiyuting@nanjids.com |
III. Information Disclosure &Location of Annual Report
| Company’s Designated Information Disclosure Media | Securities Times |
| Website designated by CSRC for publishing the Annual Report | http://www.cninfo.com.cn |
| Place where the Annual Report is available for inspection | Office of the Secretary of the Board of Directors of the Company |
| Organization code | 91320500714954842N |
| Changes of the main businesses of the Company since listed (if any) | According to the resolution of the Second Extraordinary General Meeting of the Company in 2014, it was agreed that the Company's business scope would be changed to: the production and sales of textiles and apparel, accessory, and embroidery; sales of raw and auxiliary materials, textile additives, thread spinner and thread spinner accessories related to the Company's business; self-management and agency of the import and export business for all kinds of commodities and technologies (except for the commodities and technologies that are restricted for operation or prohibited for import & export by the State); operation of the processing with imported materials and "processing and compensation trades (i.e., processing with supplied materials, processing with supplied samples, assembling with supplied parts, and compensation trade)" business; industrial investment, investment management, and investment consulting. The registration of relevant industrial and commercial changes has been completed on December 1, 2014. According to the resolution of the First Extraordinary General Meeting of the Company in 2016, it was agreed that the Company's business scope would be changed to: Internet retail and foreign trade; foreign investment, investment management & consulting, enterprise management information consulting; E-commerce technical support & information consulting, business consulting, and marketing planning; conference services, brand design, brand management, PR activities planning, cultural & art exchange activities planning, corporate image planning, exhibition & display services, photography services, cultural & educational information consulting; agricultural products processing & sales; development, transfer, consulting, and service in terms of the network technology, information technology and textile technology; quality management consulting & technical services; sales of knitwear & textile, apparel & accessory, leather products, bags & suitcases, shoes & hats, beddings, craft gifts, washing products, pet supplies, cosmetics, skin-care products, photographic equipment, toys, audio equipment & apparatus, labor protection products, metal products, furniture, household appliances, kitchen supplies, communication equipment, electronic products, water treatment & purification equipment, hardware & electrical equipment, cultural & educational stationeries, office supplies, clothing fabrics, clothing accessories. (Any business item, which is required to be approved according to laws, may not be operated until it is approved by the competent authority.) The registration of relevant industrial and commercial changes has been completed on March 2, 2016. |
| According to the resolution of the 2016 Annual General Meeting of the Company, it was agreed to add the content of "sales of prepackaged foods (excluding the refrigerated & frozen foods)" in the business scope of the Company, and the registration of relevant industrial and commercial changes has been completed on June 8, 2017. According to the resolution of the Fourth Extraordinary General Meeting of the Company in 2017, it was agreed to add the content of "design, production, agency, launch of various advertisements; and software research & development" in the business scope of the Company; and the registration of relevant industrial and commercial changes has been completed on November 22, 2017. According to the resolution of the First Extraordinary General Meeting of the Company in 2020, it was agreed to change the registered address of the Company to 8/F, Huiying Building, No.388 Dunhuang Road, Shengze Town, Wujiang District, Suzhou, Jiangsu, and the registration of relevant industrial and commercial changes has been completed on March 13, 2020. | |
| Changes of controlling shareholders (if any) during the reporting period | No change |
| Name of accounting firm | RSM China CPA LLP |
| Office address of accounting firm | No. 920-926 of Beijing Foreign Trade Building, No. 22 Fuchengmenwai Street, Xicheng District, Beijing |
| Names of the signing accountants | CHU Shiwei and KONG Lingli |
| Name of financial advisor | Office address of financial advisor | Name of main financial consultant | Period of continuous supervision |
| Donghai Securities Co., Ltd. | 6/F, Donghai Securities Mansion, No. 1928 Dongfang Road, Pudong New Area, Shanghai | WANG Zhongyao and WANG Yueyu | The period of continuous supervision lasted from December 2015 to December 31, 2018. After December 31, 2018, the continuous supervision was conducted for the unused funds raised by issuing shares to purchase assets and raise the supporting funds in 2015. |
| CITIC Securities South China Co., Ltd. (former name: Guangzhou Securities Co., Ltd.) | 19/F & 20/F, West Tower, Guangzhou International Finance Center, No.5 West Zhujiang Road, Tianhe District, | ZHANG Yu and YU Lihua | The period of continuous supervision lasted from December 2017 to December 31, 2018. After December 31, 2018, the continuous |
| Guangzhou | supervision was conducted for the unused funds raised by issuing shares to purchase assets and raise the supporting funds in 2017. |
| Year 2019 | Year 2018 | Change YoY | Year 2017 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating revenue (RMB) | 3,906,848,236.41 | 3,352,859,972.47 | 3,352,859,972.47 | 16.52% | 985,786,831.11 | 985,786,831.11 |
| Net profit attributable to shareholders of the listed company (RMB) | 1,206,136,918.38 | 886,472,236.97 | 886,472,236.97 | 36.06% | 534,291,649.78 | 534,291,649.78 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profits and losses (RMB) | 1,147,929,618.05 | 841,191,770.57 | 841,191,770.57 | 36.46% | 501,301,653.39 | 501,301,653.39 |
| Net cash flow from operating activities (RMB) | 1,254,911,826.62 | 551,386,932.66 | 551,386,932.66 | 127.59% | 537,793,308.69 | 537,793,308.69 |
| Basic EPS (RMB/share) | 0.49 | 0.36 | 0.36 | 36.11% | 0.34 | 0.23 |
| Diluted EPS (RMB/share) | 0.49 | 0.36 | 0.36 | 36.11% | 0.34 | 0.23 |
| Weighted average return on net assets | 28.13% | 26.05% | 26.05% | 2.08% | 27.26% | 27.26% |
| At the end of 2019 | At the end of 2018 | Increase or decrease of YoY | At the end of 2017 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets (RMB) | 5,484,815,012.19 | 4,549,248,714.71 | 4,549,248,714.71 | 20.57% | 3,820,524,278.42 | 3,820,524,278.42 |
| Net assets attributable to the shareholders of the listed company (RMB) | 4,858,727,120.86 | 3,738,582,158.34 | 3,738,582,158.34 | 29.96% | 3,021,168,578.39 | 3,021,168,578.39 |
VII. Accounting Data Differences under Domestic and Overseas Accounting Standards
1. Difference of net profit and net asset disclosed according to IFRS (International Financial ReportingStandards) and CAS (Chinese Accounting Standards)
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
2. Difference of net profit and net asset disclosed according to overseas accounting standardsand CAS
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
VIII. Key Financial Indicators by Quarters
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 824,328,152.30 | 810,066,302.83 | 1,012,778,700.10 | 1,259,675,081.18 |
| Net profit attributable to shareholders of the listed company | 122,050,417.60 | 264,170,858.03 | 215,876,565.20 | 604,039,077.55 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profits and losses | 118,975,641.84 | 242,576,049.56 | 204,208,165.29 | 582,169,761.36 |
| Net cash flow from operating activities | 91,167,763.93 | 58,984,344.11 | 141,781,097.22 | 962,978,621.36 |
| Item | 2019 | 2018 | 2017 | Remark |
| Gains/losses on disposals of non-current assets (including offsetting amount for the provision of impairment of assets) | -34,285.41 | -1,211,529.23 | 100,541.10 | — |
| Tax refunds or reductions with ultra vires approval or without official approval | — |
| documents | ||||
| Government grants recognized in current profit or loss (except government grants that is closely related to operations and determined based on a fixed scale according to the national unified standard) | 25,146,036.05 | 18,442,213.20 | 17,830,092.35 | — |
| Funds occupation fee recognized in current profit or loss from non-financial companies | — | |||
| The excess of attributable fair value of net identifiable assets over the consideration paid for subsidiaries, associates or joint ventures recognized by the Company | — | |||
| Gains or losses on non-monetary assets exchange | — | |||
| Gains on entrusted investments or asset managements | 33,933,372.78 | 23,715,571.43 | 8,966,777.19 | — |
| Provision for impairment of each asset due to force majeure such as a natural disaster | — | |||
| Gains or losses on debt restructuring | — | |||
| Corporate restructuring charge, such as expenditure for staff resettlement and integration cost | — | |||
| Gains /losses from excess of fair value in non-arm’s length transactions | — | |||
| Net gains/losses of subsidiaries arising from business combination under common control from the beginning of the reporting period till the combination date | — | |||
| Gains /losses arising from contingencies other than those related to principal activities of the Company | — | |||
| Gains /losses arising from changes in fair value of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities during the holding period and investment income arising from disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investment except effective | — |
| hedging transactions related to the Company's principal activities | ||||
| Reversal of provision for impairment of accounts receivable or contract assets tested for impairment individually | 100,000.00 | 2,282,922.39 | 3,261,941.88 | — |
| Gains /losses arising from entrusted loans to other entities | — | |||
| Gains /losses arising from changes in fair value of investment properties adopting fair value model for subsequent measurement | — | |||
| Impact of one-off adjustment of current profits or losses based on the requirements of taxation and accounting laws and regulations | — | |||
| Custody fee income from the entrusted operation | — | |||
| Other non-operating income/expenses except for items mentioned above | 10,199,020.48 | 8,535,035.43 | 6,957,271.45 | — |
| Other non-recurring profits or losses defined | — | |||
| Less: Income tax effect | 11,113,272.14 | 6,479,265.19 | 4,114,543.78 | — |
| Minority interest effect (after tax) | 23,571.43 | 4,481.63 | 12,083.80 | — |
| Total | 58,207,300.33 | 45,280,466.40 | 32,989,996.39 | -- |
Section 03 Business Overview of the Company
I. Main Business of the Company during the Reporting Period
NJDS mainly focuses on the E-commerce channels and strives to build the world-class consumer goods giantwith brand licensing and industry chain services.
During the reporting period, the Company continued to enhance its business and management capabilities in eightaspects, including the consumer traffic, efficiency, value chain, data empowerment, organization, culture, sharing,and risk control, and continued to consolidate its competitive advantages.(I) Overview of Sales Side
1. During the reporting period, the main brand of the Company – NANJIREN (meaning “Antarctican”) took thehousehold as the usage scenario to provide the distinctive basic products with high cost-performance, penetrationof consumption tier and consumption cycle to consumers on various E-commerce channels, such as Ali, JD.COM,Social E-commerce, and VIP.com. And the brands of the Company had about 100,000 product links in all E-commerce channels. The statistically available GMV of the Company in various E-commerce channels has reachedRMB 30.559 billion, with a year-on-year increase of 48.92%. Of which, the GMV of NANJIREN brand is RMB
27.138 billion, with a year-on-year increase of 52.86%.
NANJIREN brand is a leading consumer product brand focusing on the E-commerce channels.
2. NANJIREN brand has attracted numerous visitors, purchasers, and repeat purchasers in various E-commercechannels with high conversion rate. During the reporting period, the number of pieces paid at the licensed stores ofthe Company on the Ali platform was nearly 335 million, and the times of payment was more than 288 million; andthe monthly average number of visitors in NANJIREN underwear category on the Ali platform was about 51.15million. In addition, the monthly average price per order was about RMB 49.76, with a monthly average conversionrate of 20.28%.NANJIREN brand enjoyed a low customer acquisition cost on major E-commerce platforms.
3. The Company has timely complied with the transaction rules of the E-commerce channels, promoted the largestore strategies, and achieved good results;
The capacity of developing hot-selling product, abundant supply chain, and rapid response of NANJIRENbrand, have quickly formed the scale effect of the licensed stores.
4. The marginal costs and marketing costs for the category expansion of NANJIREN brand were low, mainly dueto the stable flow, the numerous users, and the high repeat purchase rate. Taking Nanjiren Official Flagship Store asan example, there were about 6,500 SKUs during the reporting period, which had been about 4,800 SKUs in thesame period last year, with a year-on-year increase of 35.42%. In 2019, the proportion of direct promotion fee inGMV was about 0.87%, which was about 1.04% in 2018, with a year-on-year decrease of 16.35%. During thereporting period, the GMV of this flagship store reached RMB 1.200 billion, which was RMB 580 million in 2018,with a year-on-year increase of 107.02%.NANJIREN brand had obvious advantages in category expansion and marketing costs.
5. During the reporting period on the Ali platform: the GMV of NANJIREN's strong category "Women's/ Men'sunderwear/loungewear" was RMB 6.495 billion, which was RMB 4.657 billion in 2018, with a year-on-yearincrease of 39.47%. In addition, the market share of this category was 8.42%, which was 6.69% in 2018, rankingthe first in the segment on the Ali platform. And the GMV of "bedding" was RMB 3.503 billion, which had been
RMB 2.195 billion in 2018, with a year-on-year increase of 59.59%. The market share of bedding was 8.03%, whichwas 5.87% in 2018, ranking the first in the segment on the Ali platform.The market shares of NANJIREN's strong categories have further increased, and there will still be plenty ofroom for growth.
6. The Company made full use of the big data for empowerment, and independently developed the data managementand business intelligence tools "Nanji Data Cloud" and "Nanji Middle Platform", centering on the E-commerceplatform.
The data management tools of the Company have greatly improved the collaborative efficiency between thedistributors and the suppliers, and the operation efficiency of the sales side.Based on the large user base of the Company, highly competitive product cost-performance, abundant supplychains, and accurate grasp of platform traffic rules, the Company's products are popular among consumersat different levels in China. The Company's GMV is expected to continue to grow at a medium to high speedin the future. In addition, the Company will strive to become a world-class consumer goods giant.(II) Brand LicensingDuring the reporting period, the suppliers and distributors were responsible for all production and sales ofthe products.During the reporting period, the Company had 1,113 licensed suppliers (including about 500 main licensedsuppliers), 4,513 licensed distributors, and 5,800 licensed stores respectively. The division of work was clearer atdifferent levels of the Company’s licensed stores. The large comprehensive stores sold the "hot-selling products andhot-selling product groups", and the medium-scale stores conducted the distribution through the supply chain system,while the small stores identified and tested the distinctive products, which fully reflected the trend of the rise oflarge comprehensive stores under the changes in E-commerce traffic rules. The Company took advantage of thesituation and promoted the large store strategies. Furthermore, the Company supported the medium-scale stores toconduct the distribution through the industrial chain service providers, and implemented the exit mechanism for thestores with poor performance or with behaviors in the negative list.(III) Brand Management
1. Brand gallery sharing service
The Company has continued to attach importance to the upgrading and promotion of brand image. During thereporting period, the Company has established the abundant product-packaging and logistics-packaging photogallery for clients, including 43 packaging pictures in the gallery of the textile & apparel category, 79 packagingpictures in the gallery of the healthy living category, and 20 packaging pictures in the gallery of the maternal &infant category. Meanwhile, the Company reviewed 778 packaging pictures in the textile & apparel categoryprovided by clients. Thus, both the consistency of the Company's brand image and the customized demands ofpartners are satisfied at the same time.
2. Introduction of brand partners
During the reporting period, the Company has signed an agreement with an integrative innovation-design servicecompany - Lkker ("Lkker Technology Co., Ltd."), which will help the Company to achieve the upgrade andinnovation for the brand products, and further enhance the product image and brand image of the Company.
3. Brand promotion
In order to further enhance the brand awareness, the Company has focused on promoting the new positioning ofNANJIREN, i.e., "My Family Brand", allowing more consumers to know that the products of NANJIREN hascovered many aspects of family life, including underwear, men's/ women's wear, maternal & infant products,outdoor products, bags & suitcases, shoes, home textiles, and household appliances, so as to increase consumerawareness of NANJIREN brand. The Company has carried out brand promotion in multiple scenes. During thereporting period, the Company sponsored the Tmall “Double Eleven” Carnival Night, and advertised on high-speedrail trains.
The Company will continue to invest in the image upgrading, advertising, crossover marketing and otheraspects of NANJIREN brand to create a nationally famous family brand, which shall be widely popularamong Chinese consumers.(Ⅳ) Overview of Supply Side
1. For the factories, the stable order, scale production, healthy cash flow, and low inventory are the key elements for"good and cheap goods", which have built the existing competitive advantage of NANJIREN brand.
2. With a large user base and high repeat purchase rate, the Company has been operating in the E-commercefield for nearly 10 years. Its licensed distributors have got strong customer acquisition ability with low customeracquisition cost, which has provided a guarantee for the licensed factories obtaining enough production orders.
3. The Company has adhered to the correct pricing strategy: " no low price for low purchase frequency, cost-performance for mid-frequency, high cost-performance for high-frequency."The Company has complied with the general trend of consumption upgrading and penetration into low-tier markets,and has been committed to building the world-class consumer goods giant based on E-commerce channels, makingthe client's capital turnover and inventory turnover be higher than those of traditional consumer brands.
Thus, our clients can still achieve a satisfactory return on investment, even if under a low gross profit margin.
4. Supply chain data empowerment: the Company has conducted the in-depth digital guidance to the supply chainpartners, making the consumer demands as the starting point of the business to solve the problems of "InformationIsland". The key indicators and analysis of the entire production and sales process for both the sales side and thesupply side were open to all supply chain partners, allowing the entire supply chain to respond to the market changesquickly.
1) Data empowerment on sales side: set up the data warehouse and establish the long-term availableunderlying data servicesBased on the business situations of the Company, the data application department of the Company has sorted outand designed the data warehouse system, containing the two major E-commerce platforms, i.e., Ali and JD.com. Itcan effectively support the commercialization of the new products and the development of the original products,and have considerable performance in the overall computing efficiency and data stability at the same time. With theimplementation of this program, the accumulation and empowerment of data of the Company can be realized in along term.Based on the business situations of the Company, the information development department of the Company hasconducted the statistics for and has sorted out the various brand licensing of the Company for the licensed stores ondifferent E-commerce platforms and daily GMV data, as well as factory licensing for different suppliers andtrademark procurement data. In addition, it has established the unified control relation of product categories,business data attribution criteria, and differentiation management standards, and has stored the data in more detailsto accommodate the rapidly increasing data volumes and increasingly complex business standards to achieve themulti-dimensional integration and rapid data analysis finally.
2) Data empowerment on supply side: quality data, equipment data, personnel data, warehousing data,production capacity data, commodity evaluation, etc.In addition to the business intelligence module development, during the reporting period, the data applicationdepartment and the business units of the Company has achieved a number of joint projects, including the modelresearch of product selection, shampoo industry research, pet industry research, and industry research of beautymakeup. At present, the Company has been able to make the deep research for the existing market and perform theincremental market exploration, with the construction and improvement of data infrastructure, as well as theestablishment of relevant analysis teams, which can match with more in-depth specialized analysis.During the reporting period, the data-level development was mainly based on the iterative optimization ofsupporting data products for business development, aiming at realizing the possibility of supporting data
empowerment in the vertical scenario. In addition to continuing to help the suppliers and distributors to improveproduction and operation efficiency from the product perspective, the Company has also been more proactive injointly develop the business growth plans, and conducting the in-depth development and implementation, which hasachieved results in many new projects.Enable the factory management to understand the data and make use of the data, and help the factory toconduct accurate production, improve quality, reduce cost, improve turnover, and reduce inventory, so as toachieve higher production and operation efficiency.
5. Quality management
The Company has continued to promote the quality management for its suppliers, and has made the followingmeasures during the reporting period:
1) Contracted with the third-party quality inspection agencies: as of the end of the reporting period, theCompany has established the strategic partnerships with 13 third-party quality inspection agencies, among which 7were added during the reporting period, in order to provide the quality consulting, quality management training,sampling inspection, and other services for suppliers, and further improve the inspection and monitoring networkof the Company.
2) Optimized the organizational structure: during the reporting period, the Company has further optimized theorganizational structure of the quality management team to be closer to the business, improve efficiency, and achievethe total quality management. In addition, it has assigned relevant personnel to work in the front-line of the businessunits to understand the demands, pain points and difficulties of the quality management of the business units, andto solve the quality problems in the first place. Meanwhile, the Company has continued to increase its investmentin quality management, and hired much more senior industrial experts to investigate, coach and rectify the qualitymanagement processes, personnel and organizations for the cooperative factories.
3) Investigated and guided the suppliers: during the reporting period, the Company has investigated 320 factories,compiled 12 Quality Management Operation Instructions in different categories in total, distributed them to thefactories, and sent the industry experts to perform training. Furthermore, the Company has required the factories toget to the designated institutions for testing as per the regions, aiming at further improving the quality control of thefactory.
4) Further improved the licence & termination mechanism of the supply chain partners: the Company hasformulated the negative list system, strictly screened the licence of supply chain partners, and carried out the follow-up detection for the licensed supply chain partners, performed the training, transformation and even elimination forthose failing to meet the standards to create the genuine domestic products.
5) Formulated and implemented the "Mysterious Buyer" Plan: during the reporting period, the Companyformulated the "Mysterious Buyer" Plan, which means that the Company's spot check staff have purchased theproducts of the Company in name of customers. And spot check staff have purchased a total of about 30,000 productslicensed by the Company, and inspected the compliance of the certificate of quality, care label, packaging,appearance, and trademark use for the products. This plan has been carried out gradually.
6. Industry chain service provider
The Company has learned the supply chain management experience from the excellent retail enterprise such as "7-Eleven", forging ahead on the road to becoming the industrial chain service provider with NJDS characteristics. Atpresent, a large number of high-quality supply chain companies in China are facing fierce competition, but lack ofstable orders, sufficient funds, and competitive brands. The Company can help the supply chain partners to carryout the industrial upgrading, acquire consumer traffic from the E-commerce channels more efficiently, and developthe hot-selling products effectively through our brands and services. The Company encourages the supply chainpartners to provide services such as "drop shipping" based on the consumer demands, and is committed to realizingthe status of "no bad debts in the suppliers and no out-of-season inventories in the distributors."
The industrial chain service providers cultivated by the Company can promote the continuous developmentof high-quality factories, and at the same time, continue to attract new high-quality factories to cooperatewith the Company, gradually improving the comprehensive competitiveness of the licensed industrial chain.(Ⅴ) Timelink's serviceThe main business of Timelink, a wholly-owned subsidiary of the Company, has been focusing on the mobileinternet marketing business, i.e., the advertising marketing business on the mobile terminal, promoting APP anddelivering advertisements for clients in these mobile terminals as an agent of the mobile information flow supplier.
1. Information flow suppliers: mainly including VIVO, Xiaomi, Tencent App Store, Toutiao, etc. Timelink enjoysa stable cooperation relationship with these information flow providers.
2. Advertising clients: mainly including the high-quality clients, such as Tik Tok, Taobao, VIP.com, 360 IOU, and
Money Station, whose demands for advertisements were stable with low payment risk.
3. Cash flow optimization: during the reporting period, the net operating cash flow of Timelink changed fromnegative to positive, achieving the amount of RMB 176,717,476.52.
4. Business innovation: performed the business innovation through combining with the market situations and theadvantages of the Company, deployed the internet celebrity advertising brokerage business, and enriched thebusiness of the Company.Timelink can keep sustainable, stable and healthy development for a long time, based on the operatingprinciple of "Guaranteeing Stability and Controlling Risks".
II. Major Changes in Key Assets
1. Major Changes in Key Assets
| Key assets | Explanations for major changes |
| Long-term equity investments | In 2019, the Company has signed the Transfer Agreement for XiEnEn's equity investment, which thus has not met the recognition criteria for the long-term equity investment, then was transferred to the account of “assets classified as held for sale”. |
| Fixed assets | At the end of 2019, the fixed assets amounted to RMB 6,718,909.97, with an increase of 122.35% compared with the beginning of the year, mainly due to the relocation of the actual operating address of the Company in 2019 and the increased procurement of office equipment. |
| Held-for-trading financial assets | At the end of 2019, the held-for-trading financial assets amounted to RMB 1.49 billion, with an increase of 231.01% compared with the beginning of the year, mainly due to the increased procurement of finance products by the Company. |
| Notes receivable | At the end of 2019, the notes receivable amounted to RMB 73,506,158.00, with an increase of 82.31% compared with the beginning of the year, mainly because some clients have increased the amount settled by bank acceptance bills. |
| Advances to suppliers | At the end of 2019, the advances to suppliers amounted to RMB 229,302,915.74, with a decrease of 58.52% compared with the beginning of the year, mainly due to the decrease in the prepaid information flow fees made by the subsidiary – Timelink at the end of the year |
| Other receivables | At the end of 2019, other receivables amounted to RMB 88,075,286.90, with an increase of 47.16% compared with the beginning of the year, mainly due to the increase in the purchase margin to supplier paid by the subsidiary – Timelink within the year. |
| Inventories | At the end of 2019, the inventories were RMB 5,471,862.14, with an increase of 62.77% compared with the beginning of the year, mainly due to the increase in the procurement of ready-to-wear conducted by the subsidiary – Cartelo Cale(Shanghai) Trading Co., Ltd. within the year, which launched the offline children's wear business in 2019. |
| Long-term deferred expenses | At the end of 2019, the long-term deferred expenses amounted to RMB 7,282,365.40, with |
| an increase of 6,574.14% compared with the beginning of the year, mainly due to the increase in the renovation costs for the newly-leased office building by the Company within the year. | |
| Other non-current assets | At the end of 2019, other non-current assets amounted to RMB 1,886,792.26, with a decrease of 87.42% compared with the beginning of the year, mainly because due to the input VAT to be deducted was expected to be deducted completely within the coming year, thus the Company has reclassified its balance to the account of “non-current assets maturing within one year”. |
| Details of assets | Method of formation | Asset size | Location | Operating model | Control measures to guarantee asset safety | Earning status | Proportion of the Company’s net assets | Significant risk of impairment? |
| CCPL | Equity acquisition | RMB621,847,417.61 | Samoa | Brand licensing | Measure to prevent the trademark infringements | Good | 12.80% | No |
| UNIVERSAL NEW LIMITED | Equity acquisition | RMB 50 million | British Virgin Islands (BVI) | Brand licensing | Measure to prevent the trademark infringements | Good | 1.03% | No |
in resource referral, R&D, traffic management, data analysis & application for suppliers, so as to help them todevelop the hot-selling products, realize the transformation from low-frequency to high-frequency on product usage,reduce the inventories, and improve the capital turnover rate, and help the factories to achieve low-costtransformation, and get out of the predicament with the unstable orders and difficulties in getting loans; on the otherhand, the Company has implemented the policy of “Client First” in benefit distribution, which has eased the fundingpressure of supply chain partners and established the good credit trust system, thus forming the "competition barrier".
3. The Company’s organization has optimized continuously to adapt to changes in the market andconsumption.The Company has continued to maintain small steps of change and innovation, and insisted on self-transformation,which has allowed the organization to adapt to the changes of the market and the enterprise management demands,through such measures as organization and process reengineering, information development, culture andperformance management.In terms of organizational structure, the front business units have been dynamically performing the integration andadjustment, according to the differentiation of category in E-commerce industry and the supply chain integrationneeds of the Company, cultivating the generalists in management comprehensively; in terms of the teamdevelopment, the Company has constantly introduced the professional talents to enrich the staff team; and in termsof the process management, the Company has continuously optimized the process based on business andmanagement requirements, thus enhancing the organizational efficiency.
4. Roadmap to build a world-class consumer goods giant based on E-commerce channels
The Company believes:
1) Consumer traffic is the essence of E-commerce;
The NANJIREN brand had a good consumer traffic scale in different major E-commerce channels, with the obviouscomparative advantages in number of visitors, purchasers, and repeat purchasers, which made the brand morecompetitive;
2) Efficiency is the essence of retail;
The NANJIREN brand has focused on the products with high- or medium frequency of usage, and the preciseallocation for the resources of suppliers and distributors can help the supply chain to respond to the market quickly;
3) Value chain is the essence of business;
The brands, products and services of the Company have formed the foundation of the value chain of our business.A good brand is a trust endorsement, and can exceed the expectations. Although the products and services ofNANJIREN brand have gained certain achievements, there will be still much space for improvement;
4) Good organization can achieve sustainable competitiveness;
The Company has continued to enhance its competitiveness through such methods as talent recruitment,organization optimization, and process transformation, and there will still be much space for improvement;
5) Good culture can generate self-motivation force;
The Company has encouraged the employees to find out their own value points on the platform of the Company toachieve self-motivation and self-fulfillment. There is still a certain distance for the Company to become one of theworld's top excellent enterprises;
6) Sharing is the essence of platform;
Allowing the employees, clients and shareholders to share the benefits of the Company's growth is the source of thehealthy and sustainable development of the Company’s platform. And it is the responsibility of the Company tobring the long-term returns to employees, clients and shareholders.
7) Risk control allows the Company to develop healthily;
Good risk control can make the Company invincible. The Company has always advocated the business moralitiesof conducting the operation according to laws, performing the business in an honest and trustworthy way, andattached importance to the quality management and anti-corruption management, with the aim to pursue the long-term healthy development.(II) Timelink's competitive advantages in business
1. Timelink had abundant high-quality client resources
Relying on the abundant internet marketing industry experience and resource accumulation of the management team,Timelink has quickly explored a series of high-quality clients, such as Toutiao, Alibaba Group, Suning.com, Mogujie,iQiyi, and Netease, who have high demands for service capability and quality. In addition, the good cooperativerelationship with them has reflected the excellent business capabilities of Timelink. During the business explorationand development, Timelink has quickly established a good reputation and brand influence.
2. Diversified high-quality information flow resources
Timelink not only had high-quality mobile information flow suppliers, such as VIVO and Xiaomi, but also was thecore agent of the mainstream information flow suppliers, such as Tencent App Store and Toutiao. These are the coremedia resources of Timelink. In addition, Timelink has expanded the small and medium-sized business (“SMB”) inXiaomi's information flow. The wholly-owned subsidiary of Timelink - RAYAS has obtained the SMB exclusiveagency qualification for Xiaomi Advertising in 2019, which has expanded the client resources and enriched theclient types for Timelink. It can help to improve the market share, resource advantage, and the popularity of Timelink,laying a good foundation of information flow resources for the steady development.
3. Professional business team with excellent marketing and flow integration capabilitiesRelying on the experienced business team and diversified information flow resources, Timelink can realize the morediversified flow integration strategy in the advertising plan setting, develop the targeted plan based on the actualdemands of the client, select the appropriate media resources for the clients, fully improve the promotion efficiencyof the advertising plan, reduce the advertising costs for clients, and gradually gain full recognition from more clients.The professional mobile internet marketing team of Timelink has provided not only the capability guarantee for itsbusiness realization, but also the early data accumulation for the gradual improvement of its business support system,and the technical guarantee for the design indicator setting.
4. Gradually improved business support system
Based on the industry dynamics and market demands, Timelink has developed and used the big data analysis andapplication systems, such as real-time marketing delivery monitoring system, market monitoring platform formobile application, and real-time bidding system for advertisements, to effectively track the delivering dynamics,timely adjust the marketing plans, and improve the delivery efficiency. With the continuous increase of the businessscale of Timelink, the numbers of staff, advertising channels, and clients have been increasing accordingly. Hence,Timelink has developed the integrated management platform that can make the unified management of business andorganization better and reduce management costs.
Section 04 Management Discussion & AnalysisI. Overview(I) Business overview
1. Company Mission: To help China's high-quality supply chains achieve continuous success, and provide highcost-performance products and services to Chinese families!
2. Company Vision: To become a world-class consumer goods giant!
3. Overall business performance:
During the reporting period, the statistically available GMV for the licensed brand products of the Companyamounted to RMB 30.559 billion, with a year-on-year increase of 48.92%; the total number of licensed suppliers ofthe Company was 1,113, including about 500 main licensed suppliers; and the total number of licensed distributorswas 4,513, and the number of licensed stores was 5,800.During the reporting period, the Company achieved an operating revenue of RMB 3,906,848,236.41, with a year-on-year increase of 16.52%; and the net profit attributable to shareholders of the listed company was RMB1,206,136,918.38, with a year-on-year increase of 36.06%.During the reporting period, the Company continued to strengthen the management towards the accounts receivable.
1) The accounts receivable of NJBU (excluding the factoring business) amounted to RMB 605,576,004.51, with ayear-on-year increase of 38.26%;
2) The accounts receivable for the factoring business of the Company amounted to RMB 24,282,084.36, with ayear-on-year decrease of 85.45%;
3) The accounts receivable for the business of Timelink amounted to RMB 159,846,041.33, with a year-on-yearincrease of 33.51%;During the reporting period, the net operating cash flow of the Company has been significantly improved andamounted to RMB 1.255 billion, with a year-on-year increase of 127.59%, of which, the net operating cash flow forNJBU amounted to RMB 1,078,194,350.10, with a year-on-year increase of 86.18%. In addition, the net operatingcash flow of Timelink amounted to RMB 176,717,476.52, which changed from negative to positive.
4. Memorabilia in 2019
(II) Brand analysisThe main brands of the Company include NANJIREN, Cartelo Crocodile, and Classic Teddy.
1. NANJIREN brand is positioned as a family lifestyle brand for the mass market, which has strived to become aworld-class consumer product brand based on the E-commerce channel. In 2019, the NANJIREN brand’s GMVamounted to RMB 27.138 billion, with a year-on-year increase of 52.86%, which has become one of the leadingbrands of E-commerce consumer products.
2. Cartelo Crocodile brand is positioned as an international fashion brand popular with young people, aiming atproviding consumers with products of international fashion and quality at acceptable prices, and striving to becomean influential brand in the its segment. In 2019, Cartelo Crocodile brand's GMV amounted to RMB 2.986 billion,with a year-on-year increase of 27.94%.
3. Classic Teddy brand is positioned as an international brand, which focuses on the maternal & infant and Co-Branding business, and strives to become a model of international brand cooperation. In 2019, the GMV of ClassicTeddy brand amounted to RMB 228 million, with a year-on-year increase of 45.61%.(III) Channel analysisIn 2019, the GMV of the licensed stores of the Company (“the Company’s total GMV”) amounted to RMB 30.559billion on various E-commerce platforms, with the specific breakdown as follows:
1. GMV achieved at the Ali channel amounted to RMB 20.317 billion, with a year-on-year increase of 39.13%,accounting for 66.48% of the Company’s total GMV;
2. GMV achieved at the JD.com channel amounted to RMB 4.682 billion, with a year-on-year increase of 31.50%,accounting for 15.32% of the Company’s total GMV;
3. GMV achieved at major Social E-commerce channels amounted to RMB 3.965 billion, with a year-on-yearincrease of 124.89%, accounting for 12.97% of the Company’s total GMV;
4. GMV achieved at the VIP.com channel amounted to RMB 1.445 billion, with a year-on-year increase of 200.35%,accounting for 4.73% of the Company’s total GMV.(IV) Category analysis
1. Category positioning overview
1) The product of NANJIREN brand is positioned as a multi-category of new fast-moving consumer product, whichcovers various aspects of family life and enjoys a large expansion space;
2) The product of Cartelo Crocodile brand is positioned as a sports fashion-clothing product, which reflects theinternational trend;
3) The product of Classic Teddy brand is positioned as the product of the maternal & infant category, which reflectsthe cuteness & leisure style.(The analysis of the major categories is as follows)
2. Analysis of Underwear Category
1) Category segmentation
The Company’s primary category of "women's underwear/men's underwear/loungewear" (hereinafter referred to as"underwear category") included such sub-categories as underpants, socks/leggings/silk stockings/leg-shapingstockings, pajamas/loungewear suits, thermal suits, thermal blouses, thermal pants, bras, nightdress,suspenders/vests/T-shirts, tube tops, shaping waistbands/waist clips, robes/bathrobes, nipple covers, pajamapants/lounge pants, shaping jumpsuits, bodybuilding pants, bra sets, shaping blouses, pajama jackets, inserts/breastpads, shoulder straps, two-piece shaping sets, etc.
2) Category strategy
The underwear category of the Company involved such brands as NANJIREN, Cartelo Crocodile, and Classic
Teddy, where NANJIREN is the main brand.NANJIREN has preferably achieved the accurate matching of "people, goods, market, and time" through the "EightCoverage" strategies for the underwear category, and grasped the new consumption trends, clarified the brandpositioning and data empowerment to develop the hot-selling products, identified and maintained the accurate targetconsumers, quickly penetrated into the blue ocean market segment, to make the consumers become true fans ofNANJIREN, and further establish the advantage barrier for the NANJIREN underwear category, transforming fromthe crowd scale advantage to the fans scale advantage.
3) Operational performance
① GMV ranking
In 2019, the GMV of the four sub-categories, including underpants, thermal underwear, socks and loungewear ofNANJIREN brand, ranked first and the GMV of bra subcategory ranked fifth on Ali platform respectively; inaddition, the GMV of the four sub-categories, including underpants, thermal underpants, socks and loungewear ofNANJIREN brand ranked first, and the GMV of bra sub-category ranked second on JD.com platform respectively.
② GMV performance
In 2019, the statistically available GMV for the underwear categories of the Company’s all brands amounted toRMB 8.967 billion, with a year-on-year increase of 46.20%, of which:
? GMV from the Ali platform amounted to RMB 6.523 billion, with a year-on-year increase of 38.78%;? GMV from the JD.com amounted to RMB 1.131 billion, with a year-on-year increase of 24.38%;? GMV from major Social E-commerce platform amounted to RMB 754 million, with a year-on-year increaseof 131.14%;? GMV from VIP.com amounted to RMB 538 million, with a year-on-year increase of 190.20%;? GMV from other online platforms amounted to RMB 21 million, with a year-on-year increase of 71.65%.
3. Analysis of Bedding Category
1) Category segmentation
The Company’s primary category of "beddings" included such subcategories as bedding sets/four-piecesets/multiple-piece sets (collectively referred to as "bedding sets"), quilts, pillows/pillow interiors/health carepillows/cervical pillows (collectively "pillows"), and mattresses/bed mats/protective mattress pads/tatamimattresses (collectively referred to as "mattresses"), quilt covers, casual blankets/blankets/flannelette blankets, bedsheets, fitted sheets, mosquito nets, pillowcases, bed skirts, bed covers, children's beddings, pillow towels, bedcurtains, sleeping bags, summer sleeping mats/bamboo mats/rattan mats/straw mats/leather mats, bedspreads,bedding’s accessories, customized beddings, fabric cakes/cake towels, electric blankets, etc.
2) Category strategy
The beddings category of the Company involved such brands as NANJIREN, Cartelo Crocodile, NANJIREN home,Classic Teddy, and NANJIREN+, where NANJIREN is the main brand.The bedding category of NANJIREN brand aimed at setting up the diversified consumption scenarios to create theimage of “NANJIREN, the World for your Home”, and concentrating the resources to achieve the empowerment ofthe "Home" category to create the comprehensive store portfolios. The comprehensive stores, taking NANJIRENYouxuan Specialty Store as an example, had such features as multiple SKUs, multiple hot-selling products, andhigh consumer traffic and conversion rate, etc.
3) Operational performance
① GMV ranking
In 2019, the GMV of the four sub-categories, including bedding sets, quilts, mattresses and pillows of NANJIRENbrand ranked first on Ali platform.
② GMV performance
In 2019, the statistically available GMV for the "beddings" categories of the Company’s all brands amounted toRMB 5.356 billion, with a year-on-year increase of 75.78%, of which:
? GMV from the Ali platform amounted to RMB 3.560 billion, with a year-on-year increase of 56.35%;? GMV from the JD.com amounted to RMB 928 million, with a year-on-year increase of 60.58%;? GMV from major Social E-commerce platform amounted to RMB 792 million, with a year-on-year increaseof 383.06%;? GMV from VIP.com amounted to RMB 51,030,102.06, with a year-on-year increase of 91.76%;? GMV from other online platforms amounted to RMB 24,280,237.15, with a year-on-year increase of1,836.07%.
4. Analysis of Men's wear Category
1) Category segmentation
The Company’s primary category of "men's wear" included such sub-categories as men's casual pants, T-shirts,jeans, shirts, down jackets, knitted shirts/sweaters, hoodies, jackets, cotton-padded clothes, vests/waistcoats, downpants, wind coats, suit pants, woolen overcoats, leather clothing, Polo shirts, suits, business suits, cotton-paddedtrousers, leather pants, western-style suits, and folk costume.
2) Category strategy
The men's wear category of the Company involved such brands as NANJIREN, Cartelo Crocodile, andNANJIREN+, where NANJIREN is the main brandThe men's wear category strategies of NANJIREN brand focused on the mission of "Sticking to the originalaspiration of the good products with fair prices to become the most popular brand for men's wear", and conductedthe multi-category development, created the high cost-performance goods, covered the multiple-age consumers,developed the promising category with the much younger styles, continuously promoted the new hot-sellingproducts, improved the traffic efficiency, and formed the industry-leading position of NANJIREN men's wear.
3) Operational performance
① GMV ranking
In 2019, the GMV of the four sub-categories, including men's casual pants, jeans, shirts, and cotton-padded clothesof NANJIREN brand ranked second, and the GMV of the five subcategories, including men's T-shirts, knittedshirts/sweaters, hoodies, vests/waistcoats, down pants ranked third on Ali platform respectively. In addition, theGMV of the two subcategories, including men's casual pants and jeans, ranked second, and the GMV of the threesubcategories, including men's jackets, hoodies, and cotton-padded clothes, ranked third respectively on JD.com.
② GMV performance:
In 2019, the statistically available GMV for the men's wear categories of the Company’s all brands amounted toRMB 4.949 billion, with a year-on-year increase of 48.97%, of which:
? GMV from the Ali platform amounted to RMB 3.061 billion, with a year-on-year increase of 44.65%;
? GMV from the JD.com amounted to RMB 789 million, with a year-on-year increase of 42.69%;? GMV from major Social E-commerce platform amounted to RMB 887 million, with a year-on-year increaseof 45.57%;? GMV from VIP.com amounted to RMB 148 million, with a year-on-year increase of 1,992.53%;? GMV from other online platforms amounted to RMB 65,191,900.64, with a year-on-year increase of 75.35%.
5. Analysis of Women's wear Category
1) Category segmentation:
The Company’s primary category of "women's swear/female accessory" (hereinafter referred to as the "women'sswear category") included such sub-categories as women’s pants, bust skirts, shoulder vests, suits, dresses, large-sized women's wear, jeans, POLO shirts, T-shirts, middle-aged and elderly women's wear, woolen coats, fur clothing,leather coats, woolen sweaters, short coats, waistcoats, down jackets, hoodies/woolen sweaters, business suits, shirts,wind coats, cotton-padded clothes/cotton-padded sweaters, woolen knitted sweaters, lace shirts/chiffon shirts, etc.
2) Category strategy
The women's wear category of the Company involved such brands as NANJIREN and Cartelo Crocodile, whereNANJIREN is the main brand. Main strategies of NANJIREN women's wear categories are as follows:
①Developed multiple categories, changing the previous situation that the GMV of the core product of women'swear - "trouser" accounted for more than 80% of the Company’s total GMV of women’s wear. During the reportingperiod, the Company has developed key women's wear sub-categories, such as T-shirts, hoodies, jeans, anddownwear.
②Developed the comprehensive store as benchmark. NANJIREN Women's Wear Flagship Store has served as thebenchmark for multi-category licensed stores, and has gradually cultivated the consumption habits for theconsumers of NANJIREN women's wear.
③Focused on the emerging low-tier market, so that the prices and images of our women's wear products wouldmeet the market development trends.
④Established a multi-category hot-selling product portfolio, and formed a breakthrough in "trend" by combiningwith the "Point – Line - Surface" comprehensive efforts.
⑤Continuously improved the appearance and quality of women's wear products and the consumer experience.
⑥Continuously recruited the Taobao brands with powerful strength as the in-depth partners of the Company toimprove the capabilities of the operation and supply chain of the women’swear category.
3) Operational performance
① GMV ranking
In 2019 on Ali platform, the annual GMV of NANJIREN women's wear ranked the ninth, where the annual GMVof leggings sub-category ranked the first, the best ranking of down pants and bust skirts sub-category was No.1among the monthly GMV rankings, the best ranking of women's casual pants sub-category was No.4 among themonthly GMV rankings, and the best ranking of women's sweaters sub-category was sixth among the monthly GMVrankings respectively.
② GMV performance
In 2019, the statistically available GMV for the women's wear categories of the Company’s all brands amounted toRMB 1.848 billion, with a year-on-year increase of 61.48%, of which:
? GMV from the Ali platform amounted to RMB 1.409 billion, with a year-on-year increase of 43.65%;? GMV from JD.com amounted to RMB 129 million, with a year-on-year increase of 22.76%;? GMV from major Social E-commerce platform amounted to RMB 259 million, with a year-on-year increaseof 338.95%;? GMV from the newly-expanded platform - VIP.com amounted to RMB 51,754,045.48;? GMV from other newly-expanded platforms amounted to RMB 261,951.00;
6. Analysis of Children's wear and Maternal & infant Categories
1) Category segmentation
① The Company’s primary category of "children's wear/baby's wear/parent-child clothing" (hereinafterreferred to as the "children's wear category") included such sub-categories as children's pants, T-shirts,children's underwear, children's socks, hoodies/woolen sweaters, children's loungewear, shoulder vests, backward-dressing coats/dust-coats, children's outdoor clothing, belly bands/abdomen bibs/navel protective bands,capes/mantles, children's swimwear, boob tube tops, suits, coats/jackets/overcoats, skirts, down garment/downsweater, children's accessory, baby suits/jumpsuits/rompers, woolen sweaters/knitted sweaters, cotton-paddedjackets/cotton-padded clothes, school uniforms/customized school uniforms, parent-child clothing/parent-childfashionable dresses, hats/scarfs/masks/gloves/ear-muffs/foot-muffs, children's accessories, shirts, waistcoats,children's dresses, baby gift sets, etc.
② The Company’s primary category of "infant & children products" (hereinafter referred to as the"maternal & infant category") included such sub-categories as cloth diapers/urine pads, pull-up diapers, intensivecare diapers, paper nappies, paper diapers, skin-care products for baby bath, baby sleeping bags/summer sleepingmats/pillows/beddings, baby buggies/baby walkers, water cups/cutleries/grinding products/accessories, children'scribs/baby cribs/cradles/dining chairs, wet tissues, bottles/bottle related products, collisionprevention/remaindering/safety/protection products, straps/walk learning belts/travel supplies, disinfection/milkwarming/small-household appliances, children's rooms/tables/chairs/furniture, haircuts/nail clippers/other personalcare products, teething gels/toothbrushes/toothpaste, cleaning solutions/laundry detergents/softeners, mosquitorepellent products, pacifier/pacifier related products, etc.
③The Company’s primary category of "maternity wear/maternity products/nutrition products"(hereinafter referred to as the "maternity & infant category") included such sub-categories as maternity wear,loungewear/nursing wear/long underwear, maternity pants/belly pants, nursing bras/underpants/antenatal care pants,maternal skin-care/washing & cleaning/wrinkles-removing products, pre-delivery supplies, breast pumps /accessories, breast-feeding supplies, binding belts/corsets/pelvis belts, radiation protection products, maternalnutrition products, postpartum nutrition products, maternity caps/socks/shoes, mummy packages/bags, maternitymake-up products, maternity repair devices, maternity exercise/yoga/fitness products, etc.
2) Category strategy
The children's wear and maternity & infant category of the Company involved such brands as NANJIREN, Cartelo
Crocodile, and Classic Teddy, where NANJIREN is the main brand.The strategies of children's wear and maternal & infant category of NANJIREN brand included: To further improvethe consumer experience through product innovation, packaging upgrading, quality upgrading and product's visualimage optimization; and to achieve more accurate insights and meet the differentiated demands of differentconsumers, and achieve the efficient matching of "people, goods, market, and time", continue to promote the productiteration and upgrading, gather the excellent supply chain resources, create the one-stop NANJIREN multi-categories shopping experience for different ages, and care for the healthy growth of every child through dataanalysis.
3) Operational performance
① GMV ranking:
In 2019, the GMV of the three sub-categories of NANJIREN brand, including children's underwear, children's socks,and maternity loungewear/nursing wear/thermal underwear ranked first, and the GMV of the five sub-categories,including children's pants, children's loungewear, baby sleeping bags/summer sleeping mats/pillows/beddings,nursing bras/underpants/antenatal care pants, and maternity pants/belly pants ranked second, and the GMV of thesub-category of children's shoulder vests ranked third, and the GMV of the sub-category of children'shoodies/woolen sweaters ranked fourth, and the GMV of the sub-category of children's T-shirts ranked fifth, on Aliplatform respectively; in addition, the GMV of the three sub-categories of NANJIREN brand, including children'sunderwear, children's hoodies/woolen sweaters, and baby sleeping bags/summer sleeping mats/pillows/beddingsranked first, and the GMV of the three sub-categories, including children's socks, children's loungewear and downgarment/down sweater ranked second, and the GMV of the sub-category of children's pants ranked third, on JD.comrespectively.
② GMV performance:
In 2019, the statistically available GMV for the children's wear and maternity & infant categories of the Company’sall brands amounted to RMB 3.170 billion, with a year-on-year increase of 31.36%, of which:
? GMV from the Ali platform amounted to RMB 2.193 billion, with a year-on-year increase of 21.08%;? GMV from the JD.com amounted to RMB 415 million, with a year-on-year increase of 16.00%;? GMV from major Social E-commerce platform amounted to RMB 278 million, with a year-on-year increaseof 189.76%;? GMV from the VIP.com amounted to RMB 265 million, with a year-on-year increase of 133.94%;
7. Analysis of Healthy Living Category
1) Category segmentation
①Healthy Living & Fashion Technology Business Group I (“HLFTBG I”): responsible for the managementand operation of fourteen primary categories, including large home appliances, automobileaccessories/electronic/cleaning/refitted products, family/personal cleaning tools, 3C digital accessories, stationery& electrified education products/stationery commodities/business supplies, kitchen/cooking utensils, tableware,kitchen appliances, storage & clear-up tools, medical equipment, office equipment/consumable materials/relatedservice products, automobile parts/maintenance/beauty/repair & maintenance products, Internet medical/healthcareproducts, audio & video appliances, of which, the core categories were large home appliances and kitchen appliances,
and there were 26 level-2 categories in the large home appliance category, and 46 level-2 categories in the kitchenappliance category on Tmall.com.
②HLFTBG II: responsible for the management and operation of four primary categories, including "personalcare/health care/massage devices", "pet/pet food and supplies", "beauty and body care device", and "washing &cleaning detergent/sanitary napkins/toilet paper/aromatherapy products", of which, the core category was "personalcare/health care/massage device", and there were 23 level-2 categories on Tmall.com.
③HLFTBG III: responsible for the management and operation of two primary categories, including domesticelectrical appliances and household daily products, of which, there were 52 level-2 categories in domestic electricalappliance category and 24 level-2 categories in household daily product category on Tmall.The above categories are collectively referred to as the "Healthy Living Category".
2) Category strategy:
The healthy living category of the Company mainly involved NANJIREN brand, and the strategies of NANJIRENhealthy living category mainly included:
① Category strategies of the domestic electrical appliance and household daily product? Expand the new products to achieve the multi-category coverage? Expand the sales channels to achieve the multi-channel coverage? Take advantage of the data to drive the accuracy of product development and improve the operation efficiency? Create a number of comprehensive stores
② Category strategies of the personal care/health care/massage device
The product hierarchy, which had been developed by the Company through centering on the personal care scenario,included five sub-categories, i.e., personal care appliances, health care device, massage device, beauty &body caredevice, and oral care products, which combined with the analysis and application of market data to provide morediversified and personalized goods for different consumer demands. In addition, the Company would grasp theconsumption trends at a deeper level, clarify the positioning, fully penetrate the blue ocean market with the conceptof "New National Trends, New Domestic Goods" through centering on the "Data Empowerment, MarketingIntelligence Change", and build a nation-wide healthy living brand.
3) Operational performance
① GMV ranking
Domestic electrical appliances: in 2019, the GMV of the two sub-categories of NANJIREN brand, including electricblankets and shoe dryers ranked first, and the GMV of the sub-category of lint removers ranked second on Aliplatform respectively;Household daily products: in 2019, the GMV of the two subcategories of NANJIREN brand, including hot-waterbags and electric blankets ranked first, the GMV of the subcategory of warm pastes/pocket warmers/warm productsranked second, and the GMV of the two sub-categories, including protective tools and shoe tools ranked third onAli platform respectively;In 2019, the GMV of the personal care/health care/massage device category of NANJIREN brand ranked sixth on
Ali platform;
② GMV performance
In 2019, the statistically available GMV for the personal care/health care/massage device of the Company’s allbrands amounted to RMB 1.334 billion, with a year-on-year increase of 27.87%, of which:
? GMV from the Ali platform amounted to RMB 600 million, with a year-on-year increase of 24.96%;? GMV from JD.com amounted to RMB 469 million, with almost no year-on-year change.? GMV from major Social E-commerce platforms amounted to RMB 257 million, with a year-on-year increaseof 190.74%;? GMV from VIP.com amounted to RMB 5,065,388.71, with a year-on-year increase of 1,130.34%? GMV from other platforms amounted to RMB 3,363,067.49;In 2019, the statistically available GMV for the domestic electrical appliance of the Company’s all brands amountedto RMB 538 million, with a year-on-year increase of 56.36%, of which:
? GMV from the Ali platform amounted to RMB 350 million, with a year-on-year increase of 28.88%;? GMV from JD.com amounted to RMB 112 million, with a year-on-year increase of 67.59%;? GMV from major Social E-commerce platform amounted to RMB 74,438,685.10, with a year-on-year increaseof 1,172.63%;? GMV from VIP.com amounted to RMB 1,553,185.62;? GMV from other platforms amounted to RMB 243,356.85;In 2019, the statistically available GMV for the household daily product of the Company’s all brands amounted toRMB 620 million, with a year-on-year increase of 11.16%, of which:
? GMV from the Ali platform amounted to RMB 468 million, with a year-on-year increase of 4.89%;? GMV from JD.com amounted to RMB 89,669,635.96, with a year-on-year increase of 3.37%;? GMV from major Social E-commerce platform amounted to RMB 41,898,141.98, with a year-on-year increaseof 500.82%;? GMV from VIP.com amounted to RMB 17,061,878.15, with a year-on-year increase of 12,122.10%.(V) Mobile Internet marketing business
1. Information flow suppliers: during the reporting period, the Company's wholly-owned subsidiary - Timelinkhas continued to consolidate the cooperation advantages of the existing mainstream suppliers, and has become theSMB exclusive agent of Xiaomi information flow at the same time; in addition, it has become the core agent ofTecent App Store with the highest traffic consumption; and by virtue of the continuous high-quality customer serviceand industry reputation, it has become the core agent of VIVO in E-commerce and financial industries with thehighest traffic consumption; furthermore, while consolidating the existing information flow resources, Timelink hasbecome the core agent of -Toutiao’s Tik Tok media, and has started to expand the business of short video informationstreaming media.
2. Advertising clients: To strictly screen the client qualification, improve capital usage efficiency and reduceoperational risk while ensuring capital security; at the same time, 657 new clients were developed during thereporting period. In addition, while maintaining the existing APP clients of E-commerce, Internet service, finance,educational tools and other industries, H5 type clients were developed to enrich the client portfolios and obtain newperformance growth resources.II. Main Business Analysis
1. Overview
Please refer to "I. Overview" of "Section 04 Management Discussion & Analysis" for the relevant contents.
2. Revenues and Costs
(1) Composition of operating revenue
Unit: RMB
| Year 2019 | Year 2018 | Change YOY | |||
| Amount | Percentage of operating revenue | Amount | Percentage of operating revenue | ||
| Total operating revenue | 3,906,848,236.41 | 100% | 3,352,859,972.47 | 100% | 16.52% |
| By industries | |||||
| Modern service | 1,395,896,981.58 | 35.73% | 1,035,152,447.16 | 30.87% | 34.85% |
| Mobile Internet service | 2,508,135,146.01 | 64.20% | 2,316,017,013.90 | 69.08% | 8.30% |
| Sales of goods | 2,816,108.82 | 0.07% | 1,690,511.41 | 0.05% | 66.58% |
| By products | |||||
| Brand comprehensive service | 1,240,912,123.46 | 31.76% | 899,930,249.10 | 26.84% | 37.89% |
| Distributor brand licensing service | 65,447,600.05 | 1.68% | 33,855,541.77 | 1.01% | 93.31% |
| Mobile Internet media delivery service | 2,431,170,375.39 | 62.23% | 2,200,794,790.65 | 65.64% | 10.47% |
| Mobile Internet traffic integration service | 76,964,770.62 | 1.97% | 115,222,223.25 | 3.44% | -33.20% |
| Web celebrity traffic monetization service | 46,601,214.37 | 1.19% | 47,231,969.73 | 1.41% | -1.34% |
| Factoring service | 35,912,907.06 | 0.92% | 44,730,658.99 | 1.33% | -19.71% |
| Sales of goods | 2,816,108.82 | 0.07% | 1,690,511.41 | 0.05% | 66.58% |
| Park platform service | 0.00 | 0.00% | 3,045,398.33 | 0.09% | -100.00% |
| Other services | 7,023,136.64 | 0.18% | 6,358,629.24 | 0.19% | 10.45% |
| By regions | |||||
| China | 3,906,848,236.41 | 100.00% | 3,352,859,972.47 | 100.00% | 16.52% |
| Operating revenue | Operating cost | Gross profit margin | YoY change in the operating income | YoY change in the operating costs | YoY change in the gross profit margin | |
| By industries | ||||||
| Modern service | 1,395,896,981.58 | 102,043,903.85 | 92.69% | 34.85% | 48.89% | -0.69% |
| Mobile Internet service | 2,508,135,146.01 | 2,299,176,177.70 | 8.33% | 8.30% | 8.34% | -0.04% |
| By products | ||||||
| Brand comprehensive service | 1,240,912,123.46 | 82,396,270.02 | 93.36% | 37.89% | 55.33% | -0.75% |
| Mobile Internet media delivery service | 2,431,170,375.39 | 2,248,875,980.36 | 7.50% | 10.47% | 9.75% | 0.61% |
| By regions | ||||||
| China | 3,906,848,236.41 | 2,402,698,452.04 | 38.50% | 16.52% | 9.36% | 4.03% |
By Product
Unit: RMB
| By Product | Item | Year 2019 | Year 2018 | Change YOY | ||
| Amount | % of operating cost | Amount | %of operating cost | |||
| Brand comprehensive service | Purchasing cost | 78,890,844.18 | 3.28% | 42,544,897.05 | 1.94% | 1.34% |
| Brand comprehensive service | Wage cost | 3,502,083.24 | 0.15% | 7,434,868.01 | 0.34% | -0.19% |
| Brand comprehensive service | Advertising and publicity expense | 0.00 | 0.00% | 3,061,885.88 | 0.14% | -0.14% |
| Brand comprehensive service | Depreciation of fixed assets | 3,342.60 | 0.00% | 4,137.97 | 0.00% | 0.00% |
| Distributor brand licensing service | Wage cost | 3,368,603.48 | 0.14% | 1,176,646.52 | 0.05% | 0.09% |
| Web celebrity traffic monetization service | Image licensing fee | 12,313,041.34 | 0.51% | 12,320,788.51 | 0.56% | -0.05% |
| Web celebrity traffic monetization service | Service cost | 854,565.81 | 0.04% | 110,179.42 | 0.01% | 0.03% |
| Factoring service | Interest expense | 252,904.93 | 0.01% | 501,094.33 | 0.02% | -0.01% |
| Mobile Internet media delivery service | Media delivery cost | 2,248,875,980.36 | 93.60% | 2,049,096,952.29 | 93.26% | 0.34% |
| Mobile Internet traffic integration service | Traffic integration cost | 50,300,197.34 | 2.09% | 73,140,122.52 | 3.33% | -1.24% |
| Park platform service | Service cost | 0.00 | 0.00% | 356,336.53 | 0.02% | -0.02% |
| Sales of goods | Purchasing cost | 1,478,370.49 | 0.06% | 6,367,857.11 | 0.29% | -0.23% |
| Other services | Service cost | 2,858,518.27 | 0.12% | 1,026,121.72 | 0.05% | 0.07% |
(1) Establishment of subsidiaries
① Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. was a newly established holding subsidiary, invested bythe Company's subsidiary Nanji E-commerce (Shanghai) Co., Ltd. in January 2019, with the registered capital ofRMB 30 million, and the equity held by the Company accounted for 86.67%. The registered capital of RMB 26million was paid as of December 31, 2019.
② Shanghai Aosang Cultural Communication Co., Ltd. was a newly established holding subsidiary, invested bythe Company's subsidiary Nanji E-commerce (Shanghai) Co., Ltd. in January 2019, with the registered capital ofRMB 10 million, and the equity held by the Company accounted for 96%. As of December 31, 2019, no capital wascontributed.
③ Xinjiang Jingshang E-commerce Co., Ltd. was a newly established holding subsidiary, invested by theCompany in November 2019, with the registered capital of RMB 10 million, and the equity held by the Companyaccounted for 100%. As of December 31, 2019, the registered capital of RMB 100,000 was paid.
④ Xinjiang Yuduocheng E-commerce Co., Ltd. was a newly established holding subsidiary, invested by theCompany in November 2019, with the registered capital of RMB 10 million, and the equity held by the Companyaccounted for 100%. As of December 31, 2019, the registered capital of RMB 100,000 was paid.
(2) Liquidation of subsidiaries
① Shanghai Shuimishang Culture communication Co., Ltd. has completed the liquidation and cancellation in July2019 and has finished the industrial and commercial change procedures.
② Shanghai Aosang Cultural Communication Co., Ltd. has completed the liquidation and cancellation inSeptember 2019 and has finished the industrial and commercial change procedures.
(7) Significant change or adjustment of business, product or service of the Company during the reportingperiod
□ Applicable (A) √ Not applicable (N/A)
(8) Major clients and major suppliers
Major clients of the Company
| Sales amount from the top five clients of the Company in total (RMB) | 1,187,357,783.55 |
| Proportion of the sales amount from the top five clients of the Company in total to the annual total sales amount | 30.39% |
| Proportion of the sales amount from related parties of the sales amount from the top five clients of the Company to the annual total sales amount | 0.00% |
Information on the top five clients of the Company
| S/N | Client name | Sales amount (RMB) | % of the annual total sales amount |
| 1 | Shenzhen Qianhai Xinzhijiang Information Technology Co., Ltd. | 492,260,132.50 | 12.60% |
| 2 | Beijing Mai *** Co., Ltd. | 270,401,252.54 | 6.92% |
| 3 | Fuzhou 360 Network Petty Loan Co., Ltd. (Note 1) | 168,452,185.57 | 4.31% |
| 4 | Beijing Zi ***Co., Ltd. (Note 2) | 163,616,946.84 | 4.19% |
| 5 | Taobao (China) Software Co., Ltd. (Note 3) | 92,627,266.10 | 2.37% |
| Total | -- | 1,187,357,783.55 | 30.39% |
| Procurement amount of the top five suppliers of the Company in total (RMB) | 2,164,826,798.05 |
| Proportion of the procurement amount of top five suppliers of the Company in total to the annual total procurement amount | 90.10% |
| Proportion of the procurement amount of related parties of the procurement amount of the top five suppliers of the Company in total accounting to the annual total procurement amount | 0.00% |
| S/N | Supplier name | Amount of procurement (RMB) | % of the annual total procurement amount |
| 1 | Guangzhou Xiaomi Information Service Co., Ltd. | 837,607,461.12 | 34.86% |
| 2 | Vivo Mobile Communications Co., Ltd. (Vivo Communications Technology) | 681,980,492.68 | 28.38% |
| 3 | Shenzhen Tencent Computer System Co., Ltd. | 537,926,678.09 | 22.39% |
| 4 | Huawei Software Technology Co., Ltd. | 72,326,033.79 | 3.01% |
| 5 | Hubei Jinri Toutiao Technology Co., Ltd. | 34,986,132.37 | 1.46% |
| Total | -- | 2,164,826,798.05 | 90.10% |
| Year 2019 | Year 2018 | Change YOY | Explanations for significant change | |
| Selling and distribution expenses | 118,640,571.55 | 111,353,414.51 | 6.54% | No significant change occurred in current year. |
| General and administrative expenses | 80,441,335.12 | 56,800,814.91 | 41.62% | The administrative expenses in current period increased by 41.62% compared with the previous period, mainly due to the Company's business scale expansion, personnel increase, and the corresponding increase in salaries, office building rentals, property fees and utilities charges. |
| Financial expenses | -463,079.95 | 5,207,249.27 | -108.89% | There was a decrease in the financial expenses in the current period compared to the previous period, mainly due to the following reasons: on the one hand, the subsidiary Timelink's loans have decreased during the current period, and the outstanding loans at the end of the period were all new loans by Timelink in the second half of the year; On the other hand, as a result of the Company's operating accumulation, the cash and cash equivalents have increased, hence, the interest incomes have increased. |
| Research and development expenses | 43,304,603.95 | 37,800,843.09 | 14.56% | No significant change occurred in current year. |
4. Research and development (“R&D”) investment
√ Applicable (A) □ Not applicable (N/A)
An important operation model of the Company is the "Brand Operation Model", the Company has managed multiplebrands, inducing NANJIREN, NANJIREN+, NANJIREN Home, Cartelo Crocodile, Classic Teddy, etc. And therelated operating activities involved brand promotion, design, production, distribution, warehousing & logistics, etc.There were a large number of partners, such as licensed factories, E-commerce platforms, distributors, etc. In thecourse of the long-term operation, the Company has been reducing costs and improving the profitability of theCompany and partners through continuously improving the information-based system, optimizing and integratingthe supply chains.Timelink, acquired through major asset restructuring in 2017, has mainly operated the mobile Internet mediadelivery services and mobile Internet traffic integration services. Such businesses have continued to optimizedelivery effects and better serve the clients through the information-based system, such as traffic management anddata analysis.Since the E-commerce industry and the consumer goods industry had higher and more diverse requirements on thesupply chains and products, hence, there would be still much space for improvement in terms of the mutual matching,response speed, cost control, product quality tracking & design, as well as in terms of the accuracy of the informationand computational accuracy for all supply chain aspects. The Company has kept pace with the times, developed andoptimized information system, and integrated the information of relevant partners quickly and completely, exploredand utilized the information value, improved the control and management efficiency, explored the core value ofsupply chain integration, and enhanced comprehensive competitive strength for the brand's supply chain systemfundamentally.
R&D investment of the Company
| Year 2019 | Year 2018 | % of change | |
| Number of R&D personnel (person) | 116 | 147 | -21.09% |
| Proportion of the number of R&D personnel in total number of personnel | 17.96% | 25.17% | -7.21% |
| Amount invested in R&D (RMB) | 43,304,603.95 | 37,800,843.09 | 14.56% |
| Proportion of R&D investment in operating revenue | 1.11% | 1.13% | -0.02% |
| Amount of R&D investment capitalization (RMB) | 0.00 | 0.00 | |
| Proportion of capitalization in the R&D investment | 0.00% | 0.00% |
5. Cash flow
Unit: RMB
| Item | Year 2019 | Year 2018 | Change YOY |
| Subtotal of cash inflow from operating activities | 3,882,659,498.99 | 3,663,697,173.41 | 5.98% |
| Subtotal of cash outflow from operating activities | 2,627,747,672.37 | 3,112,310,240.75 | -15.57% |
| Net cash flow from operating activities | 1,254,911,826.62 | 551,386,932.66 | 127.59% |
| Subtotal of cash inflow from investment activities | 5,185,506,764.61 | 5,074,915,196.31 | 2.18% |
| Subtotal of cash outflow from investment activities | 6,781,234,142.02 | 5,539,015,113.31 | 22.43% |
| Net cash flow from investment activities | -1,595,727,377.41 | -464,099,917.00 | 243.83% |
| Subtotal of cash inflow from financing activities | 150,000,000.00 | 90,360,000.00 | 66.00% |
| Subtotal of cash outflow from financing activities | 211,415,913.02 | 448,822,830.50 | -52.90% |
| Net cash flow from financing activities | -61,415,913.02 | -358,462,830.50 | -82.87% |
| Net increase / (decrease) in cash and cash equivalents | -402,122,128.86 | -271,448,414.96 | 48.14% |
III. Non-Main Business Analysis
□ Applicable (A) √ Not applicable (N/A)
IV. Analysis of Assets and Liabilities
1. Significant change in asset composition
Implementation of new financial instrument standards, new revenue standards or new lease standards, andadjustment and implementation of the relevant items in the financial statements at the beginning of the year by theCompany since 2019
√ Applicable (A) □ Not applicable (N/A)
Unit: RMB
| At the end of 2019 | At the beginning of 2019 | Change in proportion | Explanations for significant change | |||
| Amount | Proportion of total assets | Amount | Proportion of total assets | |||
| Cash and cash equivalents | 1,280,832,033.28 | 23.35% | 1,189,754,162.14 | 26.15% | -2.80% | The cash and cash equivalents were mainly current deposits. And the decrease in proportion in the total assets were because that the growth rate of cash and cash equivalents was lower than that of the total assets. In addition, the incremental funds of the Company were mainly used to purchase financial products. |
| Accounts Receivable | 789,704,130.20 | 14.40% | 724,583,591.63 | 15.93% | -1.53% | The decrease in proportion of the accounts receivable of the Company in the total assets was because that the Company has strengthened its collection of accounts receivable, and the increase rate in the accounts receivable was lower than that of the revenue. |
| Inventories | 5,471,862.14 | 0.10% | 3,361,669.70 | 0.07% | 0.03% | No significant change occurred in current year. |
| Long-term equity investments | 0.00 | 0.00% | 14,230,858.19 | 0.31% | -0.31% | The Company has signed the Transfer Agreement for XiEnEn's equity investment in 2019, which has not met the recognition criteria for the long-term equity investments and was transferred to the account of “asset |
| classified as held for sale”. | ||||||
| Fixed assets | 6,718,909.97 | 0.12% | 3,021,813.45 | 0.07% | 0.05% | The Company's actual business address changed in 2019, and the procurement of the office equipment increased. |
| Short-term borrowings | 100,105,694.45 | 1.83% | 70,360,000.00 | 1.55% | 0.28% | The short-term borrowings were all guaranteed loans for the business of Timelink, mainly due to the expansion of the business and the increase in financing demands. |
| Notes receivable | 73,506,158.00 | 1.34% | 40,318,407.59 | 0.89% | 0.45% | Mainly due to the reason that some clients have increased the amount settled by bank acceptance bills. |
| Held-for-trading financial assets | 1,490,000,000.00 | 27.17% | 450,140,057.98 | 9.89% | 17.28% | Due to the reason that the Company has increased the procurement of financial products. |
| Advances to suppliers | 229,302,915.74 | 4.18% | 552,797,861.17 | 12.15% | -7.97% | Due to the reason that the subsidiary Timelink's prepaid information flow payments decreased at the end of the current year. |
| Other receivables | 88,075,286.90 | 1.61% | 59,849,623.62 | 1.32% | 0.29% | Due to the reason that the purchase margins paid to the supplier by the subsidiary Timelink increased. |
| Assets classified as held for sale | 15,441,091.08 | 0.28% | 0.00% | 0.28% | The Company has signed the Transfer Agreement for XiEnEn's equity investment in 2019, which has not met the recognition criteria for the long-term equity investment and was transferred to the account of “asset classified as held for sale”. |
| Item (Unit: RMB) | Opening balance | Gains/(losses) arising from changes in fair value in current period | Accumulated Fair Value Changes recognized in Equity | Provision for Impairment in Current Period | Amount of Purchase in Current Period | Amount of Sales in Current Period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding the derivative financial assets) | 450,140,057.98 | 6,182,000,000.00 | 5,142,140,057.98 | 1,490,000,000.00 | ||||
| 4.Other equity instrument investment | 100,000.00 | 100,000.00 | ||||||
| Total of items above-mentioned | 450,240,057.98 | 6,182,000,000.00 | 5,142,140,057.98 | 1,490,100,000.00 | ||||
| Financial liabilities | 0.00 | 0.00 | ||||||
2. Significant Equity Investment Obtained During the Reporting Period
□ Applicable (A) √ Not applicable (N/A)
3. Significant Non-equity Investment Ongoing During the Reporting Period
□ Applicable (A) √ Not applicable (N/A)
4. Financial Assets Measured at Fair Value
√ Applicable (A) □ Not applicable (N/A)
Unit: RMB
| Asset type | Initial investment cost | Gains/(losses) arising from changes in fair value in current period | Accumulated fair value changes recognized in equity | Amount of purchase during the reporting period | Amount of sales during the reporting period | Accumulated investment income | Closing balance | Source of funds |
| Trust product | 50,000,000.00 | 50,000,000.00 | 1,684,110.29 | Self-owned fund | ||||
| Others | 450,140,057.98 | 6,132,000,000.00 | 5,092,140,057.98 | 32,309,204.51 | 1,490,000,000.00 | Self-owned fund | ||
| Others | 100,000.00 | 100,000.00 | Self-owned fund | |||||
| Total | 450,240,057.98 | 0.00 | 0.00 | 6,182,000,000.00 | 5,142,140,057.98 | 33,993,314.80 | 1,490,100,000.00 | -- |
| Year of Funding | Method of Funding | Total Proceeds | Total of Proceeds Used in | Total Accumulated | Total Proceeds with | Total Accumulated | Proportion of Total Accumulat | Total Unused Proceeds | Use and allocation of unused | Proceeds Idled for over Two |
| Current Year | Proceeds used | Change of Use during the reporting period | Proceeds with Change of Use | ed Proceeds with Change of Use | Proceeds | Years | ||||
| Year 2015 | Directed placement | 27,113.02 | 0.24 | 28,205.08 | 0.24 | 20,201.19 | 74.51% | 0 | ||
| Year 2017 | Directed placement | 39,149.3 | 6,928.51 | 39,194.49 | 45.31 | 45.31 | 0.12% | 0 | ||
| Total | -- | 66,262.32 | 6,928.75 | 67,399.57 | 45.55 | 20,246.5 | 30.56% | 0 | -- | 0 |
| Description for overall use of proceeds | ||||||||||
| 1. In 2019, Nanji E-commerce (Shanghai) used a total of RMB 2,402.10 of the raised funds. Considering that the projects to be invested by raised funds of the Company were completed, the Company transferred the surplus raised funds for the irrevocable supplement to working capital, and completed the related procedures for closing the above-mentioned special account for raised funds. The accumulated current interest income of the special account of the raised funds for the current year was RMB 5.15, and the net amount was RMB -1,314.85 after deducting the service fee expense of RMB 1,320.00. As of December 31, 2019, the amount of accumulated used raised funds was RMB 282,050,850.14, all of the raised funds were used up, and the accounts of the raised funds were completely closed. 2. In 2019, the Company used a total of RMB 69,285,068.09 of the raised funds, including RMB 68,832,000.00 for the cash consideration of the acquisition payment of Timelink, RMB 99,255.35 for the accumulated current interest income of the special account of the raised funds for the current year, RMB 594.81 for deducting the service fee expense, RMB 453,068.09 for the balance of the raised funds. In addition, considering that the projects to be invested by raised funds of the Company were completed, the Company transferred the surplus raised funds of RMB 453,068.09 for the irrevocable supplement to working capital, and completed the related procedures for closing the above-mentioned special account for raised funds. As of December 31, 2019, the amount of accumulated used raised funds was RMB 391,944,859.13. | ||||||||||
| Committed Investment Projects and Uses of Excess Proceeds | Project Changed (Partially Changed) | Committed Total Investment Amount from Proceeds | Total Investment Amount after Adjustment (1) | Amount Invested During the Reporting Period | Accumulated Investment Amount as of 31/12/2019 (2) | Investment Progress As of 31/12/2019 (%) (3)=(2)/(1) | Date When Project Reaches Scheduled Availability Status | Benefits Achieved During the Reporting Period | Achievement of Expected Benefits | Whether feasibility of project has changed significantly |
| Committed investment projects | ||||||||||
| E-commerce ecological service platform establishment project | Yes | 8,000 | 4,000 | N/A | Yes | |||||
| Flexible supply chain service platform establishment project | Yes | 14,000 | 5,000 | 28.58 | 0.57% | N/A | Yes | |||
| Brand building project | Yes | 8,000 | 18,255.87 | 4,157.05 | 22.77% | N/A | Yes | |||
| Cash payment for acquisition of Timelink | No | 39,330.3 | 39,330.3 | 6,883.2 | 39,149.18 | 99.54% | 11,032.12 | N/A | No | |
| Irrevocable supplement to working capital | Yes | 45.55 | 45.55 | N/A | No | |||||
| Subtotal of committed investment projects | -- | 69,330.3 | 66,586.17 | 6,928.75 | 43,380.36 | -- | -- | 11,032.12 | -- | -- |
| Investment of excess proceeds | ||||||||||
| NONE | ||||||||||
| Total | -- | 69,330.3 | 66,586.17 | 6,928.75 | 43,380.36 | -- | -- | 11,032.12 | -- | -- |
| Status of and reason for planned progress or estimated income not achieved (of a specific project) | N/A | |||||||||
| Description of major changes in project feasibility | 1. Project of "E-commerce ecological service platform establishment" With the gradual development of the Company’s brand licensing business, and the gradual normalization of the E-commerce services, the business connotation, data technology system of the E-commerce ecological service platform would be closely related to the daily business operations of the Company. The update and improvement of the relevant data system for the E-commerce ecological service platform has accelerated, it would be necessary to make adjustments accordingly with the business changes. Hence, the relevant investment should not be too large. In addition, the relative investment amount for data intelligence platform, photo shooting, store decoration, and operation & maintenance improvement has become smaller, and own funds can used for subsequent E-commerce platform system construction. The termination of this committed project would not affect the implementation of the normal E-commerce ecological services of the Company. Furthermore, it could improve the fund utilization efficiency through increasing the investment of own funds, according to the business development of the Company. The Company has planned to terminate this committed project and transfer the remaining balance of the raised funds for the project to the "brand building" project funds, in order to take advantage of the raised funds more fully and effectively, and protect the interests of the Company and all shareholders, according to the business development of the Company. 2. Project of "flexible supply chain service platform establishment" As the Company has formulated the business strategies with the "Brand Portfolio Development" as the core, according to the actual business development, continued to consolidate and expand the brand portfolio and expanded the peripheral business of the brand portfolio, hence, the business of flexible supply chain parks has declined. In addition, the Company has performed the equity transfer or cancellation for partial subsidiaries of the flexible supply chain system through the comprehensive evaluation, according to the actual situations. The Company has planned to terminate the committed project and transfer the remaining balance of the raised funds of the project to the "brand building" project funds, in order to improve the | |||||||||
| utilization efficiency of the raised funds more fully and effectively, and protect the interests of the listed company and all shareholders, according to the business development of the listed company. 3. Project of "brand building" The Company has planned to transfer the balance of the unused raised funds of the "E-commerce ecological service platform establishment" and "flexible supply chain service platform establishment" projects to the "brand building" project. The Company has planned to introduce other brands through acquisition, cooperation, and new establishment, etc., to better build the brand matrix of the listed company, improve the overall brand influence of the listed company, and meet the diversified and multi-level consumer demands, as well as promote the brands of the listed company to improve the brand image and brand awareness and reputation at the same time. | |
| Amount, use and progress of use of excess proceeds | N/A |
| Changes in location of investment projects using proceeds | N/A |
| Changes in implementation model of investment projects using proceeds | N/A |
| Pre-investment and replacement of investment projects using proceeds | A |
| Before the proceeds were fully available, as of October 10, 2017, the actual investment amount of the Company by investing its self-owned funds of RMB 63,348,320.74 in the committed investment projects in advance. After the proceeds were fully available, the 35th Meeting of the 5th Board of Directors and the 31st Meeting of the 5th Board of Supervisors of the Company were held on December 1, 2017, in which the Proposal on Replacing the Invested Self-owned Funds with Raised Funds was reviewed and approved to agree that the Company could replace the self-owned funds already invested in the committed investment projects with the proceeds of RMB 59,091,791.04. | |
| Supplementing working capital temporarily with idled proceeds | N/A |
| Amount of and reason for balance in proceeds during project implementation | A |
| As the committed investment projects of the Company were completed, the Company transferred all the surplus proceeds of RMB 2,402.10 for the irrevocable supplement to working capital on June 26, 2019. As of December 31, 2019, the accumulated investment amount was RMB 282,050,850.14, all of the proceeds have been used up, and the accounts of proceeds have been completely closed. In addition, the relevant information has been stated in the Annual Report. | |
| Usage and allocation of the unused proceeds | As of December 31, 2019, all of the proceeds have been used up, and the accounts of proceeds have been completely closed. |
| Defects and other issues | N/A |
that occurred in the useand disclosure ofproceeds
(3) Statement of Altered Investment Projects of Proceeds
√ Applicable (A) □ Not applicable (N/A)
(Unit: RMB 10,000)
| Project After Change | Original Committed Project | Total Amount to Invest in Projects Using Proceeds After Change (1) | Actual Amount Invested During the Reporting Period | Actual accumulated investment by the end of the period (2) | Investment progress by the end of the period (3)=(2)/(1) | Date When Project Reaches Scheduled Availability Status | Benefits Achieved During the Reporting Period | Achievement of Expected Benefits | Significant Changes to Project Feasibility |
| Brand building project | E-commerce ecological service platform establishment project, flexible supply chain service platform establishment project, and brand building project | 23,453.55 | 0 | 24,019.21 | 102.41% | July 01, 2018 | N/A | No | |
| Total | -- | 23,453.55 | 0 | 24,019.21 | -- | -- | 0 | -- | -- |
| Reasons for change, decision-making procedures and information disclosure (by project) | I. Reason for change: as of April 30, 2017, the fund utilization rates of the two projects "E-commerce ecological service platform establishment" and "flexible supply chain service platform establishment" were relatively low, and these two projects have not promoted the business development of the Company by using the proceeds. The progress of the brand building project was basically in line with the expectations. And the main expenditure was for the "Classic Teddy" series of Chinese text and graphic trademarks category 1-35, acquired by the Company in November 2016. The Company has established the Classic Teddy Division, and has begun to expand its business in the fields of home textiles, children's wear, and maternal & infant products, etc. 1. Project of "E-commerce ecological service platform establishment" With the gradual development of the Company’s brand licensing business, and the gradual | ||||||||
| www.cninfo.com.cn and Securities Times respectively to disclose the change for the purpose of the raised funds in this period. | |
| Status of and reason for planned progress or estimated income not achieved (of a specific project) | N/A |
| Description of major changes in project feasibility after changes | N/A |
| Company name | Company type | Main business | Registered capital | Total assets | Net assets | Operating revenues | Operating profits | Net profits |
| Nanji E-commerce (Shanghai) Co., Ltd. | Subsidiary | Sales of the clothing fabrics, clothing accessories, and knitwear & textiles, etc., business information consulting, and enterprise management consulting, etc., | 780,195,690.00 | 2,513,337,566.70 | 2,273,548,333.51 | 584,714,232.24 | 465,390,253.24 | 418,038,247.71 |
| Xinjiang Juchang E-commerce Co., Ltd. | Subsidiary | E-commerce (excluding value-added telecommunications and financial business), E-commerce information consulting, business consulting, and marketing planning; | 10,000,000.00 | 425,634,609.92 | 379,376,854.47 | 321,363,056.15 | 258,551,987.35 | 258,551,988.25 |
| Foreign trade and enterprise management information consulting, etc. | ||||||||
| Xinjiang NANJIREN E-commerce Co., Ltd. | Subsidiary | E-commerce (excluding value-added telecommunications and financial business), E-commerce information consulting, business consulting, and marketing planning; Foreign trade and enterprise management information consulting, etc. | 10,000,000.00 | 245,790,565.39 | 203,128,910.51 | 239,671,971.75 | 186,191,614.68 | 186,191,667.29 |
IX. Prospect of the Company's Future Development
(I) Industry Structure and Development Trend
1. Total Retail Sales of Consumer Goods
According to the statistical data released by the National Bureau of Statistics, the total retail sales of consumer goodsamounted to RMB 41.1649 trillion for the whole year of 2019, with a YOY increase of 8.0%, of which, the retailsales of commodities amounted to RMB 36.4928 trillion, with a YOY increase of 7.9%. According to the statisticsfor the place of business, the urban retail sales of consumer goods amounted to RMB 35.1317 trillion, with a YOYincrease of 7.9%; in addition, the rural retail sales of consumer goods amounted to RMB 6.0332 trillion, with aYOY increase of 9.0%. The online retail sales of physical commodities amounted to RMB 8.5239 trillion in 2019,with an increase of 19.5% compared with the previous year, when calculating according to the comparable statisticscale, accounting for 20.7% of the total retail sales of consumer goods, with an increase of 2.3% compared with theprevious year. E-commerce channels have still maintained the vitality and steady growth, providing a goodeconomic environment for the business development of the Company.
2. Internet Advertising Industry
According to the description of the Forecast of the Development Scale of China's Internet Advertising Industry andDevelopment Trend of Advertising Revenue in 2019 issued by China Industry Information Network(www.chyxx.com) in November 2019, the market size of China's Internet advertisement amounted to RMB 401billion in 2019, with a YOY increase of 14.28%; in addition, the market size for 2020 is estimated at RMB 441.48billion, with a growth rate of 10.1%. At the same time, with the gradually-prominent advantages of the improvementof targeted Internet advertisement and higher media quality, the client’s recognition of Internet advertising hasgradually enhanced, and the market size of Internet advertising is expected to continue to grow in the future.(II) Development Strategy and Planning of the CompanyThe Company will continue to stick to the mission of "helping China's high-quality supply chain to achievecontinuous success, and providing high cost-performance products and services to Chinese families", believe in thevision of "becoming a world-class consumer goods giant", stick to the values of “Diligent, Cooperative, Result-oriented, Sustainable, Shareable, and Felicific”, and will take the following strategic measures in the future:
1. Further enrich the brand portfolios, optimize the supply chain services, and continuously improve the
competitive advantagesThe Company will continue to enrich the brand portfolio, by appropriately acquiring the brands suitable for theCompany's operation while maintaining the number of existing brands, horizontally and vertically enriching theproduct categories, and further improving the cost-performance of products. At the same time, the Company willcontinue to improve the effectiveness of supply chain services and help the business partners in performanceimprovement, especially in supply chain services such as data analysis and application, consumer trafficmanagement, and effectively making the services match with the partner demands. In the meantime, the Companywill explore the business collaboration between Timelink and NJBU, leverage the channel and experienceadvantages of Timelink in the mobile information flow, explore the effective way to utilize mobile traffic for brandsor products licensing business, and improve the payment conversion rate.
2. Continue to improve corporate governance
The Company is committed to continuously improving the corporate governance, and will continue to optimize thecomprehensive budget, process management, data management, etc., and strengthen the promotion of managementtools for business. At the same time, the Company will continue to strengthen the collaboration between businessunits and functional departments, improve the work efficiency, and also lay the foundation for training versatileemployees.
3. Continue to conduct the business innovation and optimize the business structureThe Company will expand the internet celebrity advertising business, online live streaming sales business andoffline retail business through combining with the market trends and the Company's advantages of traffic and supplychain, etc. The Company will develop more internet celebrities and advertising clients on platforms such asXiaohongshu and Tik Tok. In addition, the Company also plans to develop its own brand live streaming or livestreaming services for other brands on short video platforms such as Kuaishou.
4. Continually implement the talent strategic plan
Talent is the key factor for the Company to maintain healthy and sustainable development, and is an importantguarantee for consolidating the existing business and expanding the new business. And the Company currently hasdiversified training, incentive, and training measures, especially the implementation of talent incubation mechanismof the "Amoeba Small Business Division Mechanism" in the business units of the Company, which is conducive tothe rapid and comprehensive growth of talents. At the same time, the Company also pays attention to recruitingprofessional and excellent external talents to supplement the fresh blood and maintain organizational vitality. Inaddition, it will also continue to implement the equity incentive and partnership plans to allow the employees and
the Company to share the value of growth.(III) Possible risks
1. Dependency risks at the E-commerce channel
At present, the products under the Company’s trademarks are mainly sold on E-commerce channels such as Ali,JD.com, PDD, VIP.com, etc. Therefore, the operating rules and merchant policies, etc., of the E-commerce platformmay have a certain impact on the sales side of the brand licensing and supply chain service of the Company.However, on the one hand, the Company maintains a good cooperative relationship and interaction with the E-commerce platforms, on the other hand, the sales scale and supply chain volume of the Company’s brands aregradually expanding, therefore, this potential risk would not pose a significant impact on the long-term developmentand normal operation of the Company.
2. Risk of uncertain performance in new business
During the reporting period, the Company has set up a joint venture with its related parties, and has planned tocooperate with the high-quality supply chain partners to develop the offline retail business by making the pricedifference of commodity sales and consumer membership fees as the main revenue sources but not assuming theinventory risk. The main purpose is to deploy the offline channels for NJDS, develop the own consumer trafficentrance, explore the high-quality supply chain, develop the new model of offline retail, and provide the broaderconsumers with the high-quality domestic products, through the development and operation of the offline retailprojects of the joint venture. However, this project involves the business related to offline retail and bears risks suchas large investment, long learning curve, and profitability uncertainty, etc.
3. Risk in profit stability and diversified development of Timelink
Timelink has a certain degree of dependency risks on key suppliers, mainly because the key information flowsuppliers, such as Tencent App Store, Xiaomi Store, VIVO Store, etc., occupy the high-quality and stable trafficresources of the mobile application market. Hence, Timelink has established a long-term relationship with Tencentand Xiaomi with the stable procurement policy. In the future, Timelink will further strengthen its cooperation withTencent, Xiaomi and VIVO, and strengthen the innovative cooperation of information flow resources of Xiaomi,etc., on the basis of the existing application market cooperation. At the same time, Timelink will further strengthenits own competitive strength on the supply side. In addition to the existing high-quality information flow suppliers,it will further expand cooperation with the high-quality information flow suppliers, such as Toutiao and Tik Tok,and strengthen the depth and breadth of cooperation with the mainstream information flow suppliers. In addition,Timelink will continue to maintain the mobile Internet flow integration marketing business and increase the
flexibility of its own media delivery strategy. On the client side, Timelink will have keen insight into the industrydevelopment trend, and continue to explore the new high-quality clients, while strengthening the cooperation withexisting high-quality clients and increasing the business size.
4. Risk of accounts receivable
NJBU has improved the status of accounts receivable by improving the client management and the performanceevaluation system for business personnel, etc. The YOY growth rate of accounts receivable was lower than that ofoperating revenue. The Company has accelerated the payment collection of accounts receivable through thenormalized tracking management of accounts receivable.X. Reception of Research, Communication, Interviews and Other Activities
1. Information on reception of research, communication, interviews and other during the reporting period
√ Applicable (A) □ Not applicable (N/A)
| Reception time | Reception mode | Type of reception object | Disclosure index |
| February 28, 2019 | Phone calls | Institutional investors | Record of Investor Relation Activities of February 28, 2019, disclosed at http://irm.cninfo.com.cn on March 1, 2019 |
| May 09, 2019 | Field research | Institutional investors | Record of Investor Relation Activities of May 9, 2019, disclosed at http://irm.cninfo.com.cn on May 10, 2019 |
| May 24, 2019 | Phone calls | Institutional investors | Record of Investor Relation Activities of May 24, 2019, disclosed at http://irm.cninfo.com.cn on May 24, 2019 |
| August 22, 2019 | Field research | Institutional investors | Record of Investor Relation Activities of August 22, 2019, disclosed at http://irm.cninfo.com.cn on August 23, 2019 |
| October 18, 2019 | Phone calls | Institutional investors | Record of Investor Relation Activities of October 18, 2019, disclosed at http://irm.cninfo.com.cn on October 19, 2019 |
Section 05 Important Matters
I. Profit Distribution and Increase of Share Capital by Conversion of Capital Reserves for theCommon Share of the Company
Status of formulation, execution, or adjustments made to profit distribution policy for common shareholders,especially the cash dividend policy, during the reporting period.
□ Applicable (A) √ Not applicable (N/A)
The Company’s plan (proposal) for profit distribution to common shareholders and plan (proposal) for increase ofshare capital by conversion of capital reserves for the recent three years (including this reporting period):
In 2019, according to the Proposal for Distribution of Profit 2019 reviewed and approved at the 24th Meeting ofthe 6th Board of Directors of the Company, it's planned to distribute a cash dividend of RMB 1.24 per 10 shares(tax inclusive) to all shareholders, based on the number of the total share of 2,437,913,476 after deducting therepurchased shares (16,956,927 shares) in the repurchase special account, and the cash dividends with the totalamount of RMB 302,301,271.02 would be distributed, and the remaining undistributed profit of the parent companyamounted to RMB 39,453,999.35, which would be temporarily used to supplement the working capital or theCompany’s development, and would be carried forward for the subsequent annual distribution. In addition, theCompany would not transfer capital reserve to share capital and would not distribute the bonus shares.In 2018, the Proposal for Distribution of Profit 2018 was reviewed and approved at the 11th Meeting of the 6thBoard of Directors of the Company: no profit distribution would be made in 2018, and no capital reserve would betransferred to share capital.In 2017, according to the Proposal for Distribution of Profit 2017 reviewed and approved at the 40th Meeting ofthe 5th Board of Directors of the Company, the Company planned to distribute a cash dividend of RMB 0.62 per 10shares (tax inclusive) to all shareholders, based on the base number of the total share of 1,636,580,269 of theCompany as of December 31, 2017, with the total amount of RMB 101,467,976.68, and part of the source of fundswere dividends from subsidiary; at the same time, the Company planned to convert 818,290,135 shares (the specifictotal number of shares of conversion shall be subject to the implementation) to all shareholders by increasing 5shares per 10 shares through conversion of capital reserves. The above-mentioned proposal for distribution of profitshould be reviewed and approved by the General Meeting of Shareholders of the Company.Cash dividends distributed to common shareholders in the most recent three years (including the reporting period)
Unit: RMB
| Year | Amount of cash dividends (tax inclusive) | Net profit attributable to common shareholders of the Company in consolidated statements | Proportion of cash dividends in net profit attributable to common shareholders of the Company in consolidated statements | Amount of cash dividends in other forms (such as share repurchase) | Proportion of the amount of cash dividends in other forms in the net profit attributable to common shareholders of the Company in consolidated statements | Total amount of cash dividends (including other forms) | Proportion of the total amount of cash dividends (including other forms) in the net profit attributable to common shareholders of the Company in consolidated statements |
| Year 2019 | 302,301,271.02 | 1,206,136,918.38 | 25.06% | 84,058,578.41 | 6.97% | 386,359,849.43 | 32.03% |
| Year 2018 | 0.00 | 886,472,236.97 | 0.00% | 67,597,253.12 | 7.63% | 67,597,253.12 | 7.63% |
| Year 2017 | 101,467,976.68 | 534,291,649.78 | 18.99% | 0.00 | 0.00% | 101,467,976.68 | 18.99% |
| Number of bonus shares per 10 shares (shares) | 0 |
| Dividend distribution per 10 shares (RMB) (tax inclusive) | 1.24 |
| Conversion of capital reserves into share capital per 10 shares (share) | 0 |
| Share base of the distribution proposal (share) | 2,437,913,476 |
| Amount of cash dividends (RMB) (tax inclusive) | 302,301,271.02 |
| Amount of cash dividends in other forms (such as share repurchase) (RMB) | 84,058,578.41 |
| Total amount of cash dividends (including other forms) (RMB) | 386,359,849.43 |
| Distributable profit (RMB) | 341,755,270.37 |
| Proportion of the total amount of cash dividends (including other forms) in the total amount for profit distribution | 100.00% |
| Cash dividend policy |
| Others |
| Details of proposal for profit distribution and conversion of capital reserves into share capital |
| In 2019, according to the Proposal for Distribution of Profit 2019reviewed and approved at the 24th Meeting of the 6th Board of Directors of the Company, the Company planned to distribute a cash dividend of RMB 1.24 per 10 shares (tax inclusive) to all shareholders, based on the base number of the total share of 2,437,913,476 after deducting the repurchased shares (16,956,927 shares) in this purchase special account, and the cash dividends with the total amount of RMB 302,301,271.02 would be distributed, and the remaining undistributed profit of the parent company amounted to RMB 39,453,999.35, which would be temporarily used to supplement the working capital or the Company’s development, and would be carried forward for the subsequent annual distribution. In addition, the Company would not convert capital reserve to share capital and would not distribute the bonus shares. |
| Commitment | Committed by | Commitment type | Commitment details | Committed time | Commitment period | Fulfillment status |
| Commitments made during conversion to joint-stock company limited | ||||||
| Commitments stated in the Report of Acquisition or Equity Change Report | ||||||
| Commitments made during asset restructuring | CHEN Jun; GE Nan; LIU Rui; YU Hanqing; ZHANG Ming; | Restricted sale of shares | As a shareholder of Timelink, I hereby make the following irrevocable commitments and warranties: 1. The new shares subscribed from NJDS through this restructuring shall not be transferred to any third party within 12 months from the date of listing; in addition, subject to the compliance of the above-mentioned lockup period, I agree to relieve the restriction on sales of the subscribed shares of NJDS in the following manner after 12 months from the date of listing to make the | November 9, 2017 | 2018-11-08 | Normal |
| requirement of such provisions simultaneously. | |||||
| NJDS - ESOP II; ZHANG Yuxiang | Restricted sale of shares | I/ESOPII make(s) the following commitments for restricted circulation or transfer of RMB common shares of NJDS subscribed during this transaction: 1. shares of NJDS subscribed through this private placement shall not be transferred within 36 months from the ending date of issuance and shall be subject to relevant regulations of CSRC and Shenzhen Exchange after 36 months. 2. As for company shares increased due to distribution of bonus shares, conversion of capital reserves into share capital and other reasons, such agreements shall be followed after issuing shares to raise supporting proceeds. 3. As for other provisions imposed by relevant laws, regulations or CSRC and exchange rules on lockup period of NJDS shares subscribed by me this time, it is a must to follow the requirement of such provisions simultaneously. | November 9, 2017 | 2020-11-08 | Normal |
| GE Nan; LIU Rui; YU Hanqing | Commitments on horizontal competition, related-party transaction and occupation of funds | I. Commitments on avoiding horizontal competition: (I). as of the signing date of this commitment letter, I have never engaged in business involving horizontal competition with NJDS and other companies under its control including Timelink. (II). In order to avoid new (or possible), direct (or indirect) business competition with the listed company's production and operation, during the period I hold NJDS shares after this reorganization, I hereby make the following commitments: 1. I will not directly engage in product production and/or business operation that are the same with or similar to those of the listed company in case of not in favor of the | January 24, 2017 | 9999-12-31 | Normal |
| confirm that each commitment listed in the commitment letter is independent. The validity of every other commitment shall remain unaffected if any single commitment is deemed as invalid or terminated. II. Commitments on reducing and regulating related-party transactions with Nanji E-commerce Co., Ltd.: as for related-party transactions that may be conducted after this transaction between NJDS and me, enterprises under my control and enterprises where I served as director and senior executive, I hereby make the following commitments: "after the completion of this transaction, I, enterprises under my control and enterprises where I served as director and senior executive (hereinafter referred to as "related parties") will reduce related-party transactions with NJDS to the greatest extent, and for inevitable related-party transactions, the related parties and NJDS shall sign an agreement according to laws, implement legal procedures and perform information disclosure obligation and handle relevant reporting and approval matters according to relevant laws, regulations, Articles of Association of Nanji E-commerce Co., Ltd. and other provisions, and promise not to damage legal interests of NJDS and other shareholders through related-party transactions." | |||||
| CHEN Xiaojie; CHEN Ye; CUI Yifeng; HU Xianghuai; HU Xiaowei; | Commitments on horizontal competition, related-party transaction and occupation of funds | I. Letter of commitment on avoiding horizontal competition: (I). as of the signing date of this commitment letter, I have never engaged in business involving horizontal competition with NJDS and other companies to be under its control including Timelink. (II). In order to avoid new (or possible), direct | January 24, 2017 | 9999-12-31 | Normal |
| LING Yun; LIU Nannan SHEN Chenxi; WAN Jieqiu; XU Lifang; XU Beibei; YANG Bin; YU Weimin; ZHANG Yanni; ZHANG Yuxiang | (or indirect) business competition with the listed company's production and operation, during the period I serve as NJDS's director/supervisor/senior executive after this transaction, I hereby make the following commitments: 1. I will not directly engage in product production and/or business operation that are the same with or similar to those of the listed company in case of not in favor of the listed company; 2. I will not invest in any enterprise which constituted or may constitute competition with the listed company's product production and/or business operation; 3. I promise that I will prompt enterprises under my direct or indirect control and enterprises where I served as director and senior executive (collectively "related parties") not to directly or indirectly engage in, take part in or conduct any activity under competition with the listed company's product production and/or business operation; 4. In case of my participated enterprises engaging in product production and/or business operation under competition with the listed company, I will avoid becoming such enterprises' controlling shareholder or obtaining such enterprises' actual controlling right; 5. In case of the listed company further expanding its product or business scope thereafter, I and/or the related parties will not undergo competition with the listed company's product or business after such expansion. If I and/or the related parties undergo competition with the listed company's product or business after expansion, I will in person and/or cause the related parties to take measures to exit such competition in a |
| I promise that I will legally exercise shareholder's rights and perform shareholder's obligations, and will not take advantage of the status of shareholder to seek any illegitimate interests and not damage the legal interests of NJDS and its minority shareholders according to the relevant laws and regulations, rules and normative documents issued by China Securities Regulatory Commission, business rules issued by Shenzhen Stock Exchange, Articles of Association of NJDS and other regulations. In case of losses of NJDS and its minority shareholders and holding subsidiaries arising from transactions with NJDS and its holding subsidiaries by violating the above-mentioned commitments, I will assume the corresponding liability for damage according to laws. | |||||
| Shanghai Fengnan Investment Center LLP; ZHANG Yuxiang; ZHU Xuelian | Commitments on horizontal competition, related-party transaction and occupation of funds | Commitment on avoiding horizontal competition: I. As of the signing date of this commitment letter, I/the enterprise have/has never engaged in business involving horizontal competition with NJDS and other companies to be under its control including Timelink. II. In order to avoid new (or possible), direct (or indirect) business competition with the listed company's production and operation, during the period I/the enterprise serve(s) as NJDS's actual controller and controlling shareholder after this transaction, I/the enterprise hereby make(s) the following commitments: 1. I/the enterprise will not directly engage in product production and/or business operation that are the same with or similar to those of the listed company in case of not in favor of the listed company; 2. | January 24, 2017 | 9999-12-31 | Normal |
| minority shareholders according to the relevant laws and regulations, rules and normative documents issued by China Securities Regulatory Commission, business rules issued by Shenzhen Stock Exchange, Articles of Association of NJDS and other regulations. In case of losses of NJDS and its minority shareholders and holding subsidiaries arising from transactions with NJDS and its holding subsidiaries by violating the above-mentioned commitments, I/the enterprise will assume the corresponding liability for damage according to laws. | |||||
| CHEN Ye; HU Xiaowei; LING Yun; LIU Nannan SHEN Chenxi; WAN Jieqiu; XU Lifang; XU Beibei; YANG Bin; YU Weimin; ZHANG Yanni; ZHANG Yuxiang | Other Commitments | Letter of commitment on dilution of immediate return in asset restructuring: according to the requirement of Opinions on Further Strengthening the Work of Protection of the Legitimate Rights and Interests of Minority Investors in the Capital Markets (No. 110 [2013] of the General Office of the State Council), Guiding Opinions on Matters concerning the Dilution of Immediate Return in Initial Public Offering, Refinancing and Material Asset Restructuring issued by China Securities Regulatory Commission and relevant laws, regulations and normative documents, the Company's directors and senior executives hereby make the following commitments: 1. Promise to perform responsibilities and obligations dutifully and diligently, and safeguard legal rights and interests of the Company and all of its shareholders. 2. Promise not to transfer interests to other entities or persons in a voluntary manner or with unfair conditions, and not to damage the Company's interests in other ways. | January 24, 2017 | 9999-12-31 | Normal |
| 3. Promise to restrain my consumption behaviors of the position. 4. Promise not to employ the Company's assets in an attempt to perform investment and consumption activities irrelevant to the performance of responsibilities. 5. Promise to, within the scope of my responsibility and limit of authority, try my best to cause the remuneration system formulated by the company's Board of Directors or Nomination and Remuneration Committee to be pegged to the implementation of the Company's specific measures for making up the gap. 6. Promise to, within the scope of my responsibility and limit of authority, try my best to cause the vesting conditions of stock options incentive to be issued by the Company to be pegged to the implementation of the Company's specific measures for making up the gap. 7. Promise to practically perform the Company's relevant specific measures for making up the gap and my commitments on such measures for making up the gap, in case of violating such commitments and causing losses on the Company or investors, I'm willing to assume the liability of indemnity against the Company or investors according to laws. | |||||
| LIU Rui | Other Commitments | Commitment on non-competition and confidentiality agreement: according to the Agreement on Asset Purchase through Share Issuance and Cash Payment signed between the listed company and relevant parties, I promised to hold a post in Timelink for at least 60 months from the delivery date of target assets, and sign Non-competition Agreement and Confidentiality Agreement with Time Link for at least 60 months. | November 8, 2017 | 2022-09-26 | Normal |
| LIU Rui; Yu Hanqing and core management team | Other Commitments | Commitment on non-competition and confidentiality agreement: according to the Agreement on Asset Purchase through Share Issuance and Cash Payment signed between the listed company and relevant parties, LIU Rui promised to hold a post in Timelink for at least 60 months from the delivery date of target assets, and sign Non-competition Agreement and Confidentiality Agreement with Timelink for at least 60 months. YU Hanqing promised to hold a post in Timelink for at least 36 months from the delivery date of target assets, and sign Non-competition Agreement and Confidentiality Agreement with Time Link for at least 60 months. Meanwhile, Timelink's core management team and technical personnel have signed a letter of commitment and promised to hold a post in Timelink for at least 36 months from the delivery date of target assets, and sign Non-competition Agreement and Confidentiality Agreement with Time Link for at least 60 months. | September 27, 2017 | 2022-09-26 | Normal |
| LIU Rui and senior executives | Other Commitments | Arrangement of senior executives of Timelink: After target assets have been transferred into the account of NJDS, NJDS shall appoint relevant personnel to serve as directors of Timelink and such number of personnel shall be more than half of the total number of directors of Time Link; appoint financial principal (by joint external recruitment) to control Timelink's financial matters and apply the system relevant to the financial management of NJDS subsidiaries. After this transaction, Timelink shall set a Board of directors consisting of 3 members, among which Liu Rui will take a post of director. | September 27, 2017 | 9999-12-31 | Normal |
| CHEN Jun; GE Nan; LIU Rui; YU Hanqing; ZHANG Ming | Other Commitments | Letter of commitment on maintaining the independence of the listed company: I. Ensure the listed company's personnel to be independent 1. Ensure that the listed company's senior executives including General Manager, Deputy General Manager, Finance Director and Board Secretary are full-time employees of the listed company with compensation and have not held a post other than Director and Supervisor in myself/the enterprise and its related natural persons, related enterprises and related legal persons (collectively " Myself and Related Parties" and the specific scope shall be subject to the existing and effective Stock Listing Rules of the Shenzhen Stock Exchange); 2. Ensure that the listed company's efforts, human resources and compensation management are totally independent of Myself and Related Parties; 3. I/The enterprise shall recommend candidates for Director, Supervisor, Manager and other senior executives to the listed company through legal procedures, and shall not interfere with the Company's board of directors and shareholders' meeting exercising their official powers to make decisions with respect to personnel appointment and removal. II. Ensure the listed company's assets to be independent and complete 1. Ensure that the listed company possesses independent business system relevant to operation and independent and complete assets; 2. Ensure that the listed company's funds and assets are not subject to occupation by myself/the enterprise and its related parties; 3. Ensure that the listed company's domicile is independent of myself and related | January 24, 2017 | 9999-12-31 | Normal |
| enterprise impose no interventions on the listed company's business activities other than intervention through exercising shareholder's rights and interests; 3. Ensure that I/the enterprise and other enterprises under its control will avoid engaging in business under substantial competition with the listed company; 4. Ensure I/the enterprise and other enterprises under its control to reduce and avoid related transactions with the listed company to the greatest extent; as for necessary and inevitable related-party transactions, it is a must to conduct such related-party transactions fairly according to the principle of marketization at fair price, and perform transaction procedures and information disclosure obligations regulated by relevant laws, regulations, normative documents and Articles of Association of NJDS. | |||||
| Shanghai Fengnan Investment Center LLP; ZHANG Yuxiang; ZHU Xuelian | Other Commitments | Commitment on maintaining the independence of the listed company: Before this restructuring, Timelink and NJDS were independent of myself/the enterprise, and after this restructuring, I/the enterprise will continue to keep NJDS to be independent, follow the principle of separation and independence in five aspects i.e. business, asset, personnel, financial affairs and organization, follow the relevant regulations formulated by CSRC, not make use of NJDS to provide guarantee illegally, not occupy NJDS funds and not constitute horizontal competition with NJDS. | January 24, 2017 | 9999-12-31 | Normal |
| Shanghai Fengnan Investment Center LLP; ZHANG | Other Commitments | Commitment on not interfering ultra vires in operation and management activities of the listed company, not encroaching on the interests of the listed company and practically | January 24, 2017 | 9999-12-31 | Normal |
| Yuxiang; ZHU Xuelian | performing the Company's specific measures for making up the performance gap: I. The Company's operation and management activity shall not be interfered ultra vires by the company's controlling shareholder and actual controller; II. the Company's interests shall not be encroached by the Company's controlling shareholder and actual controller. III. the Company's controlling shareholder and actual controller shall ensure that the Company's specific measures are practically implemented to make up the performance gap. I/The enterprise, as the liability subject of above-mentioned commitments, will assume liability for damage according to laws if the Company and investors suffer from losses due to violation of such commitments. | ||||
| Shanghai Fengnan Investment Center LLP; ZHANG Yuxiang; ZHU Xuelian | Restricted sale of shares | 1. Shares obtained by me/the enterprise through the share insurance for purchasing assets cannot be transferred during the period from the ending date of the listed company's share insurance to the expiration day of thirty six months and before the day when the performance compensation obligations are performed totally by me/the enterprise (whichever is later). Within the above lockup period, shares which increased as a result of the listed company's stock dividend distribution, conversion of capital reserve into share capital and other reasons, shall have the same lockup period with the above-mentioned shares. 2. If the listed company's shares saw a closing price less than the offering price for successively 20 trading days within 6 months after I/the enterprise completed asset purchase through issuing shares, or the closing price was | January 20, 2016 | 2019-01-19 | Completed |
| less than the offering price at the end of 6 months upon the transaction completion the lockup period of the listed company's shares held by me/the enterprise shall be automatically extended for at least 6 months. | |||||
| Sunny Special Private Fund No. 1; Sunny Special Private Fund No. 2; Sunny Special Private Fund No. 3 | Restricted sale of shares | Shares obtained through the listed company's private placement by Sunny Special Private Fund No. 1 to No. 3 under the management of Sunny Loantop Co., Ltd. shall not be transferred within thirty-six months from the ending date of share insurance by the listed company. Within the above lockup period, shares which increased as a result of the listed company's stock dividend distribution, conversion of capital reserve into share capital and other reasons, shall have the same lockup period with the above-mentioned shares. | January 20, 2016 | 2019-01-19 | Completed |
| Shanghai Fengnan Investment Center LLP; ZHANG Yuxiang; ZHU Xuelian | Commitments on horizontal competition, related-party transaction and occupation of funds | 1. The Enterprise/I and the enterprises other than NJDS and its controlling subsidiaries under my/the enterprise's holding and substantial control have no business under competition with NJDS at present. 2. Except as permitted by laws and regulations, after the completion of this transaction, the Enterprise/I and other enterprises under the Enterprise's/my control and substantial control will neither directly or indirectly operate businesses which constitute competition or may constitute substantial competition with main businesses of the listed company nor invest in other enterprises which constitute competition or may constitute substantial competition with main businesses of the listed company. 3. If the listed company affirms that other enterprises under the Enterprise's/my holding or actual control are engaging in or are about to | August 21, 2015 | 9999-12-31 | Normal |
| engage in businesses which are under horizontal competition with the listed company, the Enterprise shall voluntarily or ask relevant enterprises to transfer or terminate such businesses in a timely manner upon objection raised by the listed company. If the listed company asks for further transfer, the Enterprise shall give priority to the listed company unconditionally with respect to the transfer of the above-mentioned businesses and assets at fair price audited or assessed by an intermediary agency with securities practice qualification. 4. In case of violating any commitment in this letter of commitment, the promisee shall indemnify all direct and indirect losses suffered by Xinmin Technology. 5. This letter of commitment shall come into force after the completion of this transaction, and remain valid during the period when the promisee and Xinmin Technology and its subsidiaries have non-competition obligations for associated relationship according to relevant laws and regulations. | |||||
| Shanghai Fengnan Investment Center LLP; ZHANG Yuxiang; ZHU Xuelian | Other Commitments | 1. After the completion of this transaction, I (the Enterprise), enterprises under my (the Enterprise's) control and enterprises where I (the Enterprise) served as director or senior executive (collectively "related party") will reduce related-party transactions with Xinmin Technology to the greatest extent, and for inevitable related-party transactions, the related party and Xinmin Technology shall sign an agreement according to laws, implement legal procedures and perform information disclosure obligation and handle relevant | September 9, 2015 | 9999-12-31 | Normal |
| of NJDS are full-time and get paid in NJDS, without having a part-time job or get paid in other companies. 4. Xinmin Technology has opened independent accounts, set up an independent financial department, formulated independent financial management system and paid taxes independently. NJDS can make financial decisions independently. Thus, there is no intervention by shareholders in the use of company funds. NJDS has a set of complete and independent financial accounting system. 5. Xinmin Technology establishes an organization necessary for its business. All internal departments operate independently, without mixed operation or sharing working space. | ||||||
| Commitment made during initial public offering or re-financing | Wujiang Xinmin Industrial Investment Co., Ltd. and Wujiang Xinmin Technology Development Co., Ltd. (renamed as Dongfang Xinmin Holding Co., Ltd.) before offering by the Company | Commitments on horizontal competition, related-party transaction and occupation of funds | 1. The Enterprise and the Enterprise's affiliated enterprises will minimize and avoid related-party transactions with the joint-stock company. If certain related-party transaction shall be implemented according to the principle of being most superior to the joint-stock company, the Enterprise will avoid interfering with the independent judgment by the joint-stock company's decision-making institute, roll out just, fair and open transactions with the joint-stock company on the premise of strictly following regulations relevant to related-party transactions in the joint-stock company's Articles of Association, laws, regulations and normative documents, and will help it to fully perform necessary disclosure obligation in a practical manner. 2. During the period acting as a shareholder of Xinmin Technology, the Enterprise and its subsidiaries will not | August 17, 2006 | 9999-12-31 | Normal |
| directly or indirectly roll out any same or similar business which institutes competition against the existing businesses of Xinmin Technology. 3. The Enterprise and its holding subsidiaries shall not occupy funds or other assets of the joint-stock company and its holding subsidiaries directly or indirectly, excluding normal business dealings. | |||||
| The Company's directors, supervisors and senior executives indirectly holding the Company's shares through holding equities of the Company's shareholders i.e. Wujiang Xinmin Industrial Investment Co., Ltd. and Wujiang Xinmin Technology Development Co., Ltd. (renamed as Dongfang Xinmin Holding Co., Ltd.) before the Company's | Commitment for restricted sale of shares | Promise to report to the Company the shares they hold indirectly and the changes thereto. The shares transferred each year by any of them during his or her tenure in the Company shall not exceed 25% of total shares that he or she holds indirectly in the Company; such personnel shall not transfer the Company's shares that they hold indirectly within half a year after resign from the Company. | March 2, 2007 | 9999-12-31 | Completed |
| offering | ||||||
| Commitment on equity incentive | ||||||
| Other commitments made to minority shareholders of the Company | ||||||
| Whether commitments are performed on time | Yes | |||||
| Name of asset or project in profit forecast | Start time of forecast | End time of forecast | Forecast performance (Current) (RMB 10,000) | Actual performance (Current) (RMB 10,000) | Reasons for not achieving forecast (if applicable) | Disclosure date of original forecast | Disclosure index of original forecast |
| Timelink | January 1, 2016 | December 31, 2019 | 13,200 | 11,146.23 | N/A | September 20, 2017 | Report of Asset Purchase and Supporting Funds Raising through Share Insurance and Cash Payment, and Related-party Transaction (Revised) on www.cninfo.com.cn |
Fulfilment of performance commitments and their impact on goodwill impairment testingIV. Status of Capital of the Listed Company Used for Non-operating Purposes by theControlling Shareholder or Its Related Parties
□ Applicable (A) √ Not applicable (N/A)
In the reporting period, no controlling shareholder or its related party used capital of the listed Company for non-operating purposes.V. Explanations from the Board of Directors, Board of Supervisors and Independent Directors(If Any) on “Non-standard Audit Report” Issued by the Auditor for the Reporting Period
□ Applicable (A) √ Not applicable (N/A)
VI. Explanations on Changes in Accounting Policies, Estimates and Methods When Comparedto the Previous Financial Year
√ Applicable (A) □ Not applicable (N/A)
1. Significant changes in accounting policies
?On April 30, 2019, the Ministry of Finance of China (“MOF”) issued the Notice on Revising and Issuing theFormat of Financial Statements of General Enterprises for 2019 (CK [2019] No. 6) which requires enterprises thathave implemented the new financial instrument standards but have not implemented the new revenue standards andnew leasing standards to prepare financial statements according to the following regulations:
The item "notes receivable and accounts receivable" in balance sheet shall be divided into the items "notesreceivable" and "accounts receivable"; the item "receivables financing" shall be added, so as to reflect the notesreceivable and accounts receivable measured at fair value with changes recorded in other comprehensive incomeon balance sheet date; the item "notes payable and accounts payable" shall be divided into the items "notes payable"and "accounts payable".The sub-item of "gains /losses from derecognition of financial assets measured at amortized cost" shall be addedunder the item of “investment income”.On September 19, 2019, the MOF issued the Notice on Revising and Issuing the Format of Consolidated FinancialStatements (2019) (CK [2019] No. 16), which should be implemented with CK [2019] No. 6.The Company prepared the comparative statements in accordance with the format of financial statements regulatedby CK [2019] No. 6 and CK [2019] No. 16, and changed the presentation of financial statements related withretroactive adjustment.
②The MOF issued the Accounting Standards for Enterprises No. 22 – Recognition and Measurement of FinancialInstruments (CK [2017] No. 7), the Accounting Standards for Enterprises No. 23 – Transfer of Financial Assets(CK 8 [2017] No.) and the Accounting Standards for Enterprises No. 24 – Hedge Accounting (CK [2017] No. 9) onMarch 31, 2017 respectively, and issued the Accounting Standards for Enterprises No. 37 – Presentation ofFinancial Instruments (CK [2017] No. 14) on May 2, 2017 (collectively "new financial instrument standards").Domestic listed enterprises are required to implement new financial instrument standards from January 1, 2019. The
Company implemented such new financial instrument standards from January 1, 2019 and made adjustments forrelevant accounting policies. For details, see Note V.10.Due to inconsistency between recognition and measurement of financial instruments before January 1, 2019 andnew financial instrument standards, the Company conducted retroactive adjustment for classification andmeasurement of financial instruments (including impairment) according to new financial instrument standards, andincluded the difference between the original carrying value of financial instruments and new carrying value onimplementation day (i.e. January 1, 2019) of new financial instrument standards in retained earnings or othercomprehensive income as of January 1, 2019. Meanwhile, the Company has not made adjustment for data oncomparative statements.
③On May 9, 2019, the MOF issued the Accounting Standards for Enterprises No. 7–Exchange of Non-monetaryAssets (CK [2019] No. 8). According to the requirements, the Company has made adjustment for the exchange ofnon-monetary assets incurred from January 1, 2019 to the implementation date according to this code, and has notmade retroactive adjustment for the exchange of non-monetary assets incurred before January 1, 2019. TheCompany has implemented the Standards since June 10, 2019.
④On May 16, 2019, the MOF issued the Accounting Standards for Enterprises No. 12–Debt Restructuring (CK[2019] No. 9). According to the requirements, the Company has made adjustment for the debt restructuring incurredfrom January 1, 2019 to the implementation date according to the Standards, and has not made retroactiveadjustment for the debt restructuring incurred before January 1, 2019. The Company has implemented the Standardssince June 17, 2019.The cumulative impact of the above-mentioned accounting policies is as follows:
Unit: RMB
| Item | Consolidated statement | Parent statement | ||
| December 31,2018 | January 1, 2019 | December 31,2018 | January 1, 2019 | |
| Notes receivable and accounts receivable | 764,901,999.22 | — | 97,520,342.97 | — |
| Notes receivable | — | 40,318,407.59 | — | 700,000.00 |
| Accounts receivable | — | 724,583,591.63 | — | 96,820,342.97 |
| Held-for-trading financial assets | — | 450,000,000.00 | — | 50,000,000.00 |
| Other current assets | 486,849,976.13 | 36,849,976.13 | 54,634,672.85 | 4,634,672.85 |
| Available-for-sale financial assets | 240,057.98 | — | — | — |
| Held-for-trading financial assets | — | 140,057.98 | — | — |
| Other equity instrument investment | — | 100,000.00 | — | — |
| Notes payable and accounts payable | 52,048,994.98 | — | 23,630,397.14 | — |
| Notes payable | — | — | — | — |
| Accounts payable | — | 52,048,994.98 | — | 23,630,397.14 |
| Item | December 31, 2018 | January 1, 2019 | Adjustment |
| Current assets: | |||
| Cash and cash equivalents | 1,189,754,162.14 | 1,189,754,162.14 | — |
| Held-for-trading financial assets | — | 450,140,057.98 | 450,140,057.98 |
| Notes receivable | 40,318,407.59 | 40,318,407.59 | — |
| Accounts receivable | 724,583,591.63 | 724,583,591.63 |
| Advances to suppliers | 552,797,861.17 | 552,797,861.17 | |
| Other receivables | 59,849,623.62 | 59,849,623.62 | |
| Including: Interests receivable | — | — | — |
| Dividends receivable | — | — | — |
| Inventories | 3,361,669.70 | 3,361,669.70 | — |
| Other current assets | 486,849,976.13 | 36,849,976.13 | -450,000,000.00 |
| Total current assets | 3,057,515,291.98 | 3,057,655,349.96 | 140,057.98 |
| Non-current assets: | |||
| Available-for-sale financial assets | 240,057.98 | N/A | -240,057.98 |
| Long-term equity investments | 14,230,858.19 | 14,230,858.19 | — |
| Other equity instrument investment | N/A | 100,000.00 | 100,000.00 |
| Fixed assets | 3,021,813.45 | 3,021,813.45 | — |
| Intangible assets | 562,683,064.77 | 562,683,064.77 | — |
| Goodwill | 889,770,009.82 | 889,770,009.82 | — |
| Long-term deferred expense | 109,113.12 | 109,113.12 | — |
| Deferred tax assets | 6,679,125.79 | 6,679,125.79 | — |
| Other non-current assets | 14,999,379.61 | 14,999,379.61 | — |
| Total non-current assets | 1,491,733,422.73 | 1,491,593,364.75 | -140,057.98 |
| Total assets | 4,549,248,714.71 | 4,549,248,714.71 | — |
| Current liabilities: | |||
| Short-term borrowings | 70,360,000.00 | 70,360,000.00 | — |
| Accounts payable | 52,048,994.98 | 52,048,994.98 | — |
| Advance from customer | 369,750,631.85 | 369,750,631.85 | — |
| Payroll payable | 28,396,002.54 | 28,396,002.54 | — |
| Taxes payable | 66,445,511.72 | 66,445,511.72 | — |
| Other payables | 167,238,218.29 | 167,238,218.29 | — |
| Including: Interests payable | 150,492.26 | 150,492.26 | — |
| Dividends payable | — | — | — |
| Other current liabilities | 30,106,369.18 | 30,106,369.18 | — |
| Total current liabilities | 784,345,728.56 | 784,345,728.56 | — |
| Non-current liabilities: | |||
| Deferred income tax liabilities | 634,200.00 | 634,200.00 | — |
| Total non-current liabilities | 634,200.00 | 634,200.00 | — |
| Total liabilities | 784,979,928.56 | 784,979,928.56 | — |
| Owner's equity (or shareholder’s equity): | |||
| Paid-up capital (or share capital) | 417,326,994.00 | 417,326,994.00 | — |
| Capital reserves | 1,480,832,771.89 | 1,480,832,771.89 | — |
| Less: treasury stock | 67,590,687.09 | 67,590,687.09 | — |
| Surplus reserves | 131,720,855.52 | 131,720,855.52 | — |
| Undistributed Profits | 1,776,292,224.02 | 1,776,292,224.02 | — |
| Total owner’s equity attributable to parent company | 3,738,582,158.34 | 3,738,582,158.34 | — |
| Minority equity | 25,686,627.81 | 25,686,627.81 | — |
| Total owner's equity (or shareholder’s equity) | 3,764,268,786.15 | 3,764,268,786.15 | — |
| Total liabilities and owner's equity (or shareholders' equity) | 4,549,248,714.71 | 4,549,248,714.71 | — |
| Item | December 31,2018 | January 1, 2019 | Adjustment |
| Current assets: | |||
| Cash and cash equivalents | 546,501,650.58 | 546,501,650.58 | — |
| Held-for-trading financial assets | — | 50,000,000.00 | 50,000,000.00 |
| Notes receivable | 700,000.00 | 700,000.00 | — |
| Accounts receivable | 96,820,342.97 | 96,820,342.97 | — |
| Advances to suppliers | 349,364.99 | 349,364.99 | — |
| Other receivables | 32,667,995.54 | 32,667,995.54 | — |
| Including: Interests receivable | — | — | — |
| Dividends receivable | — | — | — |
| Inventories | 441,903.73 | 441,903.73 | — |
| Other current assets | 54,634,672.85 | 4,634,672.85 | -50,000,000.00 |
| Total current assets | 732,115,930.66 | 732,115,930.66 | — |
| Non-current assets: | |||
| Long-term equity investments | 3,938,050,533.14 | 3,938,050,533.14 | — |
| Fixed assets | 34,734.60 | 34,734.60 | — |
| Intangible assets | 101,189.01 | 101,189.01 | — |
| Other non-current assets | 14,684,511.69 | 14,684,511.69 | — |
| Total non-current assets | 3,952,870,968.44 | 3,952,870,968.44 | — |
| Total assets | 4,684,986,899.10 | 4,684,986,899.10 | — |
| Current liabilities: | |||
| Account payable | 23,630,397.14 | 23,630,397.14 | — |
| Advance from customer | 28,401,099.61 | 28,401,099.61 | — |
| Payroll payable | 7,552,651.67 | 7,552,651.67 | — |
| Taxes payable | 149,514.97 | 149,514.97 | — |
| Other payables | 115,799,734.66 | 115,799,734.66 | — |
| Including: Interests payable | — | — | — |
| Dividends payable | — | — | — |
| Total current liabilities | 175,533,398.05 | 175,533,398.05 | — |
| Total liabilities | 175,533,398.05 | 175,533,398.05 | — |
| Owner's equity (or shareholder’s equity): | |||
| Paid-up capital (or share capital) | 2,454,870,403.00 | 2,454,870,403.00 | — |
| Capital reserves | 1,860,926,915.10 | 1,860,926,915.10 | — |
| Less: treasury stock | 67,590,687.09 | 67,590,687.09 | — |
| Surplus reserves | 75,063,622.20 | 75,063,622.20 | — |
| Undistributed Profits | 186,183,247.84 | 186,183,247.84 | — |
| Total owner's equity (or shareholder’s equity) | 4,509,453,501.05 | 4,509,453,501.05 | — |
| Total liabilities and owner's equity (or shareholders' equity) | 4,684,986,899.10 | 4,684,986,899.10 | — |
4. Change of consolidated scope caused by other reasons
1) Establishment of subsidiaries
①Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. was a newly established subsidiary, invested by theCompany's subsidiary Nanji E-commerce (Shanghai) Co., Ltd. in January 2019, with the registered capital of RMB30 million, and the equity held by the Company accounted for 86.67%. The registered capital of RMB 26 millionwas paid as of December 31, 2019.
②Shanghai Aosang Cultural Communication Co., Ltd. was a newly established subsidiary, invested by theCompany's subsidiary Nanji E-commerce (Shanghai) Co., Ltd. in January 2019, with the registered capital of RMB10 million, and the equity held by the Company accounted for 96%. As of December 31, 2019, no capital wascontributed.
③Xinjiang Jingshang E-commerce Co., Ltd. was a newly established subsidiary, invested by the Company inNovember 2019, with the registered capital of RMB 10 million, and the equity held by the Company accounted for100%. The registered capital of RMB 100,000 was paid as of December 31, 2019.
④Xinjiang Yuduocheng E-commerce Co., Ltd. was a newly established subsidiary, invested by the Company inNovember 2019, with the registered capital of RMB 10 million, and the equity held by the Company accounted for100%. The registered capital of RMB 100,000 was paid as of December 31, 2019.
2) Liquidation of subsidiaries
①Shanghai Shuimishang Culture Communication Co., Ltd. has completed the liquidation and cancellation in July2019 and has finished the industrial and commercial change procedures.
②Shanghai Aosang Cultural Communication Co., Ltd. has completed the liquidation and cancellation in September2019 and has finished the industrial and commercial change procedures.IX. Appointment or Dismissal of Accounting FirmAccounting firm engaged at present
| Name of domestic accounting firm | RSM China CPA LLP |
| Fee for domestic accounting firm (in RMB 10,000) | 135 |
| Consecutive years for domestic accounting firm to provide audit service | 15 |
| Name of CPA of the domestic accounting firm | CHU Shiwei and KONG Lingli |
| Consecutive years for CPA of domestic accounting firm to provide audit service | 3 years, 1 year |
| Name of foreign accounting firm (if any) | N/A |
| Consecutive years for foreign accounting firm to provide audit service (if any) | N/A |
| Name of CPA of the foreign accounting firm (if any) | N/A |
| Consecutive years for CPA of foreign accounting firm to provide audit service (if any) | N/A |
Did the accounting firm change during the reporting period?
□ Yes √ No
Employment of auditor of internal controls, financial advisor or sponsor
□ Applicable (A) √ Not applicable (N/A)
X. Listing Suspension or Termination after the Disclosure of Annual Report
□ Applicable (A) √ Not applicable (N/A)
XI. Bankruptcy Reorganization
□ Applicable (A) √ Not applicable (N/A)
The Company had no bankruptcy reorganization during the reporting period.XII. Major Litigation or Arbitration
□ Applicable (A) √ Not applicable (N/A)
The Company had no major litigation or arbitration during the reporting period.XIII. Punishment or Rectification
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
XIV. Integrity of the Company, its Controlling Shareholders, and Actual Controller
√ Applicable (A) □ Not applicable (N/A)
The Company and its controlling shareholder and actual controller did not fail to carry out the valid court decision, and did not haveany outstanding matured debt with large amount.XV. Execution of Stock Incentive Plan, ESOP, or Other Employee Incentives
√ Applicable (A) □ Not applicable (N/A)
1. Employee Stock Ownership Plan II in 2016 (the “ESOP II”)
ESOP II: For details, see NJDS Employee Stock Ownership Plan II (Draft) and its summary, and NJDS EmployeeStock Ownership Plan II (Revised Draft) and its summary which were disclosed on August 15, 2016, January 25,2017, May 26, 2017, June 6, 2017, July 13, 2017 respectively on www.cninfo.com.cn.
2. Stock Option Incentive Plan in 2019 (the “2019 SOIP”)
1) On September 25, 2019, the Company held the 16th Meeting of the 6th Board of Directors, during which theCompany’s Proposal on 2019’s Stock Option Incentive Plan (Draft) and Its Summary, the Company’s Proposal onPerformance Assessment Management Measures for Implementation of 2019’s Stock Options Incentive Plan andthe Proposal on Submitting to the Meeting of Shareholders for Empowering the Board of Directors to HandleMatters Concerning Stock Options Incentive were reviewed and approved. The Company's independent directorshave presented independent opinions indicating their approval on matters related to the 2019 SOIP. In the2019 SOIP,the Company plans to grant 16.9569 million stock options to incentive objects with 13.7472 million stock options
to be granted to 124 persons for the first time, the strike price for the initial granting to be determined as RMB 6.7per share and 3.2097 million stock options to be reserved.
2) The Company’s Proposal on 2019’s Stock Option Incentive Plan (Draft) and Its Summary, the Company’sProposal on Performance Assessment Management Measures for Implementation of 2019’s Stock Option IncentivePlan and the Company’s Proposal on Verification of the Incentive Object List in 2019’s Stock Option Incentive Planwere approved on the fourteenth meeting of the Sixth Board of Supervisors of the Company held on September 25,2019. During this meeting, the Board of Supervisors reviewed and approved the list of incentive objects andpresented their opinions on the review and verification.
3) The names and titles of the incentive objects were noticed publicly within the Company from September 26 toOctober 8, 2019 during which no objection in connection with the incentive objects under the 2019 SOIP wasreceived by the Company's Board of Supervisors. On October 10, 2019, the Company's Board of Supervisorspublished the Board of Supervisors' Statement for the Review Opinions and Disclosure Results of the IncentiveObject List under the Company's 2019 Stock Option Incentive Plan.
4) During the Company's Second Extraordinary General Meeting in 2019 held on October 14, 2019, the Company’sProposal on the 2019 Stock Option Incentive Plan (Draft) and Its Summary, the Company’s Proposal onPerformance Assessment Management Measures for Implementation of the 2019 Stock Option Incentive Plan andthe Proposal on Submission of Empowering the Board of Directors to Handle Matters Concerning the Stock OptionIncentive to the General Meeting of Stockholders were reviewed and approved, and the Internal Inspection Reporton the Status of Purchase and Sales of the Company's Stocks Conducted by Holders of the Inside Information of the2019 Stock Option Incentive Plan was disclosed.
5) On November 13, 2019, the Proposal on Adjusting the List of Incentive Objects and Number of Stock Options toBe Granted under the 2019 Stock Option Incentive Plan and the Proposal on Granting Stock Option to IncentiveObjects for the First Time were reviewed and approved on the Eighteenth Meeting of the Sixth Board of Directorsand the Seventh Meeting of the Sixth Board of Supervisors held by the Company. The Company's independentdirectors presented independent opinions indicating their approval, which stated that the conditions for grantingspecified in the 2019 SOIP had been realized, the qualification of the objects to be granted with the incentive waslegitimate and effective and the determined Initial Granting Date conformed with relevant regulations. Since oneincentive object was no longer qualified to be an incentive object due to his voluntary resign for personal reasonsand another incentive object voluntarily waived all the stock options to be granted by the Company for personalreasons, the quantity of the stock options to be granted for the first time under the 2019 Stock Option Incentive Planwas adjusted from 13.7472 million to 13.5972 million and the number of the inventive objects was adjusted from124 to 122 with the quantity of reserved stock option of 3,2097 million as unchanged. November 13, 2019 wasdecided by the Company as the initial date for granting stock option at this time on which 122 incentive objectswere granted with 13.5972 million stock options with the strike price for the options to be granted being set as RMB
6.70/share. The date for granting the reserved 3.2097 million stock options will be determined by the Board ofDirectors separately.
6) As of November 29, 2019, the registration of the initial granting under the 2019 Stock Option Incentive Plan hadbeen completed by the Company.
XVI. Significant Related-Party Transactions
1. Related-party transactions relevant to routine operations
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
2. Related-party transactions arising from purchase and sale of assets or equities
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
3. Related-party transactions with joint investments
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
4. Credits and liabilities with related parties
□ Applicable (A) √ Not applicable (N/A)
No such case during the reporting period.
5. Other significant related-party transactions
□ Applicable (A) √ Not applicable (N/A)
No other significant related-party transactions occurred during the reporting period.XVII. Material Contracts and Their Execution
1. Status of entrustment, contracting and leases
1) Entrustment
□ Applicable (A) √ Not applicable (N/A)
No entrustment occurred during the reporting period.
2) Contracting
□ Applicable (A) √ Not applicable (N/A)
No contracting matter occurred during the reporting period.
3) Leases
□ Applicable (A) √ Not applicable (N/A)
No leases occurred during the reporting period.
2. Material Guarantees
√ Applicable (A) □ Not applicable (N/A)
1) Guarantees
(Unit: RMB 10,000)
| Guarantees from the Company and its subsidiaries (excluding the guarantees for subsidiaries) to external parties | ||||||||
| Guarantee party | Disclosure date of relevant announcement | Maximum guaranteed amount | Actual occurrence date | Actual guaranteed amount | Guarantee type | Guarantee period | Completed or not | Guarantee for a related party? |
| Guarantees from the Company to its subsidiaries | ||||||||
| Guarantee party | Disclosure date of relevant announcement | Maximum guaranteed amount | Actual occurrence date | Actual guaranteed amount | Guarantee type | Guarantee period | Completed or not | Guarantee for a related party? |
| Xinjiang Henri Jayer Technology Co., Ltd. | April 23, 2018 | 5,000 | June 29, 2018 | 5,000 | Joint liability guarantee | From the date of signing the main contract for single loan to two years after the period for debtor's performance of debts under the main contract expires | Yes | No |
| Beijing Henri Jayer Technology Co., Ltd | January 14, 2019 | 5,000 | February 3, 2019 | 5,000 | Joint liability guarantee | From the date of signing the main contract for single loan to two years after the period for debtor's performance of debts under the main contract expires | Yes | No |
| Xinjiang Henri Jayer Technology Co., Ltd. | June 29, 2019 | 5,000 | July 1, 2019 | 5,000 | Joint liability guarantee | From the date of signing the | No | No |
| main contract for single loan to two years after the period for debtor's performance of debts under the main contract expires | ||||||||
| Beijing Henri Jayer Technology Co., Ltd | December 23, 2019 | 10,000 | December 25, 2019 | 5,000 | Joint liability guarantee | From the date of signing the main contract for single loan to two years after the period for debtor's performance of debts under the main contract expires | No | No |
| Total maximum guaranteed amount approved for subsidiaries during the reporting period (B1) | 20,000 | Total actual guaranteed amount for subsidiaries during the reporting period (B2) | 15,000 | |||||
| Total maximum guaranteed amount approved for the subsidiaries at the end of the reporting period (B3) | 15,000 | Total actual guarantee balance for subsidiaries at the end of the reporting period (B4) | 10,000 | |||||
| Guarantees provided by subsidiaries to subsidiaries | ||||||||
| Guarantee party | Disclosure date of relevant announcement | Maximum guaranteed amount | Actual occurrence date | Actual guaranteed amount | Guarantee type | Guarantee period | Completed or not | Guarantee for a related party? |
| Xinjiang Henri Jayer Technology Co., Ltd. | 2,036 | November 12, 2018 | 2,036 | Joint liability guarantee | From the date of signing the main contract for single | Yes | No | |
| loan to two years after the period for debtor's performance of debts under the main contract expires | ||||||||
| Xinjiang Henri Jayer Technology Co., Ltd. | 5,000 | July 1, 2019 | 5,000 | Joint liability guarantee | From the date of signing the main contract for single loan to two years after the period for debtor's performance of debts under the main contract expires | No | No | |
| Total maximum guaranteed amount approved for subsidiaries during the reporting period (C1) | 5,000 | Total actual guaranteed amount for subsidiaries during the reporting period (C2) | 5,000 | |||||
| Total maximum guaranteed amount approved for the subsidiaries at the end of the reporting period (C3) | 5,000 | Total actual guarantee balance for subsidiaries at the end of the reporting period (C4) | 5,000 | |||||
| Total guaranteed amount provided by the Company (the total of the above three mentioned guarantees) | ||||||||
| Total maximum guaranteed amount approved during the reporting period(A1+B1+C1) | 25,000 | Total actual guaranteed amount during the reporting period (A2+B2+C2) | 20,000 | |||||
| Total maximum guaranteed amount approved at the end of the reporting period (A3+B3+C3) | 20,000 | Total actual guarantee balance at the end of the reporting period(A4+B4+C4) | 15,000 | |||||
| The ratio of total actual guaranteed amount (A4+B4+C4) to the Company's net asset | 3.09% | |||||||
| Wherein: | ||||||||
Detail of compound guarantee:
The Company’s subsidiary Xinjiang Henri Jayer obtained a short-term loan of RMB 50 million from the ShanghaiBranch of Xiamen International Bank, and the Company and its subsidiary (Timelink) provided joint and severalliability guarantee for Xinjiang Henri Jayer.
(2) Illegal provision of guarantees for external parties
□ Applicable (A) √ Not applicable (N/A)
No such cases during the reporting period.
3. Cash assets managed under trust
(1) Entrusted wealth management
√ Applicable (A) □ Not applicable (N/A)
Entrusted wealth management during the reporting period
(Unit: RMB 10,000)
| Type | Source for entrusted funds | Amount occurred in entrusted wealth management | Undue balance | Overdue outstanding amount |
| Products from banks | Self-owned fund | 149,000 | 149,000 | 0 |
| Products from trust companies | Self-owned fund | 5,000 | 0 | 0 |
| Total | 154,000 | 149,000 | 0 | |
XVIII. Social Responsibilities
1. Performance of social responsibility
Since the establishment, the Company has been adhering to the mission "helping China's high-quality supply chainto achieve continuous success, and providing high cost-performance products and services to Chinese families",emphasizing and enhancing the corporate culture development and actively performing its corporate socialresponsibilities. While pursuing economic efficiency and protecting shareholders' benefits, the Company activelysafeguards the legal rights and interests of its creditors and employees, treats its suppliers and clients with integrity,and creates harmonious development environment for corporate development in an active manner.
1) Protecting interests of shareholders and creditors
The Company regulates the procedure for calling and convening the general meetings of shareholders and votingon the meetings in strict compliance with the regulations and requirements of the Articles of Association and theRules of Procedures for the General Meeting of Shareholders and adopts effective methods such as network votingfor more minor shareholders to participate in the general meetings of shareholders so as to ensure that they canenjoy the rights to know, participate and vote when there is a significant matter in the Company; besides, theCompany actively performs its information disclosure obligations by disclosing information in a truthful, accurate,timely, complete and impartial manner and upholds the principle of fairness, justice and openness when dealingwith all investors to safeguard the legitimate rights and interests of all shareholders.The Company fully respects the creditors' rights to know significant information related to their creditor's interestsand attaches great importance to the legitimate interests of the creditors. During the process of decision making forits operation, the Company strictly adheres to relevant contracts and rules, keeps creditors informed of significantinformation related to creditor's interests in a timely manner and provides cooperation and support for creditors toget to know the Company's conditions such as related operation and management.
2) Protecting interests of employees
The Company upholds the human-oriented philosophy, attaches importance to the humanistic care to its employees,and establishes a complete human resource management system in accordance with the laws and regulations suchas Labor Law and Labor Contract Law. The Company takes the happiness of its employees and their familymembers as the basis for its endeavor, focuses on employees' health, safety and satisfaction from a practical pointof view and takes joint efforts to safeguard and guarantee the legitimate interests of employees so as to create asound environment for employees' occupational development.The Company organizes its employees to take physical examinations on a regular basis and provides employeeswith funds to participate in team-building activities organized by corresponding departments on a yearly basis.Meanwhile, the Company sets up a care plan named as "Embrace of Love" for its employees. In 2019, the Companyinitiated Filial Piety Foundation to offer concern and care to employees' family members and also organized aprogram named as "Arrival of Queens" on the Women's Day to offer concern and care to female employees.The Company actively organizes a series of activities such as new employees training, internal lecturer’s training,multiple kinds of internal training, PPT skills training and fire protection knowledge lectures so as to improveemployees' development of occupational qualities; besides, the Company also insists on carrying out rich andcolorful cultural activities to enhance a constructive interaction with its employees and strengthen employees'cohesiveness. During the year of 2019, cultural activities such as "contending for hegemony and challenging thelimit" and the annual party show were held through which the employees' cultural life after work was further
enriched, their physical and mental health was further improved and their working pressure was further relieved.In the same year, a scientific and complete human resources policy was developed. By virtue of a bright industrialdevelopment prospect, a diversified talent motivation development mechanism, a broad space for careerdevelopment and a sound environment for employees' growth, the Company has become a place attracting a lot oftalents. While aiming to achieve the strategic goal and vision for its corporate development, the Company has beenalso working to realize the life value and dream of each employee.
3) Protecting interests of supplier, client and consumer
The Company is always honest and trustworthy to its end consumers, clients and suppliers. It has never obtainedimproper benefits via advertisements with false announcements and never infringed the copyright, trademark right,patent right and other intellectual property rights of its clients and suppliers. The Company has won the nationalenterprise title of "honoring contracts and keeping promises" for two successive years and obtained the certificateof Intellectual Property Management System Certification and the title of “professional, special and new” enterprisein Shanghai. In addition, it has also become the technological center of Qingpu District of Shanghai. Furthermore,the Company has been a benchmark enterprise in electronic commerce in Shanghai in 2018 and 2019 for twosuccessive years.The Company has been adhering to take quality management as the core and conducting strict monitoring on thequality of products by methods such as sampling inspection and in-process inspection carried by the Company itself,sampling inspection by the third-party quality inspection organizations, and sampling inspection by the E-commerceplatforms, so as to provide consumers with high-quality products and protect their benefits. Meanwhile, theCompany has been also paying attention to communication and cooperation with the licensed suppliers anddistributors to achieve mutual benefits and win-win outcomes.
4) Undertaking public relation and social welfare
The Company has been actively undertaking its corporate social responsibilities, strictly performing its taxpayer'sobligations and paying tax in accordance with the law while focusing on social development and fulfilling its socialresponsibilities. During the reporting period, the Company has been continuously playing a positive role in the careplan "Embrace of Love" to help its employees solve practical problems, incorporate caring and thanksgiving cultureinto its corporate operation and strengthen regular communication and interaction with government institutionsthrough which a sound and harmonious relationship with them has been established.
2. Performance of targeted poverty alleviation program
During the reporting period, the Company did not carry out any targeted poverty alleviation program and there isno follow-up plan.
3. Environmental protection
Did the listed Company and its subsidiaries belong to the major pollutant discharge units announced by theenvironmental protection authorities?
□ Applicable (A) √ Not applicable (N/A)
XIX. Other significant matters
□ Applicable (A) √ Not applicable (N/A)
There were no other significant matters required to be disclosed during the reporting period.
XX. Significant Matters of Subsidiaries
□ Applicable (A) √ Not applicable (N/A)
Section 06 Changes in Shares and Information of Shareholders
I. Changes in Shares
1. Changes in shares
Unit: shares
| Before the change | Increase and decrease (+, -) | After the change | |||||||
| Quantity | Proportion | New share issued | Dividend shares | Shares converted from capital reserve | Others | Subtotal | Quantity | Proportion | |
| I. Shares with sales restriction | 975,038,627 | 39.72% | -416,396,151 | -416,396,151 | 558,642,476 | 22.76% | |||
| 3. Shares held by other domestic entities | 975,038,627 | 39.72% | -416,396,151 | -416,396,151 | 558,642,476 | 22.76% | |||
| Wherein: Shares held by domestic institutions | 177,635,773 | 7.24% | -169,656,645 | -169,656,645 | 7,979,128 | 0.32% | |||
| Shares held by domestic individuals | 797,402,854 | 32.48% | -246,739,506 | -246,739,506 | 550,663,348 | 22.44% | |||
| II. Shares without sales restriction | 1,479,831,776 | 60.28% | 416,396,151 | 416,396,151 | 1,896,227,927 | 77.24% | |||
| 1. RMB-denominated ordinary shares | 1,479,831,776 | 60.28% | 416,396,151 | 416,396,151 | 1,896,227,927 | 77.24% | |||
| III. Total shares | 2,454,870,403 | 100.00% | 0 | 0 | 2,454,870,403 | 100.00% | |||
purchase assets in 2017,and converted from the capital reserve in 2106 and 2018 respectively, was supposed to bereleased from restriction on May 9, 2019 as per the share lock-up commitment (for details, please see the IndicativeAnnouncement on Termination of the Restriction on Restricted Shares published by the Company on SecuritiesTimes and www.cninfo.com.cn on May 8, 2019).Approval for share changes
□ Applicable (A) √ Not applicable (N/A)
Transfer of share ownership
□ Applicable (A) √ Not applicable (N/A)
Execution of share repurchase
√ Applicable (A) □ Not applicable (N/A)
The Proposal on Repurchase of the Company's Shares for Employee Incentives was reviewed and approved throughthe Sixth Meeting of the Sixth Board of Directors and the 2018’s Fifth Extraordinary General Meeting ofShareholders held by the Company on September 18, 2018 and October 8, 2018, respectively. According to theProposal, consent was given to the Company to use its self-owned funds to buy back some shares of the Companyby centralized bidding, block trading and other means permitted by laws and regulations for subsequent stockincentive or employee stock ownership plan. The total repurchase amount shall be no less than RMB 150 millionand no greater than RMB 300 million (inclusive), the repurchase price shall be no greater than RMB 11/share(inclusive), and the repurchase period shall not exceed 12 months from the date when the share repurchase plan wasreviewed and approved by the general meeting of shareholders. For details, please see 2018-115 Share RepurchaseReport.The period for the aforesaid repurchase of the Company's shares expired as of October 7, 2019. The cumulativenumber of shares repurchased by the Company through special securities account for share repurchase bycentralized competitive bidding is 16,956,927, accounting for 0.69% of the Company's total shares, where themaximum transaction price is RMB 10.989/share, the minimum transaction price is RMB 6.895/share and the totalamount paid is RMB 151,655,831.53 (excluding the transaction expenses).During the reporting period, a total of 7,919,850 shares have been repurchased by the Company through specialsecurities account for share repurchase by centralized competitive bidding, accounting for 0.32% of the Company'stotal shares, where the maximum transaction price is RMB 10.989/share, the minimum transaction price is RMB
7.200/share, and the total amount paid is RMB 84,058,578.41 (excluding the transaction expenses).Execution of sale of repurchased shares by centralized competitive bidding
□ Applicable (A) √ Not applicable (N/A)
Effect of changes in shares on the basic EPS, diluted EPS, net assets per share attributable to ordinary shareholdersof the Company, and other financial indicators over the last year and the last reporting period
□ Applicable (A) √ Not applicable (N/A)
Other contents deemed necessary by the Company or required by the securities regulatory authorities to be disclosed
□ Applicable (A) √ Not applicable (N/A)
2. Changes in restricted shares
√ Applicable (A) □ Not applicable (N/A)
Unit: shares
| Name of shareholder | Number of restricted shares at the beginning of the period | Number of restricted shares increased in the period | Number of restricted shares released in the period | Number of restricted shares at the end of the period | Reason for restriction | Date of restriction removal |
| ZHANG Yuxiang | 654,576,856 | 454,492,434 | 617,894,673 | 491,174,617 | Restriction due to private placement; Restriction due to senior executive | 617,894,673 shares were released from restriction on January 20, 2019; 35,714,284 shares will be released from restriction on November 9, 2020; Locked shares of senior executives shall be subject to the restriction regulations for directors, supervisors and senior executives during their tenure of office. |
| Shanghai Fengnan Investment Center LLP | 75,118,830 | 0 | 75,118,830 | 0 | Restriction due to private placement | January 20, 2019 |
| ZHU Xuelian | 67,606,947 | 0 | 67,606,947 | 0 | Restriction due to private placement | January 20, 2019 |
| NJDS ESOP II | 7,979,128 | 0 | 0 | 797,912 | Restriction due to private placement | November 9, 2020 |
| LIU Rui | 38,514,964 | 15,405,985 | 15,405,985 | 38,514,964 | Restriction due to private placement; Restriction due to senior | The restriction will be removed by stages in accordance with the share lock-up commitment; Locked shares of senior executives shall be |
| executive | subject to the restriction regulations for directors, supervisors and senior executives during their tenure of office. | |||||
| GE Nan | 26,487,485 | 0 | 11,351,779 | 15,135,706 | Restriction due to private placement | The restriction will be removed by stages in accordance with the share lock-up commitment |
| Sunny Loantop (Zhejiang) Investment Co. Ltd. - Sunny Special Private Fund No. 1 | 31,512,606 | 0 | 31,512,606 | 0 | Restriction due to private placement | January 20, 2019 |
| Sunny Loantop (Zhejiang) Investment Co. Ltd. - Sunny Special Private Fund No. 2 | 31,512,606 | 0 | 31,512,606 | 0 | Restriction due to private placement | January 20, 2019 |
| Sunny Loantop (Zhejiang) Investment Co. Ltd. - Sunny Special Private Fund No. 3 | 31,512,603 | 0 | 31,512,603 | 0 | Restriction due to private placement | January 20, 2019 |
| YU Hanqing | 3,783,927 | 0 | 1,621,682 | 2,162,245 | Restriction due to private placement | The restriction will be removed by stages in accordance with the share lock-up commitment |
| CHEN Jun | 3,405,534 | 0 | 1,459,514 | 1,946,020 | Restriction due to private placement | The restriction will be removed by stages in accordance with the share locking-up commitment |
| ZHANG Ming | 3,027,141 | 0 | 1,297,345 | 1,729,796 | Restriction due to private | The restriction will be removed by stages in accordance with the |
| placement | share locking-up commitment | |||||
| Total | 975,038,627 | 469,898,419 | 886,294,570 | 551,461,260 | -- | -- |
independent opinions indicating their approval, which stated that the conditions for granting specified in the 2019SOIP had been met, the qualification of the object entities to be granted with the incentive was legitimate andeffective and the determined Initial Granting Date conformed with relevant regulations. Since one incentive objectwas no longer qualified to be an incentive object due to his voluntary resign for personal reasons and anotherincentive object voluntarily waived all the stock options to be granted by the Company for personal reasons, thequantity of the stock options to be granted for the first time under the 2019 Stock Options Incentive Plan wasadjusted from 13.7472 million to 13.5972 million and the number of the inventive objects was adjusted from 124to 122 with the quantity of reserved stock options of 3,2097 million as unchanged. November 13, 2019 was decidedby the Company as the initial date for granting stock options, at this time 122 incentive objects were granted with
13.5972 million stock options with the strike price for the options to be granted being set as RMB 6.7. The date forgranting the reserved 3.2097 million stock options will be determined by the Board of Directors separately.
6) As of November 29, 2019, the registration of the initial granting under the 2019 Stock Options Incentive Planhad been completed by the Company.
3. Existing shares held by internal employees
√ Applicable (A) □ Not applicable (N/A)
| Issuing date of the shares held by internal employees | Issuing price of the shares held by internal employees (RMB/share) | Issuing quantity of the shares held by internal employees (share) |
| November 9, 2017 | 13.44 | 29,128,942 |
| Total number of common shareholders at the end of the reporting period | 20,547 | Total number of common shareholders at the end of the last month before the disclosure date of the annual report | 18,411 | Total number of preferred shareholders with voting rights recovered at end of reporting period (if any) (see Note 8) | 0 | Total number of preferred shareholders with voting rights recovered at the end of the last month before the disclosure date of the annual report (if any) (see Note 8) | 0 | |||||||
| Shares held by shareholders holding more than 5% of the total shares or the top 10 shareholders | ||||||||||||||
| Name of shareholder | Type of shareholder | Shareholding percentag | Number of shares held at the end of | Change during the reporting | Number of shares held with sales | Number of shares held without | Pledged or frozen shares | |||||||
| Status of shares | Quantity | |||||||||||||
| e | the reporting period | period | restrictions | sales restrictions | ||||
| ZHANG Yuxiang | Domestic natural person | 24.94% | 612,159,216 | -42,740,274 | 491,174,617 | 120,984,599 | Pledged | 120,380,000 |
| Wujiang Xinmin Industrial Investment Co., Ltd. | Domestic non-state-owned legal person | 5.07% | 124,358,266 | -14,855,655 | 124,358,266 | |||
| ZHU Xuelian | Domestic natural person | 2.75% | 67,606,947 | - | 67,606,947 | |||
| Hong Kong Securities Clearing Company Ltd. | Overseas legal person | 2.58% | 63,313,869 | 50,393,173 | 63,313,869 | |||
| ICBC - CUAM Growth Focus Hybrid Securities Investment Fund | Others | 2.30% | 56,448,979 | -6,379,221 | 56,448,979 | |||
| Shanghai Fengnan Investment Center LLP | Domestic non-state-owned legal person | 2.29% | 56,339,130 | -18,779,700 | 56,339,130 | |||
| National Social Security Fund 418 Portfolio | Others | 2.23% | 54,804,474 | 23,454,918 | 54,804,474 | |||
| China Universal Asset Management Co., Ltd. - Social Security Fund 423 Portfolio | Others | 1.71% | 42,000,096 | 22,000,093 | 42,000,096 | |||
| LIU Rui | Domestic natural person | 1.57% | 38,515,223 | -12,838,063 | 38,514,964 | 259 | Hypothecation | 31,260,000 |
| National Social Security Fund 416 Portfolio | Others | 1.48% | 36,417,867 | 36,417,867 | 36,417,867 | |||
| Strategic investor or general legal person who becomes one of the top 10 shareholders due to the placement of new shares (if any) | N/A | |||||||
| Explanation of the associated relationship or acting-in-concert relationship of the above shareholders | Among the above shareholders, ZHANG Yuxiang and ZHU Xuelian are in a conjugal relationship and are persons acting in concert with Shanghai Fengnan Investment Center LLP. The Company is not aware of any associated relationship among other shareholders or whether they are persons acting in concert as stipulated under the Administrative Measures for the Disclosure of Information on the Change of Shareholdings in Listed Companies. | ||
| Top 10 shareholders holding unrestricted shares | |||
| Name of shareholder | Number of unrestricted shares held at the end of the reporting period | Share types | |
| Share types | Quantity | ||
| Wujiang Xinmin Industrial Investment Co., Ltd. | 124,358,266 | RMB-denominated ordinary shares | 124,358,266 |
| ZHU Xuelian | 67,606,947 | RMB-denominated ordinary shares | 67,606,947 |
| Hong Kong Securities Clearing Company Ltd. | 63,313,869 | RMB-denominated ordinary shares | 63,313,869 |
| ICBC - CUAM Growth Focus Hybrid Securities Investment Fund | 56,448,979 | RMB-denominated ordinary shares | 56,448,979 |
| Shanghai Fengnan Investment Center LLP | 56,339,130 | RMB-denominated ordinary shares | 56,339,130 |
| National Social Security Fund 418 Portfolio | 54,804,474 | RMB-denominated ordinary shares | 54,804,474 |
| China Universal Asset Management Co., Ltd. - Social Security Fund 423 Portfolio | 42,000,096 | RMB-denominated ordinary shares | 42,000,096 |
| National Social Security Fund 416 Portfolio | 36,417,867 | RMB-denominated ordinary shares | 36,417,867 |
| ICBC - CUAM Blue Chip Stably &Flexibly Allocated Hybrid Securities Investment Fund | 34,435,017 | RMB-denominated ordinary shares | 34,435,017 |
| JIANG Xueming | 32,400,000 | RMB-denominated ordinary shares | 32,400,000 |
| Explanation of the associated relationship or acting-in-concert | Among the above shareholders, ZHU Xuelian is the person acting in concert with Shanghai Fengnan Investment Center LLP. The Company is not aware of any associated relationship | ||
| relationship among the top 10 shareholders of unrestricted outstanding shares and between the top 10 shareholders of unrestricted outstanding shares and the top 10 shareholders | among other shareholders or whether they are persons acting in concert as stipulated under the Administrative Measures for the Disclosure of Information on the Change of Shareholdings in Listed Companies. |
| Description of the top 10 ordinary shareholders’ participation in margin trading (if any) | N/A |
| Name of controlling shareholder | Nationality | Does he/she have any right of residence of other countries or regions? |
| ZHANG Yuxiang | Chinese | No |
| ZHU Xuelian | Chinese | No |
| Primary occupation and title | Chairman and General Manager of the Company and spouse | |
| Other domestic or foreign listed companies controlled or participated during the reporting period | N/A | |
| Name of actual controller | Relationship with the actual controller | Nationality | Does he/she have any right of residence of other countries or regions? |
| ZHANG Yuxiang | Himself | Chinese | No |
| ZHU Xuelian | Acting in concert (by agreement, kinship or common control) | Chinese | No |
| Shanghai Fengnan Investment Center LLP | Acting in concert (by agreement, kinship or common control) | - | No |
| Primary occupation and title | Chairman and General Manager of the Company and spouse | ||
| Domestic or foreign listed companies controlled in the past 10 years | N/A | ||
Section 07 Preferred Shares
□ Applicable (A) √ Not applicable (N/A)
The Company had no preferred share during the reporting period.
Section 08 Convertible Bonds
□ Applicable (A) √ Not applicable (N/A)
The Company had no convertible bonds during the reporting period.
Section 09 Directors, Supervisors, Senior Executives and EmployeesI. Shareholding Change of Directors, Supervisors and Senior Executives
| Name | Title | Tenure Status | Gender | Age | Start date | End date | Number of shares at the beginning of the period (share) | Increase of shares in the current period (share) | Decrease of shares in the current period (share) | Other changes (share) | Number of shares at the end of the period (share) |
| ZHANG Yuxiang | Chairman and General Manager | Incumbent | Male | 55 | February 4, 2016 | Present | 654,899,490 | 42,740,274 | 612,159,216 | ||
| LIU Rui | Director | Incumbent | Male | 41 | December 18, 2017 | Present | 51,353,286 | 12,838,063 | 38,515,223 | ||
| Total | -- | -- | -- | -- | -- | -- | 706,252,776 | 0 | 55,578,337 | 650,674,439 |
| Name | Position | Type | Date | Reason |
| LU Lining | Chairman of the Board of Supervisors | Removal | October 8, 2019 | On September 19, 2019, LU Lining applied to the Board of Supervisors of the Company to resign from the positions of the Supervisor and the Chairman of Board of Supervisors for personal reasons. |
| LU Lining | Deputy General Manager | Appointment | September 19, 2019 | On the 15th Meeting of the 6th Board of Directors of the Company, the Proposal on the Appointment of Senior Executives of the Company was examined and approved, approving to appoint Ms. LU Lining as a Deputy General Manager of the Company. |
| ZHENG Dingxia | Chairman of the Board of Supervisors | Appointment | October 8, 2019 | On the First Extraordinary General Meeting of the Company in 2019, the Proposal on the By-election of Supervisors of the Company was examined and passed, approving to appoint Ms. ZHENG Dingxia as the Non-employee Representative Supervisor of the 6th Board of Supervisors. On the 15th Meeting of the 6th Board of Supervisors, the Proposal on the Election of the Chairman of the 6th Board of Supervisors of the Company was examined and passed, and Ms. ZHENG Dingxia was |
| elected as the Chairman of the 6th Board of Supervisors of the Company. | ||||
| JI Yanfen | Deputy General Manager | Appointment | September 19, 2019 | On the 15th Meeting of the 6th Board of Directors of the Company, the Proposal on the Appointment of Senior Executives of the Company was examined and approved, approving to appoint Ms. JI Yanfen as a Deputy General Manager of the Company. |
| LIN Zecun | Deputy General Manager | Appointment | September 19, 2019 | On the 15th Meeting of the 6th Board of Directors of the Company, the Proposal on the Appointment of Senior Executives of the Company was examined and approved, approving to appoint Mr. LIN Zecun as a Deputy General Manager of the Company. |
| FENG Jie | Deputy General Manager | Appointment | September 19, 2019 | On the 15th Meeting of the 6th Board of Directors of the Company, the Proposal on the Appointment of Senior Executives of the Company was examined and approved, approving to appoint Ms. FENG Jie as a Deputy General Manager of the Company. |
| LING Yun | Director, Deputy General Manager and Finance Director | Resign | October 21, 2019 | LING Yun resigned from the positions of Director, Deputy General Manager and Finance Director of the Company for personal reasons. |
Co., Ltd. From September 2015 to August 2018, he served as the Executive Director of Zhuji East China One-StopWomen's Wear E-Commerce Co., Ltd. From August 2015 to June 2018, he served as Executive Director andGeneral Manager of Zhuji One-Stop Network Technology Services Co., Ltd. From September 2015 to February2017, he served as the Executive Director of Tongxiang One-Stop Network Technology Services Co., Ltd. He hasserved as the Supervisor of Shanghai Xiaodai Finance Lease Co., Ltd since August 2015. He became the GeneralPartner of Shanghai Fengnan Investment Center LLP since May 2012. He has served as Director and DeputyGeneral Manager of the Company since February 2016.Mr. LING Yun: Born in June 1976, Bachelor’s Degree in Accounting from Shanghai Lixin University ofAccounting and Finance, Semi-senior Accountant. From November 2000 to July 2003, he successively served asthe Finance Manager and the Finance, Human Resources & Administration Manager of International NetworkCommunications (Shanghai) Co., Ltd. affiliated to China.com. From August 2003 to November 2006, he served asthe Finance, Human Resources & Administration Manager in Shanghai Branch of Beijing Huawang HuitongTechnology Services, Ltd. affiliated to China.com. From December 2006 to September 2008, he served as theFinance, Human Resources &Administration Director of SmartClub. From October 2008 to May 2009, he servedas the Human Resources &Administration Director of Shanghai Zhihuitong Advertising Transmission Co., Ltd.From August 2009 to December 2009, he served as the Finance Manager of Shanghai Point Electronics Co., Ltd.From April 2010 to December 2010, he served as the Preparation Manager of the Network Department of ShanghaiDushi Industry Design Centre Co., Ltd. From June 2011 to March 2013, he served as the President Assistant ofFeishang Electronic Information Technology (Shanghai) Co., Ltd. affiliated to Fclub. From April 2013 to June 2014,he served as the President Assistant and the Finance Director of F-club E-commerce (China) Co., Ltd. FromSeptember 2014 to February 2015, he served as the Finance Director of Shanghai Red Star Macalline Hxshop E-Commerce Co., Ltd. From March 2015 to April 2016, he served as the Finance Director of Shanghai Red StarMacalline Network Technology Co., Ltd. From May 2016 to October 2019, he served as the Finance Director ofNanji E-Commerce (Shanghai) Co., Ltd. From August 2016 to October 2019, he served as the Finance Director ofthe Company. From May 2018 to October 2019, he served as a Director of Beijing Timelink Network TechnologyCo., Ltd. From June 2018 to February 2020, he served as a Director of the Company. From September 2018 to April2020, he served as a Director of Shanghai Xiaodai Finance Lease Co., Ltd.Mr. LIU Rui: Born in October 1978, Bachelor. Since January 2013, he has served as a Director of Beijing WenriTechnology Co., Ltd. Since March 2014, he has served as a Director of When Corporation Limited and WhenCorporation (HK). From July 2014 to May 2015, he served as the Vice President of the Marketing Department ofBeijing Shilian Tianxia Technology Co., Ltd. From August 2015 to 2018, he served as the General Manager ofLhasa HENRI JAYER Technology Co., Ltd. From June 2015 to September 2016, he served as Chairman andGeneral Manager of Beijing Timelink Network Technology Co., Ltd.; since September 2016, he has served asExecutive Director and General Manager of Beijing Timelink Network Technology Co., Ltd. Since December 2017,he has served as a Director of the Company.Mr. YANG Bin: Born in March 1974, MBA. Since 2009, he has served as a Vice President of Far East InternationalInvestment Co., Ltd. Since December 2011, he has served as a Director of Dongfang Hengxin Capital HoldingGroup Co., Ltd. From June 2012 to May 2015, he was a Director of Dongwu Cement International Limited. SinceJuly 2013, he has served as a Director of Dongfang Xinmin Holding Co., Ltd. From September 2013 to February2016, he served as the Chairman of the Company, and since September 2013, he has been a Director of the Company.Since May 2016, he has been the CEO of Oriental Strait Capital Management Co., Ltd.Ms. ZHANG Yanni: Born in November 1975, master’s degree. From March 2004 to April 2006, she worked in
CSR Times Electric Co., Ltd.; From May 2006 to October 2013, she worked in the investment banking divisions atGuosen Securities and Great Wall Securities successively. From October 2013 to April 2016, she served as a deputygeneral manager and the board secretary of the Company, and since November 2015, she has served as a directorof the Company. Since May 2016, she has served as a Deputy General Manager of Oriental Strait CapitalManagement Co., Ltd. and General Manager's Assistant of Orient Hengye Holding Co., Ltd.; From June 2016 toJune 2018, she served as the executive director of WUXI LE-PV Internet TECHNOLOGY Co., Ltd.Mr. WAN Jieqiu: Born in October 1955, doctoral degree. Professor and doctoral supervisor of Dongwu BusinessSchool of Soochow University since August 2008. He has enjoyed special government allowance from the StateCouncil since October 1995. In 2001, he was selected as an Outstanding Talent of Jiangsu Provincial Government’s“333” Talent Project. Currently, he serves concurrently as an independent director of Jiangsu Xinning ModernLogistics Co., Ltd. (Stockcode: 300013), Jiangsu Wujiang China Eastern Silk Market Co., Ltd. (now renamed asJiangsu Eastern Shenghong Co., Ltd., stockcode: 000301), and Suzhou Golden Mantis Construction Decoration Co.,Ltd. (Stockcode: 002081) respectively. Since February 2015, he has been an independent director of the Company.Ms. WANG Haifeng: Born on November 22, 1971, doctoral degree. From July 1992 to August 1994, she workedas a Level-3 Superintendent in Public Security Department of Anhui Province; From January 2004 to January 2005,she was a visiting scholar at Kennedy School of Government of Harvard University; From January 2009 to January2011, she worked as a deputy director in the First Branch of Shanghai Municipal People's Procuratorate; SinceJanuary 2011, she has been working as a law professor in the Law Institute of Shanghai Academy of Social Sciences;From September 1997 to April 2016, she served as a part-time lawyer in GRANDALL LEGAL GROUP (Shanghai) ;Since May 2014, she has been an arbitrator of China International Economic and Trade Arbitration Commission;Since May 2015, she has been a special inspector in the Third Branch of Shanghai Municipal People's Procuratorate;Since May 2016, she has been a part-time lawyer in Shanghai Hengtai Law Office (now renamed as “Hengtai LawOffices”); Since March 2016, she has been an independent director of Shanghai Will Semiconductor Co. Ltd.(Stockcode: 603501); Since November 2017, she has been an independent director of YINYI Co., Ltd. (Stockcode:
000981); Since June 2018, she has been an independent director of the Company; Since November 2019, she hasbeen a Vice Chairman of Shanghai Arbitration Association.Mr. WU Xiaoya: Born on May 18, 1973, bachelor’s degree. From 1994 to 2000, he worked as the head ofInfrastructure Audit Department in Audit Bureau of Mengcheng County of Anhui Province. From 2001 to 2006, heworked in as a project manager Anhui Huapu Certified Public Accountants' Firm. From 2007 to 2012, he workedas the Chief in Anhui Huawan Certified Public Accountants' Firm. Since March 2011, he has been a supervisor ofAnhui Tiandao Enterprise Management Consulting Co., Ltd. Since July 2011, he has been a supervisor of AnhuiXindadi Agricultural Science &Technology Development Co., Ltd. Since 2013, he has worked as the Head of AnhuiBranch of Zhonghua Accounting Firm (Special General Partnership). Since April 2016, he has been an independentdirector of Anhui Yangzi Floor Co., Ltd. (Stockcode: 430539). Since June 2018, he has been an independent directorof the Company; Since December 2019, he has been an independent director of Anhui A-Rising New EnergyIncorporated Company (Stockcode: 834489).Ms. LU Lining: Born in April 1982, college degree. From May 2003 to November 2004, she was a BusinessSupervisor of Shanghai Colin Service Management Co., Ltd. Since 2007, she has successively served as businessassistant, business supervisor, deputy business manager, business manager of Pantyhose BU, senior manager ofClothing Center, director of Women's Outdoor BU, and deputy general manager of Maternal and Infants BU ofNanji E-Commerce (Shanghai) Co., Ltd. Since May 2018, she has served as a supervisor of Beijing Time LinkTechnology Co., Ltd. From June 2018 to October 2019, she served as a supervisor and Chairman of the Board of
Supervisors of the Company. Since September 2019, she has been a deputy general manager of the Company.Ms. ZHENG Dingxia: Born in June 1988, bachelor's degree, Chinese nationality, without the right of permanentresidence abroad. Since 2013, she has successively served as a financial specialist, finance manager and deputyFinance Director of Nanji E-Commerce (Shanghai) Co., Ltd. Since October 2019, she has served as a supervisorand Chairman of the Board of Supervisors of the Company.Mr. HU Xianghuai: Born in April 1974, bachelor's degree. He served as the manager of Engineering Departmentof Shanghai Fangjia Construction Decoration Engineering Co., Ltd. and a project manager of Shanghai TaiyiEnterprise Co., Ltd. Since December 2010, he has served as the administrative manager, engineering manager,operation manager of directly-operated stores, director of Administration Department, executive deputy director ofHuman Resource &Administration Center and supervisor of Nanjiren (Shanghai) Textile Technology Co., Ltd.(now renamed as “Nanji E-Commerce (Shanghai) Co., Ltd.”). From February 2016 to September 2016, he servedas a supervisor of the Company, and since September 2016, he has served as the Company’s employeerepresentative supervisor.Ms. CHEN Xiaojie: Born in September 1981, master’s degree, economic engineer. From August 2007 to December2010, she served as the Company's administrative assistant. From January 2011 to December 2015, she served asthe Company's administrative assistant and board secretary’s assistant. From January 2016 to the present, she servedas an assistant to the general manager of Suzhou Xinmin Textile Co., Ltd. Since June 2017, she has served as themanager of General Affairs Department of Wujiang Xinmin Industrial Investment Co., Ltd. From December 2014to September 2016, she served as the employee representative supervisor of the Company. Since September 2016,she has served as the shareholder supervisor of the Company.Mr. CAO Yitang: Born in June 1976, a dual bachelor’s degree of engineering from Shanghai Jiaotong Universityand a master’s degree of economics from Fudan University. From July 2001 to April 2002, he served as a financialanalyst at Shanghai Office of Pacific Solutions Group. From April 2002 to December 2002, he served as a seniormanager of Shanghai Richen Asset Management Co., Ltd.; From January 2003 to March 2004, he served as a vicepresident of GENES CAPITAL GROUP (Shanghai) Co., Ltd. From March 2004 to May 2007, he served as thehead of Strategic Development and the head of Investor Relations Department of Metersbonwe Fashion Group.From May 2007 to August 2009, he was the head of Direct Investment Department of Tebon Securities Co., Ltd.From August 2009 to March 2010, he was the director of Strategic Management Center of Joeone Co., Ltd. FromMarch 2010 to September 2011, he was the general manager of Zhejiang Lehoo Furniture Co., Ltd. From October2011 to June 2015, he was a partner of Shanghai Doré Hehui Equity Investment Management LLP; Since September2012, he has been the supervisor of Shanghai ?tant Capital Consulting Co., Ltd.; From July 2015 to July 2017, hewas the fashion team head of Shanghai Fosun Capital Investment &Management Co., Ltd. (General Manager ofFosun Ellassay Fashion Fund); From July 2017 to July 2018, he was a managing director of Shanghai CVCapitalAsset Management Co., Ltd.; From August 2012 to August 2018, he was an independent director of VGRASSFashion Co., Ltd. (Stockcode: 603518). Since September 2016, he has been an independent director of ZhejiangRed Dragonfly Footwear Co., Ltd. (Stockcode: 603116); Since May 2017, he has been an independent director ofJiangsu Zhongnan Construction Group Co., Ltd. (Stockcode: 000961); He has been an independent director ofGuangzhou DIKENI Garment Company Limited since June 2018,as the legal representative of Shanghai CaoyitangEnterprise Management Center since August 2018, and as the secretary of the Board of Directors and DeputyGeneral Manager of the Company since October 2018.Ms. JI Yanfeng: born in July 1988, bachelor’s degree, Chinese nationality, without the right of permanent residenceabroad. She has been working in the Company since January 2012, having successively served as the director of
Brand Department, director of the PONY Business Unit and Deputy General Manager of Nanji E-commerce(Shanghai) Co., Ltd., a subsidiary of the Company, since January 2012; She also have served as a director andGeneral Manager of Jiwenwu (Shanghai) Culture Co., Ltd., a subsidiary of the Company, since November 17, 2016;Since September 2019, she has been a deputy general manager of the Company.Mr. LIN Zecun: born in October 1990, college degree, Chinese nationality, without the right of permanentresidence abroad. He acted as the Manager of Procurement Department of Shanghai Lemon Green Tea E-commerceCo., Ltd. from August 2009 to March 2013. He has been working in the Company since April 2014, serving as theSupervisor/Manager/Senior Manager/Director of Home Daily Department, Senior Director of Healthy LivingBusiness Unit, Head of Healthy Living Business Group, Vice General Manager of Nanji E-commerce (Shanghai)Co., Ltd.; Since September 2019, he has been a deputy general manager of the Company.Ms. FENG Jie: born in November 1982, bachelor’s degree, Chinese nationality, without the right of permanentresidence abroad. She acted as the Deputy General Manager of Commodity Department of Shanghai MetersbonweFashion & Accessories Co., Ltd. from July 2005 to May 2014; She acted as a Senior Buyer Manager of SamsungFashion (Shanghai) Co., Ltd. from May 2014 to May 2016; She acted as the E-commerce Director of MarkFairwhale fashion brand of Mark Fairwhale (Shanghai) Commercial Co., Ltd. from May 2016 to May 2018; Shehas been working in the Company since May 2018, serving as the Operation Director of Women’s Wear BusinessUnit and Director of Women's Wear & Accessories Business Group of Nanji E-commerce (Shanghai) Co., Ltd.;Since September 2019, she has been a deputy general manager of the Company.Positions held in shareholder entities
√ Applicable (A) □ Not applicable (N/A)
| Name of the person | Name of the shareholder entity | Position in the shareholder entity | Start date | End date | Receives payment from the shareholder entity? |
| YANG Bin | Dongfang Xinmin Holding Co., Ltd. | Director | July 25, 2013 | No | |
| CHEN Xiaojie | Wujiang Xinmin Industrial Investment Co., Ltd. | Manager of General Affairs Department | June 30, 2017 | No | |
| SHEN Chenxi | Shanghai Fengnan Investment Center LLP | General partner | May 15, 2012 | No | |
| Notes to positions held in shareholder entities | N/A | ||||
| Name of the person | Name of other entities | Position in other entities | Start date | End date of term | Receives payment from other entities? |
| ZHANG Yuxiang | Shanghai Qiangxiang Machinery Equipment Co. Ltd. | Supervisor | August 1, 2015 | No | |
| LIU Rui | Beijing Wenri Science & Technology Co., Ltd. | Director | January 1, 2013 | No | |
| LIU Rui | Beijing Shilian Tianxia Science & Technology Co., Ltd. | Director | March 20, 2014 | ||
| LIU Rui | Shanghai Qishi International Trade Co., Ltd. | Director | March 9, 2017 | ||
| LIU Rui | When Corporation Limited | Director | March 1, 2014 | No | |
| LIU Rui | When Corporation (HK) Limited | Director | March 1, 2014 | No | |
| YANG Bin | Far East International Investment Co., Ltd. | Vice President | January 1, 2009 | No | |
| YANG Bin | Dongfang Hengxin Capital Holding Group Co., Ltd. | Director | December 1, 2011 | No | |
| YANG Bin | Oriental Strait Capital Management Co., Ltd. | CEO | May 1, 2016 | No | |
| YANG Bin | Suzhou Hengkang Life Science Co., Ltd | Chairman | December 25, 2018 | ||
| ZHANG Yanni | Oriental Strait Capital Management Co., Ltd. | Deputy General Manager | May 1, 2016 | No | |
| ZHANG Yanni | Orient Hengye Holding Co., Ltd. | General Manager Assistant | May 1, 2016 | Yes | |
| CHEN Xiaojie | Suzhou Xinmin Textile Co., Ltd. | General Manager Assistant | January 1, 2016 | Yes | |
| WAN Jieqiu | Dongwu Business School of Soochow University | Professor, doctorial supervisor | August 1, 2008 | Yes | |
| WAN Jieqiu | Jiangsu Xinning Modern Logistics Co., Ltd. | Independent director | March 1, 2017 | Yes | |
| WAN Jieqiu | Jiangsu Eastern Shenghong Co., Ltd. | Independent director | May 1, 2017 | Yes | |
| WAN Jieqiu | Suzhou Gold Mantis Construction Decoration Co., Ltd. | Independent director | April 1, 2016 | Yes | |
| WANG Haifeng | Institute of Law, Shanghai Academy of Social Sciences | Researcher | January 1, 2011 | Yes | |
| WANG Haifeng | China International Economic and Trade Arbitration Commission | Arbitrator | May 1, 2014 | No |
| WANG Haifeng | Third Branch of Shanghai People's Procuratorate | Special procurator | May 1, 2015 | No | |
| WANG Haifeng | Shanghai Hengtai Law Firm | Part-time lawyer | May 1, 2016 | No | |
| WANG Haifeng | Shanghai Will Semiconductor Co., Ltd. | Independent director | March 1, 2016 | Yes | |
| WANG Haifeng | Yinyi Co., Ltd. | Independent director | November 1, 2017 | Yes | |
| WANG Haifeng | Shanghai Arbitration Association | Vice Chairman | November 1, 2019 | No | |
| WU Xiaoya | Anhui Tiandao Enterprise Management Consulting Co., Ltd. | Supervisor | March 1, 2011 | No | |
| WU Xiaoya | Anhui Xindadi Agricultural Science &Technology Development Co., Ltd. | Supervisor | July 1, 2011 | No | |
| WU Xiaoya | Anhui Branch of Zhonghua Accounting Firm (special general partnership) | Director | July 1, 2013 | Yes | |
| WU Xiaoya | Anhui Yangzi Floor Co., Ltd. | Independent director | April 25, 2016 | Yes | |
| WU Xiaoya | Anhui A-rising New Energy Incorporated Company | Independent director | December 1, 2019 | Yes | |
| CHEN Xiaojie | Suzhou Xinmin Textile Co., Ltd. | General Manager Assistant | January 1, 2016 | Yes | |
| CAO Yitang | Shanghai ?tant Capital Consulting Co., Ltd. | Supervisor | September 30, 2012 | No | |
| CAO Yitang | Zhejiang Red Dragonfly Footwear Co., Ltd. | Independent director | September 13, 2016 | Yes | |
| CAO Yitang | Jiangsu Zhongnan Construction Group Co., Ltd. | Independent director | May 16, 2017 | Yes | |
| CAO Yitang | Guangzhou DIKENI Garment Company Limited | Independent director | June 26, 2018 | Yes | |
| CAO Yitang | Shanghai Caoyitang Enterprise Management Center | Legal representative | August 28, 2018 | No | |
| Description on position held in other entities | N/A | ||||
IV. Remuneration of directors, supervisors and senior executives
Decision making procedure, determination basis and actual payment of remuneration of directors, supervisors andsenior executivesRemunerations of the Company’s directors and supervisors are proposed by the Company’s Board of Directorsaccording to the proposal of the Remuneration and Appraisal Committee of the Board of Directors, the Company'soperating conditions and profitability and the duty and performance of each position. The proposal is submitted tothe general meeting of shareholders of the Company for approval.Remunerations of the senior executives are determined by the Company’s Board of Directors according to theproposal of the Remuneration and Appraisal Committee of the Board of Directors, the Company's operatingconditions and profitability and performance evaluation of each position. The actual remuneration of a seniorexecutive is based on the salary of each positionRemunerations of directors, supervisors and senior executives of the Company during the reporting period
(Unit: RMB 10,000)
| Name | Position | Gender | Age | Status of employment | Total pre-tax remuneration gained from the Company | Whether gained remuneration from the Company’s related parties |
| ZHANG Yuxiang | Chairman and General Manager | Male | 55 | Incumbent | 42.60 | No |
| SHEN Chenxi | Director, Deputy General Manager | Male | 32 | Incumbent | 288.96 | No |
| LING Yun | Director, Deputy General Manager, Finance Director | Male | 43 | Resigned | 73.67 | No |
| LIU Rui | Internal Director | Male | 41 | Incumbent | 45.07 | No |
| YANG Bin | External Director | Male | 45 | Incumbent | Yes | |
| ZHANG Yanni | External Director | Female | 44 | Incumbent | Yes | |
| WAN Jieqiu | Independent Director | Male | 65 | Incumbent | 7.00 | No |
| WANG Haifeng | Independent Director | Female | 49 | Incumbent | 7.00 | No |
| WU Xiaoya | Independent Director | Male | 47 | Incumbent | 7.00 | No |
| LU Lining | Chairman of Board of Supervisors | Female | 37 | Resigned | No |
| ZHENG Dingxia | Chairman of Board of Supervisors | Female | 31 | Incumbent | 40.31 | No |
| HU Xianghuai | Employee Representative Supervisor | Male | 45 | Incumbent | 40.05 | No |
| CHEN Xiaojie | Shareholder Supervisor | Female | 38 | Incumbent | 3.00 | No |
| CAO Yitang | Deputy General Manager, Secretary of Board of Directors | Male | 43 | Incumbent | 125.83 | No |
| LU Lining | Deputy General Manager | Female | 37 | Incumbent | 111.77 | No |
| JI Yanfen | Deputy General Manager | Female | 31 | Incumbent | 86.43 | No |
| LIN Zecun | Deputy General Manager | Male | 29 | Incumbent | 166.45 | No |
| FENG Jie | Deputy General Manager | Female | 37 | Incumbent | 130.18 | No |
| Total | -- | -- | -- | -- | 1,175.32 | -- |
| Name | Position | Number of exercisable shares in the reporting period | Number of shares exercised in the reporting period | Exercise price of the shares exercised in the reporting period (RMB/share) | Market price at the end of the reporting period (RMB/share) | Number of restricted shares held at the beginning | Number of unlocked shares in the current period | Number of restricted shares granted in the reporting period | Granting price of restricted share (RMB/share) | Number of restricted shares held at the end of the period |
| SHEN Chenxi | Director, Deputy General Manager | 0 | 0 | 0 | 10.91 | 0 | 0 | 0 | 0 | 0 |
| CAO Yitang | Secretary of Board of Directors, Deputy General Manager | 0 | 0 | 0 | 10.91 | 0 | 0 | 0 | 0 | 0 |
| JI Yanfen | Deputy General Manager | 0 | 0 | 0 | 10.91 | 0 | 0 | 0 | 0 | 0 |
| LIN Zecun | Deputy General Manager | 0 | 0 | 0 | 10.91 | 0 | 0 | 0 | 0 | 0 |
| FENG Jie | Deputy General Manager | 0 | 0 | 0 | 10.91 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | 0 | 0 | -- | -- | 0 | 0 | 0 | -- | 0 |
| Comments (if any) | The Company launched the 2019 SOIP during the reporting period, the above 5 directors and senior executives were granted with a total of 1,360,000 stock options, accounting for 10.002% of the total granted stock options. All stock options are not exercisable during the reporting period. | |||||||||
| Number of employees on active duty in the parent company (person) | 132 |
| Number of employees on active duty in the major subsidiaries (person) | 445 |
| Total number of employees on active duty (person) | 646 |
| Total number of employees receiving a salary during the current period (person) | 646 |
| Number of retired employees for whom the parent company and major subsidiaries bear the costs (person) | 1 |
| Role type | |
| Category | Number (person) |
| Sales personnel | 151 |
| Technical personnel | 118 |
| Financial personnel | 48 |
| Administrative personnel | 44 |
| Management personnel | 99 |
| Operational personnel | 158 |
| Staff of supporting departments | 28 |
| Total | 646 |
| Education background | |
| Category | Number (person) |
| Master's degree | 27 |
| Bachelor’s degree | 309 |
| College degree | 264 |
| Below college degree | 46 |
| Total | 646 |
Section 10 Corporate GovernanceI. Basic Information of Corporate Governance
The Company continues to improve the corporate governance structure, establish a modern enterprise system,consciously fulfill the obligation of information disclosure, achieve good investor relationship management tocontinuously enhance the Company’s normalized operation according to requirements of the following laws andregulations since the Company went public: the PRC Corporate Law, CSRC Securities Law, CSRC Code ofCorporate Governance of Listed Companies, Guidelines for Articles of Association of Listed Companies, RulesGoverning the Listing of Shares on the Shenzhen Stock Exchange.The Company revised the Company’s Articles of Association and Rules for Short-term Entrusted WealthManagement according to the actual situation of the Company in the reporting period.By the end of the reporting period, the actual conditions of Company’s corporate governance met the requirementsof the regulatory documents issued by CSRC regarding the governance of listed companies. The Company willcontinue to strengthen corporate governance in the future, establish a long-term mechanism for corporategovernance, improve the internal control system in a better way and strengthen the fulfillment efforts, to lay a solidfoundation for the Company's sustained, healthy and steady development.
1.About shareholders and general meeting of shareholders
The Company stipulates the Rules of Procedure for the General Meeting of Shareholders, and convenes the generalmeeting in strict accordance with the provisions and requirements of the Rules. The Company treats all shareholdersequally, in particular, to ensure that minority shareholders can enjoy equal status and fully exercise their rights.
2. About the Company and controlling shareholders
The Company has independent business and operational autonomy and ensures "five independences" with thecontrolling shareholders on personnel, asset, finance, organization and business. They make accounting and takeresponsibility and risk independently. There is no such situation as illegal occupation of the Company’s funds bythe controlling shareholders. The Company also provides no guarantee for the controlling shareholders. Thecontrolling shareholders behave normatively without any direct or indirect interfere with the Company’s decision-making and business beyond the general meeting of shareholders.
3. About directors and Board of Directors
The Company elects directors in strict accordance with the recruitment and selection procedures stated in theCompany’s Article of Association. There are currently 3 independent directors in the Company, accounting for 1/3of the total number of directors. The number, composition and qualification of directors in the Board of Directorsmeet the requirements of relevant laws and regulations. All directors can carry out the work in accordance with theGuidelines of Shenzhen Stock Exchange for Standardized Operation of Companies Listed on the SME Board, Rulesof Procedure for Board of Directors of the Company, Working Rules for Independent Directors of the Companyand other regulations. They attend board meetings and general meetings of shareholders seriously, participate in therelevant knowledge training actively, fulfill the obligations of being honest and trustworthy, diligent and responsible.The Board of Directors standardizes the convening and holding of and voting on the board meeting in strict
accordance with relevant regulations, to ensure that the board meeting can go on smoothly. There have neither actsof exercising the power of shareholders' general meeting beyond their authority, nor acts of interfering in theoperation of the board of supervisors and the management beyond their authority. There are Audit Committee,Nomination Committee, Remuneration &Appraisal Committee, and Investment Decision-making Committee underthe Board of Directors. The committees fulfill their own duties, to further improve the governance structure andenable the Board of Directors to make decisions in a more scientific and efficient way.
4. About supervisors and Board of Supervisors
The Company elects supervisors in strict accordance with the relevant provisions of the Corporate Law, theCompany’s Articles of Association and other regulations. The number, composition and qualification of supervisorsin the Board of Supervisors meet requirements of relevant laws and regulations. The Board of Supervisors canconvene and hold supervisor meeting in strict accordance with requirements of the Rules of Procedure for theCompany's Board of Supervisors. The voting procedure meets requirements of applicable laws and regulations. Allsupervisors can perform their duties conscientiously. The legality and compliance of major matters, financial statusand performance of directors and senior executives are effectively supervised and independent opinions are madein the spirit of being responsible for the shareholders, to safeguard the legitimate rights and interests of the Companyand its shareholders.
5. About performance evaluation and incentive and disciplinary mechanismThe Company has established and will gradually improve the performance appraisal system, to link employee'sincome to their job performance. Senior executives are recruited in an open and transparent manner and inaccordance with provisions of applicable laws and regulations.
6. About information disclosure and transparency
The Company’s Management Rules for Information Disclosure and the Company’s Internal Reporting Rules forMajor Information are formulated according to the Administrative Measures on Information Disclosure by ListedCompanies, Stock Listing Rules of Shenzhen Stock Exchange, Guidelines of the Shenzhen Stock Exchange forStandardized Operation of Companies Listed on SME Board and other regulations. The Company establishes themajor information reporting system, to standardize information disclosure acts of the Company, ensure theauthenticity, accuracy and completeness of the information disclosed by the Company and safeguard the legitimaterights and interests of the Company and its shareholders. The Chairman is the first person responsible forinformation disclosure. The Secretary of Board of Directors is responsible for the management of investor relationsin the Company. The Securities Department of the Company is responsible for the daily work on investor relationmanagement. In the reporting period, the Company discloses information in a true, accurate, timely and completeway on the Company’s website and the designated information disclosure media, to ensure that all investors havefair access to the Company's information.Is there any significant difference between the Company’s actual governance status and the relevant rules issuedby China Securities Regulatory Commission?
□ Yes √ No
There is no significant difference between the Company’s actual governance status and the relevant rules issuedby China Securities Regulatory Commission.
II. Independence of the Company from Its Controlling Shareholders in Terms of Business,Personnel, Assets, Organization, and Finance
1. Business independence: The Company has the independent market-oriented management ability and independentsales, operation and service systems. With the complete business process, the Company can conduct businessesindependently. The Company has complete independence in terms of business.
2. Personnel independence: the General Manager, Deputy General Managers, Finance Director and other seniorexecutives of the Company neither hold other administrative positions other than directors and supervisors in otherenterprises controlled by the controlling shareholders and the actual controllers of the Company, nor get salaries inother enterprises controlled by the controlling shareholders and the actual controllers. There are no such cases asholding dual posts, which are prohibited by laws, regulations and rules. the Company’s accountants are full-timestaffs and paid in the Company, without having a part-time job or get paid from other companies.
3. Asset independence: The Company has electronic equipment, tools, office equipment, transportation equipmentand other supporting facilities related to its businesses and has the legal ownership and right of use of houses,electronic equipment, office equipment, trademarks and other facilities related to its business.
4. Organizational independence: The Company establishes an organization necessary for its business. All internaldepartments operate independently, without mixed operation or sharing working space.
5. Financial independence: The Company has opened the independent bank accounts, and set up a FinanceDepartment, established an independent financial management system, and paid taxes independently. The Companycan make financial decisions independently, without any shareholder interference with the use of the Company'sfunds. The Company has a set of complete and independent financial accounting system.III. Horizontal Competition
□ Applicable (A) √ Not applicable (N/A)
IV. Information about Annual General Meeting and Extraordinary General Meeting ofShareholders Held in the Reporting Period
1. Shareholder’s general meeting in the reporting period
| Session of meeting | Type of meeting | Proportion of investor participants | Date of meeting | Date of disclosure | Disclosure index |
| 2018 Annual General Meeting | Annual general meeting | 36.46% | May 17, 2019 | May 18, 2019 | Announcement No. 2019-034 on www.cninfo.com.cn |
| The first extraordinary general meeting in 2019 | Extraordinary general meeting | 35.64% | October 8, 2019 | October 9, 2019 | Announcement No. 2019-072 on www.cninfo.com.cn |
| The second extraordinary general meeting in 2019 | Extraordinary general meeting | 41.29% | October 14, 2019 | October 15, 2019 | Announcement No. 2019-078 on www.cninfo.com.cn |
| The third extraordinary general meeting in 2019 | Extraordinary general meeting | 35.51% | November 4, 2019 | November 5, 2019 | Announcement No. 2019-089 on www.cninfo.com.cn |
| Details of independent director attendance at board sessions and shareholders’ general meetings | |||||||
| Name of independent director | Board sessions required to attend during the reporting period (times) | Number of board sessions attended in person | Number of board sessions attended by correspondence | Number of board sessions attended under commission | Number of absences of board sessions | Non-attendance to board sessions in person for two consecutive times | Number of shareholder’s general meetings attended |
| WAN Jieqiu | 11 | 3 | 8 | 0 | 0 | No | 4 |
| WANG Haifeng | 11 | 2 | 9 | 0 | 0 | No | 4 |
| WU Xiaoya | 11 | 2 | 9 | 0 | 0 | No | 4 |
Explanations for acceptance or rejection of recommendations proposed by independent directorsIndependent directors of the Company are diligent and responsible, fully exercise their rights as independentdirectors, faithfully perform their duties and carefully review all proposals approved by the Board of Directors inthe reporting period. They expressed independent opinions on such major matters as the guarantee made by theCompany to its wholly-owned subsidiaries, distribution of profits, change in the accounting policy, recruitment ofsenior executives of the Company, stock options incentive and related-party transactions.VI. Performance of Special Committees under the Board of Directors in the Reporting PeriodThere are Audit Committee, Investment Decision-making Committee, Remuneration and Appraisal Committee andNomination Committee under the Board of Directors. They work scrupulously to perform their duties in good faithin the reporting period. They are actively engaged in the Company's management, exert their strengths, skills andexperience, fulfill their duties vigorously and safeguard the rights and interests of the Company and shareholders,especially the public shareholders.
1. Performance of Audit Committee of the Board of Directors
During the reporting period, the Audit Committee has held Eight meetings, held the periodic meetings at the end ofeach quarter, to review drafts of periodic reports of the Company, work plans and reports of the internal auditdepartment, propose to appoint the head of the Audit Department, etc., and report to the Board of Directors of theCompany. The Audit Committee of the Board of Directors communicated and confirmed with the accounting firmin advance in the audit work in 2019. Independent directors, members of the Audit Committee and accountants forthe annual audit communicated and discussed the audit plan, key audit areas and other issues in the first annual auditmeeting; The second annual audit meeting was held after accountants for the annual audit of the Company submittedthe financial and accounting statements which have been initially audited. Independent directors, members of theAudit Committee and accountants for the annual audit met again and they agreed on making the 2019 annual reportand its summary based on the financial and accounting statements which have been initially audited; Beforedeliberation on the annual report by the Board of Directors, the Audit Committee held the third annual audit meeting,on which the 2019 Financial Report of the Company and 2019 Annual Report and Its Summary were reviewed andpassed. They suggested continually appointing RSM China CPA LLP as the auditor for the Company's financialstatements.
2. Performance of Investment Decision-making Committee of the Board of DirectorsDuring the reporting period, the Investment Decision-making Committee has held two meetings to mainly discussspecific contents related to the establishment of a joint venture company between the Company and its relatedparties.
3. Performance of Remuneration and Appraisal Committee of the Board of DirectorsDuring the reporting period, the Remuneration and Appraisal Committee has held three meetings, to review andapprove the Proposal on Remuneration of Directors and Supervisors of the Company, Proposal on Remunerationof Senor Executives of the Company, and Draft and Summary of 2019 Stock Options Incentive Plan respectively,and submit them to the boarding meeting for discussion and approval.
4. Performance of Nomination Committee of the Board of Directors
During the reporting period, the Nomination Committee has held to nominate the candidates of the Company’s
senior executives, and submit the proposal to the board meeting for discussion and approval.VII. Work of Board of SupervisorsWere there risks in the Company according to the supervision of the Board of Supervisors during the reportingperiod?
□ Yes √ No
The Board of Supervisors raised no objection to matters under supervision during the reporting period.VIII. Appraisal and Incentive Mechanisms for Senior ExecutivesQuarterly and annual appraisals are mainly adopted for senior executives. The Remuneration and AppraisalCommittee, Human Resources &Administration Center and General Manager Office will form an appraisal team toperform the appraisal. The quarterly appraisal will be performed according to the job duties of the senior executivesand the achievement of quarterly goals. The annual appraisal is mainly performed in a debriefing way. Seniorexecutives make debriefing reports towards the appraisal team. The annal performance bonuses for the seniorexecutives are determined according to the results of the debriefing evaluation and the quarterly performanceappraisal.Incentives for the senior executives mainly includes annual bonus, salary increase and equity incentive. Stockoptions incentive plan is developed according to the length of service and personal contribution of the seniorexecutives.IX. Evaluation Report for Internal Control
1. Details on material defects found in the Company’s internal control during reporting period
□ Yes √ No
2. Self-evaluation report for internal control
| Disclosure date of full text of Evaluation Report for Internal Control | April 16, 2020 | |
| Disclosure index of full text of Evaluation Report for Internal Control | Evaluation Report for Internal Control in 2019 on www.cninfo.com.cn | |
| Proportion of total assets included in evaluation scope | 100.00% | |
| Proportion of operating revenue included in evaluation scope | 100.00% | |
| Criteria of defect | ||
| Category | Financial report | Non-financial report |
| Qualitative criteria | Major defects: 1. Fraudulent practices of directors, supervisors or senior executives of the Company; 2. Restatement of previously issued financial statements by the Company; 3. Material misstatement of financial statements in the current period identified by the auditor but not detected by the Company’s internal control;; 4. Ineffective oversight of the Company’s internal control on financial statements by the Audit Committee and Audit Department. Important defects: 1. Failure to select and apply accounting policies according to generally accepted accounting principles; 2. Failure to establish anti-fraud procedures and control measures; 3. Failure to establish a control mechanism, or failure to develop and implement any compensatory control for the accounting of unconventional or special transactions; 4. One or more defects in the control of the final financial reporting process at the end of period, and failure to reasonably ensure that authenticity and accuracy of the prepared financial statements General defects: other control defects other than above major defects and important defects. | Major defects: decision-making process leads to major mistakes; Important business lacks systematic control or faces systematic failure, and lacks effective compensatory control; The turnover of middle and senior executives and senior technicians is high; Results of internal control evaluation (major defects in particular) have not been rectified; Other circumstances having a major negative impact on the Company. Important defects: decision-making process leads to ordinary mistakes; There are defects in important business policies or systems; High turnover of business personnel in key positions; Results of internal control evaluation (important defects in particular) have not been rectified; Other circumstances having important negative impact on the Company. General defects: the decision-making process is not efficient; There are defects in general business policies or systems; High turnover of business personnel in general positions; General defects have not been rectified. |
| Quantitative criteria | Major defects: potentially misstated amount in the financial report: misstated amount ≥ 1% of the total operating revenue; Important defects: potentially misstated amount in the financial report: 0.5% of the total operating revenue ≤ misstated amount < 1% of the operating revenue; General defects: potentially misstated amount in the financial report: misstated amount < 0.5% of the operating revenue. | Major defects: direct property loss ≥ RMB 5 million; Important defects: RMB 500,000 ≤ direct property loss < RMB 5 million; General defects: direct property loss <RMB 500,000 |
| Number of major defects in the financial report (Nr.) | 0 | |
| Number of major defects in the non-financial report (Nr.) | 0 | |
| Number of important defects in the financial report (Nr.) | 0 | |
| Number of important defects in the non-financial report (Nr.) | 0 |
Section 11 Information on Corporate Bond
Were there bonds publicly issued and listed on an exchange, either not at maturity or at maturity but not fully paidon the approval report date of the Annual Report?No
Section 12 Financial StatementsNote I. Auditor’s Report
| Type of audit opinions | Standard unqualified opinion |
| Date of signing the auditor’s report | April 15, 2020 |
| Name of auditor | RSM China CPA LLP |
| Reference number of auditor’s report | RCSZ [2020] No. 230Z1289 |
| Name of certified public accountant | CHU Shiwei and KONG Lingli |
growth rate of 16.52%.The operating revenue is one of the key performance indicators of NJDS. The recognition of the operating revenuemight be manipulated, to achieve a particular purpose or an expected inherent risk. Besides, there are differencesbetween operating products and services. Therefore, we determine the authenticity and recognition timing of theoperating revenue as a key audit matter.
2. Auditor’s Response
We have implemented the following procedures for revenue recognition:
1) Understand and test the design and implementation of the internal control policies and financial accountingsystem related to the sales and payment collection of NJDS, including client management, client archivemanagement, sales contract management and pricing policies.
2) Distinguish the operation and sales categories; implement the analytic review procedure, judge the rationality ofchanges in the sales revenue and gross profit, check whether the methods for recognizing the main business revenuesof all business units comply with provisions of Accounting Standards for Business Enterprises according to thebusiness unit, industrial development and the actual situation of NJDS;
3) Implement substantive detail test. Main procedures are as follows:
①Check the authenticity of operating revenue by distinguishing the business type, for example: For the brandcomprehensive service revenue, we conduct sampling inspection on the sales contract, integrated service requisitionand bank receipt, check the contract amount and service period, and calculate the revenue attributable to the currentperiod according to the contract amount and service period; For the revenues from the mobile Internet mediadelivery service and the mobile Internet traffic integration service, we conduct sampling inspection on the salescontract, final statement confirmed by the client, sales invoice, bank receipt and other supporting documents;
②Verify the accounts receivable at the end of the period and revenues occurred in current period through letters;
③Select samples from revenue transactions recorded before and after the date of the balance sheet, check thedelivery records, final settlement confirmed by the client and other supporting documents, to evaluate whether therevenue is recorded in the appropriate accounting period;
4) Auditors perform live interviews or video interviews for important clients of NJDS;(II) Impairment of Goodwill and Intangible Assets (Trademark Right)
1. Description of Matter
As stated in Note V.15 &16, the aggregate carrying value of intangible assets of NJDS is RMB 560.1491 millionas of December 31, 2019, including the carrying value RMB 559.2299 million of the trademark right, and thecorresponding impairment reserve balance is zero; The aggregate carrying value of the goodwill is RMB 889.77million, and the corresponding impairment reserve balance is zero. During the impairment test for relevant assetgroups or combinations of asset groups containing goodwill and trademark right, NJDS is required to estimate thefuture cash flow of relevant asset group or combinations of asset groups and determine an appropriate discount rateto calculate the present value. If the present value of the cash flow of relevant asset group is lower than its carryingvalue, the impairment loss of the goodwill and trademark right shall be recognized. As the relevant impairmentevaluation and test require major judgment of the management, we determine the impairment evaluation of this typeof asset as a key audit matter.
2. Auditor’s Response
Main audit procedures implemented for the impairment of goodwill and trademark right include:
1) Test the impairment reserve of the goodwill and trademark right based on the present value of the future cashflow of the asset group estimated in the evaluation report prepared by an external evaluation agency;
2) Review the rationality of the value type and evaluation method used in the evaluation report and the rationalityof such evaluation parameters as the discount rate, sales growth rate and gross profit margin;
3) Review the 2019’s performance of each underlying asset purchased by NJDS, compare it with the estimate tablein the evaluation report, and check whether the net profit of the asset group for the current period reaches thepredicted amounts in the table, to evaluate the reliability and accuracy of the prediction process of the management;
4) Review the prediction of the future cash flow by the management and accuracy of calculation of the present valueof the future cash flow;IV. Other informationManagement of NJDS (hereinafter referred to as "the Management") is responsible for the other information. Theother information comprises the information included in the annual report of NJDS for the year of 2019, but doesnot include the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this other information,we are required to report that fact. We have nothing to report in this regardV. Responsibilities of Management and Those Charged with Governance for the Financial StatementsManagement of NJDS (hereinafter referred to as "the Management") is responsible for the preparation and fairpresentation of the financial statements in accordance with Accounting Standards of Business Enterprises, and forthe design, implementation and maintenance of such internal control as management determines is necessary toenable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, management is responsible for assessing NJDS’ ability to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accountingunless management either intends to liquidate NJDS or to cease operations, or have no realistic alternative but to dosoThose charged with governance are responsible for overseeing NJDS’ financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withCSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these financial statements.As part of an audit, we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraudis higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internalcontrol.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on NJDS’ ability to continue as a going concern. If we conclude that a material uncertainty exists,we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, ifsuch disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtainedup to the date of our auditor’s report. However, future events or conditions may cause NJDS to cease to continue asa going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within NJDS to express an opinion on the financial statements. We are responsible for the direction,supervision and performance of the group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matteror when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefitsof such communication.RSM China CPA LLP CPA 1 (Project Partner): CPA 2:
(Special General Partnership)Beijing · China April 15, 2020
Note II. Financial StatementsAll amounts are expressed in Renminbi Yuan (“RMB”) unless otherwise stated.
1. Consolidated Balance Sheet
Prepared by: Nanji E-commerce Co., Ltd. as at December 31, 2019
Unit: RMB
| Item | December 31, 2019 | December 31,2018 |
| Current assets: | ||
| Cash and cash equivalents | 1,280,832,033.28 | 1,189,754,162.14 |
| Deposit reservation for balance | ||
| Lendings to Banks and Other Financial Institutions | ||
| Held-for-trading financial assets | 1,490,000,000.00 | |
| Financial assets at fair value through profit or loss | ||
| Derivative financial assets | ||
| Notes receivable | 73,506,158.00 | 40,318,407.59 |
| Accounts receivable | 789,704,130.20 | 724,583,591.63 |
| Accounts receivable financing | ||
| Advances to suppliers | 229,302,915.74 | 552,797,861.17 |
| Premium receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 88,075,286.90 | 59,849,623.62 |
| Including: Interests receivable | ||
| Dividend receivable | ||
| Financial assets held under resale agreements | ||
| Inventories | 5,471,862.14 | 3,361,669.70 |
| Contract assets | ||
| Assets classified as held for sale | 15,441,091.08 | |
| Non-current assets maturing within one year | 3,746,477.30 | |
| Other current assets | 34,661,870.64 | 486,849,976.13 |
| Total current assets | 4,010,741,825.28 | 3,057,515,291.98 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Debt investments | ||
| Available-for-sale financial assets | 240,057.98 | |
| Other debt investments | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 0.00 | 14,230,858.19 |
| Other equity instrument investment | 100,000.00 | |
| Other non-current financial assets | ||
| Investment properties | ||
| Fixed assets | 6,718,909.97 | 3,021,813.45 |
| Construction in progress | ||
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 560,149,124.79 | 562,683,064.77 |
| Research and development expenditure | ||
| Goodwill | 889,770,009.82 | 889,770,009.82 |
| Long-term deferred expenses | 7,282,365.40 | 109,113.12 |
| Deferred tax assets | 8,165,984.67 | 6,679,125.79 |
| Other non-current assets | 1,886,792.26 | 14,999,379.61 |
| Total non-current assets | 1,474,073,186.91 | 1,491,733,422.73 |
| Total assets | 5,484,815,012.19 | 4,549,248,714.71 |
| Current liabilities: | ||
| Short-term borrowings | 100,105,694.45 | 70,360,000.00 |
| Borrowings from the central bank | ||
| Borrowings from Banks and Other Financial Institutions | ||
| Held-for-trading financial liabilities | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivate financial liabilities | ||
| Notes payable | ||
| Accounts payable | 68,733,776.67 | 52,048,994.98 |
| Advances from customers | 200,876,035.12 | 369,750,631.85 |
| Contract liabilities | ||
| Financial assets sold under repurchase agreements | ||
| Deposits from customers and banks | ||
| Customer stock brokerage deposits | ||
| Customer stock underwriting deposits | ||
| Employee benefits payable | 37,358,795.19 | 28,396,002.54 |
| Taxes payable | 79,574,047.11 | 66,445,511.72 |
| Other payables | 119,528,535.68 | 167,238,218.29 |
| Including: Interests payables | 150,492.26 | |
| Dividend payables | ||
| Fees and commissions payable | ||
| Reinsurance payables | ||
| Liabilities classified as held for sale | ||
| Non-current liabilities maturing within one year | ||
| Other non-current liabilities | 19,911,007.11 | 30,106,369.18 |
| Total current liabilities | 626,087,891.33 | 784,345,728.56 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual capital securities | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Estimated liabilities | ||
| Deferred income | ||
| Deferred tax liabilities | 634,200.00 | |
| Other non-current liabilities | ||
| Total non-current liabilities | 634,200.00 | |
| Total liabilities | 626,087,891.33 | 784,979,928.56 |
| Owner’s equity: |
| Share capital | 417,326,994.00 | 417,326,994.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual capital securities | ||
| Capital reserves | 1,478,936,371.22 | 1,480,832,771.89 |
| Less: Treasury stock | 151,686,242.28 | 67,590,687.09 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 173,524,680.29 | 131,720,855.52 |
| General risk reserves | ||
| Retained earnings | 2,940,625,317.63 | 1,776,292,224.02 |
| Total owner’s equity attributable to parent company | 4,858,727,120.86 | 3,738,582,158.34 |
| Non-controlling interests | 25,686,627.81 | |
| Total owner’s equity | 4,858,727,120.86 | 3,764,268,786.15 |
| Total liabilities and owner’s equity | 5,484,815,012.19 | 4,549,248,714.71 |
| Item | December 31, 2019 | December 31,2018 |
| Current assets: | ||
| Cash and cash equivalents | 334,150,344.34 | 546,501,650.58 |
| Held-for-trading financial assets | 430,000,000.00 | |
| Financial assets at fair value through profit or loss | ||
| Derivative financial assets | ||
| Notes receivable | 1,300,000.00 | 700,000.00 |
| Accounts receivable | 40,798,467.85 | 96,820,342.97 |
| Accounts receivable financing | ||
| Advances to suppliers | 2,533,156.10 | 349,364.99 |
| Other receivables | 4,890,795.89 | 32,667,995.54 |
| Including: Interests receivable | ||
| Dividend receivable |
| Inventories | 393,510.05 | 441,903.73 |
| Contract assets | ||
| Assets classified as held for sale | 15,441,091.08 | |
| Non-current assets maturing within one year | 3,746,477.30 | |
| Other current assets | 4,489,761.21 | 54,634,672.85 |
| Total current assets | 837,743,603.82 | 732,115,930.66 |
| Non-current assets: | ||
| Debt investments | ||
| Available-for-sale financial assets | ||
| Other debt investments | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 3,925,133,859.28 | 3,938,050,533.14 |
| Other equity instrument investment | ||
| Other non-current financial assets | ||
| Investment properties | ||
| Fixed assets | 9,634.53 | 34,734.60 |
| Construction in progress | ||
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 92,051.85 | 101,189.01 |
| Research and development expenditure | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred tax assets | 1,797,291.73 | |
| Other non-current assets | 14,684,511.69 | |
| Total non-current assets | 3,927,032,837.39 | 3,952,870,968.44 |
| Total assets | 4,764,776,441.21 | 4,684,986,899.10 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Held-for-trading financial liabilities | ||
| Financial liabilities at fair value through profit or loss |
| Derivate financial liabilities | ||
| Notes payable | ||
| Accounts payable | 19,632,474.86 | 23,630,397.14 |
| Advances from customers | 35,996,985.18 | 28,401,099.61 |
| Contract liabilities | ||
| Employee benefits payable | 6,757,485.83 | 7,552,651.67 |
| Taxes payable | 138,349.75 | 149,514.97 |
| Other payables | 99,998,963.78 | 115,799,734.66 |
| Including: Interests payables | ||
| Dividend payables | ||
| Liabilities classified as held for sale | ||
| Non-current liabilities maturing within one year | ||
| Other non-current liabilities | ||
| Total current liabilities | 162,524,259.40 | 175,533,398.05 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual capital securities | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Estimated liabilities | ||
| Deferred income | ||
| Deferred tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | ||
| Total liabilities | 162,524,259.40 | 175,533,398.05 |
| Owner’s equity: | ||
| Share capital | 2,454,870,403.00 | 2,454,870,403.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual capital securities |
| Capital reserves | 1,864,963,348.24 | 1,860,926,915.10 |
| Less: Treasury stock | 151,686,242.28 | 67,590,687.09 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserve | 92,349,402.48 | 75,063,622.20 |
| Retained earnings | 341,755,270.37 | 186,183,247.84 |
| Total owner’s equity | 4,602,252,181.81 | 4,509,453,501.05 |
| Total liabilities and owner’s equity | 4,764,776,441.21 | 4,684,986,899.10 |
| Item | 2019 | 2018 |
| I. Revenue | 3,906,848,236.41 | 3,352,859,972.47 |
| Including: operating revenue | 3,906,848,236.41 | 3,352,859,972.47 |
| Interest income | ||
| Premium Income | ||
| Fee and commission income | ||
| II. Cost of revenue | 2,654,892,453.54 | 2,417,861,700.32 |
| Including: operating cost | 2,402,698,452.04 | 2,197,141,887.86 |
| Interest expense | ||
| Fee and commission expense | ||
| Cash surrender value | ||
| Net amount of compensation paid | ||
| Net amount of withdrawal of insurance contract reserve | ||
| Policyholder dividends resulting from participation in profits | ||
| Reinsurance expense | ||
| Taxes and surcharges | 10,270,570.83 | 9,557,490.68 |
| Selling and distribution expenses | 118,640,571.55 | 111,353,414.51 |
| General and administrative expenses | 80,441,335.12 | 56,800,814.91 |
| Research and development expenses | 43,304,603.95 | 37,800,843.09 |
| Finance costs | -463,079.95 | 5,207,249.27 |
| Including: Interest expense | 6,667,018.42 | 9,910,388.23 |
| Interest income | 7,213,315.85 | 5,154,367.25 |
| Add: Other income | 4,861,177.33 | 342,670.98 |
| Investment income/(“-”for loss) | 35,203,547.69 | 22,929,825.20 |
| Including: Investment income from associates and joint ventures | 1,210,232.89 | 427,104.15 |
| Gains /(losses) from derecognition of financial assets measured at amortized cost | ||
| Gains /(“-”for losses) from foreign exchange | ||
| Income /(“-” for loss) from net exposure hedging | ||
| Gains/(“-” for losses) from changes in fair values | ||
| Impairment loss of credit | -43,267,089.65 | |
| Impairment loss of asset | -1,138,210.78 | -21,413,070.36 |
| Gains/(“-” for losses) from disposal of assets | 4,212.88 | 1,321.15 |
| III. Profit/(“-” for loss) from operations | 1,247,619,420.34 | 936,859,019.12 |
| Add: Non-operating income | 30,616,105.63 | 26,483,062.32 |
| Less: Non-operating expenses | 230,666.74 | 303,484.67 |
| IV. Profit/(“-” for loss) before tax | 1,278,004,859.23 | 963,038,596.77 |
| Less: Income tax expenses | 71,843,874.32 | 75,758,909.06 |
| V. Net profit/(“-” for loss) for the year | 1,206,160,984.91 | 887,279,687.71 |
| (I)Net profit/(loss) by continuity | ||
| 1.Net profit/(loss) from continuing operation | 1,206,160,984.91 | 887,279,687.71 |
| 2.Net profit/(loss) from discontinued operation | ||
| (II) Net profit/(loss) by ownership attribution | ||
| 1. Attributable to owners of the parent | 1,206,136,918.38 | 886,472,236.97 |
| 2. Attributable to non-controlling interests (i.e., Minority interests) | 24,066.53 | 807,450.74 |
| VI. Other comprehensive income for the year, after tax | ||
| Attributable to owners of the parent |
| (I) Items that will not be reclassified subsequently to profit or loss | ||
| 1.Remeasurement of the net defined benefit liability (asset) | ||
| 2.Other comprehensive income using the equity method which will not be reclassified subsequently to profit and loss | ||
| 3. Changes in fair value of other equity instrument investment | ||
| 4. Changes in fair value of the Company’s own credit risks | ||
| 5. Others | ||
| (II) Items that may be reclassified subsequently to profit or loss | ||
| 1.Other comprehensive income using the equity method which will be reclassified subsequently to profit or loss | ||
| 2.Changes in fair value of other debt investment | ||
| 3.Gains/(losses) arising from changes in fair value of available-for-sale financial assets | ||
| 4.Other comprehensive income arising from the reclassification of financial assets | ||
| 5.Gains/(losses) arising from reclassification of held-to-maturity investment as available-for-sale financial assets | ||
| 6.Provision for credit impairment in other debt investments | ||
| 7.Reserve for cash flow hedges | ||
| 8.Exchange differences on translating foreign operations | ||
| 9.Others | ||
| Attributable to non-controlling interests | ||
| VII. Total comprehensive income for the year | 1,206,160,984.91 | 887,279,687.71 |
| Attributable to owners of the parent | 1,206,136,918.38 | 886,472,236.97 |
| Attributable to non-controlling interests | 24,066.53 | 807,450.74 |
| VIII. Earnings per share: | ||
| (I) Basic earnings per share | 0.49 | 0.36 |
| (II) Diluted earnings per share | 0.49 | 0.36 |
| Item | 2019 | 2018 |
| I. Revenue | 230,516,407.45 | 312,875,910.53 |
| Less: operating cost | 44,123,564.84 | 35,789,144.90 |
| Taxes and surcharges | 877,692.60 | 806,805.59 |
| Selling and distribution expenses | 19,793,638.59 | 49,814,201.74 |
| General and administrative expenses | 21,782,760.09 | 12,109,383.65 |
| Research and development expenses | 9,898,526.24 | |
| Financial costs | -10,308,802.25 | -12,589,890.49 |
| Including: Interest expense | ||
| Interest income | 10,275,064.68 | 12,605,460.43 |
| Add: Other income | 14,246.62 | |
| Investment income/(losses) | 11,152,960.24 | 90,537,146.96 |
| Including: Investment income from associates and joint ventures | 1,210,232.89 | 427,104.15 |
| Gains /(losses) from derecognition of financial assets measured at amortized cost | ||
| Income /(losses) from net exposure hedging | ||
| Gains/(losses) from changes in fair values | ||
| Impairment loss of credit | 1,924,349.19 | |
| Impairment loss of asset | -5,762,141.75 | |
| Gains/(losses) from disposal of assets | 1,321.15 |
| II. Profit/(loss) from operations | 167,324,863.01 | 301,838,311.88 |
| Add: Non-operating income | 3,745,235.22 | 2,092,905.16 |
| Less: Non-operating expenses | 9,587.15 | 0.01 |
| III. Profit/(loss) before tax | 171,060,511.08 | 303,931,217.03 |
| Less: Income tax expenses | -1,797,291.73 | |
| IV. Net profit/(loss) for the year | 172,857,802.81 | 303,931,217.03 |
| (I) Net profit/(loss) from continuing operation | 172,857,802.81 | 303,931,217.03 |
| (II) Net profit/(loss) from discontinued operation | ||
| V. Other comprehensive income for the year, after tax | ||
| (I) Items that will not be reclassified subsequently to profit or loss | ||
| 1. Remeasurement of the net defined benefit liability (asset) | ||
| 2. Other comprehensive income using the equity method which will not be reclassified subsequently to profit and loss | ||
| 3. Changes in fair value of other equity instrument investment | ||
| 4. Changes in fair value of the Company’s own credit risks | ||
| 5. Others | ||
| (II) Items that may be reclassified subsequently to profit or loss | ||
| 1. Other comprehensive income using the equity method which will be reclassified subsequently to profit or loss | ||
| 2. Changes in fair value of other debt instrument investment | ||
| 3. Gains/(losses) arising from changes in fair value of available-for-sale financial assets | ||
| 4. Other comprehensive income arising from the reclassification of financial assets |
| 5. Gains/(losses) arising from reclassification of held-to-maturity investment as available-for-sale financial assets | ||
| 6. Provision for credit impairment in other debt investments | ||
| 7. Reserve for cash flow hedges | ||
| 8. Exchange differences on translating foreign operations | ||
| 9. Others | ||
| VI. Total comprehensive income for the year | 172,857,802.81 | 303,931,217.03 |
| VII. Earnings per share: | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
| Item | 2019 | 2018 |
| I. Cash flow from operating activities: | ||
| Cash received from the sale of goods and the rendering of services | 3,809,956,466.43 | 3,584,903,307.82 |
| Net increase of deposits from customers and banks | ||
| Net increase of borrowings from the central bank | ||
| Net increase of placements from other financial institutions | ||
| Cash received from premium of original insurance contracts | ||
| Net cash received from reinsurance business | ||
| Net increase of deposit and investment of policyholder | ||
| Cash received from interests, fees and commissions | ||
| Net increase of borrowings from other |
| banks | ||
| Net increase of fund from repurchase business | ||
| Net cash received as agent of stock exchange | ||
| Cash received from tax refund | 24,237,025.33 | |
| Other cash received relating to operating activities | 72,703,032.56 | 54,556,840.26 |
| Subtotal of cash inflows from operating activities | 3,882,659,498.99 | 3,663,697,173.41 |
| Cash payments for goods purchased and services received | 2,193,510,712.14 | 2,760,296,763.04 |
| Net increase of loans and advances to customers | ||
| Net increase of deposits in central bank and other banks | ||
| Cash payments to compensation of original insurance contract | ||
| Net increase of lendings to banks and other financial institutions | ||
| Cash payments to interests, fees and commissions | ||
| Cash payments for Policyholder dividends resulting from participation in profits | ||
| Cash payments to and on behalf of employees | 146,798,226.03 | 96,997,375.50 |
| Payments of taxes | 135,380,808.10 | 139,358,833.87 |
| Other cash payments relating to operating activities | 152,057,926.10 | 115,657,268.34 |
| Subtotal of cash outflows from operating activities | 2,627,747,672.37 | 3,112,310,240.75 |
| Net cash flows from operating activities | 1,254,911,826.62 | 551,386,932.66 |
| II. Cash flows from investing activities: | ||
| Cash received from disposal and redemption of investments | 5,143,907,649.32 | 5,046,000,000.00 |
| Cash received from returns on investments | 33,933,372.78 | 23,715,571.43 |
| Net cash received from disposals of fixed assets, intangible assets and other long-term assets | 42,426.66 | 5,982.91 |
| Net cash received from disposals of subsidiaries and other business units | 410,000.00 | 642.64 |
| Other cash received relating to investing activities | 7,213,315.85 | 5,192,999.33 |
| Subtotal of cash inflows from investing activities | 5,185,506,764.61 | 5,074,915,196.31 |
| Cash payments to acquire fixed, intangible and other long-term assets | 14,802,142.02 | 770,264.32 |
| Cash payments to acquire investments | 6,697,600,000.00 | 5,438,000,000.00 |
| Net increase in pledged loan | ||
| Net cash payments to acquire subsidiaries and other business units | 68,832,000.00 | 99,519,928.53 |
| Other cash payments relating to investing activities | 724,920.46 | |
| Subtotal of cash outflows from investing activities | 6,781,234,142.02 | 5,539,015,113.31 |
| Net cash flows from investing activities | -1,595,727,377.41 | -464,099,917.00 |
| III. Cash flow from financing activities | ||
| Cash received from capital contributions | ||
| Including: Cash received from absorbing minority shareholders' equity investment by subsidiaries | ||
| Cash received from borrowings | 150,000,000.00 | 90,360,000.00 |
| Other cash received relating to financing activities | ||
| Subtotal of cash inflows from financing activities | 150,000,000.00 | 90,360,000.00 |
| Cash repayments of debts | 120,360,000.00 | 266,750,000.00 |
| Cash payments for dividends, distribution of profit and interest expenses | 6,960,357.83 | 114,482,143.41 |
| Including: Dividends, distribution of profit paid by subsidiaries to minority shareholders | 248,541.55 | 2,348,244.73 |
| Other cash payments relating to | 84,095,555.19 | 67,590,687.09 |
| financing activities | ||
| Subtotal of cash outflows from financing activities | 211,415,913.02 | 448,822,830.50 |
| Net cash flows from financing activities | -61,415,913.02 | -358,462,830.50 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 109,334.95 | -272,600.12 |
| V. Net increase / (decrease) in cash and cash equivalents | -402,122,128.86 | -271,448,414.96 |
| Add: Cash and cash equivalents at the beginning of the period | 1,189,754,162.14 | 1,461,202,577.10 |
| VI. Cash and cash equivalents at the end of the period | 787,632,033.28 | 1,189,754,162.14 |
| Item | 2019 | 2018 |
| I. Cash flow from operating activities: | ||
| Cash received from the sale of goods and the rendering of services | 317,626,602.70 | 265,237,210.18 |
| Cash received from tax refund | 24,237,025.33 | |
| Other cash received relating to operating activities | 52,016,290.51 | 23,407,789.45 |
| Subtotal of cash inflows from operating activities | 369,642,893.21 | 312,882,024.96 |
| Cash payments for goods purchased and services received | 57,253,235.92 | 32,735,258.35 |
| Cash payments to and on behalf of employees | 30,388,283.33 | 22,278,514.00 |
| Payments of taxes | 888,857.82 | 1,715,952.98 |
| Other cash payments relating to operating activities | 14,328,151.10 | 37,677,573.71 |
| Subtotal of cash outflows from operating activities | 102,858,528.17 | 94,407,299.04 |
| Net cash flows from operating activities | 266,784,365.04 | 218,474,725.92 |
| II. Cash flows from investing activities: | ||
| Cash received from disposal and redemption of investments | 1,426,907,649.32 | 1,431,000,000.00 |
| Cash received from returns on investments | 10,251,420.05 | 90,110,042.81 |
| Net cash received from disposals of fixed assets, intangible assets and other long-term assets | 5,982.91 | |
| Net cash received from disposals of subsidiaries and other business units | 1,491,307.30 | |
| Other cash received relating to investing activities | 10,275,064.68 | 12,605,460.43 |
| Subtotal of cash inflows from investing activities | 1,448,925,441.35 | 1,533,721,486.15 |
| Cash payments to acquire fixed, intangible and other long-term assets | ||
| Cash payments to acquire investments | 1,905,200,000.00 | 1,471,000,000.00 |
| Net cash payments to acquire subsidiaries and other business units | 68,832,000.00 | |
| Other cash payments relating to investing activities | ||
| Subtotal of cash outflows from investing activities | 1,974,032,000.00 | 1,471,000,000.00 |
| Net cash flows from investing activities | -525,106,558.65 | 62,721,486.15 |
| III. Cash flows from financing activities | ||
| Cash received from capital contributions | ||
| Cash received from borrowings | ||
| Other cash received relating to financing activities | 80,000,000.00 | |
| Subtotal of cash inflows from financing activities | 80,000,000.00 | |
| Cash repayments of debts | ||
| Cash payments for dividends, distribution of profit and interest expenses | 101,467,969.93 | |
| Other cash payments relating to financing activities | 84,095,555.19 | 177,590,687.09 |
| Subtotal of cash outflows from financing activities | 84,095,555.19 | 279,058,657.02 |
| Net cash flows from financing activities | -84,095,555.19 | -199,058,657.02 |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | 66,442.56 | 23,983.54 |
| V. Net increase / (decrease) in cash and cash equivalents | -342,351,306.24 | 82,161,538.59 |
| Add: Cash and cash equivalents at the beginning of the period | 546,501,650.58 | 464,340,111.99 |
| VI. Cash and cash equivalents at the end of the period | 204,150,344.34 | 546,501,650.58 |
| Item | 2019 | ||||||||||||||
| Owner’s equity attributable to the parent company | Minority equity | Total owner’s equity | |||||||||||||
| Shares capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserve | Retained earnings | Others | Subtotal | |||||
| Preemptive shar | Perpetual capital securities | Others | |||||||||||||
| I. Balance at end of last year | 417,326,994.00 | 1,480,832,771.89 | 67,590,687.09 | 131,720,855.52 | 1,776,292,224.02 | 3,738,582,158.34 | 25,686,627.81 | 3,764,268,786.15 | |||||||
| Add: Changes in accounting policy | |||||||||||||||
| Correction of prior period errors | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the year | 417,326,994.00 | 1,480,832,771.89 | 67,590,687.09 | 131,720,855.52 | 1,776,292,224.02 | 3,738,582,158.34 | 25,686,627.81 | 3,764,268,786.15 | |||||||
| III. Changes in equity during the reporting period | -1,896,400.67 | 84,095,555.19 | 41,803,824.77 | 1,164,333,093.61 | 1,120,144,962.52 | -25,686,627.81 | 1,094,458,334.71 | ||||||||
| (I) Total comprehensive income | 1,206,136,918.38 | 1,206,136,918.38 | 24,066.53 | 1,206,160,984.91 | |||||||||||
| (II) Capital contributions or withdrawals by owners | -1,896,400.67 | 84,095,555.19 | -85,991,955.86 | -25,710,694.34 | -111,702,650.20 | ||||||||||
| 1. Ordinary shares contributed by shareholders | |||||||||||||||
| 2. Capital contributed by holders of other equity instruments | |||||||||||||||
| 3. Share-based payments recognized in owners’ equity | 4,036,433.14 | 4,036,433.14 | 4,036,433.14 | ||||||||||||
| 4. Others | -5,932,833.81 | 84,095,555.19 | -90,028,389.00 | -25,710,694.34 | -115,739,083.34 | ||||||||||
| (III) Profit distribution | 41,803,824.77 | -41,803,824.77 | |||||||||||||
| 1. Withdrawal of surplus reserves | 41,803,824.77 | -41,803,824.77 | |||||||||||||
| 2. Withdrawal of general risk reserves | |||||||||||||||
| 3. Profit distribution to owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV)Transfer between owners' equity | |||||||||||||||
| 1. Capital reserves |
| transfer to share capital | |||||||||||||||
| 2. Surplus reserves transfer to share capital | |||||||||||||||
| 3. Surplus reserves used to cover accumulated deficits | |||||||||||||||
| 4. Defined benefit plan transfer to retained earnings | |||||||||||||||
| 5. Other comprehensive income transfer to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Specific reserves | |||||||||||||||
| 1. Withdrawal during the reporting period | |||||||||||||||
| 2. Usage during the reporting period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Ending balance of the reporting period | 417,326,994.00 | 1,478,936,371.22 | 151,686,242.28 | 173,524,680.29 | 2,940,625,317.63 | 4,858,727,120.86 | 4,858,727,120.86 |
| Item | 2018 | ||||||||||||||
| Owner’s equity attributable to the owners of parent company | Minority equity | Total owner’s equity | |||||||||||||
| Shares capital | Other equity instruments | Capital reserves | Less: treasury stock | Other Comprehensive income | Special reserves | Surplus reserves | General risk reserve | Retained earnings | Others | Subtotal | |||||
| Preemptive share | Perpetual capital securities | Others | |||||||||||||
| I. Balance at end of last year | 417,326,994.00 | 1,480,832,771.89 | 94,008,469.00 | 1,029,000,343.50 | 3,021,168,578.39 | 28,885,513.81 | 3,050,054,092.20 | ||||||||
| Add: Changes in accounting policy | |||||||||||||||
| Correction of prior period errors | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the year | 417,326,994.00 | 1,480,832,771.89 | 94,008,469.00 | 1,029,000,343.50 | 3,021,168,578.39 | 28,885,513.81 | 3,050,054,092.20 | ||||||||
| III. Changes in equity during the reporting period | 67,590,687.09 | 37,712,386.52 | 747,291,880.52 | 717,413,579.95 | -3,198,886.00 | 714,214,693.95 | |||||||||
| (I) Total comprehensive income | 886,472,236.97 | 886,472,236.97 | 807,450.74 | 887,279,687.71 | |||||||||||
| (II) Capital contributions or withdrawals by owners | 67,590,687.09 | -67,590,687.09 | -67,590,687.09 | ||||||||||||
| 1. Ordinary shares contributed by shareholders | |||||||||||||||
| 2. Capital contributed by holders of other equity instruments | |||||||||||||||
| 3. Share-based payments recognized in owners’ equity | |||||||||||||||
| 4. Others | 67,590,687.09 | -67,590,687.09 | -67,590,687.09 | ||||||||||||
| (III) Profit | 37,712, | - | - | - | - |
| distribution | 386.52 | 139,180,356.45 | 101,467,969.93 | 1,715,000.00 | 103,182,969.93 | ||||||||||
| 1. Withdrawal of surplus reserves | 37,712,386.52 | -37,712,386.52 | |||||||||||||
| 2. Withdrawal of general risk reserves | |||||||||||||||
| 3. Profit distribution to owners (or shareholders) | -101,467,969.93 | -101,467,969.93 | -101,467,969.93 | ||||||||||||
| 4. Others | -1,715,000.00 | -1,715,000.00 | |||||||||||||
| (IV)Transfer between owners' equity | |||||||||||||||
| 1. Capital reserves transfer to share capital | |||||||||||||||
| 2. Surplus reserves transfer to share capital | |||||||||||||||
| 3. Surplus reserves used to cover accumulated deficits | |||||||||||||||
| 4. Defined benefit plan transfer to retained earnings | |||||||||||||||
| 5. Other comprehensive income transfer to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Specific reserves | |||||||||||||||
| 1. Withdrawal during the |
| reporting period | |||||||||||||||
| 2. Usage during the reporting period | |||||||||||||||
| (VI) Others | -2,291,336.74 | -2,291,336.74 | |||||||||||||
| IV. Ending balance of the reporting period | 417,326,994.00 | 1,480,832,771.89 | 67,590,687.09 | 131,720,855.52 | 1,776,292,224.02 | 3,738,582,158.34 | 25,686,627.81 | 3,764,268,786.15 |
| Item | 2019 | |||||||||||
| Shares capital | Other equity instruments | Capital reserves | Less: treasury stock | Other Comprehensive income | Specific reserves | Surplus reserves | Retained earnings | Others | Total owner’s equity | |||
| Preference shares | Perpetual capital securities | Others | ||||||||||
| I. Balance at end of last year | 2,454,870,403.00 | 1,860,926,915.10 | 67,590,687.09 | 75,063,622.20 | 186,183,247.84 | 4,509,453,501.05 | ||||||
| Add: Changes in accounting policy | ||||||||||||
| Correction of prior period errors | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the year | 2,454,870,403.00 | 1,860,926,915.10 | 67,590,687.09 | 75,063,622.20 | 186,183,247.84 | 4,509,453,501.05 | ||||||
| III. Changes in equity during the reporting period | 4,036,433.14 | 84,095,555.19 | 17,285,780.28 | 155,572,022.53 | 92,798,680.76 | |||||||
| (I) Total | 172,85 | 172,857,8 | ||||||||||
| comprehensive income | 7,802.81 | 02.81 | ||||||||||
| (II) Capital contributions or withdrawals by owners | 4,036,433.14 | 84,095,555.19 | -80,059,122.05 | |||||||||
| 1. Ordinary shares contributed by shareholders | ||||||||||||
| 2. Capital contributed by holders of other equity instruments | ||||||||||||
| 3. Share-based payments recognized in owners’ equity | 4,036,433.14 | 4,036,433.14 | ||||||||||
| 4. Others | 84,095,555.19 | -84,095,555.19 | ||||||||||
| (III) Profit distribution | 17,285,780.28 | -17,285,780.28 | ||||||||||
| 1. Withdrawal of surplus reserves | 17,285,780.28 | -17,285,780.28 | ||||||||||
| 2. Profit distribution to owners (or shareholders) | ||||||||||||
| 3. Others | ||||||||||||
| (IV) Transfer between owners' equity | ||||||||||||
| 1. Capital reserves transfer to share capital | ||||||||||||
| 2. Surplus |
| reserves transfer to share capital | ||||||||||||
| 3. Surplus reserves used to cover accumulated deficits | ||||||||||||
| 4. Defined benefit plan transfer to retained earnings | ||||||||||||
| 5. Other comprehensive income transfer to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Specific reserves | ||||||||||||
| 1. Withdrawal during the reporting period | ||||||||||||
| 2. Usage during the reporting period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Ending balance of the reporting period | 2,454,870,403.00 | 1,864,963,348.24 | 151,686,242.28 | 92,349,402.48 | 341,755,270.37 | 4,602,252,181.81 |
| Item | 2018 | |||||||||||
| Shares capital | Other equity instruments | Capital reserves | Less: treasury stock | Other Comprehensive income | Specific reserves | Surplus reserves | Retained earnings | Others | Total owner’s equity | |||
| Preemptive share | Perpetual capital securities | Others | ||||||||||
| I. Balance at | 1,636, | 2,679,2 | 44,670, | 14,113,12 | 4,374,580,9 | |||||||
| end of last year | 580,269.00 | 17,049.10 | 500.50 | 2.44 | 41.04 | |||||||
| Add: Changes in accounting policy | ||||||||||||
| Correction of prior period errors | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the year | 1,636,580,269.00 | 2,679,217,049.10 | 44,670,500.50 | 14,113,122.44 | 4,374,580,941.04 | |||||||
| III. Changes in equity during the reporting period | 818,290,134.00 | -818,290,134.00 | 67,590,687.09 | 30,393,121.70 | 172,070,125.40 | 134,872,560.01 | ||||||
| (I) Total comprehensive income | 303,931,217.03 | 303,931,217.03 | ||||||||||
| (II) Capital contributions or withdrawals by owners | 67,590,687.09 | -67,590,687.09 | ||||||||||
| 1. Ordinary shares contributed by shareholders | ||||||||||||
| 2. Capital contributed by holders of other equity instruments | ||||||||||||
| 3. Share-based payments recognized in owners’ equity | ||||||||||||
| 4. Others | 67,590,687.09 | -67,590,687.09 | ||||||||||
| (III) Profit | 30,393, | - | - |
| distribution | 121.70 | 131,861,091.63 | 101,467,969.93 | |||||||||
| 1. Withdrawal of surplus reserves | 30,393,121.70 | -30,393,121.70 | ||||||||||
| 2. Profit distribution to owners (or shareholders) | -101,467,969.93 | -101,467,969.93 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Transfer between owners' equity | 818,290,134.00 | -818,290,134.00 | ||||||||||
| 1.Capital reserves transfer to share capital | 818,290,134.00 | -818,290,134.00 | ||||||||||
| 2. Surplus reserves transfer to share capital | ||||||||||||
| 3. Surplus reserves used to cover accumulated deficits | ||||||||||||
| 4. Defined benefit plan transfer to retained earnings | ||||||||||||
| 5. Other comprehensive income transfer to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Specific reserves | ||||||||||||
| 1. Withdrawal during the |
| reporting period | ||||||||||||
| 2. Usage during the reporting period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Ending balance of the reporting period | 2,454,870,403.00 | 1,860,926,915.10 | 67,590,687.09 | 75,063,622.20 | 186,183,247.84 | 4,509,453,501.05 |
11th Meeting of the Third Session of the Board and approved by 2009 Annual General Meeting: based on the totalshare capital of 182,762,160 shares at the end of 2009, 6 shares were increased for every 10 shares by convertingcapital reserve to share capital, 109,657,296 shares were increased in total, and the registered capital was changedto RMB 292,419,456 after the increase.In July 2010, as approved by the resolution of the Company's Second Extraordinary General Meeting in 2009 andthe Reply on Approval to Jiangsu Xinmin Textile Technology Co., Ltd. on Private Offering of Stock (ZJXK [2010]No. 674 document) issued by CSRC, the Company issued 79,629,629 RMB-denominated common shares (A-share)to 6 specific investors by private offering of stock with the par value of RMB 1.00 per share. After the privateplacement, the registered capital was changed to RMB 372,049,085.In August 2011, according to the plan of share capital increase by capital reserve transfer reviewed at the Company's21st Meeting of the Third Session of the Board and approved by 2010 Annual General Meeting: based on the totalshare capital of 372,049,085 shares at the end of 2010, 2 shares were increased for every 10 shares by convertingcapital reserve to share capital, 74,409,817 shares were increased in total, and the registered capital was changed toRMB 446,458,902 after the increase.In July 2013, Dongfang Hengxin Capital Holding Group Co., Ltd. (hereinafter referred to as "Dongfang Hengxin"),Wujiang Xinmin Technology Development Co., Ltd. (hereinafter referred to as "Xinmin TD"), Xinmin Industrialand LI Kejia signed the Equity Transfer Framework Agreement on the transfer of the equity in Xinmin TD held byXinmin Industrial and LI Kejia to Dongfang Hengxin and capital increase in Xinmin TD by RMB 200 million, afterwhich Dongfang Hengxin held 91.14% equity in Xinmin TD; then, 100,386,041 unrestricted outstanding sharesheld by Xinmin Industrial in Xinmin Technology were transferred to Xinmin TD by agreed transfer, before whichXinmin TD held 32,194,969 unrestricted outstanding shares in Xinmin Technology. On August 13, 2013, theSecurities Transfer Registration Confirmation for the transfer registration of the above shares issued by ChinaSecurities Depository and Clearing Corporation Limited was received, and Xinmin TD became the Company'slargest shareholder, holding 132,581,010 shares in Xinmin Technology, accounting for 29.69% of the total sharecapital of the listed company. Later, Xinmin TD changed its name to Dongfang Xinmin Holding Co., Ltd.(hereinafter referred to as "Dongfang Xinmin"). The actual controller of the Company was changed to Mr. JIANGXueming, and the legal representative was changed to Mr. YANG Bin.According to the resolution of the Company’s Third Extraordinary General Meeting in 2015 and the revised Articlesof Association, and as approved by the Reply on Approving Major Asset Restructuring of Jiangsu Xinmin TextileTechnology Co., Ltd. and Issuing Shares to ZHANG Yuxiang Et Al for Purchasing Assets and Raising SupportingFunds (ZJXK [2015] No. 2968) of China Securities Regulatory Commission, the Company issued 291,158,259RMB-denominated common shares (with the offering price of RMB 8.05 per share) to ZHANG Yuxiang, ZHUXuelian, HU Meizhen, Shanghai Fengnan Investment Center LLP (hereinafter referred to as "Fengnan Investment"),Jiangsu Gaotou Growth Value Equity Investment Partnership (L.P.) (hereinafter referred to as "Jiangsu Gaotou") topurchase 100% equity of Nanji E-Commerce (Shanghai) Co., Ltd., and the Company issued 31,512,605 RMB-denominated common shares (with the offering price of RMB 9.52 per share) specifically to Sunny Special PrivateFund No. 1-3 managed by Sunny Loantop (Zhejiang) Investment Co. Ltd., to raise supporting funds. The aboveincreases of registered capital (share capital) were totally RMB 322,670,864.00, and the registered capital (sharecapital) after such increases were totally RMB 769,129,766.00. The actual controller of the Company was changedto Mr. ZHANG Yuxiang and Mrs. ZHU Xuelian, and the legal representative was changed to Mr. ZHANG Yuxiang.On March 2, 2016, the Company completed the registration of change for industry and commerce information andreceived the Business License reissued by Jiangsu Suzhou Administration for Industry and Commerce. The
Company’s name was changed from "Jiangsu Xinmin Textile Technology Co., Ltd." to "Nanji E-commerce Co.,Ltd."On May 9, 2016, the Proposal for Profit Distribution of Year 2015 was reviewed and approved at the 2015 AnnualGeneral Meeting: 10 shares were increased for every 10 shares of all shareholders by conversion of capital reservesin 2015. On May 20, 2016, the equity distribution plan was executed. The Company's total shares were 769,129,766shares before dividend distribution and were increased to1,538,259,532 shares after dividend distribution.According to resolutions of the Company’s Second Extraordinary General Meeting of Shareholders in 2017 andthe revised Articles of Association, approved by the Reply to Approval about issuing Shares to LIU Rui and OtherPersons for Purchasing Assets and Raising Supporting Funds by Nanji E-commerce Co., Ltd. (ZJXK [2017] No.1703) issued by China Securities Regulatory Commission, the Company purchased 100% equities of BeijingTimelink Network Technology Co., Ltd. (hereinafter referred to as "Timelink") from LIU Rui, GE Nan, YUHanqing, Zhang Ming, CHEN Jun and Beijing Sapphire Lake Investment Co., Ltd. (hereinafter referred to as"Sapphire Lake Investment"). The Company totally paid 60% of the transaction consideration to LIU Rui, GE Nan,YU Hanqing, ZHANG Ming and CHEN Jun by issuing shares (69,191,795 RMB-denominated common shares,with the face value of RMB 1.00 per share and the offering price of RMB 8.29 per share) and paid 40.00% of thetransaction consideration to LIU Rui, GE Nan, YU Hanqing, ZHANG Ming, CHEN Jun and Sapphire LakeInvestment in cash. The Company also issued 29,128,942 RMB-denominated common shares specifically toZHANG Yuxiang and the Employee Stock Ownership Plan II of NJDS, with the face value of RMB 1.00 per share(the offering price of RMB 13.44 per share) and totally issued 98,320,737 RMB-denominated common shares.Where, 34,235,524 shares were issued to LIU Rui, 25,226,176 shares were issued to GE Nan, 3,603,739 shares wereissued to YU Hanqing, 2,882,991 shares were issued to ZHANG Ming, 3,243,365 shares were issued to CHEN Jun,23,809,523 shares were issued to ZHANG Yuxiang and 5,319,419 shares were issued to the Employee StockOwnership Plan II of NJDS. Totally, the registered capital applied for increase amounted to RMB 98,320,737.00and the registered capital amounted to RMB 1,636,580,269.00 after the change.On May 15, 2018, the Company’s 2017Annual General Meeting approved the Company’s Proposal for ProfitDistribution of Year 2017: Based on the total capital shares of 1,636,580,269 shares as of December 31, 2017, thecash dividends of RMB 0.62 (including tax) per 10 shares was distributed to all shareholders. Meanwhile, 5 shareswere increased per 10 shares by converting the capital reserves, with 818,290,134 shares increased by conversionin total. After the conversion, the registered capital was changed to RMB 2,454,870,403.00.Scope of business: Internet retail and foreign trade; outbound investment, investment management and consultation,and enterprise management information consultation; technical support and information consultation of e-commerce,business consulting as well as marketing planning; conference service, brand design, brand management, PR activityplanning, cultural and artistic exchange activity planning, corporation image planning, exhibition and presentationservice, photography service, and cultural and educational information consultation; processing and sales ofagricultural products; development, transfer, consultation and service of network technology, informationtechnology and textile technology; quality management consultation and technical service; sales of knitwear &textile, apparel &accessory, leather products, bags & suitcases, shoes & hats, beddings, craft gifts, washing products,pet supplies, cosmetics, skin-care products, photographic equipment, toys, audio equipment & apparatus, laborprotection products, metal products, furniture, household appliances, kitchen supplies, communication equipment,electronic products, water treatment & purification equipment, hardware & electrical equipment, stationeries, officesupplies, clothing fabrics and clothing accessories; sales of prepackaged food (excluding frozen food); design,production, agency and release of various advertisement; research and development of software. (As for items which
are required to be approved in accordance with laws, the Company may carry out such business activities afterapproval by competent authority)Approved Reporting Date of the Financial Statements: The financial statements were approved and authorized forissue, upon the resolution of the Company’s Board of Directors meeting on April 15, 2020.
1. Incorporated subsidiaries of the Company during the reporting period
| S/N | Full name of subsidiary | Abbreviated subsidiary name | Shareholding ratio (%) | |
| Direct | Indirect | |||
| 1 | Nanji E-commerce (Shanghai) Co., Ltd. | Shanghai NJDS | 100.00 | — |
| 2 | Jiwenwu (Shanghai) Culture Co., Ltd. | Jiwenwu | 55.00 | — |
| 3 | Shanghai Shuimishang Culture Communication Co., Ltd. | Shanghai Shuimishang | 60.00 | — |
| 4 | NANJIREN (Shanghai) E-commerce Co., Ltd. | Shanghai NANJIREN | — | 100.00 |
| 5 | Shanghai One-Stop Network Technology Service Co., Ltd. | One-Stop | — | 100.00 |
| 6 | Shanghai Xiaodai Finance Lease Co., Ltd. | Xiaodai Finance Lease | — | 75.00 |
| 7 | NANJI INTERNATIONAL CO., LTD. | NANJI | — | 100.00 |
| 8 | CARTELO CROCODILE PTE LTD | CARTELO | — | 100.00 |
| 9 | TOTAL CLASSIC INVESTMENTS LIMITED | CLASSIC | — | 100.00 |
| 10 | UNIVERSAL NEW LIMITED | UNIVERSAL | — | 100.00 |
| 11 | Xinjiang Juchang E-commerce Co., Ltd. | Xinjiang Juchang E-commerce | — | 100.00 |
| 12 | Xinjiang NANJIREN E-commerce Co., Ltd. | Xinjiang NANJIREN | — | 100.00 |
| 13 | Xinjiang Cartelo E-commerce Co., Ltd. | Xinjiang Cartelo E-commerce | — | 100.00 |
| 14 | Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. | Cartelo Crocodile Kale | 86.67 | |
| 15 | Shanghai Aosang Cultural Communication Co., Ltd | Shanghai Aosang | 96.00 | |
| 16 | Xinjiang Yuduocheng E-commerce Co., Ltd. | Xinjiang Yuduocheng | 100.00 | — |
| 17 | Xinjiang Jingshang E-commerce Co., Ltd. | Xinjiang Jingshang | 100.00 | — |
| 18 | Beijing Timelink Network Technology Co., Ltd. | Timelink | 100.00 | — |
| 19 | Beijing Henri Jayer Technology Co., Ltd | Henri Jayer | — | 100.00 |
| 20 | Xinjiang Henri Jayer Network Technology Co., Ltd. | Xinjiang Henri Jayer | — | 100.00 |
| 21 | Xinjiang Chambertin Network Technology Co., Ltd. | Chambertin | — | 100.00 |
| 22 | Xinjiang RAYAS Network Technology Co., Ltd. | RAYAS | — | 100.00 |
| S/N | Full name of subsidiary | Abbreviation of Subsidiary | Consolidated period | Reason of consolidation |
| 1 | Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. | Cartelo Crocodile Kale | 2019 | Establishment |
| 2 | Shanghai Aosang Cultural Communication Co., Ltd | Shanghai Aosang | Not open for operation | Establishment |
| 3 | Xinjiang Yuduocheng E-commerce Co., Ltd. | Xinjiang Yuduocheng | November 2019 to December 2019 | Establishment |
| 4 | Xinjiang Jingshang E-commerce Co., Ltd. | Xinjiang Jingshang | November 2019 to December 2019 | Establishment |
| S/N | Full name of subsidiary | Abbreviation of Subsidiary | Reason of reduction |
| 1 | Shanghai Shuimishang Culture Communication Co., Ltd. | Shanghai Shuimishang | Cancellation |
| 2 | Shanghai Aosang Cultural Communication Co., Ltd | Shanghai Aosang | Cancellation |
2. Going Concern
The Company has assessed its ability to continually operate for the next twelve months from the end of the reportingperiod, and no any matters that may result in doubt on its ability as a going concern were noted. Therefore, it isreasonable for the Company to prepare financial statements on the going concern basis.
Note V. Significant Accounting Policies and Accounting EstimatesInstruction on detailed accounting policies and accounting estimates:
The following significant accounting policies and accounting estimates of the Company are formulated inaccordance with the Accounting Standards for Business Enterprises. Businesses not mentioned are complied withrelevant accounting policies of the Accounting Standards for Business Enterprises.
1. Statement of compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company as per the above basis are in compliance with the requirementsof Accounting Standards for Business Enterprises, and truly and completely reflect the Company’s financialposition, operating results, cash flows and other related information.
2. Accounting period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3. Operating cycle
The normal operating cycle of the Company is one year.
4. Functional currency
The Company takes Renminbi Yuan (“RMB”) as the functional currency.
5. Accounting treatment for business combination under and not under common control
(1) Business combination under common control
The assets and liabilities that the Company obtains in a business combination under common control shall bemeasured at their carrying amount of the acquired entity at the combination date. If the accounting policy adoptedby the acquired entity is different from that adopted by the Company, the Company shall, according to accountingpolicy it adopts, adjust the relevant items in the financial statements of the acquired party based on the principal ofmateriality. As for the difference between the carrying amount of the net assets obtained by the Company and thecarrying amount of the consideration paid by it, the capital reserve (capital premium or share premium) shall beadjusted. If the capital reserve (capital premium or share premium) is not sufficient to absorb the difference, anyexcess shall be adjusted against surplus reserve and retained earnings in turn.For the accounting treatment of business combination under common control by step acquisitions, please refer to
Note V.6 (5).
(2) Business combination not under common control
The recognizable assets and liabilities that the Company obtains in a business combination not under commoncontrol shall be measured at their fair value at the acquisition date. If the accounting policy adopted by the acquiredentity is different from that adopted by the Company, the Company shall, according to accounting policy it adopts,adjust the relevant items in the financial statements of the acquired entity based on the principal of materiality. TheCompany shall recognize the positive balance between the combination costs and the fair value of the identifiablenet assets it obtains from the acquired entity as goodwill. If the combination cost is less than the fair value ofrecognizable assets and liabilities obtained from the acquired entity during business combination, the Companyshall review the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities itobtains from the acquired entity as well as the combination cost, and if , after the review, the combination cost isstill less than the fair value of the identifiable net assets it obtains from the acquired entity, the balance shall berecognized in profit or loss of the current period of business combination.For the accounting treatment of business combination not under common control by step acquisitions, please referto Note V.6 (5)".
(3) Treatment of business combination related costs
The intermediary costs such as audit, legal services and valuation consulting and other related management coststhat are directly attributable to the business combination shall be charged in profit or loss in the period in whichthey are incurred. The costs to issue equity or debt securities for the consideration of business combination shall berecorded as a part of the value of the respect equity or debt securities upon initial recognition.
6. Method of Preparing the Consolidated Financial Statements
(1) Determination of consolidation scope
The scope of consolidated financial statements shall be determined on the basis of control. It not only includessubsidiaries determined based on voting power (or similar) or other arrangement, but also structured entities underone or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure, or rights to variablereturns from the Company’s involvement with the investee; and the ability to use its power over the investee toaffect the amount of the investor’s returns. Subsidiaries are the entities that controlled by the Company (includingenterprise, a divisible part of the investee, and structured entity controlled by the enterprise). A structured entity(sometimes called a Special Purpose Entity) is an entity that has been designed so that voting or similar rights arenot the dominant factor in deciding who controls the entity.
(2) Method of Preparing the Consolidated Financial Statements
The consolidated financial statements shall be prepared by the Company based on the financial statements of theCompany and its subsidiaries, and using other related information.When preparing consolidated financial statements, the Company shall consider the entire company as an accountingentity, adopt uniform accounting policies and apply the requirements of Accounting Standard for BusinessEnterprises related to recognition, measurement and presentation. The consolidated financial statements shall reflect
the overall financial position, operating results and cash flows of the entire company.
①Like items of assets, liabilities, equity, income, expenses and cash flows of the parent are combined with thoseof the subsidiaries.
②The carrying amount of the parent’s long-term equity investment in each subsidiary is eliminated (off-set) againstthe parent’s portion of equity of each subsidiary.
③Eliminate the impact of intragroup transactions between the parent and the subsidiaries or between subsidiaries,and when intragroup transactions indicate an impairment of relevant assets, the losses shall be recognized in full.
④Make adjustments to special transactions from the perspective of the entire company.
(3) Method of preparation when subsidiaries are acquired or disposed in the reporting period
①Acquisition of subsidiaries or business
A. Subsidiaries or business acquired through business combination under common control(a) When preparing the consolidated financial statements, the opening balance of the consolidated balance sheetshall be adjusted. Relevant items of comparative financial statements shall be adjusted as well, deeming that thecombined entity has always existed ever since the ultimate controlling party began to control.(b) When preparing the consolidated income statement, incomes, expenses and profits of the subsidiary and businessincurred from the beginning of the consolidating period to the end of the reporting period shall be included into theconsolidated income statement. Relevant items of comparative financial statements shall be adjusted as well,deeming that the combined entity has always existed ever since the ultimate controlling party began to control.(c) When preparing the consolidated cash flow statement, cash flows of the subsidiary and business from thebeginning of the consolidating period to the end of the reporting period shall be included into the consolidatedstatement of cash flows. Relevant items of comparative financial statements shall be adjusted as well, deeming thatthe combined entity has always existed ever since the ultimate controlling party began to control.A. Subsidiaries or business acquired through business combination not under common control(a) When preparing the consolidated balance sheet, the opening balance of the consolidated balance sheet shall notbe adjusted.(b) When preparing the consolidated income statement, incomes, expenses and profits of the subsidiary and businessincurred from the acquisition date to the end of the reporting period shall be included into the consolidated incomestatement.(c) When preparing the consolidated cash flow statement, cash flows of the subsidiary from the acquisition date tothe end of the reporting period shall be included into the consolidated statement of cash flows.
②Disposal of subsidiaries or business
A. When preparing the consolidated balance sheet, the opening balance of the consolidated balance sheet shall notbe adjusted.B. When preparing the consolidated income statement, incomes, expenses and profits of the subsidiary and businessincurred from the beginning of the subsidiary to the disposal date shall be included into the consolidated incomestatement.
C. When preparing the consolidated cash flow statement, cash flows of the subsidiary and business from thebeginning of the subsidiary to the disposal date shall be included into the consolidated statement of cash flows.
(4) Special consideration in consolidation elimination
①Long-term equity investment held by the subsidiaries to the Company shall be recognized as treasury stock ofthe Company, which is offset with the owner’s equity, represented as “less: treasury stock” under “owner’s equity”in the consolidated balance sheet.Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equityinvestment held by the Company to its subsidiaries as reference. That is, the long-term equity investment iseliminated (off-set) against the portion of the corresponding subsidiary’s equity.
②Due to not belonging to paid-in capital (or share capital) and capital reserve, and being different from retainedearnings and undistributed profit, “Specific reserves” and “General risk provision” shall be recovered based on theproportion attributable to owners of the parent company after long-term equity investment to the subsidiaries iseliminated with the subsidiaries’ equity.
③If temporary timing difference between the book value of the assets and liabilities in the consolidated balancesheet and their tax basis is generated as a result of elimination of unrealized inter-company transaction profit or loss,deferred tax assets of deferred tax liabilities shall be recognized, and income tax expense in the consolidatedstatement of profit or loss shall be adjusted simultaneously, excluding deferred taxes related to transactions or eventsdirectly recognized in owner’s equity or business combination.
④Unrealized inter-company transactions profit or loss generated from the Company selling assets to its subsidiariesshall be eliminated against “net profit attributed to the owners of the parent company” in full. Unrealized inter-company transactions profit or loss generated from the subsidiaries selling assets to the Company shall be eliminatedbetween “net profit attributed to the owners of the parent company” and “non-controlling interests” pursuant to theproportion of the Company in the related subsidiaries. Unrealized inter-company transactions profit or lossgenerated from the assets sales between the subsidiaries shall be eliminated between “net profit attributed to theowners of the parent company” and “non-controlling interests” pursuant to the proportion of the Company in theselling subsidiaries.
⑤If loss attributed to the minority shareholders of a subsidiary in current period is more than the proportion of non-controlling interest in this subsidiary at the beginning of the period, non-controlling interest is still to be writtendown.
(5) Accounting for Special Transactions
①Purchasing of non-controlling interests
Where, the Company purchases non-controlling interests of its subsidiary, in the separate financial statements ofthe Company, the cost of the long-term equity investment obtained in purchasing non-controlling interests ismeasured at the fair value of the consideration paid. In the consolidated financial statements, difference betweenthe cost of the long-term equity investment newly obtained in purchasing non-controlling interests and share of thesubsidiary’s net assets from the acquisition date or combination date continuingly calculated pursuant to the newlyacquired shareholding proportion shall be adjusted into capital reserve (capital premium or share premium). Ifcapital reserve is not enough to be offset, surplus reserve and undistributed profit shall be offset in turn.
②Gaining control over the subsidiary in stages through multiple transactions
A. Business combination under common control in stages through multiple transactionsOn the combination date, in the separate financial statement, initial cost of the long-term equity investment isdetermined according to the share of carrying amount of the acquiree’s net assets in the ultimate controlling entity’sconsolidated financial statements after combination. The difference between the initial cost of the long-term equityinvestment and the carrying amount of the long -term investment held prior of control plus book value of additionalconsideration paid at acquisition date is adjusted into capital reserve (capital premium or share premium). If thecapital reserve is not enough to absorb the difference, any excess shall be adjusted against surplus reserve andundistributed profit in turn.In the consolidated financial statements, the assets and liabilities acquired during the combination should berecognized at their carrying amount in the ultimate controlling entity’s consolidated financial statements on thecombination date unless any adjustment is resulted from the difference in accounting policies. The differencebetween the carrying amount of the investment held prior of control plus book value of additional considerationpaid on the acquisition date and the net assets acquired through the combination is adjusted into capital reserve(capital premium or share premium). If the capital reserve is not enough to absorb the difference, any excess shallbe adjusted against retained earnings.If the acquiring entity holds equity investment in the acquired entity prior to the combination date and the equityinvestment is accounted for under the equity method, related profit or loss, other comprehensive income and otherchanges in equity which have been recognized during the period from the later of the date of the Company obtainingoriginal equity interest and the date of both the acquirer and the acquiree under common control of the same ultimatecontrolling party to the combination date should be offset against the opening balance of retained earnings at thecomparative financial statements period respectively.B. Business combination not under common control in stages through multiple transactionsOn the consolidation date, in the separate financial statements, the initial cost of long-term equity investment isdetermined according to the carrying amount of the original long-term investment plus the cost of new investment.In the consolidated financial statements, the equity interest of the acquired entity held prior to the acquisition dateshall be re-measured at its fair value on the acquisition date. Difference between the fair value of the equity interestand its book value is recognized as investment income. The other comprehensive income related to the equityinterest held prior to the acquisition date calculated through equity method, should be transferred to currentinvestment income of the acquisition period, excluding other comprehensive income resulted from theremeasurement of the net assets or net liabilities under defined benefit plan. The Company shall disclose acquisition-date fair value of the equity interest held prior to the acquisition date, and the related gains or losses due to theremeasurement based on fair value.
③Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of control, when theCompany prepares consolidated financial statements, difference between consideration received from the disposaland the corresponding share of subsidiary’s net assets cumulatively calculated from the acquisition date orcombination date shall be adjusted into capital reserve (capital premium or share premium). If the capital reserve isnot enough to absorb the difference, any excess shall be offset against retained earnings.
④Disposal of investment in subsidiaries with a loss of control
A. Disposal through one transactionIf the Company loses control in an investee through partial disposal of the equity investment, when the consolidatedfinancial statements are prepared, the retained equity interest should be re-measured at fair value at the date of lossof control. The difference between i) the fair value of consideration received from the disposal plus non-controllinginterest retained; ii) share of the former subsidiary’s net assets cumulatively calculated from the acquisition date orcombination date according to the original proportion of equity interest, shall be recognized in current investmentincome when control is lost.Moreover, other comprehensive income and other changes in equity related to the equity investment in the formersubsidiary shall be transferred into current investment income when control is lost, excluding other comprehensiveincome resulted from the remeasurement of the movement of net assets or net liabilities under defined benefit plan.B. Disposal in stagesIn the consolidated financial statements, whether the transactions should be accounted for as “a single transaction”needs to be decided firstly.If the disposal in stages should not be classified as “a single transaction”, in the separate financial statements, fortransactions prior of the date of loss of control, carrying amount of each disposal of long-term equity investmentneed to be recognized, and the difference between consideration received and the carrying amount of long-termequity investment corresponding to the equity interest disposed should be recognized in current investment income;in the consolidated financial statements, the disposal transaction should be accounted for according to related policyin “Disposal of long-term equity investment in subsidiaries without a loss of control”.If the disposal in stages should be classified as “a single transaction”, these transactions should be accounted for asa single transaction of disposal of subsidiary resulting in loss of control. In the separate financial statements, foreach transaction prior of the date of loss of control, difference between consideration received and the carryingamount of long-term equity investment corresponding to the equity interest disposed should be recognized as othercomprehensive income firstly, and transferred to profit or loss as a whole when control is lost; in the consolidatedfinancial statements, for each transaction prior of the date of loss of control, difference between considerationreceived and proportion of the subsidiary’s net assets corresponding to the equity interest disposed should berecognized in profit or loss as a whole when control is lost.In considering of the terms and conditions of the transactions as well as their economic impact, the presence of oneor more of the following indicators may lead to account for multiple transactions as a single transaction:
(a) The transactions are entered into simultaneously or in contemplation of one another.(b) The transactions form a single transaction designed to achieve an overall commercial effect.(c) The occurrence of one transaction depends on the occurrence of at least one other transaction.(d) One transaction, when considered on its own merits, does not make economic sense, but when consideredtogether with the other transaction or transactions would be considered economically justifiable.
⑤Diluting equity share of parent company in its subsidiaries due to additional capital injection by the subsidiaries’minority shareholders.Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the subsidiaries, whichresulted in the dilution of equity interest of parent company in these subsidiaries. In the consolidated financial
statements, difference between share of the corresponding subsidiaries’ net assets calculated based on the parent’sequity interest before and after the capital injection shall be adjusted into capital reserve (capital premium or sharepremium). If the capital reserve is not enough to absorb the difference, any excess shall be adjusted against retainedearnings.
(6) Reverse purchase
The Company (parent company) in law shall prepare the consolidated financial statements according to thefollowing principles:
①In the consolidated financial statements, the assets and liabilities of the subsidiary-in-law shall be recognized andmeasured at the book value before the combination.
②The amounts of equity instruments in the consolidated financial statements reflect face value of outstandingshares issued by the subsidiary-in-law before combination and the amount of equity instruments newly issued duringthe process of determining the business combination cost. However, the equity structure in the consolidated financialstatements shall reflect the equity structure of the parent company in law, i.e., the quantity and type of equitysecurities issued by the parent company in law.
③The comparison information in the consolidated financial statements shall be the comparison information of thesubsidiary-in-law (the consolidated financial statements of the subsidiary-in-law before the combination).
④The separate financial statements of the parent company shall recognize the book value of the acquired assets asper provisions in the Accounting Standards for Business Enterprises No. 2 - Long Term Equity Investment. Theseparate financial statements used for previous comparison are those of the parent company.
7. Classification of Joint Arrangements and Accounting for Joint OperationA joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of theCompany is classified as either a joint operation or a joint venture.
(1) Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rightsto the assets, and obligations for the liabilities, relating to the arrangement.The Company shall recognize the following items in relation to shared interest in a joint operation, and account forthem in accordance with relevant accounting standards of the Accounting Standards for Business Enterprises:
① its assets, including its share of any assets held jointly;
② its liabilities, including its share of any liabilities incurred jointly;
③ its revenue from the sale of its share of the output arising from the joint operation;
④ its share of the revenue from the sale of the output by the joint operation; and
⑤ its expenses, including its share of any expenses incurred jointly.
(2) Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity method of long-term equityinvestment.
8. Recognition of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents includeshort-term (generally within three months of maturity at acquisition), highly liquid investments that are readilyconvertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
9. Foreign Currency Transactions and Translation of Foreign Currency Financial Statements
(1) Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the foreign currency shall betranslated into the amount in the functional currency at the spot exchange rate of the transaction date, or at anexchange rate which is determined through a systematic and reasonable method and is approximate to the spotexchange rate of the transaction date (hereinafter referred to as the approximate exchange rate).
(2) Translation of monetary items denominated in foreign currency on the balance sheet dateThe foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. Thebalance of exchange arising from the difference between the spot exchange rate on the balance sheet date and thespot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded into theprofits and losses at the current period. The foreign currency non-monetary items measured at the historical costshall still be translated at the spot exchange rate on the transaction date; for the foreign currency non-monetary itemsrestated to a fair value measurement, shall be translated into the at the spot exchange rate at the date when the fairvalue was determined, the difference between the restated functional currency amount and the original functionalcurrency amount shall be recorded into the profits and losses at the current period.
(3) Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and accounting policy shallbe adjusted so as to conform to the Company. The adjusted foreign operation financial statements denominated inforeign currency (other than functional currency) shall be translated in accordance with the following method:
①The asset and liability items in the statement of financial position shall be translated at the spot exchange rates atthe date of that statement of financial position. The owners’ equity items except undistributed profit shall betranslated at the spot exchange rates when they are incurred.
②The income and expense items in the statement of profit and other comprehensive income shall be translated atthe spot exchange rates or approximate exchange rate at the date of transaction.
③Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the spot exchange rateor approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash ispresented separately in the statement of cash flows as an adjustment item.
④The differences arising from the translation of foreign currency financial statements shall be presented separately
as “other comprehensive income” under the owners’ equity items of the consolidated balance sheet.When disposing a foreign operation involving loss of control, the cumulative amount of the exchange differencesrelating to that foreign operation recognized under other comprehensive income in the statement of financialposition, shall be reclassified into current profit or loss according to the proportion disposed.
10. Financial instruments
Effective at 1st January 2019Financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liabilityor equity instrument of another entity.
(1) Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognized in the statement of financial position when, and onlywhen, an entity becomes party to the contractual provisions of the instrument.A financial asset can only be derecognized when meets one of the following conditions:
①The rights to the contractual cash flows from a financial asset expire
②The financial asset has been transferred and meets one of the following derecognition conditions:
Financial liabilities (or part thereof) are derecognized only when the liability is extinguished—i.e., when theobligation specified in the contract is discharged or cancelled or expires. An exchange of the Company (borrower)and lender of debt instruments that carry significantly different terms or a substantial modification of the terms ofan existing liability are both accounted for as an extinguishment of the original financial liability and the recognitionof a new financial liability.Purchase or sale of financial assets in a regular-way shall be recognized and derecognized using trade dateaccounting. A regular-way purchase or sale of financial assets is a transaction under a contract whose terms requiredelivery of the asset within the time frame established generally by regulations or convention in the market placeconcerned. Trade date is the date at which the entity commits itself to purchase or sell an asset.
(2) Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business model for managing thefinancial asset and the contractual cash flow characteristics of the financial asset: financial asset at amortized cost,financial asset at fair value through profit or loss (FVTPL) and financial asset at fair value through othercomprehensive income (FVTOCI). Reclassification of financial assets is permitted if, and only if, the objective ofthe entity’s business model for managing those financial assets changes. In this circumstance, all affected financialassets shall be reclassified on the first day of the first reporting period after the changes in business model; otherwisethe financial assets cannot be reclassified after initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assets measured at FVTPL,transaction costs are recognized in current profit or loss. For financial assets not measured at FVTPL, transactioncosts should be included in the initial measurement. Notes receivable or accounts receivable that arise from sales ofgoods or rendering of services are initially measured at the transaction price defined in the accounting standard ofrevenue where the transaction does not include a significant financing component.
Subsequent measurement of financial assets will be based on their categories:
①Financial asset at amortized cost
The financial asset at amortized cost category of classification applies when both the following conditions are met:
the financial asset is held within the business model whose objective is to hold financial assets in order to collectcontractual cash flows, and the contractual term of the financial asset gives rise on specified dates to cash flows thatare solely payment of principal and interest on the principal amount outstanding. These financial assets aresubsequently measured at amortized cost by adopting the effective interest rate method. Any gain or loss arisingfrom derecognition according to the amortization under effective interest rate method or impairment are recognizedin current profit or loss.
②Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following conditions are met: thefinancial asset is held within the business model whose objective is achieved by both collecting contractual cashflows and selling financial assets, and the contractual term of the financial asset gives rise on specified dates to cashflows that are solely payment of principle and interest on the principal amount outstanding. All changes in fair valueare recognized in other comprehensive income except for gain or loss arising from impairment or exchangedifferences, which should be recognized in current profit or loss. At derecognition, cumulative gain or losspreviously recognized under OCI is reclassified to current profit or loss. However, interest income calculated basedon the effective interest rate is included in current profit or loss.The Company make an irrevocable decision to designate part of non-trading equity instrument investments asmeasured through FVTOCI. All changes in fair value are recognized in other comprehensive income except fordividend income recognized in current profit or loss. At derecognition, cumulative gain or loss are reclassified toretained earnings.
③Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for above mentioned financial asset at amortized cost or financial asset at fair value throughother comprehensive income (FVTOCI), should be classified as financial asset at fair value through profit or loss(FVTPL). These financial assets should be subsequently measured at fair value. All the changes in fair value areincluded in current profit or loss.
(3) Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVTPL),loan commitments at a below-market interest rate and financial guarantee contracts and financial asset at amortizedcost.Subsequent measurement of financial assets will be based on the classification:
①Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilitiesdesignated at FVTPL are classified as financial liabilities at FVTP. After initial recognition, any gain or loss(including interest expense) are recognized in current profit or loss except for those hedge accounting is applied.For financial liability that is designated as at FVTPL, changes in the fair value of the financial liability that isattributable to changes in the own credit risk of the issuer shall be presented in other comprehensive income. At
derecognition, cumulative gain or loss previously recognized under OCI is reclassified to retained earnings.
②Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under specified contract terms.The provision of impairment losses of loan commitments shall be recognized based on expected credit losses model.Financial guarantee contract is a contract that requires the Company to make specified payments to reimburse theholder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the originalor modified terms of a debt instrument. Financial guarantee contracts liability shall be subsequently measured at thehigher of: The amount of the loss allowance recognized according to the impairment principles of financialinstruments; and the amount initially recognized less the cumulative amount of income recognized in accordancewith the revenue principles.
③Financial liabilities at amortized cost
After initial recognition, the Company measured other financial liabilities at amortized cost using the effectiveinterest method.Except for special situation, financial liabilities and equity instrument should be classified in accordance with thefollowing principles:
①If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill acontractual obligation, this contractual obligation meets the definition of financial liabilities. Some financialinstruments do not comprise terms and conditions related to obligations of delivering cash or another financialinstrument explicitly, they may include contractual obligation indirectly through other terms and conditions.
②If a financial instrument must or may be settled in the Company's own equity instruments, it should be consideredthat the Company’s own equity instruments are alternatives of cash or another financial instrument, or to entitle theholder of the equity instruments to sharing the remaining rights over the net assets of the issuer. If the former is thecase, the instrument is a liability of the issuer; otherwise, it is an equity instrument of the issuer. Under somecircumstances, it is regulated in the contract that the financial instrument must or may be settled in the Company'sown equity instruments, where, amount of contractual rights and obligations are calculated by multiplying thenumber of the equity instruments to be available or delivered by its fair value upon settlement. Such contracts shallbe classified as financial liabilities, regardless that the amount of contractual rights and liabilities is fixed, orfluctuate totally or partially with variables other than market price of the entity’s own equity instruments (such asinterest rate, price of some kind of goods or some kind of financial instrument).
(4) Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative contracts are signed andsubsequently measured at fair value. The derivative with a positive fair value shall be recognized as an asset, andwith a negative fair value shall be recognized as a liability.Gains or losses arising from the changes in fair value of derivatives shall be recognized directly into current profitor loss except for the effective portion of cash flow hedges which shall be recognized in other comprehensive incomeand reclassified into current profit or loss when the hedged items affect profit or loss.An embedded derivative is a component of a hybrid contract with a financial asset as a host, the Company shallapply the requirements of financial asset classification to the entire hybrid contract. If a host that is not a financial
asset and the hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss,and the economic characteristics and risks of the embedded derivative are not closely related to the economiccharacteristics and risks of the host, and a separate instrument with the same terms as the embedded derivativewould meet the definition of a derivative, the embedded derivative shall be separated from the hybrid instrumentand accounted for as a separate derivative instrument. If the Company is unable to measure the fair value of theembedded derivative at the acquisition date or subsequently at the balance sheet date, the entire hybrid contract isdesignated as financial assets or financial liabilities at fair value through profit or loss.
(5) Impairment of financial instrument
The Company shall recognize a loss allowance based on expected credit losses on a financial asset that is measuredat amortized cost, a debt investment at fair value through other comprehensive income, a contract asset, a leasereceivable, a loan commitment and a financial guarantee contract.
①Measurement of expected credit losses
Expected credit losses are the weighted average of credit losses of the financial instruments with the respective risksof a default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due tothe Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. allcash shortfalls), discounted at the original effective interest rate or credit- adjusted effective interest rate forpurchased or originated credit-impaired financial assets.Lifetime expected credit losses are the expected credit losses that result from all possible default events over theexpected life of a financial instrument.12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected creditlosses that result from default events on a financial instrument that are possible within the 12 months after thereporting date (or the expected lifetime, if the expected life of a financial instrument is less than 12 months).At each reporting date, the Company classifies financial instruments into three stages and makes provisions forexpected credit losses accordingly. A financial instrument of which the credit risk has not significantly increasedsince initial recognition is at stage 1. The Company shall measure the loss allowance for that financial instrumentat an amount equal to 12-month expected credit losses. A financial instrument with a significant increase in creditrisk since initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall measurethe loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. A financialinstrument is considered to be credit-impaired as at the end of the reporting period is at stage 3. The Company shallmeasure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses.The Company may assume that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have low credit risk at the balance sheet date and measurethe loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue shall be calculatedby applying the effective interest rate to the gross carrying amount of a financial asset (i.e., impairment loss notbeen deducted). For financial instrument at stage 3, interest revenue shall be calculated by applying the effectiveinterest rate to the amortized cost after deducting of impairment loss.For notes receivable, accounts receivable and accounts receivable financing, no matter it contains a significantfinancing component or not, the Company shall measure the loss allowance at an amount equal to the lifetime
expected credit losses.A. ReceivablesFor the notes receivable, accounts receivable, other receivables, accounts receivable financing and long-termreceivables which are demonstrated to be impaired by any objective evidence, or applicable for individualassessment, the Company shall individually assess for impairment and recognize the loss allowance for expectedcredit losses. If the Company determines that no objective evidence of impairment exists for notes receivable,accounts receivable, other receivables, accounts receivable financing and long-term receivables, or the expectedcredit loss of a single financial asset cannot be assessed at reasonable cost, such notes receivable, accounts receivable,other receivables, accounts receivable financing and long-term receivables shall be divided into several groups withsimilar credit risk characteristics and collectively calculated the expected credit loss. The determination basis ofgroups is as following:
Determination basis of notes receivable is as following:
Group 1: Commercial acceptance billsGroup 2: Bank acceptance billsFor each group, the Company calculates the expected credit losses through default exposure and the lifetimeexpected credit losses rate, taking reference to historical experience for credit losses and considering currentcondition and expectation for the future economic situation.Determination basis of accounts receivable is as following:
Group 1: Accounts receivable arising from businesses other than finance leasing business and factoring businessGroup 2: Accounts receivable arising from factoring businessGroup 3: Accounts receivable arising from finance leasing businessFor each group, the Company calculates the expected credit losses through preparing an aging analysis schedulewith the lifetime expected credit losses rate, taking reference to historical experience for credit losses andconsidering current condition and expectation for the future economic situation.Determination basis of other receivables is as following:
Group 1: Interest receivableGroup 2: Dividend receivableGroup 3: OthersFor each group, the Company calculates the expected credit losses through default exposure and the 12-months orlifetime expected credit losses rate, taking reference to historical experience for credit losses and considering currentcondition and expectation for the future economic situation.Determination basis of accounts receivable financing is as following:
Group 1: Commercial acceptance billGroup 2: Bank acceptance bill
For each group, the Company calculates the expected credit losses through default exposure and the lifetimeexpected credit losses rate, taking reference to historical experience for credit losses and considering currentcondition and expectation for the future economic situation.B. Debt investment and other debt investmentFor debt investment and other debt investment, the Company shall calculate the expected credit loss through thedefault exposure and the 12-month or lifetime expected credit loss rate based on the nature of the investment,counterparty and the type of risk exposure.
②Low credit risk
If the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cashflow obligations in the near term and adverse changes in economic and business conditions in the longer term may,but will not necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations.
③Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased significantly since initialrecognition, using the change in the risk of a default occurring over the expected life of the financial instrument,through the comparison of the risk of a default occurring on the financial instrument as at the reporting date withthe risk of a default occurring on the financial instrument as at the date of initial recognition.To make that assessment, the Company shall consider reasonable and supportable information, that is availablewithout undue cost or effort, and that is indicative of significant increases in credit risk since initial recognition,including forward-looking information. The information considered by the Company are as following:
A. Significant changes in internal price indicators of credit risk as a result of a change in credit risk since inceptionB. Existing or forecast adverse change in the business, financial or economic conditions of the borrower that resultsin a significant change in the borrower’s ability to meet its debt obligations;C. An actual or expected significant change in the operating results of the borrower; An actual or expectedsignificant adverse change in the regulatory, economic, or technological environment of the borrower;D. Significant changes in the value of the collateral supporting the obligation or in the quality of third-partyguarantees or credit enhancements, which are expected to reduce the borrower’s economic incentive to makescheduled contractual payments or to otherwise have an effect on the probability of a default occurring;E. Significant change that are expected to reduce the borrower’s economic incentive to make scheduled contractualpayments;F. Expected changes in the loan documentation including an expected breach of contract that may lead to covenantwaivers or amendments, interest payment holidays, interest rate step-ups, requiring additional collateral orguarantees, or other changes to the contractual framework of the instrument;G. Significant changes in the expected performance and behavior of the borrower;H. Contractual payments are more than 30 days (including 30 days) past due.Depending on the nature of the financial instruments, the Company shall assess whether the credit risk has increasedsignificantly since initial recognition on an individual financial instrument or a group of financial instruments. When
assessed based on a group of financial instruments, the Company can group financial instruments on the basis ofshared credit risk characteristics, for example, past due information and credit risk rating.Generally, the Company shall determine the credit risk on a financial asset has increased significantly since initialrecognition when contractual payments are more than 30 days past due. The Company can only rebut thispresumption if the Company has reasonable and supportable information that is available without undue cost oreffort, that demonstrates that the credit risk has not increased significantly since initial recognition even though thecontractual payments are more than 30 days past due.
④Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred for financial asset atamortized cost and debt investment at fair value through other comprehensive income. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financialasset have occurred. Evidences that a financial asset is credit-impaired include observable data about the followingevents:
Significant financial difficulty of the issuer or the borrower; a breach of contract, such as a default or past due event;the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty,having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; it is becomingprobable that the borrower will enter bankruptcy or other financial reorganization; the disappearance of an activemarket for that financial asset because of financial difficulties; the purchase or origination of a financial asset at adeep discount that reflects the incurred credit losses.
⑤Presentation of impairment of expected credit loss
In order to reflect the changes of credit risk of financial instrument since initial recognition, the Company shall ateach reporting date remeasure the expected credit loss and recognize in profit or loss, as an impairment gain or loss,the amount of expected credit losses addition (or reversal). For financial asset at amortized cost, the loss allowanceshall reduce the carrying amount of the financial asset in the statement of financial position; for debt investment atfair value through other comprehensive income, the loss allowance shall be recognized in other comprehensiveincome and shall not reduce the carrying amount of the financial asset in the statement of financial position.
⑥Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the Company has noreasonable expectations of recovering the contractual cash flow of a financial asset in its entirety or a portion thereof.Such write-off constitutes a derecognition of the financial asset. This circumstance usually occurs when theCompany determines that the debtor has no assets or sources of income that could generate sufficient cash flow torepay the write-off amount.Recovery of financial asset written off shall be recognized in profit or loss as reversal of impairment loss.
(6) Transfer of financial assets
Transfer of financial assets refers to following two situations:
A. Transfers the contractual rights to receive the cash flows of the financial asset;B. Transfers the entire or a part of a financial asset and retains the contractual rights to receive the cash flows of thefinancial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
①Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial asset, or neithertransfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retainedcontrol of the financial asset, the financial asset shall be derecognized.Whether the Company has retained control of the transferred asset depends on the transferee’s ability to sell theasset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is ableto exercise that ability unilaterally and without needing to impose additional restrictions on the transfer, theCompany has not retained control.The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance ofthe transfer.If the transfer of financial asset qualifies for derecognition in its entirety, the difference between the following shallbe recognized in profit or loss:
A. The carrying amount of transferred financial asset;B. The sum of consideration received and the part derecognized of the cumulative changes in fair value previouslyrecognized in other comprehensive income (The financial assets involved in the transfer are classified as financialassets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standardsfor Business Enterprises - Recognition and Measurement of Financial Instruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition, theprevious carrying amount of the larger financial asset shall be allocated between the part that continues to berecognized (For this purpose, a retained servicing asset shall be treated as a part that continues to be recognized)and the part that is derecognized, based on the relative fair values of those parts on the date of the transfer. Thedifference between following two amounts shall be recognized in profit or loss:
A. The carrying amount (measured at the date of derecognition) allocated to the part derecognized;B. The sum of the consideration received for the part derecognized and part derecognized of the cumulative changesin fair value previously recognized in other comprehensive income (The financial assets involved in the transfer areclassified as financial assets at fair value through other comprehensive income in accordance with Article 18 of theAccounting Standards for Business Enterprises - Recognition and Measurement of Financial Instruments).
②Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferredasset, and retains control of the transferred asset, the Company shall continue to recognize the transferred asset tothe extent of its continuing involvement and also recognize an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed tochanges in the value of the transferred asset
③Continue to recognize the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset, theCompany shall continue to recognize the transferred asset in its entirety and the consideration received shall berecognized as a financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent accounting period, theCompany shall continuously recognize any income (gain) arising from the transferred asset and any expense (loss)incurred on the associated liability.
(7) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of financial position and shallnot be offset. When meets the following conditions, financial assets and financial liabilities shall be offset and thenet amount presented in the balance sheet:
The Company currently has a legally enforceable right to set off the recognized amounts;The Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition, the transferor shall not offsetthe transferred asset and the associated liability.
(8) Determination of fair value of financial instruments
Fair value refers to the price receivable in selling an asset or payable in transferring a liability during the orderlytransaction concluded by market participants on the measurement date.The price in the major market is used by the Company to measure the fair value of relevant assets or liabilities. Ifthere is no major market, the price in the most favorable market would be used by the Company to measure the fairvalue of relevant assets or liabilities. The Company adopts the assumption used by market participants when theyprice the asset or liability with the aim to maximize their economic benefits.Major market refers to the market having the maximum trading volume and the highest trading activity of relevantassets or liabilities. The most favorable market refers to the market on which relevant assets can be sold at thehighest price or relevant liabilities can be transferred at the lowest price after considering transaction andtransportation expenses.As for financial assets or financial liabilities existing in an active market, the fair value is determined by theCompany at the quoted price in the active market. As for financial instruments for which there is no active market,the valuation technique is used by the Company to determine the fair value.For the non-financial assets measured at the fair value, the ability of market participants to utilize the assets in thebest way for generating economic benefits or the ability to sell such assets to other market participants who are ableto utilize the assets in the best way for generating economic benefits should be considered.
① Valuation technique
The Company adopts valuation techniques that are appropriate in the current circumstances and supported bysufficient available data and other information. The valuation techniques adopted by the Company mainly includemarket approach, income approach and cost approach. The Company adopts a method consistent with one or moreof the above approaches to measure the fair value. If the fair value is measured by various valuation techniques, therationality of valuation results should be considered and the most representative amount in the current situation forthe fair value should be selected.When valuation techniques are adopted by the Company, the relevant observable inputs are preferred, andunobservable inputs are only used when it is not possible or practicable to obtain observable inputs. Observable
inputs refer to inputs that can be obtained from market data. Such inputs reflect the assumption used by marketparticipants to price relevant assets or liabilities. Unobservable inputs refer to inputs that cannot be obtained frommarket data. Such inputs are obtained from the best available information of the assumption used by marketparticipants to price relevant assets or liabilities.
② Level of fair value
The Company classifies the inputs used for the measurement of the fair value into three levels. The Company firstuses Level 1 inputs, followed by Level 2 and Level 3 inputs. Level 1 inputs are unadjusted quoted prices of the sameassets or liabilities obtainable in the active market on the measurement date. Level 2 inputs are directly or indirectlyobservable inputs of relevant assets or liabilities apart from Level 1 inputs. Level 3 inputs are unobservable inputsof relevant assets or liabilities.The following accounting policies for financial instruments are applicable to the fiscal year 2018 and before
(1) Classification of financial assets
①Financial assets at fair value through profit or loss
This category comprises financial assets defined as held for trading, or those designated as at fair value throughprofit or loss. The former mainly includes shares, bonds, funds, and derivative financial instruments investment thatare not designated effective hedging instruments that are acquired principally for the purpose of sale in the nearfuture. Such financial assets are initially recognized at fair values when acquired. Relevant transaction expenses areincluded in the current profit or loss. Cash dividends that have been declared but not distributed and bond intereststhat have matured but not been drawn included in the consideration paid are recognized as receivables separately.The interests or cash dividends to be received during the holding period are recognized as investment income. Onthe balance sheet date, this category of financial assets is measured at fair value, and change in fair values is includedin the current profit or loss. Difference between the fair value and initial measurement amount is recognized asinvestment income upon disposal; meanwhile, gains or losses from changes in fair values are written-off.
② Held-to-maturity investment
Held-to-maturity investments refer to government bonds, corporate bonds with fixed or determinable payments andfixed maturity, for which the Company has a positive intention and ability to hold to maturity. Held-to-maturityinvestments are initially measured at fair values plus the related transaction costs when acquired. Bond interests thathave matured but not been drawn included in the consideration paid is recognized as a receivable separately. Theinterest income calculated at amortization cost and effective interest rate during the holding period is recognized asinvestment income. The difference between the amount received and the book value of the investment is includedin the investment income upon disposal.
③ Receivables
Receivables mainly include accounts receivable and other receivables. Receivables arise from external sales ofgoods or rendering of service by the Company. They are recognized initially at the contract price or agreement pricereceivable from the purchasing party.
④ Available-for-sale financial assets
This category of financial assets comprises those financial assets that cannot be classified as financial assets at fairvalue through profit or loss, held-to-maturity financial assets, loans and receivables. Available-for-sale financial
assets are initially recognized at fair values plus the related transaction costs when acquired. Cash dividends thathave been declared but not distributed and bond interests that have matured but not been drawn included in theconsideration paid are recognized as receivables separately. The interests or cash dividends to be received duringthe holding period are recognized as investment income.For available-for-sale financial assets that are foreign currency monetary financial assets, the exchange gain or lossshall be recognized in current profit or loss. Interest of available-for-sale debt instrument investment calculatedusing effective interest rate method shall be recognized in current profit or loss; cash dividend of available-for-saleequity instrument investment shall be recognized into current profit or loss when the investee declares the dividend.At the balance sheet date, available-for-sale financial assets are measured at fair value and change in fair value shallbe included in other comprehensive income. The difference between the amount received and the book value of thefinancial asset is included in the investment income upon disposal. Meanwhile, the corresponding accumulatedchange in fair value recognized in other comprehensive income is transferred into investment income.
(2) Classification of financial liabilities
①This category of financial liabilities comprises financial liabilities that are defined as held for trading, or thosethat are designated as at fair value through profit or loss. This category of financial liabilities is initially measuredat fair value. Relevant transaction costs are included in the current profit or loss. On the balance sheet date, changein fair values is included in the current profit or loss.
②Other financial liabilities are those financial liabilities excluding financial liabilities at fair value through profitor loss.
(3) Reclassification of financial assets
An investment will be reclassified as available-for-sale if, as a result of a change in intention or ability, it fails tomeet the requirements for classification as held-to-maturity. After the reclassification, it will be subsequentlymeasured at fair value. If the held-to maturity investment is partially disposed, or a large part of it has beenreclassified, and not included in the exceptions illustrated in provision 16 of “Accounting Standards for EnterprisesNo. 22 – Recognition and Measurement of Financial Instruments”, as a result of which, the remaining of theinvestment fails to meet the requirements for classification as held-to-maturity, any remaining held-to-maturityinvestments should also be reclassified as available-for-sale, and subsequently measured at fair value. However, itis prohibited that the above available-for-sale is reclassified back to held-to-maturity within current fiscal year andthe following two fiscal years.On the date of reclassification, difference between carrying value of the investment and its fair value is recorded inother comprehensive income, which shall be transferred out and recognized directly in current profit or loss uponincurrence of impairment or de-recognition of the investment.
(4) Classification of financial liabilities and equity instruments
Except for special situation, financial liabilities and equity instrument should be classified in accordance with thefollowing principles:
①If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill acontractual obligation, this contractual obligation meets the definition of financial liabilities. Some financialinstruments do not comprise terms and conditions related to obligations of delivering cash or another financialinstrument explicitly, they may include contractual obligation indirectly through other terms and conditions.
②If a financial instrument must or may be settled in the entity's own equity instruments, it should be consideredthat the entity’s own equity instruments are alternatives of cash or another financial instrument, or to entitle theholder of the equity instruments to sharing the remaining rights over the net assets of the issuer. If the former is thecase, the instrument is a liability of the issuer. Otherwise, it is an equity instrument of the issuer. Under somecircumstances, it is regulated in the contract that the financial instrument must or may be settled in the entity's ownequity instruments, where, amount of contractual rights and obligations are calculated by multiplying the numberof the equity instruments to be available or delivered by its fair value upon settlement. Such contacts shall beclassified as financial liabilities, regardless that the amount of contractual rights and liabilities is fixed, or fluctuatetotally or partially with variables (such as interest rates, the price of a commodity or the price of a financialinstrument) other than market price of the entity’s own equity instruments.
(5) Transfer of financial assets
Transfer of financial assets include below situations:
A. The contractual rights to receive cash flows from the asset are transferred to another entity; andB. The financial assets are totally or partially transferred to another entity, while the rights to receive cash flowsfrom the asset or obligations to pay the received cash flows to one or several payees are retained.
①Derecognition of transferred financial assets
The financial assets should be derecognized if the Company has transferred substantially all the risks and rewardsof the asset, or the Company has neither transferred nor retained substantially all the risks and rewards of the asset,but has transferred control of the asset.When judging whether control of the asset has been transferred or not, the Company shall lay emphasis on thetransferee’s substantial capability to sell the financial asset. If the transferee itself can sell the financial asset as awhole to a third party that has no any relationship with it, without any restrictions on this sale through supplementalterms, it is shown that the control of the asset has been given up.The Company adopts the principle of substance over form to determine whether the transfer of a financial assetsatisfies the criteria described above for derecognition of a financial asset.If the entire transfer of financial asset satisfies the criteria for derecognition, the difference between the amounts ofthe following two items shall be included in the current profit or loss:
A. The carrying amounts of the transferred financial assets;B. The sum of the consideration received from the transfer and the cumulative amount of the changes in fair valueoriginally and directly included in owners’ equity (where the financial asset transferred is an available-for-salefinancial asset).If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition, theprevious carrying amount of the financial asset shall be allocated between the part that continues to be recognizedand the part that is derecognized, based on the relative fair values (In such circumstances, servicing asset shall betreated as a part that continues to be recognized)and the difference between the amounts of the following two itemsshall be recognized in current profit or loss:
A. The carrying amount allocated to the part derecognized and;
B. The sum of the consideration received for the part derecognized and any cumulative fair value change originallyand directly recognized in other comprehensive income (where the financial asset transferred is an available-for-sale financial asset).
②Continuing involvement in transferred financial assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financialasset, and retains control of the transferred financial asset, the Company shall continue to recognize the transferredasset to the extent of its continuing involvement and also recognize an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed tochanges in the value of the transferred asset.
③Continuing recognize transferred financial assets
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, theCompany shall continue to recognize the transferred asset in its entirety and the consideration received shall berecognized as a financial liability.The financial asset and the associated liability shall not be offset. During the subsequent accounting period, theCompany shall continue to recognize any income arising on the transferred financial asset and any expense incurredon the associated liability. If the transferred financial asset is measured at amortized cost, to designate a financialliability as at fair value through profit or loss is not applicable to the associated liability.
(6) Derecognition of financial liability
A financial liability shall be totally or partly derecognized if its present obligations are totally or partly dissolved.If the assets to be used to settle a financial liability is transferred to another institute or establish a trust, where thepresent obligations still exist, either the financial liability or the assets transferred shall not be derecognized.Where the Company enters into an agreement with a creditor so as to substitute the existing financial liabilities withany new financial liability, and the new financial liability is substantially different from the contractual stipulationsregarding the existing financial liability, it shall derecognize the existing financial liability, and shall at the sametime recognize a new financial liability.Where substantial revisions are made to some or all of the contractual stipulations of the existing financial liability,the Company shall derecognize the existing financial liability totally or partly, and at the same time recognize thefinancial liability with revised contractual stipulations as a new financial liability.Upon total or partial derecognition of financial liabilities, the difference between the carrying amount of thefinancial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new financialliabilities assumed) shall be included in the current profit or loss.
(7) Offsetting financial assets and liabilities
Financial assets and liabilities shall be presented separately in the statement of financial position and shall not beoffset. However, they shall be presented on a net basis after offsetting if the following criteria are both satisfied.The Company has a legal right to offset the recognized amounts, and the right is executable at present; andThe Company has an intention to settle on a net basis or liquidate the asset and settle the liability simultaneously.
Asset transfer that does not satisfy the criteria for derecognition of this asset, the transferor shall not offset thetransferred asset and the related liability.
(8) Impairment testing and impairment provision of financial assets
①Objective evidence for the impairment of the financial assets
A. The issuer or debtor encounters serious financial difficulties;B. The debtor violates the terms of contract, for example, it cannot repay the interest or the principal of the loan onschedule;C. The creditor makes concessions to the debtor in financial difficulties from the respect of economy or law;D. The creditor is possible to bankrupt or execute other financial restructuration;E. The financial asset is no longer traded in the active market since the issuer encounters significant financialdifficulties;F. It is unrecognizable whether cash flows from an asset in one group of financial assets has decreased, however, itis identifiable that the estimated future cash flows of the group of financial assets has decreased and measurablesince they are initially recognized through overall assessment on them on the basis of public data;G. The debtor’s technological, market, economic or legal environment encounters significant unfavorable change,as a result of which investment cost may not be recovered;H. A serious or prolonged decline in the fair value of equity instrument;I. Other objective evidence that indicate impairment of financial assets.
②Impairment provision of the financial assets (excluding receivables)
A. Impairment testing of held-to-maturity investmentWhen the held-to-maturity investment is impaired, the carrying amount of the held-to-maturity investment shall bewritten down to the present value of its expected future cash flows (excluding future credit losses that have notoccurred); the amount written down shall be recognized as impairment loss in current profit or loss.The present value of the estimated future cash flows is determined by discounting at the original effective rate ofthe held-to maturity investment, considering the value of related guaranty (deducting expense incurred for obtainingor selling this guaranty). The original effective rate is the effective rate calculated when the held-to maturityinvestment is initially recognized. For held-to maturity investment with floating interest rate, when calculate thepresent value of expected future cash flow, the current effective interest rate determined in the contract can be usedas the discount rate.Even if the contract terms have been renegotiated or modified due to the financial difficulties of the debtor or theissuer of the financial assets, the original calculated effective interest rate of such financial assets before themodification of the terms shall still be used to calculate the impairment loss.After the impairment loss of held-to-maturity investment is recognized, if there is objective evidence indicating thatthe value of the held-to-maturity investment has recovered and is objectively related to an event occurring after theloss was recognized (such as the debtor's credit rating has been raised, etc.), the previously recognized impairmentlosses are reversed, included in current profit or loss.
After the held-to maturity investment is impaired, the interest revenue shall be calculated by using the discount ratethat used to discount the future cash flows when determining the impairment loss.B. Impairment testing of available-for-sale financial assetAt balance sheet date, the Company will analyze the impairment of available-for-sale financial asset to determinewhether its fair value continues to decline. Typically, if the fair value of the available-for-sale financial asset at theend of the period decreases significantly relative to the cost, or if it is expected that the decline trend will not be ontemporary basis after considering various related factors, it can be determined that the available-for-sale financialasset has decreased in value and the impairment loss will be recognized. In case that impairment occurs with theavailable-for-sale financial assets, when recognizing the impairment loss, the accumulated loss caused by thedecrease of the fair value originally directly incurred in the owner's equity will be transferred out and included inthe asset impairment loss.Whether the financial assets of available-for-sale debt instruments are impaired can be analyzed and determined byreferring to guidance on the above available-for-sale equity instrument investment.The impairment loss of available-for-sale equity instrument investment shall not be reversed through profit or loss.Upon impairment occurs with the financial assets of available-for-sale debt instruments, the interest revenue willbe calculated and recognized as per the discount rate that used to discount the future cash flows when determiningthe impairment loss.For the available-for-sale debt instruments with impairment loss recognized, if the fair value has risen in thesubsequent accounting period and is objectively related to the events occurring after the recognition of the originalimpairment loss, the originally recognized impairment loss will be reversed and incurred in the current profit andloss.
(9) Method of determining the fair value of financial assets and financial liabilitiesFair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on market value in the principal market,or in the absence of a principal market, in the most advantageous market price for the related asset or liability. Thefair value of an asset or a liability is measured using the assumptions that market participants would use whenpricing the asset or liability, assuming that market participants act in their economic best interest.The principal market refers to a market in which transactions for an asset or liability take place with the greatestvolume and frequency. The most advantageous market is the market which maximizes the value that could bereceived from selling the asset and minimizes the value which is needed to be paid in order to transfer a liability,considering the effect of transport costs and transaction costs both.If the active market of the financial asset or financial liability exists, the Company shall measure the fair value usingthe quoted price in the active market. If the active market of the financial instrument is not available, the Companyshall measure the fair value using valuation techniques.A fair value measurement of a non-financial asset takes into account a market participant’s ability to generateeconomic benefits by using the asset in its highest and best use or by selling it to another market participant thatwould use the asset in its highest and best use.
①Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data areavailable to measure fair value, including the market approach, the income approach and the cost approach. TheCompany shall use valuation techniques consistent with one or more of those approaches to measure fair value. Ifmultiple valuation techniques are used to measure fair value, the results shall be evaluated considering thereasonableness of the range of values indicated by those results. A fair value measurement is the point within thatrange that is most representative of fair value in the circumstances.When using the valuation technique, the Company shall give the priority to relevant observable inputs. Theunobservable inputs can only be used when the relevant observable inputs are not available or practically would notbe obtained. Observable inputs refer to the information which is available from market and reflects the assumptionsthat market participants would use when pricing the asset or liability. Unobservable Inputs refer to the informationwhich is not available from market and it has to be developed using the best information available in thecircumstances from the assumptions that market participants would use when pricing the asset or liability.
②Fair value hierarchy
To Company establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniquesused to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to theLevel 2 inputs and the lowest priority to Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in activemarkets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputsother than quoted prices included within Level 1 that are observable for the asset or liability, either directly orindirectly. Level 3 inputs are unobservable inputs for the asset or liability.
11. Notes receivable
12. Accounts receivable
The following account receivable accounting standard is applicable for year 2018 and before.
(1) Receivable with individually significant balance and recognized provision for bad debts individuallyAssessment basis or standard of amount individually significant: The Company assesses the top five receivablesover RMB 1 million as individually significant.Method of provision for bad debts of receivables which are individually significant: For accounts receivable withindividually significant amount, the Company shall test impairment separately. After separate impairment test, ifthere is objective evidence of impairment, the impairment loss of receivables shall be recognized at the differencebetween the individual receivable’s carrying amount and the present value of estimated future cash flows and theprovision for bad debts shall be recognized accordingly. Receivables that have not been impaired through separatetest will be classified into corresponding group provision for bad debts.
(2) Receivables with provision for bad debts recognized on the basis of similar credit risk characteristicsThe Company uses aging as the credit risk characteristic. Provision method for bad debt provision by group: aginganalysis method.Based on the actual loss rate of accounts receivables in each aging group in previous year, the Company determines
the provision ratio for accounts receivable in each aging group and calculate the provision for bad debt in currentreporting period.
①In addition to the financing lease receivable and factoring receivable of the subsidiary Xiaodai Finance Lease,the provision ratio of bad debt reserves for receivables group of each age group of each company is as follows:
| Aging | Provision ratio for accounts receivable (%) | Provision ratio for other receivables (%) |
| Within 1 year (including 1 year) | 5.00 | 5.00 |
| 1-2 years | 10.00 | 10.00 |
| 2-3 years | 30.00 | 30.00 |
| Above 3 years | 100.00 | 100.00 |
| Aging | Provision ratio for accounts receivable (%) |
| Within credit period | 0.50 |
| 1-2 years beyond the credit period | 30.00 |
| 2-3 years beyond the credit period | 60.00 |
| More than 3 years beyond the credit period | 100.00 |
| Aging | Provision ratio of receivables (%) |
| Within credit period | 1.00 |
| 1-2 years beyond the credit period | 30.00 |
| 2-3 years beyond the credit period | 60.00 |
| More than 3 years beyond the credit period | 100.00 |
15. Inventories
(1) Classification of inventories
Inventories are finished goods or products held by the Company for sale in the ordinary course of business, in theprocess of production for such sale, or in the form of materials or supplies to be consumed in the production processor in the rendering of services, including raw materials, work in progress, semi-finished goods, finished goods,goods in stock, turnover material, etc.
(2) Measurement method of cost of inventories sold or used
The Company’s cost of inventories used or sold is determined on the weighted average basis.
(3) Inventory counting system
The perpetual inventory counting system is adopted in the Company. The inventories should be counted at leastonce a year, and surplus or losses of inventory stocktaking shall be included in current profit and loss.
(4) Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value at the balance sheet date. The excess of cost overnet realizable value of the inventories is recognized as provision for impairment of inventory, and recognized incurrent profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidence obtained, and factorssuch as purpose of holding the inventory and impact of post balance sheet event shall be considered.
①In normal operation process, finished goods, products and materials for direct sale, their net realizable values aredetermined at estimated selling prices less estimated selling expenses and relevant taxes and surcharges; forinventories held to execute sales contract or service contract, their net realizable values are calculated on the basisof contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by theCompany, the net realizable value of the excess portion of inventories shall be based on general selling prices. Netrealizable value of materials held for sale shall be measured based on market price.
②For materials in stock need to be processed, in the ordinary course of production and business, net realizablevalue is determined at the estimated selling price less the estimated costs of completion, the estimated sellingexpenses and relevant taxes. If the net realizable value of the finished products produced by such materials is higherthan the cost, the materials shall be measured at cost; if a decline in the price of materials indicates that the cost ofthe finished products exceeds its net realizable value, the materials are measured at net realizable value anddifferences shall be recognized at the provision for impairment.
③Provisions for inventory impairment are generally determined on an individual basis. For inventories with largequantity and low unit price, the provisions for inventory impairment are determined on a category basis.
④If any factor rendering write-downs of the inventories has been eliminated at balance sheet date, the amountswritten down are recovered and reversed to the extent of the inventory impairment, which has been provided for.The reversal shall be included in profit or loss.
(5) Amortization method of turnover materials
One-off writing off method is adopted for material withdrawal.
16. Contract assets
17. Contract costs
18. Assets held for sale
(1) Classification of non-current assets or disposal groups as held for sale
The Company classifies a non-current asset or disposal group as held for sale if the following requirements are metsimultaneously:
①The asset or disposal group must be available for immediate sale in its present condition subject only to the termsthat are usual and customary for sales of such assets (or disposal groups).
②Its sale must be highly probable, i.e., the Company must be committed to a plan to sell the asset (or disposalgroup) and obtain definite purchase commitment, and the sale is expected to complete within one year. If the relevantregulations require the approval from the relevant power organizations or supervision departments of the Companybefore they can be sold, the approval has been obtained.When the Company acquires a non-current asset (or disposal group) exclusively with a view to its subsequentdisposal, it shall classify the non-current asset (or disposal group) as held for sale at the acquisition date only if theone-year requirement is met and it is highly probable that any other criteria that are not met at that date will be metwithin a short period following the acquisition (usually within three months).The Company that is committed to dispose its equity investment in a subsidiary which will lead to its loss of controlof the subsidiary shall classify the investment as held for sale in the separate financial statements of the Company,and classify all the assets and liabilities of that subsidiary as held for sale in the consolidated financial statementsof the group, when the above criteria are met, regardless of whether the Company will remain part of equityinvestment in the subsidiary.
(2) Measurement of non-current assets or disposal groups held for sale
The principal of measurement of non-current assets or disposal groups held for sale does not apply to the followingassets: investment properties that are measured in accordance with the fair value model, biological assets that aremeasured at fair value less costs to sell, assets arising from employee benefits, deferred tax assets, financial assetswithin the scope of relevant accounting standards related to financial instruments and contractual rights underinsurance contracts as defined in accounting standards related to insurance contracts.When the non-current assets or disposal groups as held for sale are initially measured or subsequently measured atbalance sheet date, if the carrying amount of the asset or disposal group is higher than the fair value less cost to sell,it shall be written-down to its fair value less cost to sell, and the difference shall be recognized as impairment lossinto current profit or loss, and provision for asset impairment shall be recognized simultaneously. At subsequentreporting date, if there is any increase in fair value less costs to sell of a non-current asset or disposal group, theimpairment loss recognized in previously shall be reversed to the extent of impairment loss recognized after theasset has been classified as held-for-sale and included in profit or loss. An impairment loss recognized for goodwillshall not be reversed in a subsequent period.When the assets or disposal groups ceases to be classified as held for sale or the non-current assets are removedfrom disposal groups since the criteria for held for sale are no longer met, the assets shall be measured at the lower
of:
①Its carrying amount before the asset or disposal group was classified as held for sale, adjusted for any depreciation,amortization or revaluations that would have been recognized had the asset or disposal group not been classified asheld for sale, and
②Its recoverable amount.
(3) Presentation
The company shall present a non-current asset classified as held for sale and the assets of a disposal group classifiedas held for sale separately from other assets in the statement of financial position. The liabilities of a disposal groupclassified as held for sale shall be presented separately from other liabilities in the statement of financial position.Those assets and liabilities shall not be offset and presented as a single amount.
19. Debt investments
20. Other debt investments
21. Long-term receivables
22. Long-term equity investment
Long-term equity investments refer to equity investments where an investor has control of, or significant influenceover, an investee, as well as equity investments in joint ventures. Associates of the Company are those entities overwhich the Company has significant influence.
(1) Determination basis of joint control or significant influence over the investeeJoint control is the relevant agreed sharing of control over an arrangement, and the arranged relevant activity mustbe decided under unanimous consent of the parties sharing control. In assessing whether the Company has jointcontrol of an arrangement, the Company shall assess first whether all the parties, or a group of the parties, controlthe arrangement. When all the parties, or a group of the parties, considered collectively, are able to direct theactivities of the arrangement, the parties control the arrangement collectively. Then the Company shall assesswhether decisions about the relevant activities require the unanimous consent of the parties that collectively controlthe arrangement. If two or more groups of the parties could control the arrangement collectively, it shall not beassessed as have joint control of the arrangement. When assessing the joint control, the protective rights are notconsidered.Significant influence is the power to participate in the financial and operating policy decisions of the investee but isnot control or joint control of those policies. In determination of significant influence over an investee, the Companyshould consider not only the existing voting rights directly or indirectly held but also the effect of potential votingrights held by the Company and other entities that could be currently exercised or converted, including the effect ofshare warrants, share options and convertible corporate bonds that issued by the investee and could be converted incurrent period.If the Company holds, directly or indirectly 20% (including 20%) or more but less than 50% of the voting power ofthe investee, it is presumed that the Company has significant influence of the investee, unless it can be clearlydemonstrated that in such circumstance, the Company cannot participate in the decision-making in the production
and operating of the investee.
(2) Determination of initial investment cost
①For long-term equity investments generated in business combinations, its investment cost will be determined inaccordance with the following provisions:
A. For a business combination involving enterprises under common control, if the Company makes payment in cash,transfers non-cash assets or bears liabilities as the consideration for the business combination, the share of carryingamount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controllingparty is recognized as the initial cost of the long-term equity investment on the combination date. The differencebetween the initial investment cost and the carrying amount of cash paid, non-cash assets transferred and liabilitiesassumed shall be adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributedprofit shall be offset in turn.B. For a business combination involving enterprises under common control, if the Company issues equity securitiesas the consideration for the business combination, the share of carrying amount of the owners’ equity of the acquireein the consolidated financial statements of the ultimate controlling party is recognized as the initial cost of the long-term equity investment on the combination date. The total par value of the shares issued is recognized as the sharecapital. The difference between the initial investment cost and the carrying amount of the total par value of theshares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributedprofit shall be offset in turn.C. For business combination not under common control, the assets paid, liabilities incurred or assumed and the fairvalue of equity securities issued to obtain the control of the acquiree at the acquisition date shall be determined asthe cost of the business combination and recognized as the initial cost of the long-term equity investment. The audit,legal, valuation and advisory fees, other intermediary fees, and other relevant general administrative costs incurredfor the business combination, shall be recognized in profit or loss as incurred.
②Long-term equity investments acquired not through the business combination, the investment cost shall bedetermined based on the following requirements:
A. For long-term equity investments acquired by payments in cash, the initial cost is the actually paid purchase cost,including the expenses, taxes and other necessary expenditures directly related to the acquisition of long-term equityinvestments.B. For long-term equity investments acquired through issuance of equity securities, the initial cost is the fair valueof the issued equity securities.C. For the long-term equity investments obtained through exchange of non-monetary assets, if the exchange hascommercial substance, and the fair values of assets traded out and traded in can be measured reliably, the initial costof long-term equity investment traded in with non-monetary assets are determined based on the fair values of theassets traded out together with relevant taxes. Difference between fair value and book value of the assets traded outis recorded in current profit or loss. If the exchange of non-monetary assets does not meet the above criterion, thebook value of the assets traded out and relevant taxes are recognized as the initial investment cost.D. For long-term equity investment acquired through debt restructuring, the initial cost is determined based on thefair value of the equity obtained and the difference between initial investment cost and carrying amount of debtsshall be recorded in current profit or loss.
(3) Subsequent measurement and profit and loss recognition methods
Long-term equity investment to an entity over which the Company has ability of control shall be accounted for atcost method. Long-term equity investment to a joint venture or an associate shall be accounted for at equity method.
①Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment shall be adjusted whenadditional amount is invested or a part of it is withdrawn. The Company recognizes its share of cash dividends orprofits which have been declared to distribute by the investee as current investment income.
②Equity method
For the long-term equity investment calculated based on the equity method, the general accounting is as follows:
If the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in theinvestee at the date of investment, the difference shall not be adjusted to the initial cost of long-term equityinvestment; if the initial cost of the investment is in short of the share of the fair value of the net identifiable assetsin the investee at the date investment, the difference shall be included in the current profit or loss and the initial costof the long-term equity investment shall be adjusted accordingly.The Company recognizes the share of the investee’s net profits or losses, as well as its share of the investee’s othercomprehensive income, as investment income or losses and other comprehensive income respectively, and adjuststhe carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by theshare of any profit or cash dividends declared to distribute by the investee. The investor’s share of the investee’sowners’ equity changes, other than those arising from the investee’s net profit or loss, other comprehensive incomeor profit distribution, shall be recognized in the investor’s equity, and the carrying amount of the long-term equityinvestment shall be adjusted accordingly. The Company recognizes its share of the investee’s net profits or lossesafter making appropriate adjustments of investee’s net profit based on the fair values of the investee’s identifiablenet assets at the investment date. If the accounting policy and accounting period adopted by the investee is not inconsistency with the Company, the financial statements of the investee shall be adjusted according to the Company’saccounting policies and accounting period, based on which, investment income or loss and other comprehensiveincome, etc., shall be adjusted. The unrealized profits or losses resulting from inter-company transactions betweenthe company and its associate or joint venture are eliminated in proportion to the company’s equity interest in theinvestee, based on which investment income or losses shall be recognized. Any losses resulting from inter-companytransactions between the investor and the investee, which belong to asset impairment, shall be recognized in full.Where the Company obtains the power of joint control or significant influence, but not control, over the investee,due to additional investment or other reason, the relevant long-term equity investment shall be accounted for byusing the equity method, initial cost of which shall be the fair value of the original investment plus the additionalinvestment. Where the original investment is classified as available-for sale investment, difference between its fairvalue and the carrying value, in addition to the cumulative changes in fair value previously recorded in othercomprehensive income, shall be recognized into current profit or loss using equity method.If the Company loses the joint control or significant influence of the investee for some reasons such as disposal ofequity investment, the retained interest shall be measured at fair value and the difference between the carryingamount and the fair value at the date of loss the joint control or significant influence shall be recognized in profit orloss. When the Company discontinues the use of the equity method, the Company shall account for all amountspreviously recognized in other comprehensive income under equity method in relation to that investment on the
same basis as would have been required if the investee had directly disposed of the related assets or liabilities.
(4) Equity investment classified as held for sale
For an equity investment, or a portion of an equity investment, in an associate or a joint venture is classified as heldfor sale, the relevant accounting treatment please refer to Note V.18.Any retained interest in the equity investment not classified as held for sale, shall be accounted for using equitymethod.When an equity investment in an associate or a joint venture previously classified as held for sale no longer meetsthe criteria to be so classified, it shall be accounted for using the equity method retrospectively as from the date ofits classification as held for sale. Financial statements for the periods since classification as held for sale shall beamended accordingly.
(5) Impairment testing and provision for impairment loss
For investment in subsidiaries, associates or a joint venture, provision for impairment loss please refer to Note V.31.
23. Investment Properties
The measurement model of investment propertyN/A
24. Fixed Assets
(1) Recognition criteria of fixed assets
Fixed assets will only be recognized at the actual cost paid when obtaining as all the following criteria are satisfied:
①It is probable that the economic benefits relating to the fixed assets will flow into the Company;
②The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition criteria of fixedassets are satisfied, otherwise the expenditure shall be recorded in current profit or loss when incurred.
(2) Depreciation methods
| Category | Depreciation method | Period of depreciation (year) | Residual rates | Annual depreciation rates |
| Buildings and constructions | Straight-line method | 20 | 5% | 4.75% |
| Machinery equipment | Straight-line method | 10 | 5% | 9.5% |
| Transport equipment | Straight-line method | 5 | 5% | 19% |
| Office equipment | Straight-line method | 5 | 5% | 19% |
| Electronic equipment | Straight-line method | 3 | 5% | 31.67% |
calculating depreciation.At the end of reporting period, the Company shall review the useful life, estimated net residual value anddepreciation method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changedcompared to the original estimation.
(3) Recognition criteria, valuation and depreciation methods of fixed assets obtained through a finance leaseIf the entire risk and rewards related to the leased assets have been substantially transferred, the Company shallrecognize the lease as a finance lease. The cost of the fixed assets obtained through a finance lease is determined atthe lower of the fair value of the leased assets and the present value of the minimum lease payment on the date ofthe lease. The fixed assets obtained by a finance lease are depreciated in the method which is consistent with theself-owned fixed assets of the Company. For fixed assets obtained through a finance lease, if it is reasonably certainthat the ownership of the leased assets will be transferred to the lessee by the end of the lease term, they shall bedepreciated over their remaining useful lives; otherwise, the leased assets shall be depreciated over the shorter ofthe lease terms or their remaining useful lives.
25. Construction in Progress
(1) Construction in progress is measured on an individual project basis.
(2) Recognition criteria and timing of transfer from construction in progress to fixed assetsThe initial book values of the fixed assets are stated at total expenditures incurred before they are ready for theirintended use, including construction costs, original price of machinery equipment, other necessary expensesincurred to bring the construction in progress to get ready for its intended use and borrowing costs of the specificloan for the construction or the proportion of the general loan used for the constructions incurred before they areready for their intended use. The construction in progress shall be transferred to fixed asset when the installation orconstruction is ready for the intended use. For construction in progress that has been ready for their intended usebut relevant budgets for the completion of projects have not been completed, the estimated values of project budgets,prices, or actual costs should be included in the costs of relevant fixed assets, and depreciation should be providedaccording to relevant policies of the Company when the fixed assets are ready for intended use. After the completionof budgets needed for the completion of projects, the estimated values should be substituted by actual costs, butdepreciation already provided is not adjusted.
26. Borrowing Costs
(1) Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the acquisition, construction orproduction of qualifying assets when meet the following conditions:
①Expenditures for the asset are being incurred;
②Borrowing costs are being incurred, and;
③Acquisition, construction or production activities that are necessary to prepare the assets for their intended use orsale are in progress.
Other borrowing cost, discounts or premiums on borrowings and exchange differences on foreign currencyborrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or productionof a qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3 months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired, constructed or producedbecome ready for their intended use or sale. The expenditure incurred subsequently shall be recognized as expenseswhen incurred.
(2) Capitalization rate and measurement of capitalized amounts of borrowing costsWhen funds are borrowed specifically for purchase, construction or manufacturing of assets eligible forcapitalization, the Company shall determine the amount of borrowing costs eligible for capitalization as the actualborrowing costs incurred on that borrowing during the period less any interest income on bank deposit or investmentincome on the temporary investment of those borrowings.Where funds allocated for purchase, construction or manufacturing of assets eligible for capitalization are part of ageneral borrowing, the eligible amounts are determined by the weighted-average of the cumulative capitalexpenditures in excess of the specific borrowing multiplied by the general borrowing capitalization rate. Thecapitalization rate will be the weighted average of the borrowing costs applicable to the general borrowing.
27. Biological Assets
28. Oil and Gas Assets
29. Right-of-use Assets
30. Intangible Assets
(1) Measurement method, the useful life and impairment testing
Measurement method of intangible assetsIntangible assets are recognized at actual cost at acquisition.The useful life and amortization of intangible assets
①Service life estimation of intangible assets with limited service life
| Category | Estimated useful life | Basis |
| Land use right | 50 years | Legal life |
| Software | 5 years | The service life is determined by reference to the period that can bring economic benefits to the Company |
end. If the useful lives of those assets are still indefinite, impairment test should be performed on those assets at thebalance sheet date.
③Amortization of the intangible assets
For intangible assets with finite useful lives, their useful lives should be determined upon their acquisition andsystematically amortized on a straight-line basis [units of production method] over the useful life. The amortizationamount shall be recognized into current profit or loss according to the beneficial items. The amount to be amortizedis cost deducting residual value. For intangible assets which has impaired, the cumulative impairment provisionshall be deducted as well. The residual value of an intangible asset with a finite useful life shall be assumed to bezero unless: there is a commitment by a third party to purchase the asset at the end of its useful life; or there is anactive market for the asset and residual value can be determined by reference to that market; and it is probable thatsuch a market will exist at the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortized. The Company reassesses the useful lives ofthose assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite, theuseful lives shall be estimated and the intangible assets shall be amortized systematically and reasonably within theestimated useful lives.
(2) Internal R&D expenditure accounting policy
Criteria of classifying expenditures on internal research and development projects into research phase anddevelopment phase
①Preparation activities related to materials and other relevant aspects undertaken by the Company for the purposeof further development shall be treated as research phase. Expenditures incurred during the research phase ofinternal research and development projects shall be recognized in profit or loss when incurred.
②Development activities after the research phase of the Company shall be treated as development phase.Criteria for capitalization of qualifying expenditures during the development phaseExpenditures arising from development phase on internal research and development projects shall be recognized asintangible assets only if all of the following conditions have been met:
① Technical feasibility of completing the intangible assets so that they will be available for use or sale;
② Its intention to complete the intangible asset and use or sell it;
③ The method that the intangible assets generate economic benefits, including the Company can demonstrate theexistence of a market for the output of the intangible assets or the intangible assets themselves or, if it is to beused internally, the usefulness of the intangible assets;
④ The availability of adequate technical, financial and other resources to complete the development and to use orsell the intangible asset; and
⑤ Its ability to measure reliably the expenditure attributable to the intangible asset.
31.Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures, investment properties,fixed assets and constructions in progress subsequently measured at cost, productive biological assets, intangible
assets, goodwill, the rights and interests of proved mining areas of petroleum and natural gas and wells and otherrelevant facilities measured at cost (excluding inventories, investment properties measured at fair value, deferredtax assets, financial assets), shall be determined according to following method:
The Company shall assess at the balance sheet date whether there is any indication that an asset may be impaired.If any such indication exists, the Company shall estimate the recoverable amount of the asset and test for impairment.Irrespective of whether there is any indication of impairment, the Company shall test for impairment of goodwillacquired in a business combination, intangible assets with an indefinite useful life or intangible assets not yetavailable for use annually.The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and thepresent values of the estimated future cash flows of the long-term assets. The Company estimates the recoverableamounts on an individual basis. If it is difficult to estimate the recoverable amount of an individual asset, theCompany estimates the recoverable amount of the groups of assets that the individual asset belongs to. Identificationof a group of assets is based on whether the cash inflows from it are largely independent of the cash inflows fromother assets or groups of assets.If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying amount, the carryingamount of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall berecognized accordingly.For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date,be allocated to relevant group of assets based on reasonable method; if it is difficult to allocate to relevant group ofassets, good will shall be allocated to relevant combination of asset groups. The relevant group of assets orcombination of asset groups is a group of assets or combination of asset groups that is benefit from the synergies ofthe business combination and is not larger than the reporting segment determined by the Company.When test for impairment, if there is an indication that relevant group of assets or combination of asset groups maybe impaired, impairment testing for group of assets or combination of asset groups excluding goodwill shall beconducted first, and calculate the recoverable amount and recognize the impairment loss. Then the group of assetsor combination of asset groups including goodwill shall be tested for impairment, by comparing the carrying amountwith its recoverable amount. If the recoverable amount is less than the carrying amount, the Company shallrecognize the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognized.
32. Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be amortized over current andsubsequent periods with the amortization period exceeding one year.The long-term deferred expenses will be amortized on average during the benefit period, among which the fixedassets improvement expenditure rented in through commercial lease will be amortized reasonably based on themethods with the best expected economic benefits.
33. Contract liabilities
34. Employee Benefits
(1) Accounting of short-term benefits
①Basic remuneration (salary, bonus, allowance, subsidy)
During the accounting period when employees rendering their services, the Company will recognize the short-termbenefits actually incurred as liabilities and include it in the current profit and loss, except for those required orpermitted by other accounting standards to be included in the cost of assets.
②Employee welfare
The Company shall recognize the employee welfare based on actual amount when incurred into current profit orloss or related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary benefit.
③Social insurance such as medical insurance, work injury insurance and maternity insurance, housing funds, laborunion fund and employee education fundPayments made by the Company of social insurance for employees, such as medical insurance, work injuryinsurance and maternity insurance, payments of housing funds, and labor union fund and employee education fundaccrued in accordance with relevant requirements, in the accounting period in which employees provide services,is calculated according to required accrual bases and accrual ratio in determining the amount of employee benefitsand the related liabilities, which shall be recognized in current profit or loss or the cost of relevant asset.
④Short-term paid absences
The Company shall recognize the related employee benefits arising from accumulating paid absences when theemployees render service that increases their entitlement to future paid absences. The additional payable amountsshall be measured at the expected additional payments as a result of the unused entitlement that has accumulated.The Company shall recognize relevant employee benefit of non-accumulating paid absences when the absencesactually occurred.
⑤Short-term profit-sharing plan
The Company shall recognize the related employee benefits payable under a profit-sharing plan when all of thefollowing conditions are satisfied:
A. The Company has a present legal or constructive obligation to make such payments as a result of past events;andB. A reliable estimate of the amounts of employee benefits obligation arising from the profit- sharing plan can bemade.
(2) Accounting method of post-employment benefits
①Defined contribution plans
The Company shall recognize, in the accounting period in which an employee provides service, the contributionpayable to a defined contribution plan as a liability, with a corresponding charge to the current profit or loss or thecost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled wholly before twelve months afterthe end of the annual reporting period in which the employees render the related service, they shall be discountedusing relevant discount rate (market yields at the balance sheet date on high quality corporate bonds in active marketor government bonds with the currency and term which shall be consistent with the currency and estimated term of
the defined contribution obligations) to measure employee benefits payable.
②Defined benefit plans
A. Recognize the present value of defined benefit obligation and current service costsBased on the expected accumulative welfare unit method, the Company shall make estimates about demographicvariables and financial variables in adopting the unbiased and consistent actuarial assumptions and measure definedbenefit obligation, and determine the obligation period. The Company shall discount the obligation arising fromdefined benefit plan using relevant discount rate (market yields at the balance sheet date on high quality corporatebonds in active market or government bonds with the currency and term which shall be consistent with the currencyand estimated term of the defined benefit obligations) in order to determine the present value of the defined benefitobligation and the current service cost.B. Recognize the net defined benefit liability or assetThe net defined benefit liability or asset is the deficit or surplus recognized as the present value of the defined benefitobligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan, it shall measure the net defined benefit asset at the lowerof the surplus in the defined benefit plan and the asset ceiling.C. The amount recognized in the cost of asset or current profit or lossService cost comprises current service cost, past service cost and any gain or loss on settlement. Other service costshall be recognized in profit or loss unless accounting standards require or allow the inclusion of current servicecost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on plan assets, interest cost on thedefined benefit obligation and interest on the effect of the asset ceiling, shall be included in profit or loss.D. The amount recognized in other comprehensive incomeChanges in the net liability or asset of the defined benefit plan resulting from the remeasurements including:
(a) Actuarial gains and losses, the changes in the present value of the defined benefit obligation resulting fromexperience adjustments or the effects of changes in actuarial assumptions;(b) Return on plan assets, excluding amounts included in net interest on the net defined benefit liability or asset;(c) Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefitliability or asset.Remeasurements of the net defined benefit liability or asset recognized in other comprehensive income shall not bereclassified to profit or loss in a subsequent period. However, the Company may transfer those amounts recognizedin other comprehensive income within equity.
(3) Accounting method of termination benefits
The Company providing termination benefits to employees shall recognize an employee benefits liability fortermination benefits, with a corresponding charge to the profit or loss of the reporting period, at the earlier of thefollowing dates:
①When the Company cannot unilaterally withdraw the offer of termination benefits because of an employmenttermination plan or a curtailment proposal.
②When the Company recognizes costs or expenses related to a restructuring that involves the payment oftermination benefits.If the termination benefits are not expected to be settled wholly before twelve months after the end of the annualreporting period, the Company shall discount the termination benefits using relevant discount rate (market yields atthe balance sheet date on high quality corporate bonds in active market or government bonds with the currency andterm which shall be consistent with the currency and estimated term of the defined benefit obligations) to measurethe employee benefits.
(4) Accounting method of other long-term employee benefits
①Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees satisfies the conditions forclassifying as a defined contribution plan, all those benefits payable shall be accounted for as employee benefitspayable at their discounted value.
②Meet the conditions of the defined benefit plan
At the end of the reporting period, the Company recognized the cost of employee benefit from other long-termemployee benefits as the following components:
A. Service costs;B. Net interest cost for net liability or asset of other long-term employee benefitsC. Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefitsIn order to simplify the accounting treatment, the net amount of above items shall be recognized in profit or loss orrelevant cost of assets.
35. Lease liabilities
36. Estimated liabilities
(1) Recognition criteria of estimated liabilities
The Company recognizes the estimated liabilities when obligations related to contingencies satisfy all the followingconditions:
① That obligation is a current obligation of the Company;
② It is likely to cause any economic benefit to flow out of the Company as a result of performance of theobligation; and
③ The amount of the obligation can be measured reliably.
(2) Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of expenses required for theperformance of relevant present obligations. The Company, when determining the best estimate, has had acomprehensive consideration of risks with respect to contingencies, uncertainties and the time value of money. Thecarrying amount of the estimated liabilities shall be reviewed at the balance sheet date. If conclusive evidencesindicate that the carrying amount fails to be the best estimate of the estimated liabilities, the carrying amount shallbe adjusted based on the updated best estimate.
37. Share-based Payments
(1) Classification of share-based payments
Share-based payments of the Company include equity-settled share-based payments and cash-settled share-basedpayments.
(2) Determining fair value of equity instruments
①The fair value of shares granted to the employees can be determined by reference to the quotations in the activemarket, adjusted in accordance with the terms and conditions granted (excluding vesting conditions other thanmarket conditions).
②For share option granted to the employees, it is usually difficult to obtain its market price. If the share option withsimilar terms and conditions is not available, the Company estimates the fair value of those options using anapplicable option pricing model.
(3) Basis of best estimate of equity instruments expected to vest
Every balance sheet date during the vesting period, the Company makes best estimate according to the most updatednumber of employees that are eligible to exercise their options and revises the number of equity instrumentsexpected to vest in order to make the best estimate of equity instruments expected to vest.
(4) Accounting for implementation of share-based payment programs
Cash-settled share-based payment
①For cash-settled share-based payment vested immediately after granting, the Company shall recognize relevantcosts or expenses at the fair value of the liability borne at grant date and a corresponding increase in liability. Untilthe liability is settled, the Company shall remeasure the fair value of the liability at the balance sheet date and at thedate of settlement, with any changes in fair value recognized in profit or loss.
②If the share instrument do not vest until services during the vesting period are completed or performanceconditions are satisfied during the vesting period, at the balance sheet date during the vesting period, the Companyshall recognize relevant costs or expenses and the corresponding increase in liability for services received in thereporting period at the fair value of the liability borne, based on the best available estimate of the number expectedto vest.Equity-settled share-based payment
①For equity-settled share-based payment transaction in which services are received, if the equity instrumentgranted vest immediately, the Company shall recognize relevant costs or expenses at the fair value of the equityinstruments at grant date and the corresponding increase in capital reserve.
②If the equity instrument do not vest until services during the vesting period are completed or performanceconditions are satisfied , at the balance sheet date during the vesting period, the Company shall recognize relevantcosts or expenses and the corresponding increase in capital reserve for services received in the reporting period atthe fair value of the equity instruments at grant date, based on the best available estimate of the number of equityinstruments expected to vest.
(5) Accounting for modification of share-based payment programs
When the Company modifies terms and conditions of the share-based payment program, if the modificationincreases the fair value of the equity instruments granted, the increased amount should be recognized for servicereceived accordingly; if the quantity granted of the equity instruments is increased, the increased amount should berecognized for service received accordingly as well. If the modification reduces the total fair value of the share-based payment arrangement, or the terms are changed in such a way that the arrangement is no longer for the benefitof the employee, the entity is still required to account for the services received as consideration for the equityinstruments granted as if that modification had not occurred unless a part or all of the equity instruments arecancelled.
(6) Accounting for termination of share-based payment programs
If a grant of equity instruments is cancelled or settled during the vesting period (other than a grant cancelled byforfeiture when the vesting conditions are not satisfied), the Company shall:
①Account for the cancellation or settlement as an acceleration of vesting, and therefore recognize immediately theamount that otherwise would have been recognized for services received over the remainder of the vesting period.
②Account for any payment made to the employee on the cancellation or settlement of the grant as the repurchaseof an equity interest, and recognize any excess of the payment over the fair value of the equity instruments measuredat the repurchase date as an expense.If the Company repurchases vested equity instruments, the payment made to the employee shall be accounted foras a deduction from equity, and recognize any excess of the payment over the fair value of the equity instrumentsmeasured at the repurchase date shall be recognized in current profit or loss.
38. Other Financial Instrument Such as Preference Share and Perpetual Capital Securities
39. Revenue
Whether the new revenue standards have been implemented?
□ Yes √ No
(1) Revenue from sale of goods
Revenue from sale of goods shall be recognized when the following criteria are satisfied: Significant risks andrewards related to ownership of the goods have been transferred to the buyer; The Company retains neithercontinuous management rights associated with ownership of the goods sold nor effective control over the goodssold; Relevant amount of revenue can be measured reliably; It is probable that the economic benefits associatedwith the transaction will flow into the Company; and relevant amount of cost incurred or to be incurred can bemeasured reliably.
(2) Revenue from rendering of services
When the outcome of rendering of services can be estimated reliably at the balance sheet date, revenue associatedwith the transaction is recognized using the percentage of completion method. Percentage of completion isdetermined based on the measurement of the work completed.The outcome of rendering of services can be estimated reliably when all of the following conditions are satisfied:
A. the amount of revenue can be measured reliably; B. it is probable that the associated economic benefits will flowto the Company; C. the percentage of completion of the transaction can be measured reliably; D. the costs incurredand to be incurred for the transaction can be measured reliably.The Company shall determine the total revenue from rendering of services based on the received or receivable pricestipulated in the contract or agreement, unless the received or receivable amount as stipulated in the contract oragreement is unfair. At the balance sheet date, the Company shall recognize the revenue from rendering of theservices in current period, based on the amount of multiplying the total amount of revenues from rendering of theservices by the percentage of completion then deducting the accumulative revenues from rendering of the servicesthat have been recognized in the previous accounting periods. At the same time, the Company shall recognize thecurrent cost incurred for rendering of the services based on the amount of multiplying the total estimated cost forrendering of the services by the percentage of completion and then deducting the accumulative costs from renderingof the services that have been recognized in the previous accounting periods.If the outcome of rendering of services cannot be estimated reliably at the balance sheet date, the accountingtreatment shall be based on the following circumstances, respectively:
①When the costs incurred are expected to be recovered, revenue shall be recognized to the extent of costs incurredand charge an equivalent amount of cost to the profit and loss;
②When the costs incurred are not expected to be recovered, revenue shall not be recognized and the costs incurredare recognized into current profit or loss.
(3) Revenue from alienating the right to use assets
When it is probable that the economic benefits associated with the transaction will flow into the Company andamount of revenue can be measured reliably, the Company shall recognize the amount of revenue from the alienatingof right to use assets based on the following circumstances, respectively:
①Interest revenue should be calculated in accordance with the period for which the enterprise's cash is used byothers and the effective interest rate; or
②The amount of royalty revenue should be calculated in accordance with the period and method of charging asstipulated in the relevant contract or agreement.
(4) Specific principles for revenue recognition of the Company
①Revenue from brand comprehensive service
Brand comprehensive service refers to the comprehensive services such as brand licensing, supply chain services,etc. provided by NJDS to licensed manufacturers based on the batch of trademark labels issued, and will be chargedwith the brand comprehensive service fees. The revenue of the Company's brand comprehensive service will beapportioned and recognized within the agreed service period for each product.
②Revenue from web-celebrity traffic monetization service
The web celebrity traffic monetization service refers to the value-added services on the Internet mobile terminalthrough the Company's web celebrity’s influence. The revenue of the Company's web-celebrity traffic realizationservice will be apportioned and recognized within the service period agreed in the contract.
③Revenue from park platform service
The park platform service refers that the Company consolidates the logistics, information flow, capital flow, dataflow, product flow and service flow together through the big data system platform to integrate the management, andcharges the service fees accordingly. After obtaining the settlement information confirmed by the counter-parties,the Company will recognize the revenue from park service.
④Revenue from finance leases
A. Accounting for the start date of the lease termOn the start date of the lease term, the difference between the sum of the finance lease payment receivable and theunguaranteed residual value, and its present value will be recognized as unrealized financial revenue, and will bealso recognized as lease revenues in each period in which the rent will be received in the future. The initial directexpenses incurred by the Company will be included in the initial measurement of finance lease receivables, and theamount of revenue recognized during the lease term will be reduced.B. Distribution of unrealized financing revenueUnrealized financing revenue will be distributed in each period of the lease term and recognized as lease revenue.At the time of distribution, the Company will use the effective interest method to calculate the lease revenue thatshould be recognized in the current period. The effective interest rate refers to the discount rate that makes the sumof the present value of the minimum lease income and the present value of the unguaranteed residual value equal tothe sum of the fair value of the leased asset and the initial direct expenses incurred by the Company on the leasestart date.C. Accounting for changes with unguaranteed residual valuesWhen the unguaranteed residual value decreases and the unguaranteed residual value of the recognized loss isrecovered, the implicit interest rate (effective interest rate) of the lease will be recalculated, and the lease revenueto be recognized in each subsequent period will be determined based on the revised net lease investment and therecalculated implicit interest rate of the lease. When the unguaranteed residual value increases, no adjustment willbe made.
⑤Factoring revenue
Factoring revenue refers to the fees charged by the Company for offering the financing and related comprehensivefinancial services for the receivables arising from the commodity sales, and the rendering of services or other reasonsby the clients to their buyers.
⑥Revenue from distributor brand licensing service
The distributor brand licensing service means NJDS provides brand licensing and e-commerce services to thelicensed distributors, and collects the distributor brand licensing fee accordingly. The distributors mainly sellproducts to consumers through Alibaba, JD.com, PDD, VIP.com and other e-commerce platforms. The revenue
from the distributor brand licensing service of the Company will be apportioned and recognized within the serviceperiod agreed in the service agreement.
⑦Revenue from mobile Internet media delivery service
When the Company’s wholly-owned subsidiary Timelink has completed the media delivery per the request of clientsand the relevant costs can be reliably measured, the Company will recognize the revenue in accordance with thedelivery schedule or monthly settlement sheet confirmed by clients.
⑧Revenue from mobile Internet traffic integration service
The wholly-owned subsidiary Timelink purchases the available scattered traffic from the traffic suppliers based oncustomers' needs, and customizes and executes marketing plans. When the relevant costs can be reliably measured,the Company will recognize revenue in accordance with the monthly statement confirmed by clients.
40. Government Grants
(1) Recognition of government grants
A government grant shall not be recognized until there is reasonable assurance that:
①The Company will comply with the conditions attaching to them; and
②The grants will be received.
(2) Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable, and non-monetary grantsfrom the government shall be measured at their fair value or at a nominal value of RMB 1.00 when reliable fairvalue is not available.
(3) Accounting for government grants
①Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the Company used forpurchase or construction, or forming the long-term assets by other ways. Government grants pertinent to assets shallbe recognized as deferred income, and should be recognized in profit or loss on a systematic basis over the usefullives of the relevant assets. Grants measured at their nominal value shall be directly recognized in profit or loss ofthe period when the grants are received. When the relevant assets are sold, transferred, written off or damaged beforethe assets are terminated, the remaining deferred income shall be transferred into profit or loss of the period ofdisposing relevant assets.
②Government grants related to income
Government grants other than related to assets are classified as government grants related to income. Governmentgrants related to income are accounted for in accordance with the following principles:
If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses infuture periods, such government grants shall be recognized as deferred income and included into profit or loss inthe same period as the relevant expenses or losses are recognized;If the government grants related to income are used to compensate the enterprise’s relevant expenses or lossesincurred, such government grants are directly recognized into current profit or loss.For government grants comprised of part related to assets as well as part related to income, each part is accountedfor separately; if it is difficult to identify different part, the government grants are accounted for as governmentgrants related to income as a whole.
Government grants related to daily operation activities are recognized in other income (or write down relatedexpenses) in accordance with the nature of the activities, and government grants irrelevant to daily operationactivities are recognized in non-operating income.
③Loan interest subsidy
When loan interest subsidy is allocated to the bank, and the bank provides a loan at lower-market rate of interest tothe Company, the loan is recognized at the actual received amount, and the interest expense is calculated based onthe principal of the loan and the lower-market rate of interest.When loan interest subsidy is directly allocated to the Company, the subsidy shall be recognized as offsetting therelevant borrowing cost.
④Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of the asset if the bookvalue of the asset has been written down, or reducing the balance of relevant deferred income if deferred incomebalance exists, any excess will be recognized into current profit or loss; or directly recognized into current profit orloss for other circumstances.
41. Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in the statement offinancial position and its tax base at the balance sheet date. The Company recognizes and measures the effect oftaxable temporary differences and deductible temporary differences on income tax as deferred tax liabilities ordeferred tax assets using liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.
(1) Recognition of deferred tax assets
Deferred tax assets should be recognized for deductible temporary differences, the carryforward of unused tax lossesand the carryforward of unused tax credits to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences, the carryforward of unused tax losses and the carryforward of unusedtax credits can be utilized at the tax rates that are expected to apply to the period when the asset is realized, unlessthe deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:
①Is not a business combination; and
②At the time of the transaction, affects neither accounting profit nor taxable profit (or deductible tax loss)The Company shall recognize a deferred tax asset for all deductible temporary differences arising from investmentsin subsidiaries, associates and joint ventures, only to the extent that, it is probable that:
①The temporary difference will reverse in the foreseeable future; and
②Taxable profit will be available against which the deductible temporary difference can be utilized.At the balance sheet date, if there is sufficient evidence that it is probable that taxable profit will be available againstwhich the deductible temporary difference can be utilized, the Company recognizes a previously unrecognizeddeferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the balance sheet date. The Company shall reducethe carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profitwill be available to allow the benefit of part or all of that deferred tax asset to be utilized. Any such reduction shallbe reversed to the extent that it becomes probable that sufficient taxable profit will be available.
(2) Recognition of deferred tax liabilities
A deferred tax liability shall be recognized for all taxable temporary differences at the tax rate that are expected toapply to the period when the liability is settled, except for the following circumstances:
①No deferred tax liability shall be recognized for taxable temporary differences arising from:
A. The initial recognition of goodwill; orB. The initial recognition of an asset or liability in a transaction which: is not a business combination; and at thetime of the transaction, affects neither accounting profit nor taxable profit (tax loss)
②An entity shall recognize a deferred tax liability for all taxable temporary differences associated with investmentsin subsidiaries, associates, and joint ventures, except to the extent that both of the following conditions are satisfied:
A. The Company is able to control the timing of the reversal of the temporary difference; andB. It is probable that the temporary difference will not reverse in the foreseeable future.
(3) Recognition of deferred tax liabilities or assets involved in special transactions or events
①Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a business combination notunder common control, a deferred tax liability or a deferred tax asset shall be recognized, and simultaneously,goodwill recognized in the business combination shall be adjusted based on relevant deferred tax expense (income).
②Items directly recognized in equity
Current tax and deferred tax related to items that are recognized directly in equity shall be recognized in equity.Such items include: other comprehensive income generated from fair value fluctuation of available for saleinvestments; an adjustment to the opening balance of retained earnings resulting from either a change in accountingpolicy that is applied retrospectively or the correction of a prior period (significant) error; amounts arising on initialrecognition of the equity component of a compound financial instrument that contains both liability and equitycomponent.
③Unused tax losses and unused tax credits
A. Unused tax losses and unused tax credits generated from daily operation of the Company itselfDeductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be offsetagainst taxable income in future periods. The criteria for recognizing deferred tax assets arising from thecarryforward of unused tax losses and tax credits are the same as the criteria for recognizing deferred tax assetsarising from deductible temporary differences. The Company recognizes a deferred tax asset arising from unusedtax losses or tax credits only to the extent that there is convincing other evidence that sufficient taxable profit willbe available against which the unused tax losses or unused tax credits can be utilized by the Company. Income taxesin current profit or loss shall be deducted as well.B. Unused tax losses and unused tax credits arising from a business combinationUnder a business combination, the acquiree’s deductible temporary differences which do not satisfy the criteria atthe acquisition date for recognition of deferred tax asset shall not be recognized. Within 12 months after theacquisition date, if new information regarding the facts and circumstances exists at the acquisition date and theeconomic benefit of the acquiree’s deductible temporary differences at the acquisition is expected to be realized, theCompany shall recognize acquired deferred tax benefits and reduce the carrying amount of any goodwill related tothis acquisition. If goodwill is reduced to zero, any remaining deferred tax benefits shall be recognized in profit orloss. All other acquired deferred tax benefits realized shall be recognized in profit or loss.
④Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between carrying value of the assets andliabilities in the consolidated financial statements and their taxable bases is generated from elimination of inter-company unrealized profit or loss, deferred tax assets or deferred tax liabilities shall be recognized in theconsolidated financial statements, and income taxes expense in current profit or loss shall be adjusted as well exceptfor deferred tax related to transactions or events recognized directly in equity and business combination.
⑤Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period in which the expensesare recognized according to the accounting standards, the Company estimates the tax base in accordance with
available information at the end of the accounting period and the temporary difference arising from it. Deferred taxshall be recognized when criteria of recognition are satisfied. If the amount of estimated future tax deduction exceedsthe amount of the cumulative expenses related to share-based payment recognized according to the accountingstandards, the tax effect of the excess amount shall be recognized directly in equity.
42. Leases
(1) Accounting for operating leases
①When the Company as a lessee, the lease payments should be recognized into profit or loss of the reporting periodover the lease terms on a straight-line basis or the amount of usage. If the lessor provides the rent-free period, theCompany shall allocate total lease payment over the entire lease terms including the rent-free period using straight-line basis or other reasonable method. Lease expense and the corresponding liabilities shall be recognized duringthe rent-free period. If expenses relating to lease which should be borne by the Company are paid by the lessor ofthe assets, they shall be deducted from the total lease expenses and the balances shall be amortized over the leaseterms by the Company.Initial direct costs relating to lease transactions incurred by the Company shall be recognized into current profit orloss. Contingent rental, if included in the lease contract, shall be recognized into profit or loss upon occurrence.
②When the Company as a lessor, lease income should be recognized over the lease terms on a straight-line basis.If the lessor provides the rent-free period, the Company shall allocate total lease income over the entire lease termsincluding the rent-free period using straight-line basis or other reasonable method. Lease income shall be recognizedduring the rent-free period. If expenses relating to leases which should be borne by the lessee of the assets are paidby the Company, they shall be deducted from the total lease income and the balances shall be amortized over thelease terms by the Company.Initial direct costs relating to lease transactions incurred by the Company shall be recognized into current profit orloss; if the amounts are material, they shall be capitalized and amortized over the lease terms on the same basis asthe recognition of lease income. Contingent rental, if included in the lease contract, shall be recognized into profitor loss upon occurrence.
(2) Accounting for finance leases
①When the Company as a lessee, at commencement of the lease, assets obtained through finance leases should berecorded at the lower of their fair values and the present values of the minimum lease payments. The Company shallrecognize long-term payables at amounts equal to the minimum lease payments, and the differences shall berecognized as unrecognized finance charges, which shall be amortized over the lease terms as finance expenses byusing effective interest rate method and recognized into finance cost.Initial direct costs are recorded in the value of the leased assets.The Company adopts the same depreciation policy for the leased assets as its self-owned fixed assets. Depreciationperiod is determined according to the lease contract. If it is reasonably certain that the Company will obtain theownership of the assets at the expiration of the lease, the depreciation period will be the useful lives of the leasedassets. If it is not certain that the Company will obtain the ownership of the asset at the expiration of the lease, thedepreciation period is the shorter of the lease period and their useful lives.
②When the Company as a lessor, at commencement of the lease, lease receivables shall be measured at minimum
lease receivables plus initial direct costs relating to lease transactions and recognized as long-term receivable in thestatement of financial position. Unguaranteed residual values are recorded simultaneously. The differences betweenthe total of minimum lease receivable, initial direct cost and unguaranteed residual values and their present valueshall be recognized as unearned finance income, and shall amortized over the lease terms as lease income at theeffective interest rate method.
43. Other significant accounting policies and accounting estimates
Repurchase of the Company’s Share
(1) If the Company reduces its registered capital through repurchase of the Company’s share according to theapproval required in relevant laws and regulations, the share capital shall be reduced at the par value of the sharesderegistered, the difference between the consideration paid for repurchase (including the transaction cost) and thepar value of the shares shall adjust the owner’s equity. Any excess of the total par value shall offset the capitalreserve (share premium), surplus reserve and retained earnings in turn. If the consideration paid is less than the totalpar value, the difference shall increase the capital reserve (share premium).
(2) Before being deregistered or transferred, shares repurchased by the Company shall be treated as treasury stockand all expenditures of the repurchase shall be recognized as the cost of treasury stock.
(3) Any excess of the income generated from transferring the treasury stock over their cost shall increase the capitalreserve (share premium), and any less shall offset the capital reserve (share premium), surplus reserve and retainedearnings in turn.
44. Changes in Significant Accounting Policies and Accounting Estimates
(1) Changes in accounting polices
√ Applicable (A) □ Not applicable (N/A)
| Contents and reasons of changes with accounting policies | Approval procedure | Remarks |
| Notice of Revising and Issuing the Format of Financial Statements of General Enterprises for 2019 (CK [2019] No.6) | Approved at the 14th Session of the 6th Board of Directors Meeting | |
| Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments (Revised in 2017) (CK [2017] No. 7) | Approved at the 12th Session of the 6th Board of Directors Meeting | |
| Accounting Standard for Business Enterprises No. 23 - Transfer of financial assets (Revised in 2017) (CK [2017] No. 8) | Approved at the 12th Session of the 6th Board of Directors Meeting |
| Accounting Standards for Business Enterprises No. 24 - Hedging (Revised in 2017) (CK [2017] No. 9) | Approved at the 12th Session of the 6th Board of Directors Meeting | |
| Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments (Revised in 2017) (CK [2017] No. 14) | Approved at the 12th Session of the 6th Board of Directors Meeting | |
| Accounting Standards for Business Enterprises No. 7 - Exchange of Non-Monetary Assets (CK [2019] No. 8) | Approved at the 24th Session of the 6th Board of Directors Meeting | |
| Accounting Standards for Business Enterprises No. 12 - Debt Restructuring” (CK [2019] No. 9) | Approved at the 24th Session of the 6th Board of Directors Meeting |
| Item (Unit: RMB) | Consolidated statement | Parent statement | ||
| December 31,2018 | January 1, 2019 | December 31,2018 | January 1, 2019 | |
| Notes receivable and accounts receivable | 764,901,999.22 | — | 97,520,342.97 | — |
| Notes receivable | — | 40,318,407.59 | — | 700,000.00 |
| Accounts Receivable | — | 724,583,591.63 | — | 96,820,342.97 |
| Held-for-trading financial assets | — | 450,000,000.00 | — | 50,000,000.00 |
| Other current assets | 486,849,976.13 | 36,849,976.13 | 54,634,672.85 | 4,634,672.85 |
| Available-for-sale financial assets | 240,057.98 | — | — | — |
| Held-for-trading financial assets | — | 140,057.98 | — | — |
| Other equity instrument investment | — | 100,000.00 | — | — |
| Notes payable and accounts payable | 52,048,994.98 | — | 23,630,397.14 | — |
| Notes payable | — | — | — | — |
| Accounts payable | — | 52,048,994.98 | — | 23,630,397.14 |
(3) Adjustments of the financial statements at the beginning of the reporting period for the first year adoptingnew standards for financial instruments, revenue or leases since 2019.
√ Applicable (A) □ Not applicable (N/A)
Consolidated Balance Sheet
| Item (Unit: RMB) | December 31,2018 | January 1, 2019 | Adjustment |
| Current assets: | |||
| Cash and cash equivalents | 1,189,754,162.14 | 1,189,754,162.14 | |
| Deposit reservation for balance | |||
| Lendings to banks and other financial institutions | |||
| Held-for-trading financial assets | 450,140,057.98 | 450,140,057.98 | |
| Financial assets at fair value through profit or loss | |||
| Derivative financial assets | |||
| Notes receivable | 40,318,407.59 | 40,318,407.59 | |
| Accounts receivable | 724,583,591.63 | 724,583,591.63 | |
| Accounts receivable financing | |||
| Advances to suppliers | 552,797,861.17 | 552,797,861.17 | |
| Premium receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance contract reserves receivable | |||
| Other accounts receivable | 59,849,623.62 | 59,849,623.62 | |
| Including: Interests receivable | |||
| Dividends receivable | |||
| Financial assets held under resale agreements | |||
| Inventory | 3,361,669.70 | 3,361,669.70 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 486,849,976.13 | 36,849,976.13 | -450,000,000.00 |
| Total current assets | 3,057,515,291.98 | 3,057,655,349.96 | 140,057.98 |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Available-for-sale financial assets | 240,057.98 | -240,057.98 | |
| Other debt investment |
| Held-to-maturity investment | |||
| Long-term accounts receivable | |||
| Long-term equity investment | 14,230,858.19 | 14,230,858.19 | |
| Other equity instrument investment | 100,000.00 | 100,000.00 | |
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 3,021,813.45 | 3,021,813.45 | |
| Construction in progress | |||
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 562,683,064.77 | 562,683,064.77 | |
| Research and development expenditure | |||
| Goodwill | 889,770,009.82 | 889,770,009.82 | |
| Long-germ deferred expenses | 109,113.12 | 109,113.12 | |
| Deferred tax assets | 6,679,125.79 | 6,679,125.79 | |
| Other non-current assets | 14,999,379.61 | 14,999,379.61 | |
| Total non-current assets | 1,491,733,422.73 | 1,491,593,364.75 | -140,057.98 |
| Total assets | 4,549,248,714.71 | 4,549,248,714.71 | |
| Current liabilities: | |||
| Short-term borrowings | 70,360,000.00 | 70,360,000.00 | |
| Borrowings from the central bank | |||
| Borrowings from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Financial liabilities at fair value through profit or loss | |||
| Derivate financial liabilities | |||
| Notes payable | |||
| Accounts payable | 52,048,994.98 | 52,048,994.98 | |
| Advances from customers | 369,750,631.85 | 369,750,631.85 | |
| Contract liabilities | |||
| Financial assets sold under repurchase agreements | |||
| Deposits from customers and banks | |||
| Customer stock brokerage deposits | |||
| Customer stock underwriting deposits |
| Employee benefits payable | 28,396,002.54 | 28,396,002.54 | |
| Taxes payable | 66,445,511.72 | 66,445,511.72 | |
| Other payables | 167,238,218.29 | 167,238,218.29 | |
| Including: Interests payable | 150,492.26 | 150,492.26 | |
| Dividends payable | |||
| Fees and commissions payable | |||
| Reinsurance payables | |||
| Liabilities classified as held for sale | |||
| Non-current liabilities due within one year | |||
| Other non-current liabilities | 30,106,369.18 | 30,106,369.18 | |
| Total current liabilities | 784,345,728.56 | 784,345,728.56 | |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual capital securities | |||
| Lease liabilities | |||
| Long-term accounts payable | |||
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | |||
| Deferred income tax liabilities | 634,200.00 | 634,200.00 | |
| Other Non-current liabilities | |||
| Total non-current liabilities | 634,200.00 | 634,200.00 | |
| Total liabilities | 784,979,928.56 | 784,979,928.56 | |
| Owner's equities: | |||
| Share capital | 417,326,994.00 | 417,326,994.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual capital securities | |||
| Capital reserves | 1,480,832,771.89 | 1,480,832,771.89 | |
| Less: Treasury stock | 67,590,687.09 | 67,590,687.09 | |
| Other comprehensive income |
| Specific reserves | |||
| Surplus reserve | 131,720,855.52 | 131,720,855.52 | |
| General risk reserve | |||
| Retained earnings | 1,776,292,224.02 | 1,776,292,224.02 | |
| Total owner’s equity attributable to parent company | 3,738,582,158.34 | 3,738,582,158.34 | |
| Minority interests | 25,686,627.81 | 25,686,627.81 | |
| Total owner’s equity | 3,764,268,786.15 | 3,764,268,786.15 | |
| Total liabilities and owner's equities | 4,549,248,714.71 | 4,549,248,714.71 |
| Item (Unit: RMB) | December 31,2018 | January 1, 2019 | Adjustment |
| Current assets: | |||
| Cash and cash equivalents | 546,501,650.58 | 546,501,650.58 | |
| Held-for-trading financial assets | 50,000,000.00 | 50,000,000.00 | |
| Financial assets at fair value through profit or loss | |||
| Derivative financial assets | |||
| Notes receivable | 700,000.00 | 700,000.00 | |
| Accounts receivable | 96,820,342.97 | 96,820,342.97 | |
| Accounts receivable financing | |||
| Advances to suppliers | 349,364.99 | 349,364.99 | |
| Other receivable | 32,667,995.54 | 32,667,995.54 | |
| Including: Interests receivable | |||
| Dividends receivable | |||
| Inventories | 441,903.73 | 441,903.73 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 54,634,672.85 | 4,634,672.85 | -50,000,000.00 |
| Total current assets | 732,115,930.66 | 732,115,930.66 | |
| Non-current assets: | |||
| Debt investment | |||
| Available-for-sale financial assets | |||
| Other debt investment | |||
| Held-to-maturity investment | |||
| Long-term accounts receivable |
| Long-term equity investment | 3,938,050,533.14 | 3,938,050,533.14 | |
| Other equity instrument investment | |||
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 34,734.60 | 34,734.60 | |
| Construction in progress | |||
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 101,189.01 | 101,189.01 | |
| Research and development expenditure | |||
| Goodwill | |||
| Long-germ deferred expenses | |||
| Deferred tax assets | |||
| Other non-current assets | 14,684,511.69 | 14,684,511.69 | |
| Total non-current assets | 3,952,870,968.44 | 3,952,870,968.44 | |
| Total assets | 4,684,986,899.10 | 4,684,986,899.10 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Financial liabilities at fair value through profit or loss | |||
| Derivate financial liabilities | |||
| Notes payable | |||
| Accounts payable | 23,630,397.14 | 23,630,397.14 | |
| Advances from customers | 28,401,099.61 | 28,401,099.61 | |
| Contract liabilities | |||
| Employee benefits payable | 7,552,651.67 | 7,552,651.67 | |
| Taxes payable | 149,514.97 | 149,514.97 | |
| Other payables | 115,799,734.66 | 115,799,734.66 | |
| Including: Interests payable | |||
| Dividends payable | |||
| Debts held for sale | |||
| Non-current liabilities due within one year | |||
| Other non-current liabilities | |||
| Total current liabilities | 175,533,398.05 | 175,533,398.05 |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual capital securities | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employee benefits payable | |||
| Estimated liabilities | |||
| Deferred income | |||
| Deferred income tax liabilities | |||
| Other Non-current liabilities | |||
| Total non-current liabilities | |||
| Total liabilities | 175,533,398.05 | 175,533,398.05 | |
| Owner's equities: | |||
| Share capital | 2,454,870,403.00 | 2,454,870,403.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual capital securities | |||
| Capital reserves | 1,860,926,915.10 | 1,860,926,915.10 | |
| Less: Treasury stock | 67,590,687.09 | 67,590,687.09 | |
| Other comprehensive income | |||
| Specific reserves | |||
| Surplus reserve | 75,063,622.20 | 75,063,622.20 | |
| Retained earnings | 186,183,247.84 | 186,183,247.84 | |
| Total owner’s equity | 4,509,453,501.05 | 4,509,453,501.05 | |
| Total liabilities and owner's equities | 4,684,986,899.10 | 4,684,986,899.10 |
Note VI. Taxation
1. Main tax categories and tax rates
| Tax category | Taxation basis | Tax rate |
| Value added tax (VAT) | Taxable sales revenue | 16%, 13%, 6% |
| Urban maintenance and construction tax | Payable turnover tax | 7%, 5%, 1% |
| Corporate income tax | Taxable income | 0%, 15%, 25% |
| Educational surcharge | Payable turnover tax | 3% |
| Local educational surcharge | Payable turnover tax | 1%, 2% |
| Name of taxpayer | Income tax rate |
| Nanji E-commerce Co., Ltd. | 25% |
| Nanji E-commerce (Shanghai) Co., Ltd. | 15% (refer to “2. Tax Preference”) |
| NANJIREN (Shanghai) E-commerce Co., Ltd. | 25% |
| Shanghai Xiaodai Finance Lease Co., Ltd. | 25% |
| Shanghai One-Stop Network Technology Service Co., Ltd. | 15% (refer to “2. Tax Preference”) |
| Shanghai Shuimishang Culture Communication Co., Ltd. | 25% |
| Xinjiang Juchang E-commerce Co., Ltd. | (refer to “2. Tax Preference”) |
| Xinjiang NANJIREN E-commerce Co., Ltd. | (refer to “2. Tax Preference”) |
| Xinjiang Cartelo E-commerce Co., Ltd. | (refer to “2. Tax Preference”) |
| Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. | 25% (refer to “2. Tax Preference”) |
| Xinjiang Yuduocheng E-commerce Co., Ltd. | (refer to “2. Tax Preference”) |
| Xinjiang Jingshang E-commerce Co., Ltd. | (refer to “2. Tax Preference”) |
| Beijing Timelink Network Technology Co., Ltd. | 25% |
| Beijing HENRI JAYER Technology Co., Ltd | 15% (refer to “2. Tax Preference”) |
| Xinjiang HENRI JAYER Network Technology Co., Ltd. | (refer to “2. Tax Preference”) |
| Xinjiang RAYAS Network Technology Co., Ltd. | (refer to “2. Tax Preference”) |
| Xinjiang Chambertin Network Technology Co., Ltd. | (refer to “2. Tax Preference”) |
On December 6, 2017, the Company’s subsidiary Henri Jayer obtained the certificate of HNTE (Certificate No.:
GR201711007629, and Valid Term: 3 years) jointly issued by Beijing Municipal Science and TechnologyCommittee, Beijing Municipal Finance Bureau, Beijing Municipal Tax Service Bureau of State TaxationAdministration and Beijing Municipal Taxation Bureau. Henri Jayer enjoys the national tax preference for HNTEfrom 2017 to 2019 with the corporate income tax calculated and paid at the rate of 15% in line with relevantregulations.On October 8, 2019, the Company’s subsidiary Shanghai One-Stop obtained the certificate of HNTE (CertificateNo.: GR201931000269, and Valid Term: 3 years) jointly issued by Shanghai Municipal Science and TechnologyCommittee, Shanghai Municipal Finance Bureau and Shanghai Municipal Tax Service of State TaxationAdministration. Shanghai One-Stop enjoys the national tax preference for HNTE from 2019 to 2021 with thecorporate income tax calculated and paid at the rate of 15% in line with relevant regulations.In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on PreferentialPolicies for Corporate Income Tax in Kashi and Khorgos Special Economic Development Zones in Xinjiang (CSNo. [2011]112 ), the new enterprises established in Kashi and Khorgos Special Economic Development Zones inXinjiang from January 1, 2010 to December 31, 2020 and within the scope of the Preferential Catalogue ofCorporate Income Tax of Key Industries Encouraged to Develop in Underdeveloped Areas in Xinjiang shall beexempted from corporate income tax for five years from the tax year of the first revenue generated from productionand operation. The Company’s subsidiaries Xinjiang Henri Jayer, Chambertin, RAYAS, Xinjiang Juchang E-commerce, Xinjiang NANJIREN, Xinjiang Crocodile E-commerce, Xinjiang Jingshang E-commerce and XinjiangYuduocheng E-commerce were exempted from business income tax in 2019.
3. Miscellaneous
Note VII. Notes to the Consolidated Financial Statements
1. Cash and Cash Equivalents
Unit: RMB
| Item | Ending balance | Initial balance |
| Cash on hand | 13,213.71 | 112,576.06 |
| Cash in bank | 1,280,491,738.71 | 1,157,232,273.16 |
| Other monetary funds | 327,080.86 | 32,409,312.92 |
| Total | 1,280,832,033.28 | 1,189,754,162.14 |
2. Held-for-trading financial assets
Unit: RMB
| Item | Ending balance | Initial balance |
| Financial Assets at Fair Value through Profit or Loss | 1,490,000,000.00 | 450,140,057.98 |
| Including: | ||
| Including: | ||
| Total | 1,490,000,000.00 | 450,140,057.98 |
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
| Bank acceptance bills | 73,506,158.00 | 40,318,407.59 |
| Total | 73,506,158.00 | 40,318,407.59 |
| Category | Ending balance | Initial balance | ||||||||
| Book balance | Bad-debt provision | Book value | Book balance | Bad-debt provision | Book value | |||||
| Amount | Proportion | Amount | Accrual proportion | Amount | Proportion | Amount | Accrual proportion | |||
| including: | ||||||||||
| Notes receivable with bad debt provision recognized collectively | 73,506,158.00 | 73,506,158.00 | 40,318,407.59 | 40,318,407.59 | ||||||
| including: | ||||||||||
| Total | 73,506,158.00 | 73,506,158.00 | 40,318,407.59 | 40,318,407.59 |
| Name | Ending balance | |||
| Book balance | Bad-debt provision | Accrual proportion | Reason for provision | |
| Name | Ending balance | ||
| Book balance | Bad-debt provision | Accrual proportion | |
| Category | Initial balance | Changes during the reporting period | Ending balance | |||
| Provision | Recovery or reversal | Write off | Others | |||
| Item | Pledged amount at the end of the period |
| Item (Unit: RMB) | Ending amount of derecognition | Ending amount of recognition |
| Bank acceptance bills | 390,000.00 | |
| Total | 390,000.00 |
| Item | Amounts transferred to accounts receivable at the end of the period |
| Item | Amount written off |
| Entity name | Nature of notes receivable | Amount written off | Write-off reason | Write-off procedures | Due from related parties or not |
| Category | Ending balance | Initial balance | ||||||||
| Book balance | Bad-debt provision | Book value | Book balance | Bad-debt provision | Book value | |||||
| Amount | Proportion | Amount | Accrual proportion | Amount | Proportion | Amount | Accrual proportion | |||
| Provision for bad debt recognized individually | 56,604,805.13 | 6.46% | 28,410,817.07 | 50.19% | 28,193,988.06 | 3,696,463.47 | 0.48% | 3,696,463.47 | 100.00% | |
| Including: | ||||||||||
| Provision for bad debt recognized collectively | 820,197,013.12 | 93.54% | 58,686,870.98 | 7.16% | 761,510,142.14 | 772,498,506.84 | 99.52% | 47,914,915.21 | 6.20% | 724,583,591.63 |
| Including: | ||||||||||
| Group 1: Accounts receivable arising from businesses other than finance leasing business and factoring business | 786,875,904.78 | 89.74% | 49,647,847.00 | 6.31% | 737,228,057.78 | 599,716,880.20 | 77.26% | 41,986,119.21 | 7.00% | 557,730,760.99 |
| Group 2: Accounts receivable arising from factoring business | 33,321,108.34 | 3.80% | 9,039,023.98 | 27.13% | 24,282,084.36 | 172,781,626.64 | 22.26% | 5,928,796.00 | 3.43% | 166,852,830.64 |
| Group 3: Accounts receivable arising from finance leasing business | ||||||||||
| Total | 876,801,818.25 | 100.00% | 87,097,688.05 | 9.93% | 789,704,130.20 | 776,194,970.31 | 100.00% | 51,611,378.68 | 6.65% | 724,583,591.63 |
| Entity Name | Ending balance | |||
| Book balance | Bad-debt provision | Provision ratio | Reason for provision | |
| Shenzhen Qianhai Xinzhijiang Information Technology Co., Ltd. | 56,387,976.13 | 28,193,988.07 | 50.00% | Litigation |
| Nantong Weida E-commerce Co., Ltd. | 216,829.00 | 216,829.00 | 100.00% | Expected to be irrecoverable |
| Total | 56,604,805.13 | 28,410,817.07 | -- | -- |
| Name | Ending balance | |||
| Book balance | Bad-debt provision | Provision ratio | Reason for provision | |
| Name | Ending balance | ||
| Book balance | Bad-debt provision | Provision ratio | |
| Within 1 year | 728,876,389.47 | 36,443,819.49 | 5.00% |
| 1-2 years | 41,041,567.78 | 4,104,156.78 | 10.00% |
| 2-3 years | 11,225,824.00 | 3,367,747.20 | 30.00% |
| Above 3 years | 5,732,123.53 | 5,732,123.53 | 100.00% |
| Total | 786,875,904.78 | 49,647,847.00 | -- |
| Name | Ending balance | ||
| Book balance | Bad-debt provision | Provision ratio | |
| Within 1 year | 3,301,063.89 | 33,010.64 | 1.00% |
| 1-2 years | 30,020,044.45 | 9,006,013.34 | 30.00% |
| 2-3 years | |||
| Above 3 years | |||
| Total | 33,321,108.34 | 9,039,023.98 | -- |
| Name | Ending balance | ||
| Book balance | Bad-debt provision | Provision ratio | |
| Aging | Book balance |
| Within 1 year (inclusive) | 788,615,429.49 |
| 1 to 2 years | 71,061,612.23 |
| 2 to 3 years | 11,273,265.25 |
| Above 3 years | 5,851,511.28 |
| 3 to 4 years | 4,626,789.12 |
| 4 to 5 years | 1,224,722.16 |
| Total | 876,801,818.25 |
(2) Changes of provision for bad debt during the reporting period
Provision of bad debt during the reporting period:
Unit: RMB
| Category | Initial balance | Changes during the reporting period | Ending balance | |||
| Provision | Recovery or reversal | Write off | Others | |||
| Bad-debt provision | 51,611,378.68 | 40,472,733.49 | -100,000.00 | 5,086,424.12 | 87,097,688.05 | |
| Total | 51,611,378.68 | 40,472,733.49 | -100,000.00 | 5,086,424.12 | 87,097,688.05 | |
| Entity name | Recovered or reversed amount | Recovery method |
| Jiangyin Zhuo'er Textile Products Co., Ltd. | 100,000.00 | Bank deposit |
| Total | 100,000.00 | -- |
| Item | Amount written off |
| Accounts receivable actually written off | 5,086,424.12 |
| Entity name | Nature of accounts receivable | Amount written off | Write-off reason | Write-off procedures | Due from related parties or not |
| Nantong Handuo Textile Co., Ltd. | Payment for business transaction | 1,406,550.00 | Irrecoverable | General Manager Meeting | No |
| Wujiang Yijinfang Textile Co., Ltd. | Payment for business transaction | 2,286,976.92 | Irrecoverable | General Manager Meeting | No |
| Yiwu Tianying Maternal and Infant Products Co., Ltd. | Payment for business transaction | 910,520.00 | Irrecoverable | General Manager Meeting | No |
| Total | -- | 4,604,046.92 | -- | -- | -- |
(4) Top five ending balances by debtors
Unit: RMB
| Entity name | Ending balance of accounts receivable | Proportion of the balance to the total accounts receivable | Ending balance of bad-debt provisions |
| Shenzhen Qianhai Xinzhijiang Information Technology Co., Ltd. | 56,387,976.13 | 6.43% | 28,193,988.07 |
| Zhejiang A *** Co., Ltd. | 30,700,000.00 | 3.50% | 1,535,000.00 |
| Shanghai Tuoxin Industry Co., Ltd. | 30,000,000.00 | 3.42% | 9,000,000.00 |
| Hangzhou Qu *** Co., Ltd. | 29,225,311.60 | 3.33% | 1,461,265.58 |
| Zhejiang Juren Supply Chain Management Co., Ltd. | 28,598,345.80 | 3.26% | 2,098,584.58 |
| Total | 174,911,633.53 | 19.94% |
| Item | Ending balance | Initial balance |
| Account age | Ending balance (RMB) | Initial balance (RMB) | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 223,546,773.54 | 97.49% | 551,075,388.32 | 99.69% |
| 1 to 2 years | 5,756,142.09 | 2.51% | 1,708,215.11 | 0.31% |
| 2 to 3 years | 0.11 | 0.00% | 14,257.74 | 0.00% |
| Total | 229,302,915.74 | -- | 552,797,861.17 | -- |
| Entity name | Amount (RMB) | Proportion of the balance to the total advances to suppliers (%) |
| Guangzhou Xiaomi Information Service Co., Ltd. | 116,212,705.26 | 50.68 |
| Hubei Jinri Toutiao Technology Co., Ltd. | 43,922,215.38 | 19.15 |
| Vivo Mobile Communications Co., Ltd. | 34,034,434.14 | 14.84 |
| Guangdong HeyTap Technology Co., Ltd. | 7,943,396.23 | 3.46 |
| Shanghai Jinzhao Culture Communication Co., Ltd. | 5,975,140.76 | 2.61 |
| Total | 208,087,891.77 | 90.74 |
| Item | Ending balance (RMB) | Initial balance (RMB) |
| Other receivables | 88,075,286.90 | 59,849,623.62 |
| Total | 88,075,286.90 | 59,849,623.62 |
| Item | Ending balance (RMB) | Initial balance (RMB) |
| Borrower | Ending balance (RMB) | Overdue period | Reason for overdue | Impairment or not (if have, the indications for that) |
③ Provision for bad debt
□ Applicable (A) √ Not applicable (N/A)
(2) Dividends receivable
① Classification of dividends receivable
| Project (or investee) | Ending balance (RMB) | Initial balance (RMB) |
| Project (or investee) | Ending balance (RMB) | Account age | Reason for overdue | Impairment or not (if have, the indications for that) |
| Nature of the payment | Ending book balance (RMB) | Initial book balance (RMB) |
| Business deposit | 92,005,304.21 | 61,398,438.49 |
| Business transaction payment | 1,534,223.09 | 1,741,355.10 |
| Equity transfer payment | 410,000.00 | |
| Others | 1,145,515.45 | 385,620.02 |
| Total | 94,685,042.75 | 63,935,413.61 |
| Bad-debt provision | Stage I | Stage II | Stage III | Total |
| Expected credit loss in the next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) | ||
| Balance on January 1, 2019 | 3,785,789.99 | 300,000.00 | 4,085,789.99 |
| Balance on January 1, 2019 in the current period | —— | —— | —— | —— |
| Provision in the current period | 2,794,356.16 | 2,794,356.16 | ||
| Write-off in the current period | 270,390.30 | 270,390.30 | ||
| Balance on December 31, 2019 | 6,309,755.85 | 300,000.00 | 6,609,755.85 |
| Aging | Book balance |
| Within 1 year (inclusive) | 89,032,787.69 |
| 1 to 2 years | 633,941.80 |
| 2 to 3 years | 4,176,558.56 |
| Above 3 years | 841,754.70 |
| 3 to 4 years | 841,754.70 |
| Total | 94,685,042.75 |
| Category | Initial balance | Changes during the reporting period | Ending balance | |||
| Provision | Recovery or reversal | Write off | Others | |||
| Bad-debt provision | 4,085,789.99 | 2,794,356.16 | 270,390.30 | 6,609,755.85 | ||
| Total | 4,085,789.99 | 2,794,356.16 | 270,390.30 | 6,609,755.85 | ||
| Entity name | Reversed or recovered amount | Recovery method |
| Item | Amount written off |
| Other receivables actually written off | 270,390.30 |
| Entity name | Nature of other receivables | Amount written off | Write-off reason | Write-off procedures | Due from related parties or not |
| Entity name | Nature | Ending balance | Aging | Proportion of the balance to the total other receivables | Ending balance of bad-debt provisions |
| Shenzhen Tencent Computer System Co., Ltd. | Deposit | 77,026,000.00 | Not more than 3 years | 81.35% | 4,351,300.00 |
| Shanghai High Thai Real Estate Development Co., Ltd. | Deposit | 5,245,783.50 | Not more than 1 year | 5.54% | 262,289.18 |
| Guangzhou Xiaomi Information Service Co., Ltd. | Deposit | 4,000,000.00 | Not more than 3 years | 4.22% | 700,000.00 |
| Vivo Mobile Communications Co., Ltd. | Deposit | 2,000,000.00 | Not more than 1 year | 2.11% | 100,000.00 |
| Beijing LDDC No. 55 Cultural Development Co., Ltd. | Deposit | 943,697.00 | Not more than 1 year | 1.00% | 47,184.85 |
| Total | -- | 89,215,480.50 | -- | 94.22% | 5,460,774.03 |
| Entity name | Name of government grant | Balance at the end of the reporting period | Aging at the end of the reporting period | Estimated date, amount and basis for the receipt |
7) Derecognition of other receivables for transfer of financial assets
8) Assets or liabilities arising from continuing involvement in transferred other receivablesOther notes:
9. Inventories
Whether the new revenue standards have been implemented?
□ Yes √ No
(1) Inventories by category
Unit: RMB
| Item | Ending balance | Initial balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Raw material | 1,985,150.79 | 1,985,150.79 | 2,223,458.92 | 2,223,458.92 | ||
| Finished goods | 8,298,955.07 | 4,872,544.62 | 3,426,410.45 | 4,872,544.62 | 3,734,333.84 | 1,138,210.78 |
| Goods sold | 24,007.40 | 24,007.40 | ||||
| Work in process - outsourced | 36,293.50 | 36,293.50 | ||||
| Total | 10,344,406.76 | 4,872,544.62 | 5,471,862.14 | 7,096,003.54 | 3,734,333.84 | 3,361,669.70 |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance | ||
| Provision | Others | Reversal or written-down | Others | |||
| Finished goods | 3,734,333.84 | 1,138,210.78 | 4,872,544.62 | |||
| Total | 3,734,333.84 | 1,138,210.78 | 4,872,544.62 | |||
| Item | Amount |
10. Contract assets
Unit: RMB
| Item | Ending balance | Initial balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Item | Amount of change | Reason for change |
| Item | Provision in the current period | Reversal in the current period | Write-off in the current period | Reason |
| Item | Ending book balance | Impairment provision | Ending book value | Fair value | Estimated disposal cost | Estimated disposal time |
| Disposal of 10% equity of Guangzhou XiEnEn Culture Communication Co., Ltd. | 15,441,091.08 | 15,441,091.08 | 15,633,458.64 | December 31, 2020 | ||
| Total | 15,441,091.08 | 15,441,091.08 | 15,633,458.64 | -- |
12. Non-current assets due within one year
Unit: RMB
| Item | Ending balance | Initial balance |
| Input VAT to be deducted | 3,746,477.30 | |
| Total | 3,746,477.30 |
| Debt item | Ending balance | Initial balance | ||||||
| Par value | Nominal rate | Actual rate | Maturity date | Par value | Nominal rate | Actual rate | Maturity date | |
| Item | Ending balance | Initial balance |
| Unused traffic returns | 16,288,812.64 | 9,906,934.01 |
| Prepaid corporate income tax | 1,125,274.50 | 2,406,229.79 |
| Input VAT to be deducted | 12,088,607.56 | 20,163,637.63 |
| Deferred expense | 5,159,175.94 | 4,373,174.70 |
| Total | 34,661,870.64 | 36,849,976.13 |
| Item | Ending balance | Initial balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
Unit: RMB
| Debt item, | Ending balance | Initial balance | ||||||
| Par value | Nominal rate | Actual rate | Maturity date | Par value | Nominal rate | Actual rate | Maturity date | |
| Bad-debt provision | Stage I | Stage II | Stage III | Total |
| Expected credit loss in the next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) | ||
| Balance on January 1, 2019 in the current period | —— | —— | —— | —— |
| Item | Initial balance | Accrued interest | Changes of fair value during the reporting period | Ending balance | Costs | Cumulative changes in fair value | Accumulative loss allowance recognized in other comprehensive income | Remarks |
| Item of other debt | Ending balance | Initial balance | ||||||
| Par value | Nominal rate | Actual rate | Maturity date | Par value | Nominal rate | Actual rate | Maturity date | |
| Bad-debt provision | Stage I | Stage II | Stage III | Total |
| Expected credit loss in the next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) |
| Balance by January 1, 2019 in the current period | —— | —— | —— | —— |
| Item | Ending balance | Initial balance | Discount rate range | ||||
| Book balance | Bad-debt provision | Book value | Book balance | Bad-debt provision | Book value | ||
| Bad-debt provision | Stage I | Stage II | Stage III | Total |
| Expected credit loss in the next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) | ||
| Balance on January 1, 2019 in the current period | —— | —— | —— | —— |
| Investee | Initial | Increase/decrease in the current period | Ending | Ending |
| balance (book value) | Increase in investment | Decrease in investment | Gain /(loss) on investment under equity method | Adjustment of other comprehensive income | Other equity changes | Cash dividend or profit declared to distribute | Impairment provision | Others | balance (book value) | balance of impairment provisions | |
| I. Joint ventures | |||||||||||
| Guangzhou XiEnEn Culture Communication Co., Ltd. | 14,230,858.19 | 1,210,232.89 | 15,441,091.08 | ||||||||
| Subtotal | 14,230,858.19 | 1,210,232.89 | 15,441,091.08 | ||||||||
| II. Associated enterprise | |||||||||||
| Total | 14,230,858.19 | 1,210,232.89 | 15,441,091.08 | ||||||||
| Item | Ending balance | Initial balance |
| Zhuji East China One-Stop Women's Wear E-commerce Co., Ltd. | 100,000.00 | 100,000.00 |
| Total | 100,000.00 | 100,000.00 |
| Item | Recognized dividend income | Cumulative gains | Cumulative losses | Amount of other comprehensive income transfer to retained earnings | Reason for designated as fair value through other comprehensive income | Reason for the transfer of other comprehensive income to retained earnings |
| Zhuji East China One-Stop Women's Wear E-commerce Co., Ltd. | Designated by the management based on the business model of equity investment and the characteristics of future cash flow |
| Item | Ending balance | Initial balance |
| Item | Book value | Reason for the failure to obtain the certificate of title |
| Item | Ending balance | Initial balance |
| Fixed assets | 6,718,909.97 | 3,021,813.45 |
| Total | 6,718,909.97 | 3,021,813.45 |
(1) Details of fixed assets
| Item (Unit: RMB) | Buildings and constructions | Transport equipment | Office equipment | Electronic equipment | Total |
| I. Original book value | |||||
| 1. Initial balance | 19,802.44 | 7,373,533.14 | 781,284.91 | 4,025,877.48 | 12,200,497.97 |
| 2. Increase in the current period | 2,759,913.06 | 2,299,694.31 | 5,059,607.37 | ||
| (1) Purchase | 2,759,913.06 | 2,299,694.31 | 5,059,607.37 | ||
| (2) Transfer from construction-in-progress | |||||
| (3) Increase from business combination | |||||
| 3. Decrease in the current period | 582,838.81 | 997,183.19 | 1,580,022.00 | ||
| (1) Disposal | 582,838.81 | 997,183.19 | 1,580,022.00 | ||
| 4. Ending balance | 19,802.44 | 7,373,533.14 | 2,958,359.16 | 5,328,388.60 | 15,680,083.34 |
| II. Accumulated depreciation | |||||
| 1. Initial balance | 13,168.53 | 5,605,946.18 | 586,213.09 | 2,973,356.72 | 9,178,684.52 |
| 2. Increase in the current period | 940.56 | 713,698.25 | 64,966.11 | 446,251.84 | 1,225,856.76 |
| (1) Provision | 940.56 | 713,698.25 | 64,966.11 | 446,251.84 | 1,225,856.76 |
| 3. Decrease in the current period | 531,023.36 | 912,344.55 | 1,443,367.91 | ||
| (1) Disposal | 531,023.36 | 912,344.55 | 1,443,367.91 | ||
| 4. Ending balance | 14,109.09 | 6,319,644.43 | 120,155.84 | 2,507,264.01 | 8,961,173.37 |
| III. Impairment provision | |||||
| 1. Initial balance | |||||
| 2. Increase in the current period | |||||
| (1) Provision | |||||
| 3. Decrease in the current period | |||||
| (1) Disposal or scrap | |||||
| 4. Ending balance | |||||
| IV. Book value | |||||
| 1. Ending book value | 5,693.35 | 1,053,888.71 | 2,838,203.32 | 2,821,124.59 | 6,718,909.97 |
| 2. Initial book value | 6,633.91 | 1,767,586.96 | 195,071.82 | 1,052,520.76 | 3,021,813.45 |
| Item (RMB) | Initial cost | Accumulated depreciation | Impairment provision | Book value | Remarks |
| NONE |
(3) Fixed assets acquired under finance leases
Unit: RMB
| Item | Initial cost | Accumulated depreciation | Impairment provision | Book value |
| NONE |
| Item | Ending book value |
| NONE |
| Item | Book value | Reason for the failure to obtain the certificate of title |
| NONE |
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
(2) Changes in significant projects of construction in progress in the current period
Unit: RMB
| Project name | Budget | Initial balance | Increase in the current period | Transfer to fixed asset in the current period | Other decrease in the current period | Ending balance | Proportion of accumulative project input to budget | Rate of progress | Accumulated amount of interest capitalization | Including: capitalized interest in the current period | Interest capitalization rate of the current period | Source of funds |
| Item | The amount of provision in the current period | Reason for provision |
| Item | Ending balance | Initial balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
25. Right-of-use asset
Unit: RMB
| Item | Total |
| Item | Land use right | Patent right | Non-patented technology | Software | Trademark right | Copyright | Total |
| I. Initial cost | |||||||
| 1. Initial balance | 114,971.32 | 2,738,922.42 | 559,229,900.00 | 5,496,400.00 | 567,580,193.74 | ||
| 2. Increase in the current period | 376,606.35 | 376,606.35 | |||||
| (1) Purchase | 376,606.35 | 376,606.35 | |||||
| (2) Internal research and development | |||||||
| (3) Increase from business combination | |||||||
| 3. Decrease in the current period | 985,259.26 | 985,259.26 | |||||
| (1) Disposal | 985,259.26 | 985,259.26 | |||||
| 4. Ending balance | 114,971.32 | 2,130,269.51 | 559,229,900.00 | 5,496,400.00 | 566,971,540.83 | ||
| II. Accumulated amortization | |||||||
| 1. Initial balance | 33,725.09 | 1,903,803.88 | 2,959,600.00 | 4,897,128.97 | |||
| 2. Increase in the current period | 9,137.16 | 364,609.17 | 2,536,800.00 | 2,910,546.33 | |||
| (1) Provision | 9,137.16 | 364,609.17 | 2,536,800.00 | 2,910,546.33 | |||
| 3. Decrease in the current period | 985,259.26 | 985,259.26 | |||||
| (1) Disposal | 985,259.26 | 985,259.26 |
| 4. Ending balance | 42,862.25 | 1,283,153.79 | 5,496,400.00 | 6,822,416.04 | |||
| III. Impairment provision | |||||||
| 1. Initial balance | |||||||
| 2. Increase in the current period | |||||||
| (1) Provision | |||||||
| 3. Decrease in the current period | |||||||
| (1) Disposal | |||||||
| 4. Ending balance | |||||||
| IV. Book value | |||||||
| 1. Ending book value | 72,109.07 | 847,115.72 | 559,229,900.00 | 560,149,124.79 | |||
| 2. Initial book value | 81,246.23 | 835,118.54 | 559,229,900.00 | 2,536,800.00 | 562,683,064.77 |
| Item | Book value | Reason for the failure to obtain the certificate of title |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance | ||||
| Internal research and development | Others | Recognized as intangible assets | Recognized in current profit or loss | |||||
| Total | ||||||||
28. Goodwill
(1) Initial recognition of goodwill
Unit: RMB
| Investees or matters that goodwill arising from | Initial balance | Increase in the current period | Decrease in the current period | Ending balance | ||
| Business combination | Disposal | |||||
| Acquired CARTELO CROCODILE | 109,969,096.91 | 109,969,096.91 | ||||
| Acquired Beijing Timelink Network Technology Co., Ltd. | 779,800,912.91 | 779,800,912.91 | ||||
| Total | 889,770,009.82 | 889,770,009.82 | ||||
| Investees or matters that goodwill arising from | Initial balance | Increase in the current period | Decrease in the current period | Ending balance | ||
| Provision | Disposal | |||||
| Acquired CARTELO CROCODILE PTE LTD., Note 1 | ||||||
| Acquired Beijing Timelink Network Technology Co., Ltd., Note 2 | ||||||
| Total | ||||||
was based on assumptions, with details of the key parameters made by the management in determining the cashflow forecast for the goodwill impairment test go as follows:
Revenue growth: Determined by the corresponding growth rate to maintain in line with the expected market demandand the Company's own business development and marketing strategies on basis of the revenue growth rate achievedin the year preceding the budget year as well as other historical data.Budgeted gross margins: Determined by the average gross margins achieved in the year immediately before thebudget year with proper adjustment in line with expected efficiency improvements and expected marketdevelopment.Discount rate - The discount rate used in the test reflects the discount rate before tax of specific risks relating to therelevant CGU.Impact of goodwill impairment testOther notes:
The following are the key results of goodwill impairment test:
Note 1: The Company purchased 95% of the equity of Cartelo Crocodile Pte Ltd. in 2016, forming goodwill ofRMB 109,969,096.91. The goodwill, upon confirmation of the management, lies in the corresponding CGU thatincludes "CARTELO" brand and related trademarks, such as CARTELO & crocodile figure, Cartelo, Cartelocrocodile, Cartelo & figure trademarks of CCPL purchased before June 14, 2016. The Company conducted theimpairment test accordingly.The recoverable amount of the CGU was determined by the present value of the expected future cash flow of theCGU. The expected future cash flows refer to the cash flow forecast in the recent financial budget approved by themanagement. The results of goodwill impairment test indicated that the Company did not need to make impairmentprovisions for this goodwill.Note 2: The Company purchased 100% of the equity of Timelink in 2017, forming goodwill of RMB779,800,912.91. After the merger and acquisition, the business, technology and personnel of Timelink were stillrelatively independent, with cash inflow generated independently. Therefore, the Company allocated the goodwillto Timelink CGU and conducted the impairment test accordingly.The recoverable amount of the asset group was determined by the present value of the expected future cash flow ofthe asset group. The expected future cash flows refer to the cash flow forecast in the recent financial budget approvedby the management.Completion status of performance commitment and its impact on goodwill impairment testCompletion status of M&A Restructuring performance commitment made when the goodwill was formed:
(Unit: RMB 10,000)
| Item | Year 2016 | Year 2017 | Year 2018 | Year 2019 | Accumulative completion |
| Performance commitment of the year | 6,800.00 | 9,000.00 | 11,700.00 | 13,200.00 | 40,700.00 |
| Actual completion (net profit attributable to the owner of the parent company after deducting non-recurring profits and losses) | 7,240.68 | 10,936.22 | 12,761.77 | 11,146.23 | 42,084.90 |
| Item | Initial balance | Increase in the current period | Amortization amount of the current period | Other amount of decrease | Ending balance |
| Decoration cost | 109,113.12 | 7,479,136.04 | 305,883.76 | 7,282,365.40 | |
| Total | 109,113.12 | 7,479,136.04 | 305,883.76 | 7,282,365.40 |
| Item | Ending balance | Initial balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Asset impairment provision | 42,141,746.70 | 7,427,749.09 | 40,391,040.68 | 6,651,685.70 |
| Difference between accounting income and taxable income | 182,933.96 | 27,440.09 | 182,933.96 | 27,440.09 |
| Share-based payment | 3,990,470.73 | 710,795.49 | ||
| Total | 46,315,151.39 | 8,165,984.67 | 40,573,974.64 | 6,679,125.79 |
(2) Deferred tax liabilities before offsetting
| Item | Ending balance (RMB) | Initial balance (RMB) | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Assets appreciation arising from business combination not under common control | 2,536,800.00 | 634,200.00 | ||
| Total | 2,536,800.00 | 634,200.00 | ||
| Item (RMB) | Offset amount of deferred tax assets and liabilities at the end of the period | Ending balance of deferred tax assets or liabilities after offset | Initial offset amount of deferred tax assets and liabilities | Initial balance of deferred tax assets or liabilities after offset |
| Deferred tax assets | 8,165,984.67 | 6,679,125.79 | ||
| Deferred tax liabilities | 634,200.00 |
| Item | Ending balance (RMB) | Initial balance (RMB) |
| Deductible loss | 16,153,644.28 | 186,175,175.74 |
| Asset impairment loss | 56,438,241.82 | 19,040,461.83 |
| Share-based payment | 45,962.41 | |
| Total | 72,637,848.51 | 205,215,637.57 |
| Year | Ending amount (RMB) | Initial amount (RMB) | Remarks |
| Year 2019 | 185,033,393.70 | ||
| Year 2020 | |||
| Year 2021 | |||
| Year 2022 | |||
| Year 2023 | 1,141,782.04 | 1,141,782.04 | |
| Year 2024 | 15,011,862.24 | ||
| Total | 16,153,644.28 | 186,175,175.74 | -- |
31. Other non-current assets
Whether the new revenue standards have been implemented?
□ Yes √ No
Unit: RMB
| Item | Ending balance | Initial balance |
| Input VAT to be deducted | 14,684,511.69 | |
| Prepayment for long-term assets | 1,886,792.26 | 314,867.92 |
| Total | 1,886,792.26 | 14,999,379.61 |
| Item | Ending balance | Initial balance |
| Mortgage loans | 20,360,000.00 | |
| Guarantee loans | 100,000,000.00 | 50,000,000.00 |
| Interests payable | 105,694.45 | |
| Total | 100,105,694.45 | 70,360,000.00 |
| Borrower | Ending balance | Borrowing rate | Overdue time | Overdue interest rate |
33. Held-for-trading financial liabilities
Unit: RMB
| Item | Ending balance | Initial balance |
| Including: | ||
| Including: |
| Item | Ending balance | Initial balance |
| Category | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
| Payments for goods | 43,665,225.25 | 32,466,406.96 |
| Payments for advertisement | 7,735,848.91 | 10,660,377.50 |
| Payments for services | 15,617,761.46 | 8,645,057.35 |
| Others | 1,714,941.05 | 277,153.17 |
| Total | 68,733,776.67 | 52,048,994.98 |
| Item | Ending balance | Reasons for not paid or carried forward |
37. Advances from Customers
Whether the new revenue standards have been implemented?
□ Yes √ No
(1) Details of advances from customers
Unit: RMB
| Item | Ending balance | Initial balance |
| Advances for goods | 117,290,131.03 | 310,115,449.97 |
| Advances for licensing services | 82,622,019.59 | 59,266,883.94 |
| Advances for factoring services | 226,805.13 | 368,297.94 |
| Advances for web celebrity traffic monetization services | 737,079.37 | |
| Total | 200,876,035.12 | 369,750,631.85 |
| Item | Ending balance | Reasons for not being paid or carried forward |
| Item | Amount |
| Item | Ending balance | Initial balance |
| Item | Amount of change | Reason for change |
39. Employee Benefits Payable
(1) Details of employee benefits payable
Unit: RMB
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance |
| 1. Short-term employee benefits | 27,978,262.95 | 141,177,364.12 | 132,072,773.85 | 37,082,853.22 |
| 2. Post-employment benefits - defined contribution plans | 417,739.59 | 12,644,504.56 | 12,786,302.18 | 275,941.97 |
| 3. Termination benefits | 1,939,150.00 | 1,939,150.00 | ||
| Total | 28,396,002.54 | 155,761,018.68 | 146,798,226.03 | 37,358,795.19 |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance |
| 1. Salary, bonus, subsidy and allowance | 27,680,825.83 | 124,726,168.45 | 115,539,057.50 | 36,867,936.78 |
| 2. Employees welfares | 3,488,692.69 | 3,488,692.69 | ||
| 3. Social insurance | 233,927.12 | 7,596,117.52 | 7,642,757.00 | 187,287.64 |
| Including: Health insurance | 208,349.61 | 6,770,007.59 | 6,810,918.40 | 167,438.80 |
| Injury insurance | 9,037.13 | 165,349.67 | 170,236.58 | 4,150.22 |
| Birth insurance | 16,540.38 | 660,760.26 | 661,602.02 | 15,698.62 |
| 4. Housing provident fund | 63,510.00 | 5,289,305.98 | 5,325,187.18 | 27,628.80 |
| 5. Funds for labor union and employee education | 77,079.48 | 77,079.48 | ||
| Total | 27,978,262.95 | 141,177,364.12 | 132,072,773.85 | 37,082,853.22 |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance |
| 1. Basic pension insurance | 400,191.53 | 12,059,384.45 | 12,198,895.54 | 260,680.44 |
| 2. Unemployment insurance | 17,548.06 | 585,120.11 | 587,406.64 | 15,261.53 |
| Total | 417,739.59 | 12,644,504.56 | 12,786,302.18 | 275,941.97 |
mainly due to two reasons: a) increase of the number of staff in the current period as compared with the previousperiod, b) the recognition of bonus for performance completion in commitment period to the Company’s subsidiaryTimelink at the end of the current period in accordance with the agreement.
40. Taxes payable
Unit: RMB
| Item | Ending balance | Initial balance |
| Value added tax (VAT) | 39,787,454.45 | 20,156,833.97 |
| Corporate income tax | 34,593,278.13 | 43,555,729.29 |
| Individual income tax | 501,974.73 | 276,508.03 |
| Urban maintenance and construction tax | 2,361,821.91 | 1,095,120.02 |
| Educational surcharge | 1,181,826.33 | 604,396.86 |
| Local educational surcharge | 787,889.91 | 254,236.57 |
| Others | 359,801.65 | 502,686.98 |
| Total | 79,574,047.11 | 66,445,511.72 |
| Item | Ending balance | Initial balance |
| Interests payable | 150,492.26 | |
| Other payables | 119,528,535.68 | 167,087,726.03 |
| Total | 119,528,535.68 | 167,238,218.29 |
| Item | Ending balance | Initial balance |
| Interests payable on short-term borrowings | 150,492.26 | |
| Total | 150,492.26 |
| Borrower | Overdue amount | Reason for overdue |
(2) Dividends payable
Unit: RMB
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
| Equity transfer payment | 8,307,649.32 | 69,032,000.00 |
| Deposit | 110,401,486.99 | 96,167,377.29 |
| Business transaction payment (via third party) | 752,199.34 | 1,770,902.19 |
| Others | 67,200.03 | 117,446.55 |
| Total | 119,528,535.68 | 167,087,726.03 |
| Item | Ending balance | Reasons for not paid or carried forward |
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
□ Yes √ No
Unit: RMB
| Item | Ending balance | Initial balance |
| Deferred income –traffic returns | 13,798,829.77 | 24,384,191.84 |
| Provision of advertising fee | 5,541,792.45 | 5,541,792.45 |
| Notes endorsement financing | 390,000.00 | |
| Provision of service fee | 180,384.89 | 180,384.89 |
| Total | 19,911,007.11 | 30,106,369.18 |
| Bond name | Par value | Date of issue | Bond duration | Issued amount during the reporting period | Initial balance | Current issuance | Interest accrued on face value | Premium or discount amortization | Repayment during the reporting period | Ending balance |
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
(2) Changes in bonds payable (except for other financial instruments classified as financial liabilities such aspreference shares and perpetual capital securities)
Unit: RMB
| Bond name | Par value | Date of issue | Bond duration | Issued amount | Initial balance | Issued amount during the reporting period | Interest accrued on face value | Premium or discount amortization | Repayment during the reporting period | Ending balance | |
| Total | -- | -- | -- |
| Outstanding financial instruments | Beginning of the period | Increase in the current period | Decrease in the current period | End of the period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
| Item | Ending balance | Initial balance |
| Item | Ending balance | Initial balance |
(1) Long-term payables by nature
Unit: RMB
| Item | Ending balance | Initial balance |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance | Reason |
| Item | Ending balance | Initial balance |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
50. Estimated liabilities
Whether the new revenue standards have been implemented?
□ Yes √ No
Unit: RMB
| Item | Ending balance | Initial balance | Reason |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance | Reason |
| Liability items | Initial balance | Increase during the reporting period | Recognized in non-operating income during the reporting period | Recognized in other income during the reporting period | Costs offset during the reporting period | Other changes | Ending balance | Related to assets / Related to profit or loss |
| Item | Ending balance (RMB) | Initial balance (RMB) |
| Unit: RMB | Initial balance | Changes (+/-) during the reporting period | Ending balance | ||||
| New issues | Bonus issues | Conversion from capital reserve | Others | Subtotal | |||
| Total shares | 417,326,994.00 | 417,326,994.00 | |||||
Other notes:
The Company prepared the consolidated statements in accordance with the principle of reverse acquisition, with theamount of equity instruments in the consolidated financial statements reflecting the par value of the shares and theamount of equity instruments issued by the subsidiary-in-law (Shanghai NJDS).The quantity and structure of the share capital of the parent company in law
| Item | January 1, 2019 | Changes (+/-) during the reporting period | December 31, 2019 | ||||
| New issues | Bonus issues | Conversion from capital reserve | Others | Subtotal | |||
| I. Shares with sales restriction | 975,038,627.00 | — | — | -416,396,151.00 | -416,396,151.00 | 558,642,476.00 | |
| 1. State-owned shares | — | — | — | — | — | — | — |
| 2. Shares held by state-owned legal person | — | — | — | — | — | — | — |
| 3. Shares held by other domestic entities | 975,038,627.00 | — | — | -416,396,151.00 | -416,396,151.00 | 558,642,476.00 | |
| 4. Shares held by foreign entities | — | — | — | — | — | — | — |
| II. Shares without sales restrictions | 1,479,831,776.00 | — | — | 416,396,151.00 | 416,396,151.00 | 1,896,227,927.00 | |
| 1. RMB denominated ordinary shares | 1,479,831,776.00 | — | — | 416,396,151.00 | 416,396,151.00 | 1,896,227,927.00 |
| 2. Domestically listed foreign shares (B share) | — | — | — | — | — | — | — |
| 3. Overseas-listed foreign shares (H share, etc.) | — | — | — | — | — | — | — |
| 4. Others | — | — | — | — | — | — | — |
| III. Total shares | 2,454,870,403.00 | — | — | — | — | — | 2,454,870,403.00 |
54. Other equity instruments
(1) Basic information of other financial instruments such as preferred shares and perpetual capital securitiesissued at the end of the period
(2) Table of changes in other financial instruments such as preferred shares and perpetual capital securitiesissued at the end of the period
Unit: RMB
| Outstanding financial instruments | Beginning of the period | Increase in the current period | Decrease in the current period | End of the period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance |
| Capital (share) premium | 1,480,832,771.89 | 5,932,833.81 | 1,474,899,938.08 | |
| Other capital reserves | 4,036,433.14 | 4,036,433.14 | ||
| Total | 1,480,832,771.89 | 4,036,433.14 | 5,932,833.81 | 1,478,936,371.22 |
56. Treasury stock
Unit: RMB
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance |
| Treasury stock | 67,590,687.09 | 84,095,555.19 | 151,686,242.28 | |
| Total | 67,590,687.09 | 84,095,555.19 | 151,686,242.28 |
| Item | Initial balance | Changes during the reporting period | Ending balance | |||||
| Amount incurred before income tax during the reporting period | Less: Amount previously recognized in other comprehensive income being reclassified to current profit or loss | Less: amount previously recognized in other comprehensive income being reclassified to current retained earnings | Less: Income tax expense | After-tax income attributable to the parent company | After-tax income attributable to minority shareholders | |||
| Item | Initial balance | Increase in 2019 | Decrease in 2019 | Ending balance |
59. Surplus reserves
Unit: RMB
| Item | Initial balance | Increase in the current period | Decrease in the current period | Ending balance |
| Statutory surplus reserve | 131,720,855.52 | 41,803,824.77 | 173,524,680.29 | |
| Total | 131,720,855.52 | 41,803,824.77 | 173,524,680.29 |
| Item | Current period | Previous period |
| Balance at the end of last period before adjustments | 1,776,292,224.02 | 1,029,000,343.50 |
| Balance at the beginning of the reporting period after adjustments | 1,776,292,224.02 | 1,029,000,343.50 |
| Add: net profit attributable to owners of the parent company for the reporting period | 1,206,136,918.38 | 886,472,236.97 |
| Less: appropriation to statutory surplus reserves | 41,803,824.77 | 37,712,386.52 |
| Ordinary share dividend payable | 101,467,969.93 | |
| Balance at the end of the reporting period | 2,940,625,317.63 | 1,776,292,224.02 |
| Item | 2019 (RMB) | 2018 (RMB) | ||
| Revenues | Costs | Revenues | Costs | |
| Main business | 3,905,189,015.65 | 2,401,537,867.99 | 3,352,201,464.88 | 2,196,989,723.67 |
| Other business | 1,659,220.76 | 1,160,584.05 | 658,507.59 | 152,164.19 |
| Total | 3,906,848,236.41 | 2,402,698,452.04 | 3,352,859,972.47 | 2,197,141,887.86 |
| Item (Unit: RMB) | Amount incurred in the current period | Amount incurred in the previous period |
| Urban maintenance and construction tax | 3,843,258.70 | 3,501,238.13 |
| Educational surcharge | 3,131,246.51 | 2,786,265.72 |
| Stamp duty | 1,973,741.17 | 1,808,684.24 |
| Construction fee for cultural undertakings | 1,097,834.95 | 1,156,138.73 |
| Disabled employment security fund | 210,986.94 | 288,300.50 |
| Others | 13,502.56 | 16,863.36 |
| Total | 10,270,570.83 | 9,557,490.68 |
| Item (Unit: RMB) | Amount incurred in the current period | Amount incurred in the previous period |
| Salaries and wages | 65,058,456.74 | 38,896,278.08 |
| Advertising fees | 36,758,702.26 | 64,805,416.00 |
| Conference and travel expenses | 5,158,761.58 | 4,421,330.15 |
| Equity incentive expenses | 2,819,745.92 | |
| Rental fees | 1,773,577.94 | 637,563.20 |
| Testing fees | 1,511,536.99 | 48,568.87 |
| Business entertainment expenses | 1,224,728.95 | 1,350,636.07 |
| Decoration costs | 1,091,915.73 | 325,633.53 |
| Freights | 885,832.80 | 416,097.85 |
| Property and utilities charges | 436,234.54 | 26,199.71 |
| Office expenses | 193,142.65 | 169,210.83 |
| Others | 1,727,935.45 | 256,480.22 |
| Total | 118,640,571.55 | 111,353,414.51 |
64. General and Administrative Expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Salaries and wages | 41,454,041.49 | 29,806,649.17 |
| Service fees | 9,632,820.02 | 9,839,958.20 |
| Rental fees | 9,207,533.46 | 5,042,728.12 |
| Depreciation and amortization | 3,327,949.26 | 3,333,918.81 |
| Intellectual property fees | 3,040,716.03 | 1,770,004.16 |
| Conference and travel expenses | 3,855,799.52 | 1,747,893.50 |
| Property and utilities charges | 2,395,841.02 | 363,542.07 |
| Business entertainment expenses | 1,913,863.03 | 1,271,542.90 |
| Administrative expenses | 1,507,606.39 | 1,124,769.21 |
| Equity incentive expense | 1,141,916.02 | |
| Decoration cost | 529,402.96 | 45,384.72 |
| Others | 2,433,845.92 | 2,454,424.05 |
| Total | 80,441,335.12 | 56,800,814.91 |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Salaries and wages | 37,545,101.00 | 33,224,700.91 |
| Rental fees | 4,247,773.03 | 2,545,366.68 |
| Depreciation, amortization | 658,593.83 | 962,698.80 |
| Office expenses | 140,748.00 | 92,091.80 |
| Property and utilities charges | 105,490.04 | |
| Others | 606,898.05 | 975,984.90 |
| Total | 43,304,603.95 | 37,800,843.09 |
66. Financial costs
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Interest expenses | 6,667,018.42 | 9,910,388.23 |
| Less: interest income | 7,213,315.85 | 5,154,367.25 |
| Net interest expenses | -546,297.43 | 4,756,020.98 |
| Foreign exchange losses | 21.85 | 432,035.73 |
| Less: Foreign exchange gains | 109,356.80 | 159,435.61 |
| Net foreign exchange losses | -109,334.95 | 272,600.12 |
| Bank charges | 192,552.43 | 178,628.17 |
| Total | -463,079.95 | 5,207,249.27 |
| Sources of other income | Amount incurred in the current period | Amount incurred in the previous period |
| 1. Government grant recognized in other income | 800,000.00 | |
| Including: government grant related to deferred income (related to assets) | ||
| Government grant related to deferred income (related to income) | ||
| Government grant directly recognized in current profit or loss (related to income) | 800,000.00 | |
| 2. Others related to daily operation activities and recognized in other income | 4,061,177.33 | 342,670.98 |
| Including: input tax plus deduction | 4,061,177.33 | |
| 3. Return of service charge | 342,670.98 |
68. Investment income
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Income from long-term equity investments under equity method | 1,210,232.89 | 427,104.15 |
| Gains on disposal of long-term equity investments | -1,212,850.38 | |
| Gains on disposal of held-for-trading financial assets | 59,942.02 | |
| Investment income from bank financial products | 33,933,372.78 | 23,715,571.43 |
| Total | 35,203,547.69 | 22,929,825.20 |
| Item (Unit: RMB) | Amount incurred in the current period | Amount incurred in the previous period |
| Sources of gains on changes in fair value | Amount incurred in the current period | Amount incurred in the previous period |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Bad debt losses of other receivables | -2,794,356.16 | |
| Bad debt losses of accounts receivable | -40,472,733.49 | |
| Total | -43,267,089.65 |
72. Asset impairment loss
Whether the new revenue standards have been implemented?
□ Yes √ No
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| I. Bad debt loss | -19,058,482.36 | |
| II. Loss on depreciation of inventories | -1,138,210.78 | -2,354,588.00 |
| Total | -1,138,210.78 | -21,413,070.36 |
| Items | Amount incurred in the current period | Amount incurred in the previous period |
| Gains or losses from disposal of fixed assets, construction in progress, productive biological assets and intangible assets not classified as held for sale: | 4,212.88 | 1,321.15 |
| Including: gains from disposal of fixed assets | 4,212.88 | 1,321.15 |
| Item | Amount incurred in the current period | Amount incurred in the previous period | Amount included in the current non-recurring profits and losses |
| Government grants | 20,284,858.72 | 17,644,542.22 | 20,284,858.72 |
| Penalty income | 7,944,983.37 | 6,857,636.87 | 7,944,983.37 |
| Others | 2,386,263.54 | 1,980,883.23 | 2,386,263.54 |
| Total | 30,616,105.63 | 26,483,062.32 |
| Item | Granting institution | Reason for grant | Nature/type | Does the subsidy affect the current | Special grant (Yes or No?) | Amount incurred in the current | Amount incurred in the previous | Related to assets / income |
| profit or loss (Yes or No?) | period | period | ||||||
| Financial Support Fund for Scientific and Technological Innovations of Enterprises | Subsidy | Subsidies for research, development, technology upgrading and transformation | No | No | 17,473,000.00 | 15,435,000.00 | Related to income | |
| Special Government Support Fund with Special Account of Expo Zone Development Management Committee of Shanghai Pudong New Area | Expo Zone Development Management Committee of Shanghai Pudong New Area, Shanghai | Subsidy | Subsidies from compliance with local government support policies, such as investment promotion | No | No | 2,387,000.00 | Related to income | |
| Shanghai 2019 Action Plan for Science and Technology Innovation | Shanghai Municipal Science and Technology Committee | Subsidy | Subsidies for research, development, technology upgrading and transformation | No | No | 200,000.00 | Related to income | |
| Enterprises to be Awarded by Provincial Finance with Research and Development Expenses in 2018 | Finance Bureau of Shengze Town, Jiangsu Province | Award | Subsidies for research, development, technology upgrading and transformation | No | No | 100,000.00 | Related to income | |
| Financial Support for the Development of Financial | Finance Bureau of Pudong New Area, Shanghai | Subsidy | Subsidies due to compliance with local government support | No | No | 968,000.00 | Related to income |
| Industry in Pudong New Area in the 13th Five Year Plan | policies, such as investment promotion | |||||||
| E-commerce Benchmark Enterprise Award | Commerce Bureau of Qingpu District, Shanghai | Award | Subsidies from engaging in specific trades and industries encouraged and supported by the state (in accordance with national policies and regulations) | No | No | 500,000.00 | Related to income | |
| 2016 Headquarter Enterprise Award | Shengze Town Government, Jiangsu Province | Award | Subsidies due to compliance with local government support policies, such as investment promotion | No | No | 326,200.00 | Related to income | |
| 2017 Wujiang District Business Development Award | Finance Bureau of Wujiang District, Jiangsu Province | Award | Subsidies from engaging in specific trades and industries encouraged and supported by the state (in accordance with national policies and regulations) | No | No | 150,000.00 | Related to income | |
| Top 100 Taxpayer | Finance Bureau of | Award | Subsidies due to compliance | No | No | 100,000.00 | 120,000.00 | Related to income |
| Award of Qingpu District | Qingpu District, Shanghai | with local government support policies, such as investment promotion | ||||||
| 2017 "Software Information Service Industry" Support Project in Qingpu District | Science and Technology Committee of Qingpu District, Shanghai | Subsidy | Subsidies for research, development, technology upgrading and transformation | No | No | 60,000.00 | Related to income | |
| 2017 Top 10 Advanced Service Enterprise | Shengze Town Government, Jiangsu Province | Award | Subsidies from engaging in specific trades and industries encouraged and supported by the state (in accordance with national policies and regulations) | No | No | 50,000.00 | Related to income | |
| 2018 Award for the Accelerated Promotion of High-Quality Development in Wujiang High-Tech Development Zone (Shengze Town) | Finance Bureau of Shengze Town, Jiangsu Province | Award | Subsidies for research, development, technology upgrading and transformation | No | No | 19,000.00 | Related to income | |
| Patent grant | Shanghai Intellectual | Subsidy | Subsidies from | No | No | 3,655.00 | 2,000.00 | Related to income |
| Property Administration | engaging in specific trades and industries encouraged and supported by the state (in accordance with national policies and regulations) | |||||||
| Others | Subsidy | Subsidies due to compliance with local government support policies, such as investment promotion | No | No | 2,203.72 | 33,342.22 | Related to income |
| Item | Amount incurred in the current period | Amount incurred in the previous period | Amount recognized in the current non-recurring profits or losses |
| Penalty, overdue fine | 11,380.05 | 202.58 | 11,380.05 |
| Losses from damage or scrapping of non-current assets | 98,440.31 | 98,440.31 | |
| Including: losses from damage or scrapping of fixed assets | 98,440.31 | 98,440.31 | |
| Losses from compensations | 6,091.50 | 100,542.43 | 6,091.50 |
| Others | 114,754.88 | 202,739.66 | 114,754.88 |
| Total | 230,666.74 | 303,484.67 |
76. Income tax expenses
(1) Details of income tax expenses
Unit: RMB
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Current income tax expenses | 73,964,933.20 | 76,740,977.21 |
| Deferred income tax expenses | -2,121,058.88 | -982,068.15 |
| Total | 71,843,874.32 | 75,758,909.06 |
| Item | Amount incurred in the current period |
| Total profit | 1,278,004,859.23 |
| Income tax expense at the statutory /applicable tax rate | 319,501,214.81 |
| Effect of different tax rates of subsidiaries | -198,949,809.06 |
| Adjustments of impact from prior period income tax | -4,488,524.49 |
| Effect of non-deductible costs, expenses and losses | 719,554.59 |
| Effect of usage of deductible losses previously not recognized as deferred income tax assets | -44,368,060.94 |
| Effect of deductible temporary difference or deductible losses not recognized as deferred tax assets in the reporting period | 3,077,968.81 |
| R&D expenses plus deduction | -3,648,469.40 |
| Income tax expense | 71,843,874.32 |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Margins and deposits | 43,830,308.37 | 22,526,178.35 |
| Government grants | 21,084,858.72 | 18,442,213.20 |
| Penalty income | 6,785,336.25 | 6,738,187.62 |
| Business transaction payment | 887,693.28 | 5,744,926.84 |
| Others | 114,835.94 | 1,105,334.25 |
| Total | 72,703,032.56 | 54,556,840.26 |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Advertising fees | 36,720,239.48 | 54,122,761.68 |
| Deposits | 56,952,563.32 | 25,737,978.91 |
| Service fees | 9,632,820.02 | 9,655,935.33 |
| Rental fees | 15,734,245.07 | 8,739,953.74 |
| Conference and travel expenses | 9,014,561.10 | 6,412,601.08 |
| Business entertainment expenses | 3,138,591.98 | 2,622,178.97 |
| Intellectual property fees | 3,040,716.03 | 1,770,004.16 |
| Office expenses | 1,841,497.04 | 1,386,071.84 |
| Property and utilities charges | 2,937,565.60 | 389,741.78 |
| Testing fee | 1,511,536.99 | 48,568.87 |
| Decoration cost | 1,718,958.84 | 371,018.25 |
| Others | 9,814,630.63 | 4,400,453.73 |
| Total | 152,057,926.10 | 115,657,268.34 |
| Item | Amount incurred in the current period | Amount incurred in the previous period |
| Interest income | 7,213,315.85 | 5,154,367.25 |
| Others | 38,632.08 | |
| Total | 7,213,315.85 | 5,192,999.33 |
(4) Other cash paid relating to investing activities
Unit: RMB
| Items | Amount incurred in the current period | Amount incurred in the previous period |
| Cash and cash equivalents held by subsidiaries on the date of loss of control | 724,920.46 | |
| Total | 724,920.46 |
| Items | Amount incurred in the current period | Amount incurred in the previous period |
| Items | Amount incurred in the current period | Amount incurred in the previous period |
| Share repurchase | 84,095,555.19 | 67,590,687.09 |
| Total | 84,095,555.19 | 67,590,687.09 |
| Supplementary information | 2019 | 2018 |
| 1.Adjustments of net profit to cash flows from operating activities: | -- | -- |
| Net profit | 1,206,160,984.91 | 887,279,687.71 |
| Add: Provisions for impairment of assets | 1,138,210.78 | 21,413,070.36 |
| Depreciation of fixed assets, oil and gas assets, and productive biological assets | 43,267,089.65 | |
| Depreciation of right-of-use assets | 1,225,856.76 | 1,375,147.44 |
| Amortization of intangible assets | 2,910,546.33 | 2,991,799.30 |
| Amortization of long-term deferred expenses | 305,883.76 | 187,050.96 |
| Losses /(gains) on disposal of fixed assets, intangible assets and other long-term assets | -4,212.88 | -1,321.15 |
| Losses /(“-” for gains) on scrapping of fixed assets | 98,440.31 | |
| Finance costs /(“-” for income) | -655,632.38 | 5,483,621.10 |
| Investment losses /(“-” for income) | -35,203,547.69 | -22,929,825.20 |
| Decreases /(“-” for increases) in deferred tax assets | -1,486,858.88 | -347,868.15 |
| Increases /(“-” for decreases) in deferred tax liabilities | -634,200.00 | -634,200.00 |
| Decreases /(“-” for increases) in inventories | -3,248,403.22 | 6,892,693.37 |
| Decreases /(“-” for increases) in operating receivables | 120,508,976.46 | -684,014,858.36 |
| Increases /(“-” for decreases) in operating payables | -79,471,307.29 | 333,691,935.28 |
| Net cash flows from operating activities | 1,254,911,826.62 | 551,386,932.66 |
| 2. Significant investing and financing activities not involving cash receipts and payments: | -- | -- |
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Cash at end of the reporting period | 787,632,033.28 | 1,189,754,162.14 |
| Less: Cash at beginning of the reporting period | 1,189,754,162.14 | 1,461,202,577.10 |
| Net increase in cash and cash equivalents | -402,122,128.86 | -271,448,414.96 |
| Amount | |
| Including: | -- |
| Including: | -- |
| Add: Cash or cash equivalents paid in the reporting period for business combination occurred in the prior periods | 68,832,000.00 |
| Including: | -- |
| Net cash payments for acquisition of subsidiaries | 68,832,000.00 |
(3) Net cash received from disposals of subsidiaries in the reporting period
Unit: RMB
| Amount | |
| Including: | -- |
| Including: | -- |
| Add: Cash or cash equivalents received in the reporting period from disposal of subsidiaries occurred in the prior periods | 410,000.00 |
| Including: | -- |
| Net cash received from disposals of subsidiaries | 410,000.00 |
| Items | Balance at 31/12/2019 | Balance at 1/1/2019 |
| Cash | 787,632,033.28 | 1,189,754,162.14 |
| Including: Cash on hand | 13,213.71 | 112,576.06 |
| Cash in bank available for immediate use | 787,291,738.71 | 1,157,232,273.16 |
| Other monetary funds available for immediate use | 327,080.86 | 32,409,312.92 |
| Cash and cash equivalents at 31/12/2019 | 787,632,033.28 | 1,189,754,162.14 |
| Items | Carrying amount at 31 December 2019 | Reason |
| Cash and cash equivalents | 490,000,000.00 | Fixed deposit |
| Cash and cash equivalents | 3,200,000.00 | Restriction caused by litigation |
| Total | 493,200,000.00 | -- |
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Items | Balance of foreign currency at the end of the reporting period | Exchange rate | Balance in RMB at the end of the reporting period |
| Cash and cash equivalents | -- | -- | |
| Including: USD | 641,071.92 | 6.9762 | 4,472,245.93 |
| EUR | |||
| HKD | |||
| Accounts Receivable | -- | -- | |
| Including: USD | |||
| EURO | |||
| HKD | |||
| Long-term borrowings | -- | -- | |
| Including: USD | |||
| EURO | |||
| HKD | |||
| Subsidiary name | Principal place of business | Functional currency |
| NANJI INTERNATIONAL CO., LTD. | British Virgin Islands (BVI) | RMB |
| CARTELO CROCODILE PTE LTD | Samoa | RMB |
| TOTAL CLASSIC INVESTMENTS LIMITED | British Virgin Islands (BVI) | RMB |
| UNIVERSAL NEW LIMITED | British Virgin Islands (BVI) | RMB |
84. Government Grants
(1) Basic information of government grants
Unit: RMB
| Type | Amount | Items | Amount recognized in current profit or loss |
| Financial support fund for scientific and technological innovations of enterprises | 17,473,000.00 | Non-operating income | 17,473,000.00 |
| Additional deduction of service input tax | 4,061,177.33 | Other income | 4,061,177.33 |
| Special Government Support Fund with Special Account of Expo Zone Development Management Committee of Pudong New District, Shanghai | 2,387,000.00 | Non-operating income | 2,387,000.00 |
| Integrated comprehensive service platform (R&D subsidy) | 800,000.00 | Other income | 800,000.00 |
| Shanghai 2019 Action Plan for Science and Technology Innovation | 200,000.00 | Non-operating income | 200,000.00 |
| Enterprises to be Awarded by Provincial Finance with Research and Development Expenses in 2018 | 100,000.00 | Non-operating income | 100,000.00 |
| Top 100 Taxpayer Award of Qingpu District | 100,000.00 | Non-operating income | 100,000.00 |
| 2018 Award for the Accelerated Promotion of High-Quality Development in Wujiang High-Tech Development Zone (Shengze Town) | 19,000.00 | Non-operating income | 19,000.00 |
| Patent Grant | 3,655.00 | Non-operating income | 3,655.00 |
| Others | 2,203.72 | Non-operating income | 2,203.72 |
Note VIII. Changes in the Scope of Consolidation
1. Business Combination not Under Common control
(1) Business combination not under common control during the reporting period
Unit: RMB
| Name of acquiree | Date of acquiring the equity interests | Acquisition costs | Ratio of equity acquired | Ways to acquire the equity | Acquisition date | Basis for determination of the acquisition date | Revenue of the acquirees from the acquisition date to the end of the reporting period | Net profits of the acquirees from the acquisition date to the end of the reporting period |
| Combination costs |
| Fair value | Carrying amount | |
(5) Note to failing to reasonably determine the combination consideration or fair value of acquiree’sidentifiable assets and liabilities on acquisition date or by the end of combination period
(6) Other notes
None
2. Business Combination under Common Control
(1) Business combination under common control during the reporting period
Unit: RMB
| Name of the combined entity | Percentage of equity interest acquired during the combination (%) | Basis for the determination of business combination under common control | Combination date | Basis for the determination of the combination date | Revenue of the combined entity from the beginning of the reporting period to the combination date | Net profits of the combined entity from the beginning of the reporting period to the combination date | Revenue of the combined entity during the comparison reporting period | Net profits of the combined entity during the comparison reporting period |
| Combination date | End of prior period | |
measured at the carrying amount before combination.
(2) The amounts of equity instruments in the consolidated financial statements reflect the face value of shares issued
by the subsidiary before combination and the amount of equity instruments newly issued during the process ofdetermining the business combination cost. However, the equity structure in the consolidated financialstatements shall reflect the equity structure of the parent company in law, i.e., the quantity and type of equitysecurities issued by the parent company in law.
(3) The comparison information in the consolidated financial statements shall be the comparison information of the
subsidiary-in-law (the consolidated financial statements of the subsidiary-in-law before the combination).
(4) The separate financial statements of the parent company shall recognize the book value of the acquired assets asper provisions in the Accounting Standards for Business Enterprises No. 2 - Long Term Equity Investment andother provisions. The separate financial statements used for previous comparison are those of the parent company.
4. Disposal of Subsidiaries
Is there a case that the disposal of subsidiaries through one transaction causes a loss of control?
□ Yes √ No
Whether there is the condition of loss controlling rights with disposing subsidiary on multiple steps through manytransactions or notIs there a case that the subsidiaries have been disposed in stages through multiple transactions and the loss ofcontrol occurred during the reporting period?
□ Yes √ No
5. Other Reasons of Changes in the Scope of Consolidation
Specify other reasons of changes in the scope of consolidation (such as establishment of new subsidiaries andliquidation of subsidiaries) and other related situations:
(1) Establishment of new subsidiaries
① Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. was a newly established holding subsidiary, invested by
the Company's subsidiary Nanji E-commerce (Shanghai) Co., Ltd. in January 2019, with the registered capitalof RMB 30 million, and the equity held by the Company accounted for 86.67%. The registered capital of RMB26 million had been paid as of December 31, 2019.
② Shanghai Aosang Cultural Communication Co., Ltd. was a newly established holding subsidiary, invested by
the Company's subsidiary Nanji E-commerce (Shanghai) Co., Ltd. in January 2019, with the registered capitalof RMB 10 million, and the equity held by the Company accounted for 96%. No capital had been contributed asof December 31, 2019.
③ Xinjiang Jingshang E-commerce Co., Ltd. was a newly established holding subsidiary, invested by the Companyin November 2019, with the registered capital of RMB 10 million, and the equity held by the Company accountedfor 100%. The registered capital of RMB 100,000 had been paid as of December 31,2019.
④ Xinjiang Yuduocheng E-commerce Co., Ltd. was a newly established holding subsidiary, invested by theCompany in November 2019, with the registered capital of RMB 10 million, and the equity held by the Companyaccounted for 100%. The registered capital of RMB 100,000 had been paid as of December 31,2019.
(2) Liquidation of subsidiaries
① Shanghai Shuimishang Culture communication Co., Ltd. has completed the liquidation and cancellation in July2019 and has finished the industrial and commercial change procedures.
② Shanghai Aosang Cultural Communication Co., Ltd. has completed the liquidation and cancellation in
September 2019 and has finished the industrial and commercial change procedures.
6. Others
None
Note IX. Interests in Other Entities
1. Interests in subsidiaries
(1) Composition of corporate group
| Name of subsidiary | Principal place of business | Registered address | Nature of business | Percentage of equity held by the Company | Ways of acquisition | |
| Direct | Indirect | |||||
| Nanji E-commerce (Shanghai) Co., Ltd. | Shanghai | Shanghai | Sales of the clothing fabrics, clothing accessories, and knitwear & textiles, etc., business information consulting, and enterprise management consulting, etc., | 100.00% | Establishment | |
| Jiwenwu (Shanghai) Culture Co., Ltd. | Shanghai | Shanghai | Planning of cultural and artistic exchange activities, enterprise image planning, planning of public relations activities, brand management, engagement in online cosmetics retail, wholesale, import and export and related supporting services of daily necessities, apparel & accessory, knitwear & textile, leather products, bags & suitcases, shoes & hats, bedding, and cosmetics. | 55.00% | Establishment | |
| Shanghai Shuimishang | Shanghai | Shanghai | Cultural and artistic exchange planning and consulting, | 60.00% | Establishment | |
| Culture Communication Co., Ltd. | enterprise image planning, public relations consulting, brand management, and sales of daily necessities, fashion, apparel & accessory, knitwear & textile, leather products, bags & suitcases, shoes & hats, bedding, cosmetics, etc. | |||||
| NANJIREN (Shanghai) E-commerce Co., Ltd. | Shanghai | Shanghai | E-commerce, e-commerce information consulting, etc. | 100.00% | Establishment | |
| Shanghai One-Stop Network Technology Service Co., Ltd. | Shanghai | Shanghai | Technical services, technical consulting, e-commerce in the field of network science and technology | 100.00% | Establishment | |
| Shanghai Xiaodai Finance Lease Co., Ltd. | Shanghai | Shanghai | Financial leasing businesses, leasing business; purchase and lease property at home and aboard; disposal of residual value and maintenance of leased property; consulting and guarantee of leasing transactions; engagement in the commercial factoring business related to the main business | 75.00% | Establishment | |
| Nanji International Co., Ltd. Note 1 | BVI | BVI | Brand licensing business, charging of royalty, etc. | 100.00% | Establishment | |
| Cartelo Crocodile Pte Ltd Note 1 | Samoa | Samoa | CCPL licenses the licensee to use the CARTELO brand and charges royalties to allow the licensee to operate on a product category or multiple product categories. | 100.00% | Acquisition | |
| Total Classic Investments Limited Note 2 | BVI | BVI | Brand licensing | 100.00% | Establishment | |
| Universal New Limited Note 2 | BVI | BVI | Brand licensing | 100.00% | Acquisition | |
| Xinjiang Juchang E-commerce Co., Ltd. | Khorgos, Xinjiang | Khorgos, Xinjiang | E-commerce (excl. value-added telecommunications and financial business), E-commerce | 100.00% | Establishment |
| information consulting, business consulting, and marketing planning; Foreign trade, and consulting of enterprise management information, etc. | ||||||
| Xinjiang NANJIREN E-commerce Co., Ltd. | Khorgos, Xinjiang | Khorgos, Xinjiang | E-commerce (excl. value-added telecommunications and financial business); E-commerce information consulting; Knitwear & textile, leather products, apparel & accessory, shoes & hats, daily necessities, plastic products, craft gifts, pet supplies, washing products, labor protection apparatus/appliances, metal products, furniture, household appliances, etc. | 100.00% | Establishment | |
| Xinjiang Cartelo E-commerce Co., Ltd. | Khorgos, Xinjiang | Khorgos, Xinjiang | E-commerce information consulting; Enterprise management consulting; brand management; conference services; enterprise image planning, planning of public relations activities, marketing planning, and exhibition services; development, transfer, consulting and services of information technology and textile technology | 100.00% | Establishment | |
| Cartelo Crocodile Kale (Shanghai) Trading Co., Ltd. | Shanghai | Shanghai | Knitwear & textile, apparel &accessory, shoes & hats, bags & suitcases, leather products, bedding, daily necessities, toys, e-commerce (excl. value-added telecommunications and financial business), import and export business of goods and technology, and engagement in technical development, consulting, transfer and services in the field of biotechnology | 86.67% | Establishment | |
| Xinjiang Jingshang E-commerce Co., | Khorgos, Xinjiang | Khorgos, Xinjiang | E-commerce (excl. value-added telecommunications, financial services), e-commerce information | 100.00% | Establishment |
| Ltd. | consulting, business consulting, and marketing planning; Foreign trade and consulting of enterprise management information; Conference services, brand management, planning of public relations activities, and exhibition services; development, transfer, consulting and services of network technology and information technology | |||||
| Xinjiang Yuduocheng E-commerce Co., Ltd. | Khorgos, Xinjiang | Khorgos, Xinjiang | E-commerce (excl. value-added telecommunications and financial business), e-commerce information consulting, business consulting, and marketing planning; Foreign trade and consulting of enterprise management information; conference services, brand management, planning of public relations activities, and exhibition services; development, transfer, consulting and services of network technology, information technology and textile technology | 100.00% | Establishment | |
| Shanghai Aosang Cultural Communication Co., Ltd | Shanghai | Shanghai | Cultural and artistic exchange planning, e-commerce (excl. value-added telecommunications and financial business), sales of clothing, shoes & hats, cosmetics, office supplies, stationery, photographic equipment, sound equipment, daily necessities, packaging materials, building materials, conference services, exhibition services, computer graphics and text design, business information consulting, import and export of goods and technology, stage building, leasing of own equipment, and engagement in technical development, consulting, transfer and services in the field of | 96.00% | Establishment |
| biotechnology | ||||||
| Beijing Timelink Network Technology Co., Ltd. Note 3 | Beijing | Beijing | Technology promotion service; design, production, agency and delivery of advertisement; translation services; organization of cultural and artistic exchange activities (excluding performance); convention and exhibition services; marketing research; enterprise planning | 100.00% | Acquisition | |
| Xinjiang Henri Jayer Network Technology Co., Ltd. Note 3 | Beijing | Kashi, Xinjiang | Technical development, consulting, services and transfer; infrastructure software services; application software services; software development; software consulting; product design; public relations services; conference services, etc. | 100.00% | Acquisition | |
| Beijing Henri Jayer Technology Co., Ltd. Note 3 | Beijing | Beijing | Technical development, consulting, services and transfer; infrastructure software services; application software services; software development; software consulting; product design; public relations services; conference services, etc. | 100.00% | Acquisition | |
| Xinjiang Chambertin Network Technology Co., Ltd. Note 3 | Beijing | Khorgos, Xinjiang | Technical development, consulting, services and transfer of computer and software; infrastructure software services; application software services; software development; software consulting; product design; public relations services, etc. | 100.00% | Establishment | |
| Xinjiang RAYAS Network Technology Co., Ltd. Note 3 | Beijing | Kashi, Xinjiang | Technical development, consulting, services and transfer in the field of network technology; infrastructure software services; application software services; software development; software consulting; product design; public relations services; conference services; computer animation | 100.00% | Establishment |
design; enterprise marketingplanning; Enterprise managementconsulting; computer systemservices; sales of self-developedproducts; design, production,agency and release of variousdomestic advertising;
Note to the difference between percentage of equity interests and percentage of voting rights:
Basis for control exists when voting rights in the investees is 50% or lower, and no control exists when voting rights in the investeesis above 50%Basis for control of those significant structured entities within the scope of consolidation:
Basis for defining the Company as an agent or a principal:
Other notes:
Note 1: CARTELO CROCODILE PTE LTD is a wholly-owned subsidiary of NANJI INTERNATIONAL CO., LTD.Note 2: UNIVERSAL NEW LIMITED is a wholly-owned subsidiary of TOTAL CLASSIC INVESTMENTS LIMITED.Note 3: Henri Jayer and Xinjiang Henri Jayer are the wholly-owned subsidiaries of Timelink. Chambertin and RAYAS are the wholly-owned subsidiaries of Henri Jayer.
(2) Significant non-wholly owned subsidiaries (RMB)
| Name of subsidiary | Proportion of ownership interest held by non-controlling interests | Profit or loss attributable to minority shareholders during the reporting period | Dividends declared to distribute to minority shareholders during the reporting period | Minority interests at the end of the reporting period |
| Name of subsidiary | Balance at the end of the reporting period | Balance at the beginning of the reporting period | ||||||||||
| 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 | |
| Name of subsidiary | 2019 | 2018 | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
(4) Material restrictions to using the assets and settling the liabilities of the group
(5) Financial support or other support to consolidated structured entities
Other notes:
2. Transactions which Resulted in Change of Equity Interests in a Subsidiary without Loss of Control
(1) Note to the changes of the proportion of equity interests in the subsidiaryAccording to the Acquisition Agreement on the Sales and Purchase of 5% Shares of Cartelo Crocodile Pte Ltdsigned between Shanghai NJDS and Cartelo Crocodile Holding Co., Ltd: The Parties agree that the share transferamount shall be negotiated and determined by the Parties of the Agreement with reference to the appraisal valuerecorded on the ZSZYPBZ [2016] No. 2366 Appraisal Report issued by Zhongshui Zhiyuan Assets Appraisal Co.,Ltd., which is engaged by the Seller and is qualified for securities and futures business in Mainland China, for 100%of the issued shares of the Target Company. Through negotiation between the Parties, the amount for the sales of5% shares by the Seller is determined to be RMB 31,394,986.60.
(2) Impact on the minority interests and the owner’s equity attributable to the parent company
Unit: RMB
| CARTELO CROCODILE PTE LTD | |
| Cash | 31,394,986.60 |
| Consideration paid for acquisition /consideration received for disposal | 31,394,986.60 |
| Less: Subsidiary’s net assets calculated at the proportion of equity interest acquired or disposed | 25,462,152.79 |
| Difference | 5,932,833.81 |
| Including: Adjustment of capital surplus | 5,932,833.81 |
| Name of joint venture or associate | Principal place of business | Registered address | Nature of business | Proportion of equity held by the Company | Measurement methods on investment for joint ventures or associates | |
| Direct | Indirect | |||||
Basis for having significant influence over the investees with voting rights of less than 20%, and having nosignificant influence over the investee with voting rights of 20% or above:
(2) Main financial information of the significant joint ventures
Unit: RMB
| Balance at the end of the reporting period/the amount incurred in the reporting period | Balance at the beginning of the reporting period/ the amount incurred in the prior period | |
| Balance at the end of the reporting period/the amount incurred in the reporting period | Balance at the beginning of the reporting period/ the amount incurred in the prior period | |
| Balance at the end of the reporting period/the amount incurred in the reporting period | Balance at the beginning of the reporting period/ the amount incurred in the prior period | |
| Joint ventures: | -- | -- |
| The aggregate amounts of below items calculated based on proportion of equity interests: | -- | -- |
| Associate: | -- | -- |
| Total carrying amount of investments | 15,441,091.08 | 14,230,858.19 |
| The aggregate amount of below items calculated based on proportion of equity interests: | -- | -- |
| -- Net profit | 1,210,232.89 | 427,104.15 |
| -- Other comprehensive income | 0.00 | |
| -- Total comprehensive income | 1,210,232.89 | 427,104.15 |
Other notesAccording to the Proposal on Investment in Equity of Guangzhou XiEnEn Culture Communication Co., Ltd. andRelated-party Transactions reviewed and approved at the Seventeenth Meeting of the Fifth Board of Directors ofthe Company on October 28, 2016, NJDS purchased 10% equity of Guangzhou XiEnEn Culture CommunicationCo., Ltd. (hereinafter referred to as "XiEnEn") at RMB 12.67 million and ZHANG Yuxiang, the actual controllerof NJDS, purchased 20% equity of XiEnEn at RMB 25.33 million.According to the Articles of Association of XiEnEn, XiEnEn shall have a Board of Directors (3 members) and Boardof Supervisors (3 members). After the equity purchase, NJDS has assigned a director and a supervisor to XiEnEn,and has a significant influence on the production and operation of the investee.An equity transfer agreement was signed between the Company and Mrs. HE Tinghua (the actual controller ofGuangzhou XiEnEn Culture Communication Co., Ltd.) on September 10,2019, stipulating that the Company's 10%equity of Guangzhou XiEnEn shall be transferred to HE Tinghua under the agreed price of RMB 15,633,458.64.The Company shall assist in the industrial and commercial change procedures after receiving the full payment forequity transfer according to the equity transfer agreement. The industrial and commercial change procedures are nothandled yet by the end of the reporting period.
(5) Note to the significant restrictions on the ability of joint ventures or associates transferring funds to theCompany
(6) Excess deficit from joint ventures or associates
Unit: RMB
| Name of joint ventures or associates | Cumulative unrecognized loss of prior period | Unrecognized profit in the reporting period (or share of net profit in the reporting period) | Cumulative unrecognized loss at end of the reporting period |
| Name of joint operation | Principal place of business | Registered address | Nature of business | Proportion of equity interests /shares by the Company | |
| Direct | Indirect | ||||
5. Equity in Structured Entities not Included in the Consolidated Financial StatementsNote to structured entities not included in the consolidated financial statements:
None
6. Others
NoneNote X. Risks Relating to Financial Instruments
Risks related to the financial instruments of the Company arise from the recognition of various financial assets andfinancial liabilities during its operation, including credit risk, liquidity risk and market risk.The Company’s management is responsible for determining risk management objectives and policies related tofinancial instruments. Operational management is responsible for the daily risk management through functionaldepartments (e.g. the Company’s credit management department reviews each credit sale). Internal audit departmentis responsible for the daily supervision of implementation of the risk management policies and procedures, andreports the findings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies to minimize the riskswithout unduly affecting the competitiveness and resilience of the Company.
1. Credit Risk
Credit risk is the risk of one party of the financial instrument to face a financial loss because the other party of thefinancial instrument fails to fulfill its obligation. The credit risk of the Company is related to cash and equivalent,notes receivable, accounts receivables, other receivables and long-term receivables. Credit risk of these financialassets is derived from the counterparty’s breach of contract. The maximum risk exposure is equal to the carryingamount of these financial instruments.Cash and cash equivalent of the Company has lower credit risk, as they are mainly deposited in such financialinstitutions as commercial bank, of which the Company thinks with higher reputation and financial position.For notes receivable, other receivables and long-term receivables, the Company establishes the correspondingpolicies to control their credit risk exposure. The Company assesses credit capability of its clients and determinestheir credit terms based on their financial position, possibility of the guarantee from third party, credit record andother factors (such as current market status, etc.). The Company monitors its clients’ credit record periodically, andfor those clients with poor credit record, the Company will take measures such as written call, shortening orcancelling their credit terms so as to ensure the overall credit risk of the Company is controllable.
(1) Determination of significant increases in credit risk
The Company assesses at each reporting date as to whether the credit risk on financial instruments has increasedsignificantly since initial recognition. When the Company determines whether the credit risk has increasedsignificantly since initial recognition, it considers based on reasonable and supportable information that is availablewithout undue cost or effort, including quantitative and qualitative analysis of historical information, external creditratings and forward-looking information. The Company determines the changes in the risk of a default occurring
over the expected life of the financial instrument through comparing the risk of a default occurring on the financialinstrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date ofinitial recognition based on individual financial instrument or a group of financial instruments with the similar creditrisk characteristics.When occurrence of one or more of the following quantitative or qualitative criteria, the Company determines thatthe credit risk on financial instruments has increased significantly: the quantitative criteria applied mainly becauseas at the reporting date, the increase in the probability of default occurring over the lifetime is more than a certainpercentage since the initial recognition; the qualitative criteria applied if the debtor has adverse changes in businessand economic conditions, early warning list of customer, and etc.
(2) Definition of credit-impaired financial assets
The criteria adopted by the Company for determination of credit impairment are consistent with internal credit riskmanagement objectives of relevant financial instruments in considering both quantitative and qualitative indicators.When the Company assesses whether the debtor has incurred the credit impairment, the main factors considered areas following: Significant financial difficulty of the issuer or the borrower; a breach of contract, e.g., default or past-due event; a lender having granted a concession to the borrower for economic or contractual reasons relating to theborrower’s financial difficulty that the lender would not otherwise consider; the probability that the borrower willenter bankruptcy or other financial re-organization; the disappearance of an active market for the financial assetbecause of financial difficulties of the issuer or the borrower; the purchase or origination of a financial asset at adeep discount that reflects the incurred credit losses.The credit impairment of financial assets may be caused by the joint effect of multiple events, and may not be causedby individually identifiable events.
(3) The parameter of expected credit loss measurement
The Company measures provision for impairment for different assets with the expected credit loss of 12-month orthe lifetime based on whether there has been a significant increase in credit risk or credit impairment has occurred.The key parameters for expected credit loss measurement include default probability, default loss rate and defaultrisk exposure. The Company sets up the model of default probability, default loss rate and default risk exposure inconsidering the quantitative analysis of historical statistics (such as counterparties’ ratings, guarantee method andcollateral type, repayment method, etc.) and forward-looking information.Relevant definitions are as following:
Default probability refers to the probability of the debtor will fail to discharge the repayment obligation over thenext 12 months or the entire remaining lifetime;Default loss rate refers to the Company's expectation of the loss degree of default risk exposure. The default lossrate varies depending on the type of counterparty, recourse method and priority, and the collateral. The default lossrate is the percentage of the risk exposure loss when default has occurred and it is calculated over the next 12 monthsor the entire lifetime;The default risk exposure refers to the amount that the company should be repaid when default has occurred in thenext 12 months or the entire lifetime. Both the assessment of significant increase in credit risk of forward-lookinginformation and the calculation of expected credit losses involve forward-looking information. Through historicaldata analysis, the Company identifies key economic indicators that have impact on the credit risk and expected
credit losses for each business.The maximum exposure to credit risk of the Company is the carrying amount of each financial asset in the statementof financial position. The Company does not provide any other guarantees that may expose the Company to creditrisk. Please refer to Note VII.4 & 6 for the information on risk exposure of accounts receivable and other receivablesof the Company.
2. Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by delivering cash or otherfinancial assets. The Company is responsible for the capital management of all of its subsidiaries, including short-term investment of cash surplus and dealing with forecasted cash demand by raising loans. The Company’s policyis to monitor the demand for short-term and long-term floating capital and whether the requirement of loan contractsis satisfied so as to ensure to maintain adequate cash and cash equivalents.As of December 31, 2019, the financial liabilities of the Company are as follows (Unit: RMB):
| Items | December 31, 2019 | ||
| Carrying amount | Within 1 year | Over 1 year | |
| Financial liabilities: | |||
| Short-term borrowings | 100,105,694.45 | 100,105,694.45 | — |
| Accounts payable | 68,733,776.67 | 60,743,449.40 | 7,990,327.27 |
| Other payables | 119,528,535.68 | 68,391,396.99 | 51,137,138.69 |
| Non-current liabilities maturing within one year | — | — | — |
| Long-term borrowings | — | — | — |
| Items | December 31, 2018 | ||
| Carrying amount | Within 1 year | Over 1 year | |
| Financial liabilities: | |||
| Short-term borrowings | 70,360,000.00 | 70,360,000.00 | — |
| Accounts payable | 52,048,994.98 | 49,409,707.30 | 2,639,287.68 |
| Other payables | 167,238,218.29 | 41,757,791.35 | 125,480,426.94 |
| Non-current liabilities maturing within one year | — | — | — |
| Long-term borrowings | — | — | — |
| Borrower bank | Type of borrowing | Amount of borrowing | Beginning date of borrowing | Due date of borrowing | Borrowing conditions |
| Shanghai Qingpu Subbranch of China Construction Bank | Short-term borrowings | 50,000,000.00 | 2019/12/30 | 2020/12/29 | Nanji E-commerce Co., Ltd. provides a joint liability guarantee |
| Shanghai Branch of Xiamen International Bank | Short-term borrowings | 50,000,000.00 | 2019/7/2 | 2020/7/2 | NJDS and Timelink provide joint liability guarantees |
| Total | — | 100,000,000.00 | — | — | — |
| Items | Fair value at the end of the reporting period | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Recurring fair value measurements | -- | -- | -- | -- |
| (I) Held-for-trading financial assets | 1,490,000,000.00 | 1,490,000,000.00 | ||
| 1. Financial assets at fair value through profit or loss | 1,490,000,000.00 | 1,490,000,000.00 | ||
| (1) Debt instruments | 1,490,000,000.00 | 1,490,000,000.00 | ||
| (III) Equity instruments | 100,000.00 | 100,000.00 | ||
| Total liabilities measured at fair value on a recurring basis | 1,490,000,000.00 | 100,000.00 | 1,490,100,000.00 | |
| II. Nonrecurring fair value measurements | -- | -- | -- | -- |
Note XII. Related Parties and Related Party Transactions
1. General Information of the Parent Company
| Name of the parent company | Registered address | Nature of business | Registered capital | Percentage of equity interests in the Company | Voting rights in the Company |
| Name of joint venture or associate | Relationship with the Company |
| Name of related party | Relationship with the Company |
| ZHANG Yuxiang | Chairman and actual controller of the Company |
| ZHANG Yun | A close relative of the actual controller |
| Shanghai Fengnan Investment Center LLP | A shareholder of the Company, and an enterprise controlled by ZHANG Yuxiang |
| Shanghai Qiangxiang Machinery Equipment Co. Ltd. | A company controlled by ZHANG Yuxiang |
| Shanghai Chaolin Consulting and Management Center LLP | An enterprise controlled by ZHANG Yuxiang |
| ZHU Xueqin | A shareholder of Fengnan Investment, and a close relative of the actual controller |
| SHEN Chenxi | A director of the Company, a shareholder of Fengnan Investment, and a close relative of the actual controller |
| LIU Rui | A shareholder and director of the Company |
| Beijing Wenri Science & Technology Co., Ltd. | A company in which LIU Rui, a director of the Company, serves as a director |
| Beijing Shilian Tianxia Science & Technology Co., Ltd. | A company in which LIU Rui, a director of the Company, serves as a director |
| Shanghai Qishi International Trade Co., Ltd. | A company in which LIU Rui, a director of the Company, serves as a director |
| Beijing Baifu Trading Co., Ltd. | A company controlled by LIU Rui (a director of the Company) |
| ZHANG Yanni | A director of the Company |
| Jiangsu RENAC Power Technology Co., Ltd. | A company controlled by spouse of ZHANG Yanni |
| Wuxi Le-PV Energy Technology Co., Ltd. | A company controlled by spouse of ZHANG Yanni |
| Wuxi Nayuan IoT Technology LLP | A company controlled by spouse of ZHANG Yanni, |
| Shanghai Naxin New Energy Technology Co., Ltd. | A company controlled by spouse of ZHANG Yanni |
| Jiangxi Guoyuan Electric Power Testing Co., Ltd. | A company controlled by ZHANG Yanni |
| LU Lining | A director and deputy general manager of the Company |
| Shanghai Lanmei E-commerce Co., Ltd. | A company controlled by spouse of LU Lining |
| Shanghai Lanmei Xingchen E-commerce Co., Ltd. | A company controlled by spouse of LU Lining |
| Zhejiang Lanmei Fengying E-commerce Co., Ltd. | A company controlled by spouse of LU Lining |
| Shanghai Yangwei Trading Co., Ltd. | A company controlled by spouse of LU Lining |
| Shanghai Sichuan Network Technology Co., Ltd. | A company controlled by spouse of LU Lining |
| Shanghai Lanba Garment Co., Ltd. | A company controlled by spouse of LU Lining |
| Jiangyin Shuyihui Trading Co., Ltd. | A company controlled by spouse of LU Lining |
| Zhejiang Xinzhi E-commerce Co., Ltd. | A company controlled by a younger brother of LU Lining’s spouse |
| YANG Bin | A director of the Company |
| Suzhou Hengkang Life Science Co., Ltd | A company in which YANG Bin, a director of the Company, serves as a director |
| ZHENG Dingxia | Chairman of the Board of Supervisors of the Company |
| CHEN Xiaojie | A supervisor of the Company |
| Suzhou Moye Trading Co., Ltd. | A company controlled by spouse of CHEN Xiaojie |
| HU Xianghuai | A supervisor of the Company |
| Shanghai Junhuai Industrial Co., Ltd. | A company controlled by spouse of HU Xianghuai |
| CAO Yitang | Board secretary and deputy general manager of the Company |
| Shanghai Caoyitang Enterprise Management Center | A company controlled by CAO Yitang |
| Shanghai ?tant Capital Consulting Co., Ltd. | A company controlled by spouse of CAO Yitang |
| LIN Zecun | Deputy General Manager of the Company |
| FENG Jie | Deputy General Manager of the Company |
| JI Yanfen | Deputy General Manager of the Company |
| Dongfang Xinmin Holding Co., Ltd. (hereinafter referred to as "Dongfang Xinmin") | A shareholder of the Company |
| Wujiang Xinmin Industrial Investment Co., Ltd. | A shareholder of the Company |
| JIANG Xueming | A shareholder of the Company and the actual controller of Dongfang Xinmin |
| Dongfang Hengxin Capital Holding Group Co., Ltd. (hereinafter referred to as "Dongfang Hengxin") | A company controlled by JIANG Xueming, and the controlling shareholder of Dongfang Xinmin |
| Far East International Investment Co., Ltd. | A company controlled by JIANG Xueming |
| Dongwu Cement International Limited | A company controlled by JIANG Xueming |
| Orient Financial Holdings Group Co., Ltd. | A company controlled by JIANG Xueming |
| Orient Expressway (Hong Kong) Co., Ltd. | A company controlled by JIANG Xueming |
| Xuzhou Dongtong Construction and Development Co., Ltd. | A company controlled by JIANG Xueming |
| Suzhou Orient Jiujiu Industrial Co., Ltd. | A company controlled by JIANG Xueming |
| Shanghai Wenqi Investment Co., Ltd. | A company controlled by JIANG Xueming |
| Oriental Strait Capital Management Co., Ltd. | A company controlled by JIANG Xueming |
| Orient Zhongan Information Technology Co., Ltd. | A company controlled by JIANG Xueming |
| Suzhou Industrial Park Orient Huayu Investment Co., Ltd. | A company controlled by JIANG Xueming |
| Suzhou Dongtong Environmental Protection Technology Co., Ltd. | A company controlled by JIANG Xueming |
| Suzhou Industrial Park Foreign Language School | A company controlled by JIANG Xueming |
| Global Mining (China) Co., Ltd. | A company controlled by JIANG Xueming |
| Huaxin Resources Co., Ltd. | A company controlled by JIANG Xueming |
| Dosilicon Semiconductor Co., Ltd. | A company controlled by Dongfang Hengxin |
| Fidelix Co., Ltd. | A company controlled by Dongfang Hengxin |
| Huzhou Dongyuan Real Estate Co., Ltd. | A company controlled by Dongfang Hengxin |
| Wujiang Hongyuan Investment Management Co., Ltd. | A company controlled by Dongfang Hengxin |
| Wujiang Xinmin Chemical Fibre Co., Ltd. | A company controlled by Dongfang Xinmin |
| Suzhou Orient Kangtan New Energy Technology Co., Ltd. | A company controlled by Dongfang Hengxin |
| Suzhou Tailong Real Estate Development Co., Ltd. | A company controlled by Dongfang Hengxin |
| Suzhou Orient Hengfu Investment Management Co., Ltd. | A company controlled by Dongfang Hengxin |
| Orient Holdings Group (Overseas) Investment Co., Ltd. | A company controlled by Dongfang Hengxin |
| Orient Hengkang Life Science Co., Ltd. | A company controlled by Dongfang Hengxin |
| Suzhou Hengkang Life Science Co., Ltd | A company controlled by Dongfang Hengxin |
| Suzhou Xinmin Textile Co., Ltd. | A company controlled by Xinmin Industrial |
| Mumi Enterprise Management (Shanghai) Co., Ltd. (former name: Jueqing Enterprise Management (Shanghai) Co., Ltd.) | A company controlled by CHEN Ye, a former deputy general manager of the Company |
| Related parties | Nature of the transaction | Amount incurred in the current period | Trading limit approved | Excess to trading limit | Amount incurred in the prior period |
| Guangzhou XiEnEn Culture Communication Co., Ltd. | Sales of goods | No | 167,657.96 | ||
| Mumi Enterprise Management (Shanghai) Co., Ltd. | Receiving of services | 9,165,454.31 | 9,165,454.31 | No | 9,799,489.12 |
| Related parties | Nature of the transaction | 2019 | 2018 |
| Shanghai Lanmei E-commerce Co., Ltd. | Brand comprehensive services | 22,107,464.93 | 5,194,794.36 |
| Shanghai Lanmei E-commerce Co., Ltd. | Distributor licensing services | 183,018.91 | 217,641.56 |
| Shanghai Lanmei E-commerce Co., Ltd. | Sales of goods | 1,114,070.08 | |
| Shanghai Lanmei E-commerce Co., Ltd. | Park services | 1,599.11 | |
| Shanghai Lanmei E-commerce Co., Ltd. | Others | 9,203.00 | 451,229.42 |
| Zhejiang Lanmei Fengying E-commerce Co., Ltd. | Brand comprehensive services | 4,783,040.00 | |
| Zhejiang Lanmei Fengying E-commerce Co., Ltd. | Distributor licensing services | 20,754.72 |
| Shanghai Yangwei Trading Co., Ltd. | Distributor licensing services | 5,660.38 | 4,060,398.00 |
| Shanghai Sichuan Network Technology Co., Ltd. | Brand comprehensive services | 18,679.33 | 2,617,925.00 |
| Shanghai Sichuan Network Technology Co., Ltd. | Distributor licensing services | 53,301.90 | 16,981.13 |
| Shanghai Lanba Garment Co., Ltd. | Distributor licensing services | 3,773.60 | 4,716.99 |
| Jiangyin Shuyihui Trading Co., Ltd. | Distributor licensing services | 75,471.68 | 47,169.80 |
| Zhejiang Xinzhi E-commerce Co., Ltd. | Brand comprehensive services | 4,716,993.00 | |
| Zhejiang Xinzhi E-commerce Co., Ltd. | Distributor licensing services | 49,056.59 | |
| Beijing Wenri Science & Technology Co., Ltd. | Mobile Internet media delivery services | 18,253.01 | |
| Mumi Enterprise Management (Shanghai) Co., Ltd. | Other business | 348,902.08 | |
| Guangzhou XiEnEn Culture Communication Co., Ltd. | Web celebrity traffic monetization services | 98,630.13 | |
| Guangzhou XiEnEn Culture Communication Co., Ltd. | Distributor licensing services | 37,735.84 | |
| Guangzhou XiEnEn Culture Communication Co., Ltd. | Brand comprehensive services | 23,583.38 | 69,027.83 |
| Name of the entruster/employer | Name of the entrustee/ contractor | Type of asset | Start date | End date | Basis for pricing of trustee /contract income | Income recognized in the reporting period |
| Name of the entruster/employer | Name of the entrustee/ contractor | Type of assets | Start date | End date | Basis for pricing of trustee fee /contract expenditure | Trustee fee /contract expenditure recognized in the reporting period |
| The lessee | Type of assets | Lease income recognized in the reporting period | Lease income recognized in the prior period |
| The lessor | Type of assets | Lease expense recognized in the reporting period | Lease expense recognized in the prior period |
| Shanghai Qiangxiang Machinery Equipment Co. Ltd. | Warehouse | 475,247.40 | 430,487.18 |
| ZHANG Yuxiang | Housing | 144,000.00 | 144,000.00 |
| Guarantee | Amount | Effective date | Expiry date | Whether the guarantee has been fulfilled |
| Guarantor | Amount | Effective date | Expiry date | Whether the guarantee has been fulfilled |
| LIU Rui | 20,360,000.00 | November 13,2018 | November 13,2019 | Yes |
| Related parties | Amount | Effective date | Expiry date | Notes |
| Borrowings | ||||
| Lendings | ||||
| Related parties | Related party transaction | Amount incurred in the current period | Amount incurred in the prior period |
(7) Key management personnel compensation
Unit: RMB
| Items | 2019 | 2018 |
| Key management personnel compensation | 10,709,600.00 | 5,510,900.00 |
| Items | Related parties | Balance at 31/12/2019 | Balance at 1/1/2019 | ||
| Book balance | Bad-debt provision | Book balance | Bad-debt provision | ||
| Accounts receivable | Shanghai Lanmei E-commerce Co., Ltd. | 16,000,000.00 | 800,000.00 | 3,099,500.00 | 154,975.00 |
| Accounts receivable | Zhejiang Lanmei Fengying E-commerce Co., Ltd. | 2,400,000.00 | 120,000.00 | ||
| Accounts receivable | Shanghai Yangwei Trading Co., Ltd. | 1,254,800.00 | 125,480.00 | 3,012,800.00 | 150,640.00 |
| Accounts receivable | Shanghai Sichuan Network Technology Co., Ltd. | 1,240,000.00 | 123,010.00 | 1,942,500.00 | 97,125.00 |
| Accounts receivable | Zhejiang Xinzhi E-commerce Co., Ltd. | 2,500,000.00 | 125,000.00 | 3,099,500.00 | 154,975.00 |
| Accounts receivable | Mumi Enterprise Management (Shanghai) Co., Ltd. | 126,983.62 | 6,349.18 | ||
| Advances to suppliers | ZHANG Yuxiang | 72,000.00 | |||
| Other receivables | Guangzhou XiEnEn Culture Communication Co., Ltd. | 11.00 | 0.55 | ||
| Other receivables | Mumi Enterprise Management (Shanghai) Co., Ltd. | 362,754.61 | 18,137.73 | ||
(2) Payables
Unit: RMB
| Items | Related parties | 31 December 2019 | 1 January 2019 |
| Accounts payable | Mumi Enterprise Management (Shanghai) Co., Ltd. | 3,745,965.27 | 8,428,001.74 |
| Advances from customers | Guangzhou XiEnEn Culture Communication Co., Ltd. | 65,000.05 | |
| Advances from customers | Shanghai Lanmei E-commerce Co., Ltd. | 481,500.00 | 185,000.00 |
| Advances from customers | Zhejiang Lanmei Fengying E-commerce Co., Ltd. | 135,000.00 | 22,000.00 |
| Advances from customers | Shanghai Yangwei Trading Co., Ltd. | 11,000.00 | 3,000.00 |
| Advances from customers | Shanghai Sichuan Network Technology Co., Ltd. | 73,000.00 | 55,000.00 |
| Advances from customers | Shanghai Lanba Garment Co., Ltd. | 24,000.00 | |
| Advances from customers | Jiangyin Shuyihui Trading Co., Ltd. | 120,000.00 | 80,000.00 |
| Advances from customers | Zhejiang Xinzhi E-commerce Co., Ltd. | 66,000.00 | 185,000.00 |
| Other payables | LIU Rui | 34,057,500.00 | |
| Other payables | Guangzhou XiEnEn Culture Communication Co., Ltd. | 2,137,671.32 | 230,000.00 |
| Other payables | Shanghai Lanmei E-commerce Co., Ltd. | 235,000.00 | 145,000.00 |
| Other payables | Shanghai Yangwei Trading Co., Ltd. | 10,000.00 | 10,000.00 |
| Other payables | Shanghai Sichuan Network Technology Co., Ltd. | 20,000.00 | 20,000.00 |
| Other payables | Shanghai Lanba Garment Co., Ltd. | 25,000.00 | 25,000.00 |
| Other payables | Jiangyin Shuyihui Trading Co., Ltd. | 20,000.00 | 20,000.00 |
| Other payables | Zhejiang Xinzhi E-commerce Co., Ltd. | 10,000.00 | |
| Other payables | Suzhou Xinmin Textile Co., Ltd. | 1,094.40 | 1,094.40 |
| Total amount of equity instruments granted during the reporting period | 13,489,200.00 |
| Total amount of equity instruments exercised during the reporting period | 0.00 |
| Total amount of equity instruments expired during the reporting period | 258,000.00 |
| Range of exercise prices of share options outstanding at the end of the reporting period, and the remaining contract period | Note 1, Note 2 and Note 3 |
| Range of exercise prices of other equity instruments outstanding at the end of the reporting period, and the remaining contract period | — |
| Exercise arrangement | Exercise time | % of exercisable options to the initially-granted options | |
| Stock options granted initially | First exercise period | From the first trading date after 12 months since the grant date to the last trading date within 24 months since the grant date | 30% |
| Second exercise period | From the first trading date after 24 months since the grant date to the last trading date within 36 months since the grant date | 40% | |
| Third exercise period | From the first trading date after 36 months since the grant date to the last trading date within 48 months since the grant date | 30% | |
The exercise time of reserved stock options is arranged as follows:
| Exercise arrangement | Exercise time | % of exercisable options to the reserved options |
| First exercise period | From the first trading date after 12 months since the date of granting the reserved options to the last trading date within 24 months since date of granting the reserved options | 50% |
| Second exercise period | From the first trading date after 24 months since the date of granting the reserved options to the last trading date within 36 months since the s date of granting the reserved options | 50% |
The stock options granted under the 2019 SOIP shall be subject to performance assessment and exercise in eachassessment fiscal year during the exercise period, so as to achieve the performance objective, which is the exercisecondition of the employee.The annual performance objectives of the initially-granted stock options are listed as follows:
| Exercise period | Performance objective |
| First exercise period | Based on 2018, the Company's net profit growth rate in 2019 should not be less than 36%; |
| Second exercise period | Based on 2019, the Company's net profit growth rate in 2020 should not be less than 28%; |
| Third exercise period | Based on 2020, the Company's net profit growth rate in 2021 should not be less than 28%. |
| Exercise period | Performance objective |
| First exercise period | Based on 2019, the Company's net profit growth rate in 2020 should not be less than 28%; |
| Second exercise period | Based on 2020, the Company's net profit growth rate in 2021 should not be less than 28%; |
| Total assessment score (Y) | 90-100 | 80-89 | 60-79 | <0 |
| Assessment grade | Excellent | Good | Qualified | Unqualified |
| Individual exercise ratio (S) | 100% | Y% | Y% | 0 |
2. Equity-settled Share-based Payment
√ Applicable (A) □ Not applicable (N/A)
Unit: RMB
| Determination of the fair value of equity instruments at grant date | Option pricing model |
| Determination of the number of equity instruments that eventually vest | To be determined according to the number of employees, expected return level of stock options, performance evaluation of employees, and other factors |
| Reasons for significant differences between the valuation during the reporting period and prior periods | — |
| Cumulative amount of equity-settled share-based payment recognized as capital reserve | 4,036,433.14 |
| Total costs recognized by equity-settled share-based payment in the reporting period | 4,036,433.14 |
that mentioned above.
(2) A note is required when the Company has no significant contingency required to disclose.The Company has no significant contingencies required to disclose other than that mentioned above.
3. Others
Note XV. Events after the Balance Sheet Date
1. Significant Non-adjusting Events
Unit: RMB
| Items | Content | Estimation of its financial effect | Reason for the estimation cannot be made |
| Profits or dividends proposed to be distributed | 302,301,271.02 |
| Profits or dividends declared to be distributed upon approval | 302,301,271.02 |
| Correction of accounting errors | Treatment process | Financial statement line items affected in each comparative period | Cumulative effects |
(2) Prospective application method
| Correction of accounting errors | Approval process | Reasons for adoption of prospective application |
| Item | Revenue | Cost and expense | Total profit | Income tax expense | Net profit | Net profit/loss from discontinued operation attributable to the parent company |
Company can combine them into one single operating segment.The Company’s reportable segments include: NJDS brand licensing-related businesses (refer to the businesses otherthan the Internet advertising business of the Company’s subsidiary Timelink, hereinafter referred to as the "NJBUBusiness") and the Internet advertising business of Timelink (hereinafter referred to as "Timelink Business").Accounting policies for operating segments of the Company are consistent with main accounting policies of theCompany.
(2) Financial information of reportable segments
Unit: RMB
| Items | NJBU business | Timelink business | Eliminations | Total |
| Year 2019 | ||||
| Revenues | 1,397,584,877.89 | 2,510,285,394.83 | 1,022,036.31 | 3,906,848,236.41 |
| Costs of revenues | 102,063,697.05 | 2,300,634,754.99 | 2,402,698,452.04 | |
| Operating expenses | 171,031,114.87 | 71,914,352.11 | 1,022,036.31 | 241,923,430.67 |
| Total profits | 1,171,171,006.59 | 108,257,263.70 | 1,423,411.06 | 1,278,004,859.23 |
| Net profits | 1,099,173,887.01 | 108,418,634.15 | 1,431,536.25 | 1,206,160,984.91 |
| Total assets | 4,995,853,172.42 | 666,411,242.37 | 177,449,402.60 | 5,484,815,012.19 |
| Total liabilities | 398,385,458.50 | 229,010,001.58 | 1,307,568.75 | 626,087,891.33 |
| Net assets | 4,597,467,713.92 | 437,401,240.79 | 176,141,833.85 | 4,858,727,120.86 |
| Year 2018 | ||||
| Revenues | 1,037,851,981.67 | 2,316,017,013.90 | 1,009,023.10 | 3,352,859,972.47 |
| Costs of revenues | 74,904,813.05 | 2,122,237,074.81 | 2,197,141,887.86 | |
| Operating expenses | 154,574,609.81 | 57,596,735.07 | 1,009,023.10 | 211,162,321.78 |
| Total profits | 831,137,418.37 | 130,412,388.91 | -1,488,789.49 | 963,038,596.77 |
| Net profits | 759,857,040.33 | 125,933,857.89 | -1,488,789.49 | 887,279,687.71 |
| Total assets | 3,985,746,747.25 | 767,988,054.86 | 204,486,087.40 | 4,549,248,714.71 |
| Total liabilities | 375,750,270.14 | 439,005,448.22 | 29,775,789.80 | 784,979,928.56 |
| Net assets | 3,609,996,477.11 | 328,982,606.64 | 174,710,297.60 | 3,764,268,786.15 |
(3) A note is required if the Company does not have any reportable segment or it is unable todisclose total assets and total liabilities of the reportable segment.
None
(4) Other notes
① Top five clients of NJBU by operating revenue in 2019
| Client name | Operating revenue (RMB) | % in total operating revenue of NJBU of the current year |
| Zhejiang Shangwei E-commerce Co., Ltd. | 54,128,690.61 | 3.87 |
| Zhejiang A*** Co., Ltd. | 53,066,112.28 | 3.80 |
| Changsha Jiashi Fashion Trading Co., Ltd. | 34,932,087.42 | 2.50 |
| Shanghai Wenjie Textile Co., Ltd. | 27,425,011.64 | 1.96 |
| Quanzhou Quanhong Trading Co., Ltd. | 24,713,464.57 | 1.77 |
| Total | 194,265,366.52 | 13.90 |
| Client name | Operating revenue (RMB) | % in total operating revenue of Timelink of the current year |
| Shenzhen Qianhai Xinzhijiang Information Technology Co., Ltd. | 492,260,132.50 | 19.61 |
| Beijing Mai *** Co., Ltd. | 270,401,252.54 | 10.77 |
| Fuzhou 360 Network Petty Loan Co., Ltd. (Note 1) | 168,452,185.57 | 6.71 |
| Beijing Zi *** Co., Ltd. (Note 2) | 163,482,085.91 | 6.51 |
| Taobao (China) Software Co., Ltd. (Note 3) | 92,627,266.10 | 3.69 |
| Total | 1,187,222,922.62 | 47.29 |
7. Other Significant Transactions and Matters which may have a Major Impact on Investor’s Decision-making
8. Others
Note XVII. Notes to the Main Items of Financial Statements of the Parent Company
1. Accounts Receivable
(1) Disclosure of accounts receivable by category
Unit: RMB
| Category | Balance at the end of the reporting period | Balance at the beginning of the reporting period | ||||||||
| Book balance | Bad-debt provision | Carrying amount | Book balance | Bad-debt provision | Carrying amount | |||||
| Amount | Proportion | Amount | Accrual proportion | Amount | Proportion | Amount | Accrual proportion | |||
| Including: | ||||||||||
| Accounts receivable with bad debt provisions recognized collectively | 43,008,735.90 | 100.00% | 2,210,268.05 | 5.14% | 40,798,467.85 | 102,147,001.90 | 100.00% | 5,326,658.93 | 5.21% | 96,820,342.97 |
| Including: | ||||||||||
| Group 1: Accounts receivable arising from businesses other than finance leasing business and factoring business | 43,008,735.90 | 100.00% | 2,210,268.05 | 5.14% | 40,798,467.85 | 102,147,001.90 | 100.00% | 5,326,658.93 | 5.21% | 96,820,342.97 |
| Total | 43,008,735.90 | 100.00% | 2,210,268.05 | 5.14% | 40,798,467.85 | 102,147,001.90 | 100.00% | 5,326,658.93 | 5.21% | 96,820,342.97 |
| Name | Balance at the end of the reporting period | |||
| Book balance | Bad-debt provision | Accrual proportion | Reason for provision | |
| Name | Balance at the end of the reporting period |
| Book balance | Bad-debt provision | Accrual proportion | |
| Group 1: Accounts receivable arising from businesses other than finance leasing business and factoring business | 43,008,735.90 | 2,210,268.05 | 5.14% |
| Total | 43,008,735.90 | 2,210,268.05 | -- |
| Name | Balance at the end of the reporting period | ||
| Book balance | Bad-debt provision | Accrual proportion | |
| Aging | Book balance |
| Within 1 year (inclusive) | 41,812,110.90 |
| 1-2 years | 1,196,625.00 |
| Total | 43,008,735.90 |
| Category | Balance at the beginning of the reporting period | Changes during the reporting period | Balance at the end of the reporting period | |||
| Provision | Recovery or reversal | Write off | Others | |||
| Bad-debt provision | 5,326,658.93 | -3,116,390.88 | 2,210,268.05 | |||
| Total | 5,326,658.93 | -3,116,390.88 | 2,210,268.05 | |||
| Entity | Recovery or reversal amount | Recovery method |
(3) Accounts receivable write-off during the reporting period
Unit: RMB
| Items | Amount written off |
| Entity | Nature of accounts receivable | Amount written off | Write-off reason | Write-off procedures | Due from related parties or not |
| Entity | Balance of account receivable at 31/12/2019 | % of the balance to the total accounts receivable | Balance of bad-debt provision at 31/12/2019 |
| Shanghai Xiaodai Finance Lease Co., Ltd. | 9,524,117.06 | 22.14% | 476,205.85 |
| Jingzhou Hongye Knitting Apparels Co., Ltd. | 6,486,437.08 | 15.08% | 324,321.85 |
| Xinjiang Cartelo E-commerce Co., Ltd. | 5,079,281.33 | 11.81% | 253,964.07 |
| Hangzhou Gesa Information Technology Co., Ltd. | 2,645,318.00 | 6.15% | 132,265.90 |
| Changshu Meite Wei'er Garment Co., Ltd. | 2,400,000.00 | 5.58% | 120,000.00 |
| Total | 26,135,153.47 | 60.76% |
| Items | Balance at the end of the reporting period | Balance at the beginning of the reporting period |
| Other receivables | 4,890,795.89 | 32,667,995.54 |
| Total | 4,890,795.89 | 32,667,995.54 |
(1) Interests receivable
① Interests receivable by category
Unit: RMB
| Items | Balance at the end of the reporting period | Balance at the beginning of the reporting period |
| Borrower | Balance at the end of the reporting period | Overdue time | Reason for overdue | Impairment or not (if have, the indications for that) |
| Item (or investee) | Balance at the end of the reporting period | Balance at the beginning of the reporting period |
| Item (or investee) | Balance at the end of the reporting period | Aging | Reason for overdue | Impairment or not (if have, the indications for that) |
(3) Other receivables
① Other receivables by nature
Unit: RMB
| Nature | Book balance at the end of the reporting period | Book balance at the beginning of the reporting period |
| Business transaction payment | 8,674,881.08 | 35,009,362.50 |
| Deposit | 70,000.00 | 70,000.00 |
| Others | 2,564.87 | 253,521.41 |
| Total | 8,747,445.95 | 35,332,883.91 |
| Bad-debt provision | Stage I | Stage II | Stage III | Total |
| Expected credit loss in next 12 months | Expected credit loss over the entire duration (without credit impairment) | Expected credit loss over the entire duration (with credit impairment) | ||
| Balance at1 January 2019 | 2,664,888.37 | 2,664,888.37 | ||
| Balance at1 January 2019in the reporting period | —— | —— | —— | —— |
| Provision in the reporting period | 1,192,041.69 | 1,192,041.69 | ||
| Write-off in the reporting period | 280.00 | 280.00 | ||
| Balance at December 31,2019 | 3,856,650.06 | 3,856,650.06 |
| Aging | Book balance |
| Within 1 year (inclusive) | 5,037,117.25 |
| 1-2 years | 112,100.00 |
| 2 to 3 years | 6,635.00 |
| Above 3 years | 3,591,593.70 |
| 3 to 4 years | 3,591,593.70 |
| Total | 8,747,445.95 |
| Category | Balance at the beginning of the reporting period | Changes during the reporting period | Balance at the end of the reporting period | |||
| Provision | Recovery or reversal | Write off | Others | |||
| Bad-debt provision | 2,664,888.37 | 1,192,041.69 | 280.00 | 3,856,650.06 | ||
| Total | 2,664,888.37 | 1,192,041.69 | 280.00 | 3,856,650.06 | ||
| Entity | Reversal or recovery amount | Recovery method |
| Items | Amount written off |
| Other receivables actually written off | 280.00 |
| Entity | Nature of other receivables | Write-off amount | Write-off reason | Write-off procedures | Due from related parties or not |
| Entity | Nature of payment | Balance at 31 December 2019 | Aging | Proportion of the balance to the total other receivables | Bad-debt provisions at 31 December 2019 |
| Nanji E-commerce (Shanghai) Co., Ltd. | Intra-company transaction payment | 3,494,298.18 | Within 1 year | 39.95% | 174,714.91 |
| CARTELO CROCODILE PTE LTD | Intra-company transaction payment | 3,131,643.70 | 1-3 years | 35.80% | 3,111,213.70 |
| Xinjiang Juchang E-commerce Co., Ltd. | Intra-company transaction payment | 776,763.40 | Within 1 year | 8.88% | 38,838.17 |
| Beijing Micro Streaming Technology Co., Ltd. | Business transaction payment | 600,000.00 | Within 1 year | 6.86% | 30,000.00 |
| Hema International Sports Goods (Shanghai) Co., Ltd. | Business transaction payment | 482,350.00 | Above 3 years | 5.51% | 482,350.00 |
| Total | -- | 8,485,055.28 | -- | 97.00% | 3,837,116.78 |
| Entity | Government grant | Balance at the end of the reporting period | Aging at the end of the reporting period | Estimated date, amount and basis for the receipt |
| Items | Balance at the end of the reporting period | Balance at the beginning of the reporting period | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investment in subsidiaries | 3,925,133,859.28 | 3,925,133,859.28 | 3,923,819,674.95 | 3,923,819,674.95 | ||
| Investment in joint ventures and associates | 14,230,858.19 | 14,230,858.19 | ||||
| Total | 3,925,133,859.28 | 3,925,133,859.28 | 3,938,050,533.14 | 3,938,050,533.14 | ||
| Investees | Balance at 1 January 2019 (carrying amount) | Changes during the reporting period | Balance at 31 December 2019 (carrying amount) | Balance of impairment provision at 31 December 2019 | |||
| Increase | Decrease | Provision for impairment | Others | ||||
| Nanji E-commerce (Shanghai) Co., Ltd. | 2,966,019,674.95 | 2,914,184.33 | 2,968,933,859.28 | ||||
| Shanghai Shuimishang Culture Communication Co., Ltd. | 1,800,000.00 | 1,800,000.00 | |||||
| Beijing Timelink Network Technology Co., Ltd. | 956,000,000.00 | 956,000,000.00 | |||||
| Xinjiang Yuduocheng E-commerce Co., Ltd. | 100,000.00 | 100,000.00 | |||||
| Xinjiang Jingshang E-commerce Co., Ltd. | 100,000.00 | 100,000.00 | |||||
| Total | 3,923,819,674.95 | 3,114,184.33 | 1,800,000.00 | 3,925,133,859.28 | |||
| Investees | Balance | Changes during the reporting period | Balance | Balance |
| at 1 January 2019 (carrying amount) | Increase | Decrease | Gains /(losses) on investments under the equity method | Adjustments of other comprehensive income | Changes in other equity | Declaration of cash dividends or distribution of profit | Provision for impairment | Others | at 31 December 2019 (carrying amount) | of impairment provision at 31 December 2019 | |
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Guangzhou XiEnEn Culture Communication Co., Ltd. | 14,230,858.19 | 1,210,232.89 | -15,441,091.08 | 0.00 | |||||||
| Subtotal | 14,230,858.19 | 1,210,232.89 | -15,441,091.08 | 0.00 | |||||||
| Total | 14,230,858.19 | 1,210,232.89 | -15,441,091.08 | ||||||||
| Items | 2019 | 2018 | ||
| Revenues | Costs | Revenues | Costs | |
| Main business | 216,999,814.62 | 44,031,866.73 | 305,731,920.09 | 35,740,754.29 |
| Other business | 13,516,592.83 | 91,698.11 | 7,143,990.44 | 48,390.61 |
| Total | 230,516,407.45 | 44,123,564.84 | 312,875,910.53 | 35,789,144.90 |
5. Investment Income
| Items (Unit: RMB) | 2019 | 2018 |
| Investment income from long-term equity investments under cost method | 84,000,000.00 | |
| Investment income from long-term equity investments under equity method | 1,210,232.89 | 427,104.15 |
| Losses on disposal of long-term equity investments | -308,692.70 | |
| Investment income from bank financial products | 10,251,420.05 | 6,110,042.81 |
| Total | 11,152,960.24 | 90,537,146.96 |
| Items | Amount | Notes |
| Losses on disposal of non-current assets | -34,285.41 | — |
| Tax refunds or reductions with ultra vires approval or without official approval documents | — | |
| Government grants recognized in current profit or loss (except government grants that is closely related to operations and determined based on a fixed scale according to the national unified standard) | 25,146,036.05 | — |
| Funds occupation fee recognized in current profit or loss from non-financial companies | — | |
| The excess of attributable fair value of net identifiable assets over the consideration paid for subsidiaries, associates or joint ventures recognized by the Company | — | |
| Gains/(losses) generated from non-monetary asset exchange | — | |
| Gains on entrusted investments or asset managements | 33,933,372.78 | — |
| Provision for impairment of each asset due to force majeure such as a natural disaster | — | |
| Gains /(losses) on debt restructuring | — | |
| Corporate restructuring charge, such as expenditure for staff resettlement and integration cost | — | |
| Gains /(losses) from excess of fair value in non-arm’s length transactions | — | |
| Net gains /(losses) of subsidiaries arising from business combination under common control from the beginning of the reporting period till the combination date | — | |
| Gains /(losses) arising from contingencies other than those related to normal operations of the Company | — |
| Gains /(losses) arising from changes in fair value of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities during the holding period and investment income arising from disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investment except effective hedging transactions related to the Company's normal operations | — | |
| Reversal of provision for impairment of accounts receivable tested for impairment individually | 100,000.00 | — |
| Gains /(losses) arising from entrusted loans to other entities | — | |
| Gains /(losses) arising from changes in fair value of investment properties adopting fair value model for subsequent measurement | — | |
| Impact of one-off adjustment to current profit or loss based on the requirements of taxation and accounting laws and regulations | — | |
| Custody fee income from entrusted operations | — | |
| Other non-operating income except for items mentioned above | 10,199,020.48 | — |
| Other extraordinary gains/(losses) defined | — | |
| Less: Income tax effect | 11,113,272.14 | — |
| Effect of minority interests | 23,571.43 | — |
| Total | 58,207,300.33 | -- |
| Profit for the reporting period | Weighted average return on net assets | EPS | |
| Basic (RMB/share) | Diluted (RMB/share) | ||
| Net profit attributable to ordinary shareholders of the Company | 28.13% | 0.49 | 0.49 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring profits or losses | 26.77% | 0.47 | 0.47 |
3. Differences in Accounting Data under Domestic and Overseas Accounting Standards
(1) Difference of net profit and net asset disclosed according to IFRS and CAS
□ Applicable (A) √ Not applicable (N/A)
(2) Difference of net profit and net asset disclosed according to overseas accounting standard and CAS
□ Applicable (A) √ Not applicable (N/A)
(3) Explanation of difference in accounting data disclosed according to overseas accounting standard and ifthe accounting data has been audited by any overseas audit firm, please disclose the name of the audit firm.
4. Others
Section 13 List of Documents for Reference
(I) Financial statements signed and sealed by the Company’s legal representative, the person in charge of accounting,and the finance manager (accountant in charge).(II) Original of the auditor’s report with the seal of the accounting firm and the signature and seal of the certifiedpublic accountants.(III) Originals of all company documents and announcements publicly disclosed on the websites designated byCSRC during the reporting period.
Nanji E-commerce Co., Ltd.Chairman: ZHANG Yuxiang
April 15, 2020