Stock code: 300888
Winner Medical Co., Ltd.Semi-annual Report
Winner Medical Co., Ltd.Semi-annual ReportTo enhance your health, life and well-being
Section 1 Important Notes, Contents, and Definitions
The Board of Directors, the Board of Supervisors and directors, supervisors andsenior management of the Company hereby guarantee that the statement in thisSemi-annual Report is true, accurate and complete without false or misleadinginformation or major omission and that they will assume all the legal liabilities,individually and jointly.Li Jianquan, the head of the Company, Fang Xiuyuan, the head of accountingwork, and Wu Kezhen, the head of accounting body (accountant in charge),guarantee the authenticity, accuracy, and completeness of the financial report inthis semi-annual reporting period.All directors of the Company personally attended the board meeting forreviewing this report.The forward-looking contents in this report, such as the future developmentstrategy and performance planning, are the goals sets by the Company, whichare planned matters. The achievement of the goals depends on many factors,including market change, which is uncertain. So these contents are not theCompany’s profit forecast for the next year and do not constitute a substantialcommitment of the Company to investors and related parties. Investors andrelated parties should be fully aware of related risks and understand thedifferences among plans, forecasts, and commitments. Investors are asked tobeware of investment risks!The main risks that the Company may face in the future are described in the “12.Risks and countermeasures” in “Section 3 Management Discussion and Analysis”of this report. Investors are asked to read the entire section carefully.The Company does not plan to distribute cash dividends, transfer shares orincrease the share capital of the common reserve fund.
Contents
Section 1 Important Notes, Contents, and Definitions ...... 2
Section 2 Company Profile and Major Financial Indicators ...... 7
Section 3 Management Discussion and Analysis ...... 11
Section 4 Corporate Governance ...... 72
Section 5 Environmental Protection and Social Responsibility ...... 74
Section 6 Important Issues ...... 80
Section 7 Changes in Shares and Shareholders ...... 88
Section 8 Preferred Shares-related Information ...... 96
Section 9 Bond-related Information ...... 97
Section 10 Financial Statements ...... 98
Document Catalog
(1) Financial statements containing the signatures and seals of the person in charge of the Company, the person in charge ofaccounting work, and the person in charge of the accounting body (accountant in charge).
(2) The originals of all company documents and announcements publicly disclosed during the reporting period.
(3) The place where the documents are available for inspection: the Securities Department of the Company.
Definitions
| Term | Refers to | Definition |
| Company, Winner Medical | Refers to | Winner Medical Co., Ltd. |
| Winner Group | Refers to | Winner Group Limited, a controlling shareholder of the Company |
| Sequoia Xinyuan | Refers to | Beijing Sequoia Xinyuan Equity Investment Center (L.P.), a shareholder of the Company |
| Kangsheng Investment | Refers to | Shenzhen Kangsheng Investment Partnership (L.P.), a shareholder of the Company |
| Kangxin Investment | Refers to | Shenzhen Kangxin Investment Partnership (L.P.), a shareholder of the Company |
| SCGC | Refers to | Shenzhen Capital Group Co., Ltd., a shareholder of the Company |
| Kanglong Investment | Refers to | Shenzhen Kanglong Investment Partnership (L.P.), a shareholder of the Company |
| Kangli Investment | Refers to | Shenzhen Kangli Investment Partnership (L.P.), a shareholder of the Company |
| Winner Medical (Chongyang) | Refers to | Winner Medical (Chongyang) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Jiayu) | Refers to | Winner Medical (Jiayu) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Jingmen) | Refers to | Winner Medical (Jingmen) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Yichang) | Refers to | Yichang Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Huanggang) | Refers to | Winner Medical (Huanggang) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Tianmen) | Refers to | Winner Medical (Tianmen) Co., Ltd., a wholly-owned subsidiary of the Company |
| Shenzhen Purcotton | Refers to | Shenzhen Purcotton Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Guangzhou Purcotton | Refers to | Guangzhou Purcotton Medical Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Beijing Purcotton | Refers to | Beijing Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Shanghai Purcotton | Refers to | Shanghai Purcotton Technology Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Qianhai Purcotton | Refers to | Shenzhen Qianhai Purcotton E-Commerce Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Purunderwear | Refers to | Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd., a wholly-owned subsidiary of Shenzhen Purcotton |
| Winner (Huanggang) Cotton | Refers to | Winner (Huanggang) Cotton Processing & Trading Co., Ltd., a wholly-owned subsidiary of Winner Medical (Huanggang) |
| Winner Medical Malaysia | Refers to | Winner Medical Malaysia Sdn. Bhd., a subsidiary controlled by the Company |
| Winner Medical (Hong Kong) | Refers to | Winner Medical (Hong Kong) Ltd., a subsidiary controlled by the Company |
| Winner Medical (Heyuan) | Refers to | Winner Medical (Heyuan) Co., Ltd., a wholly-owned subsidiary of the Company |
| Winner Medical (Wuhan) | Refers to | Winner Medical (Wuhan) Co., Ltd., a wholly-owned subsidiary of the Company |
| Pure HB (Shanghai) | Refers to | Pure HB (Shanghai) Co., Ltd., a wholly-owned subsidiary of the Company |
| PureH2B | Refers to | Shenzhen PureH2B Technology Co., Ltd., a wholly-owned subsidiary of the Company |
| Chengdu Wenjian Likang | Refers to | Chengdu Wenjian Likang Medical Products Co., Ltd., a wholly-owned subsidiary of the Company |
| Tmall | Refers to | An integrated online Business-to-Consumer (B2C) shopping platform (www.tmall.com) under Alibaba Group |
| JD.com | Refers to | Beijing Jingdong Century Trading Co., Ltd. (JD.com, Inc.), a company listed on U.S. exchanges with an integrated online B2C shopping platform (www.jd.com) |
| Key Client | Refers to | Corporate clients with bulk purchase or customized purchase needs regarding Purcotton business |
| Galaxy Real Estate | Refers to | Shenzhen Galaxy Real Estate Development Co., Ltd. |
| Reporting period | Refers to | The first half of 2021, from January 1, 2021 to June 30, 2021 |
| yuan | Refers to | CNY |
| 10,000 yuan | Refers to | CNY 10,000 yuan |
Section 2 Company Profile and Major Financial IndicatorsI. Company Profile
| Stock abbreviation | Winner Medical | Stock code | 300888 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Company name in Chinese | Winner Medical Co., Ltd. | ||
| Chinese abbreviation of the company (if any) | Winner Medical | ||
| Company name in foreign language (if any) | Winner Medical Co., Ltd. | ||
| Company short name in foreign language (if any) | Winner Medical | ||
| Legal representative of the company | Li Jianquan | ||
II. Contact Person and Contact Information
| Secretary to the Board of Directors | Securities affairs representative | |
| Name | Chen Huixuan | Wei Na, Liu Yanxiang |
| Contact address | F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City | F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City |
| Tel | 0755-28066858 | 0755-28066858 |
| Fax | 0755-28134688 | 0755-28134688 |
| investor@winnermedical.com | investor@winnermedical.com |
III. Other Information
1. Company contact
Whether the registered and office addresses and their post codes, official website, and email of the Company were changed duringthe reporting period
√Applicable □ Not applicable
| Registered address of the Company | F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City; Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City |
| Postal code of the Company’s registered address | 518131 |
| Office address of the Company | F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District, Shenzhen City |
| Postal code of the Company’s office address | 518131 |
| Website | http://www.winnermedical.cn, http://www.winnermedical.com |
| investor@winnermedical.com | |
| Date of inquiry on the designated website for disclosure of interim announcements (if any) | April 20, 2021 |
| Query index of the designated website for disclosure of interim announcements (if any) | http://www.cninfo.com.cn/new/index |
2. Information disclosure and keeping place
Whether information disclosure and the place where the semi-annual report is kept were changed during the reporting period
□ Applicable √ Not applicable
The newspapers selected by the Company for information disclosure, the websites designated by the China Securities RegulatoryCommission (CSRC) for publishing the semi-annual report, and the place where the semi-annual report is kept were not changedduring the reporting period. See the 2020 Annual Report for details.
3. Change of registration
Whether the registration status was changed during the reporting period
□ Applicable √ Not applicable
There were no changes in the Company’s registration during the reporting period. See the 2020 Annual Report for details.IV Main Accounting Data and Financial IndicatorsWhether the Company needs to retroactively adjust or restate the accounting data of the previous years
□Yes √No
| Current reporting period | Same period last year | Increase/decrease the reporting period compared to the previous year | |
| Revenue (yuan) | 4,059,865,654.92 | 4,179,778,883.27 | -2.87% |
| Net profits attributable to shareholders of listed companies (yuan) | 761,038,730.24 | 1,032,218,689.91 | -26.27% |
| Net profits attributable to shareholders of the listed company after deduction of non-recurring profits and losses (yuan) | 627,255,609.19 | 1,022,971,049.47 | -38.68% |
| Net cash flow from operating activities (yuan) | 197,604,865.77 | 2,473,405,982.25 | -92.01%Note 1 |
| Basic EPS (yuan/share) | 1.7844 | 2.7417 | -34.92% |
| Diluted EPS (yuan/share) | 1.7715 | 2.7417 | -35.39% |
| Weighted average return on net assets | 7.06% | 28.33% | -21.27%Note 2 |
| End of the reporting period | End of the previous year | Increase/decrease at the end of the reporting period compared to the end of the previous year | |
| Total assets (yuan) | 13,112,976,247.91 | 13,002,251,764.44 | 0.85% |
| Net assets attributable to shareholders of listed companies (yuan) | 10,518,676,503.69 | 10,453,934,045.43 | 0.62% |
Note 1: (1) Cash received from the sales of goods and services decreased by 1,548 million yuan during the reporting period comparedwith the same period of the previous year, mainly due to the decrease in advance payments from customers. In the same period of lastyear, the Company adopted a credit policy of 100% advance payment for protection products, and the credit policy returned to thenormal level during the reporting period. (2) The increase of 899 million yuan in cash paid for operating activities in this reportingperiod was mainly due to the better performance and the higher provision for various taxes in the previous year, resulting in anincrease of 403 million yuan in various taxes paid after remittance in this reporting period compared with the same period of theprevious year. In addition, the higher provision for performance bonuses in the previous year led to an increase of 160 million yuan inemployee compensation paid in this reporting period compared with the same period of the previous year. (3) The above two pointswere the main reasons for the decrease of 2,276 million yuan in net cash flow from operating activities in this reporting periodcompared with the same period of the previous year, a decrease of 92.01% year-on-year.Note 2: -21.27% is the level of difference not the rate of change.
V. Differences in Accounting Data Under Domestic and Foreign Accounting Standards
1. The difference between net profits and net assets in financial statements disclosed according to theInternational Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the International Accounting Standards(IAS) and Chinese Accounting Standards during the reporting period.
2. The difference between net profits and net assets in financial statements disclosed according to the
Overseas Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standardsand Chinese Accounting Standards during the reporting period.
VI. Non-Recurring Profit and Loss Items and Amount
√Applicable □ Not applicable
Unit: yuan
| Item | Amount | Description |
| Profits and losses on the disposal of non-current assets (including the write-off part of the provision for asset impairment) | (7,991,363.76) | |
| Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state | 86,791,122.28 | |
| In addition to the effective hedging business related to the company's normal business operations, the profit and loss from fair value changes arising from holding tradable financial assets, derivative financial assets, tradable financial liabilities, and derivative financial liabilities, as well as the investment income from disposal of tradable financial assets and derivative financial assets, tradable financial liabilities, derivative financial liabilities, and other debt investments | 79,825,882.59 | |
| Income and expenditure other than those mentioned above | 1,756,948.93 | |
| Less: Amount affected by income tax | 26,599,643.40 | |
| Amount of minority shareholders' equity affected (after tax) | (174.41) | |
| Total | 133,783,121.05 | -- |
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 onInformation Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from thenon-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of PublicSecurities Issuing Companies - Non-recurrent Profits and Losses
□ Applicable √ Not applicable
No definition of non-recurrent profit and loss items defined and enumerated in the Interpretative Announcement No. 1 onInformation Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses as non-recurrent profit and lossitems during the reporting period.
Section 3 Management Discussion and Analysis
I. Main Business of the Company During Reporting Period
(I) Main business of the Company during reporting periodWinner Medical is a health enterprise developing both medical and consumption products under its three brands: Winner, Purcotton,and PureH2B. Specifically, the Company has been adhering to the core business principle of “Quality before profit, brand beforespeed, social value before corporate value”. Through continuous innovation and expansion of industrial boundaries, the Company hasdeveloped from a single manufacturer of medical consumables into a large medical health enterprise covering wound care, infectionprevention, personal care, home care, maternal and child care, home textile and clothing and other fields.
1. Medical consumables section
Winner Medical is a benchmarking enterprise in the domestic medical consumables industry. Its main product lines cover wound care,infection prevention and disinfection and cleaning. The specific products include high-end wound dressing products, traditionalwound care and dressing products, infection control products in operating room, disease prevention products and disinfection andcleaning products for body surface cleaning.
The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton
Medical
Woundcare
Woundcareconsumables
consumables
Non-wovenconsumergoods
| Infection protection | Disinfection and cleaning | Non-woven consumer goods | Textile consumer goods | Beauty products and perfumes | Health & personal care | Home sports | ||||||||
| Cotton tissues Sanitary pads Wet tissues etc. | Baby supplies Baby clothing Adult clothing | |||||||||||||
procurement, R&D, production, and direct export. The Company’s products have been certified by the EU CE certification, the USFDA certification and the Japanese Ministry of Health, Labour and Welfare certification, and exported to Europe, America, Japan andother countries. In 2005, “Winner” brand entered the domestic hospital and drugstore market. With its excellent product quality andservice, Winner Medical gradually established a good brand and reputation in domestic hospitals and drugstores. Since the outbreakof COVID-19 in 2020, the “Winner” brand epidemic prevention products have entered the hospital and the civilian market. Thanks toits public commitment not to increase prices and the quality of its products, it has won the unanimous praise at home and abroad,from government units and the public, and the brand reputation and popularity have been greatly improved.
In terms of products, Winner Medical focuses on market demand, is close to clinical and terminal, is driven by R&D and innovation,and constantly improves product layout. Its business scope extends from sales of single wound care products such as cotton gauze tosales of integrated solutions of wound care, infection prevention, disinfection and cleaning. Disposable operating room consumablescan more effectively reduce nosocomial infection than reusable medical products. With more attention of the state and hospitals tonosocomial infection and residents’ attention to personal health environment, disposable operating room consumables are graduallyaccepted by the domestic market. Winner Medical’s medical dressing product line has been expanded from traditional dressingproducts mainly focusing on gauze products to high-end dressing products, such as silica gel foam dressing, hydrocolloid dressing,super absorbent pad, negative pressure drainage products, etc., which are mainly applied to chronic wound healing scenes such asdiabetes, large-area burns and wounds. The Company’s technical level in the field of high-end dressings has been in the forefront ofthe industry, and is expected to become the core products for the development of Winner Medical.
2. Healthy Consumer Goods Section
Purcotton is a healthy life brand with "Medical background/Purcotton philosophy/Quality in our DNA "as its core competitiveness,which starts with pure cotton spunlace non-woven fabric and takes “medicine close to life, Purcotton care for health” as its brandproposition. Its products include pure cotton tissue, sanitary pads with pure cotton surface, pure cotton wet tissues and othernon-woven consumer goods, as well as baby supplies, baby clothing, baby products, adult clothing and other textile consumer goods.Purcotton advocates the life concept of “comfort, health, environmental protection”, replacing chemical fiber with cotton and keepingaway from chemical stimulation. It provides overall solutions for different life scenes, having a good user reputation and formed afully differentiated brand image in the field of consumer goods with strong brand appeal.
In terms of products, with excellent quality control ability and technology research and development ability, the Company continuesto introduce medical grade quality consumer goods. Cotton is the main raw material of core products of Purcotton, which adoptsglobal high-quality cotton to control product quality and safety from the source. According to the high standard of medicalconsumables, all kinds of pollution sources are strictly controlled in the production process. Disposable underwear, newborn babyclothes and other close-fitting clothing are packaged with medical grade sterilization to further ensure the safety and environmentalprotection of the products. Purcotton products cover multiple consumer groups, such as mothers and infants, children and adults, andspan multiple product lines, such as high-end pure cotton tissues, female care, baby care, adult clothing, home textile products, etc.
In July 2019, the Company launched the “PureH2B” brand, aiming to build a one-stop retail platform covering beauty makeup,personal care, sports and other healthy and beautiful life needs. As of June 30, 2020, “PureH2B” has sold products through 9 offlinestores, online official websites and Wechat mini programs, and its business is still at the initial stage.
(II) Main Products and Purposes
Its health product system covers: wound care products, infection prevention products, disinfection & cleaning products under itsmedical consumables section; the non-woven consumer goods and textile consumer goods under its healthy consumer goods section;and pure cotton spunlace non-woven fabric, an industry intermediate product.The main categories and images of some products under the Company's medical consumables section are as follows:
| Product Class | Product Category | Main Purpose | Product | Image of Some Products |
| Wound care products | Traditional wound care and wound dressing products | For absorbing wound exudate, dressing wounds, and sports protection | Gauze sheets, non-woven sheets, gauze bandage, dressing change kits, etc. | |
| High-end wound dressing products | For creating a moisture balance at the wound interface to optimize its benefits for wound healing, reduce the frequency of dressing replacement, and reduce secondary damage | Silicone dressings, alginate dressings, etc. |
| Infection prevention products | Operating room infection control products | For preventing infections in the operating room | Surgical packs, surgical gowns, etc. | |
| Disease prevention and control products | For occupational protection of medical staff and patient isolation | Masks, protective clothing, isolation gowns, etc. |
| Disinfection & cleaning products | Disinfection & cleaning products | For wound cleaning and disinfection, and daily cleaning | Cotton swabs, cotton pads, cotton balls, alcohol cotton pads, disinfectant, etc. |
As the important guarantee for medical staff’s occupational protection and patient isolation protection, disease protection and controlproducts such as masks and protective clothing play an indispensable role in coping with major health incidents and improving publichealth. The main categories and images of some products under the company's healthy consumer goods section are as follows:
| Class | Product Category | Product | Image of Some Products |
| Non-woven consumer goods | Cotton tissues | ||
| Wet tissues | |||
| Sanitary pads | ||
| Other non-woven consumer goods | Cotton swabs, makeup cotton pads, disposable underwear, etc. | |
| Textile consumer goods | Baby supplies | Baby's bath towels, handkerchiefs, and quilts, etc. | |
| Baby clothing | Baby's leisure wear, outing costume, underwear, footwear, etc. | ||
| Adult clothing | Adult's leisure wear, outing costume, underwear, footwear, etc. | ||
| Other textile consumer goods | Bedding, bathroom accessories, etc. |
The purposes and images of the Company's pure cotton spunlace non-woven fabric are as follow:
| Class | Main Purpose | Image |
| Pure cotton spunlace non-woven fabric | With 100% quality cotton as raw materials, the fabric is made with the pure cotton spunlace non-woven fabric technology. It can be used in fields such as personal care, home care, medical equipment, and industrial wipes. |
(III) Main Operating Modes
1. Procurement mode
The Company has established a complete procurement management system, which mainly includes the Procurement Control Process,Procurement Price Management Process, New Supplier Selection and Review Control Process, Supplier Performance AppraisalManagement Process, and the Company also has made a Qualified Supplier Directory. According to the Company's regulations,purchase applications shall be submitted by requiring departments based on customer orders, sales plans, and production plans. Thepurchasing department shall strictly follow the purchasing management regulations after analyzing the purchasing requirements andthe raw material market. The procurement of key bulk raw materials (such as cotton and veil) is implemented in a unified manneraccording to the Company's rules on its strategic procurement. The Company implements a strict supplier management system toensure product quality and stable product supply. The Company has set a supplier directory and a perfect update and eliminationmechanism to dynamically manage existing suppliers and new suppliers, which enables the Company to preferentially cooperate withthe suppliers with the highest assessment results. For new suppliers, the Company has made strict selection criteria and supplierdevelopment and process management systems, including on-site inspection on suppliers; for suppliers with poor or even unqualifiedannual performance, the Company will add them to the key watch list or eliminate them. Generally, the Company will sign an annualframework agreement with a supplier to specify the cooperation content and the annual cooperation arrangement, and specificprocurement contracts will be signed separately.
2. Production mode
The Company formulates production plans according to customers' POs and requirements, its annual sales plans, and monthly rollingsales plans. Based on its own production capacity and demand fluctuations, the Company adopts the production strategies of Make toOrder (MTO) and Made to Stock (MTS).
3. Sales mode
The Company sells products through multiple channels. The main sales channels are shown in the following figure:
4. Marketing mode
The Company is developing its products under the Winner, Purcotton, and PureH2B brands a coordinated way. With 30 years ofexperience in the production of medical supplies, Winner is a leading medical consumables brand in the Chinese market and a brandwith a global vision. With “To enhance your health, life and well-being” as its vision and industry-leading product quality as thecornerstone of its brand value, the product marketing and promotion for the brand rely more on its brand reputation. With pure cottonproducts as its label, Purcotton ad opts unique, differentiated strategies to build its brand. By integrating multiple promotion channelssuch as directly-sales stores, brand roadshows, celebrity endorsements, event sponsorship, new media, and advertising, Purcottonkeeps conveying to consumers its proposition of “medicine close to life, Purcotton care for health” and its vision of “PurcottonChanges the World”, which helps deepen the meaning of Purcotton brand and increase its brand awareness and loyalty. PureH2Boffers consumers selected products that are high-quality, healthy, and beautiful from around the world through its paid membershipsystem. It offers its members products with extremely competitive prices and a series of excellent offline services such as beautysalons, free makeup, and seminars. With “Love, protect and enjoy nature” as its brand vision, and “Influence the mainstreamconsumption attitude with “inner health brings outer beauty” philosophy, and attract mainstream consumers with natural products” asits mission, PureH2B is bringing consumers a new all-round digital retail experience.(IV) Main Driving Factors of Performance
1. Medical consumables industry and consumer goods industry will keep growing rapidlyAs the global demand for healthcare of aging population increases, resident income continues to grow, and medical and healthcareimprove, the global medical consumables market is showing a steady growth trend. The COVID-19 pandemic has made globalconsumers pay more attention to health and personal protection. In China, especially, most families choose to wear masks when theytake public transport and are in public places, so the demand for masks is expected to increase significantly compared with thatbefore the pandemic. After the COVID-19 pandemic outbreak, as the government, medical workers, and consumers in China paygreater attention to protection and quality, the use rate of disposable medical consumables and disposable surgical packs will gethigher; on the other hand, as the Chinese government attaches importance to the medical consumables industry, the supervision overthe industry are continuously strengthened while the reserves of medical consumables are increasing. Therefore, companies that donot comply with laws and regulations will surely be eliminated. In addition, China's medical dressings are changing from traditionaldressings to high-end dressings, and they are expected to replace imported dressings step by step. The medical consumables marketin China is growing rapidly, creating a good external environment for enterprise development.In recent years, the total retail sales of consumer goods in China has been rising rapidly, showing an obvious trend of consumptionupgrading. Consumers' demand for green, healthy, and environmentally friendly products is increasing, bringing good opportunitiesin the consumer goods industry.
Online channels
Medicalconsumables
| Medical consumables | Pure cotton spunlace non-woven fabric | Healthy consumer goods |
Offline channelsOffline channels
Offline channelsOffline channels
| Direct selling to domestic and foreign customers | Online channels | Offline channels |
| Third-party B2C platforms, such as Tmall, JD.com and Amazon | Domestic sales | Overseas sales |
| Winner's own brand at hospitals | Winner's own brand at OTC drugstores | OEM mode | Winner's own brand sales |
E-commerceplatforms
Real stores
Real storesSelf-operatedflagship storesat Tmall and
JD.com
| Self-operated flagship stores at Tmall and JD.com | Warehousing by e-commerce platforms, such as JingDong self-run stores and Tmall Supermarket | Official website, APP and Wechat mini program of PurCotton | Directly operated and franchised chain stores | Supermarket sales | Bulk purchase by key accounts or customization business |
2. The Company‘s ability to innovate and its foresight enable it to lead the market and seize opportunitiesIn terms of technological innovation, the Company's pure cotton spunlace non-woven fabric is a kind of pioneering fabric in theindustry, with breakthrough significance. The Company innovatively applies the fabric in healthy consumer goods and medicalconsumables. In terms of product innovation, the Company keeps introducing new products based on medical consumables andhealthy consumer goods, to increase loyalty of existing customers and to win new customers. In addition, the Company keepsexploring new areas based on its R&D advantages. For example, the innovative application of pure cotton spunlace non-wovenfabrics in infection prevention products such as medical protective clothing, surgical gowns, and isolation gowns, which has not onlyalleviated the shortage of raw materials during the pandemic but also improved the breathability and comfort of anti-pandemicproducts, allowing them to be more environmentally friendly. As for high-end wound dressings, the Company keeps tacklingobstacles to enrich its high-end dressing products. With a top-down innovation system established, the Company is able to grasp thetrend of market development in a timely manner to develop new products and constantly promote its self-innovation.
3. High-quality products and precise brand positioning enhance brand valueThe Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cottonprocurement, R&D, production, and direct export. The Company is one of the early companies that established a medical-gradequality management system in the industry, and has passed the ISO13485 Medical Devices Quality Management SystemCertification. Its product quality complies with the European, American, Japanese, and Chinese standards. Winner Medical enjoys ahigh brand reputation and recognition. In 2020, Winner Medical was praised by the Joint Prevention and Control Mechanism of theState Council as a well-deserved “ordnance factory” in fighting the pandemic. Its wholly-owned subsidiary Winner Medical(Huanggang) was awarded the title of “National Advanced Unit for Fighting the COVID-19 Pandemic” by the CPC CentralCommittee and the State Council. It is also the only enterprise awarded the title in Hubei Province. In May 2021, Winner Medicalwas selected by the Federation of Shenzhen Industries as the “Benchmarking Enterprise in China’s Medical Consumables Sector”and at the same time recognized as an “International Renowned Brand” by the United Nations Industrial Development Organization.Winner Medical has expanded its business from the medical field to the consumer goods field, which has also increased the brandvalue of its consumer products.
Purcotton is committed to fulfilling consumers’ demand for high-quality products which are “comfortable, healthy, andenvironmentally friendly”. Constantly winning recognition from consumers since its launch in 2009, Purcotton has rapidly growninto a top brand of maternal and child products on Tmall, and has gained greater market shares in the field of maternal and childconsumer products. In October 2019, Purcotton won the reputation of “70 Brand of the 70th Anniversary of the Founding of NewChina” sponsored by CCTV. In January 2021, Purcotton was honored as one of the “Shenzhen Top Brands” by Federation ofShenzhen Industries. In April 2021, Purcotton was included into the list of the second “Shenzhen Top 100 Brands” announced byShenzhen Quality City Promotion Association.In conclusion, with high brand value, the Winner and Purcotton brands will help the Company enhance customer loyalty, stabilizeproduct prices, and expand its market share in the fierce competitive market, thereby ensuring its sustainable and stable profitability.
(V) The Industry in Which We Operate
1. Industry definition
According to the Classification Rules of Medical Devices (2015) (Order No. 15 of the China Food and Drug Administration) and theClassification Catalogue of Medical Devices (Notice No. 104 of the China Food and Drug Administration in 2017), the medicaldressings produced and sold by the Company belong to the nursing and protective devices in medical devices. According to theIndustry Classification of National Economy (GB/T4754-2017) and the Industry Classification Guidelines for Listed Companies(revised in 2012), the industry of the Company is special equipment manufacturing industry (C35) in manufacturing industry (C).The products of the Company's healthy consumer goods include pure cotton tissues, sanitary pads with pure cotton surface, cottonwet tissues and other non-woven consumer goods, baby supplies, baby clothing, adult clothing and other textile consumer goods.According to the Industry Classification of National Economy (GB/T4754-2017) and the Industry Classification Guidelines forListed Companies (revised in 2012), the consumer goods operated by the Company mainly belong to the textile industry (C17) andthe textile and apparel industry (C1 8) in the manufacturing industry (C).
2. Development of the industry
(1) Development of medical consumables industry at home and abroad
Medical consumables refer to the medical and health materials used in the process of clinical diagnosis and nursing, testing and repair.With a wide variety of models and wide application, they are important materials for medical institutions to carry out daily medicaland nursing work. From the perspective of value, medical consumables can be divided into high-value medical consumables andlow-value medical consumables.
Data source: China Medical Consumables Market Conditions and Investment Prospect Survey Report 2021-2026, China Medical
Device Blue Book , Chinese Medicine, IBM Report
Data source: China Medical Device Blue Book, Chinese Medicine, Magna Information Centre, IBM ReportCompared with high-value medical consumables, low-value medical consumables are mainly injection and punching, medicaldressings and medical polymers, with low entry threshold and fierce market competition. Due to the wide application and benefitfrom the improvement of people’s living standards and the continuous growth of medical demand in China, the market space oflow-value medical consumables is huge, and will continue to maintain high-speed growth in the future. According to the research andanalysis of IBM, it is estimated that the market scale of low-value medical consumables in China will reach 221.3 billion yuan by2025.
① Market development of operating room infection control products
Due to the growth of the number of surgical operations and the strengthening of infection control measures, the market of operatingroom infection control products is growing continuously. According to the statistics of CMI, the market size of operating roominfection control products is expected to reach USD 3.688 billion in 2026, with an average annual compound growth rate of 4.9%.Operating room infection control products can be divided into reusable products and disposable products. The change from reusableproducts to disposable products is the development trend of the industry. The main reasons include: on the one hand, compared withreusable products, disposable surgical infection control products can significantly reduce the risk of cross infection. According toCoherent, disposable operating room infection control products can reduce the risk of cross infection during surgery by 60%. TheGuide to Operating Room Nursing Practice compiled by the Operating Room Professional Committee of Chinese NursingAssociation also recommends the use of disposable aseptic products in the operating room. On the other hand, disposable operatingroom infection control products also have advantages in convenience and cost compared with reusable products, which makes thedemand for disposable products more active.Compared with a single product, the market scale of customized surgical packs will show a rapid growth trend. According to thestatistics of CMI, the market size of global customized surgical packs is expected to grow to USD 21.347 billion in 2026, with anaverage annual compound growth rate of 10.2%. In China, the market size of customized surgical packs is expected to rise to USD
1.504 billion, with an average compound annual growth rate of 12.2%, which is quite promising.
② Market development of high-end wound dressing products
Judging from the global trend, the demand for high value-added and multifunctional medical dressings made of new materials isincreasing, and the high-end medical dressing industry will usher in good development opportunities. According to the statistics ofBMI, the global high-end dressing market is expected to reach USD 7.015 billion in 2022.As the manufacturers in China improve their technologies and product quality, and relevant government departments and institutionsformulate and implement laws, regulations, and industry policies to support the development of medical dressings, includinghigh-end dressings, high-end medical dressings in China is expected to replace the imported ones in the future.
(2) Development of consumer goods segmentation industry
① Development of household paper industry
According to 2020 Annual Report of China’s Paper Industry released by China Paper Association, the production of household paperin 2020 was 10.80 million tons, an increase of 7.46% over the previous year, and the consumption was 9.96 million tons, an increaseof 7.10% over the previous year. The average annual growth rate of production from 2011 to 2020 is 4.45%, and the average annualgrowth rate of consumption is 4.43%.Household paper has the characteristics of rigid and continuous demand, its market continues to expand, and the popularization rateof facial tissue and wipe paper products also further increases. Because of its more environmental protection and less sensitization,pure cotton tissues can replace traditional paper products and have great market potential. Since cotton tissues are gaining higheracceptance, Tmall has added cotton tissue as a category under its paper products. Cotton tissues are widely used in many scenariossuch as cleaning and personal care. As people's consumption capacity improves, cotton tissues' penetration rate is expected to rise.The Company is the pioneer of cotton wipes, leading the industry to achieve rapid growth in the past few years. According to the dataof Leading Industry Research Institute, the demand for cotton wipes in China increased from 2.35 billion sheets in 2015 to 23.35billion sheets in 2019, with an average annual compound growth rate of 77.5%.
② Development of disposable sanitary products industry
According to Euromonitor statistics, the market of absorptive care products in China increased from 128.9 billion yuan to 175.4billion in 2015-2020, with an average annual compound growth rate of 6.4%. Among them, female health care products increasedfrom 74 billion yuan to 89.1 billion yuan, with an average annual compound growth rate of 3.8%. The market scale of infant diapersincreased from 47.9 billion yuan to 70.3 billion yuan, with an average annual compound growth rate of 8.0%. The market scale ofadult incontinence products increased from 1.6 billion yuan to 5.1 billion yuan, with an average annual compound growth rate of
26.7%. The market scale of wet tissues increased from 5.4 billion yuan to 10.9 billion yuan, with an average annual compoundgrowth rate of 15.3%. Adult incontinence products started late in China and are still in the introduction period. With the gradualemergence of aging population, the huge potential of adult incontinence products market in China will be released. The marketpenetration rate of wipes in China is relatively low. At present, the market is dominated by baby wet tissues and general-purpose wettissues. Female hygiene wet tissues, makeup removal wet tissues, home cleaning wet tissues and other categories account for arelatively small proportion, so there is a large market space to develop.
③ Development of textile industry and textile clothing and apparel industry
China has become the world's largest producer and consumer of textiles and clothing. The sales of specialized retail goods of textiles,clothing and daily necessities increased from 70.302 billion yuan in 2007 to 667.640 billion yuan in 2019, with an average compoundannual growth rate of 20.63%. Among them, the sales of textile, clothing and daily necessities in chain retail enterprises haveincreased rapidly in recent years, reaching 144.802 billion yuan in 2019.The development of e-commerce industry also led to the transformation and upgrading of textile, clothing and daily necessitiesindustries. According to the statistics of China National Textile And Apparel Council, the total volume of e-commerce transactions oftextile and clothing in China in 2019 was 6.69 trillion yuan, accounting for 19.22% of the total volume of national e-commercetransactions, which is the most active trading category of e-commerce platform. Among them, the scale of online retail of textile andapparel is 1.67 trillion yuan, accounting for 19.59% of the total online retail sales of physical goods.
④ Development of maternal and child supplies industry
On May 31, 2021, the Political Bureau of the Communist Party of China held a meeting to deliberate and approve the Decision onOptimizing the Fertility Policy and Promoting the Long-term Balanced Development of the Population. The meeting proposed toimplement the policies that a couple can have three children and supporting measures are conducive to improving China’s populationstructure, implementing the national strategy of actively responding to the aging population, and maintaining China’s advantages inhuman resources endowment. The supporting policies for three-child policy - the Decision of the Central Committee of theCommunist Party of China and the State Council on Optimizing the Fertility Policy and Promoting the Long-term BalancedDevelopment of the Population, and the Notice of the Office of the National Healthcare Security Administration on Improving BirthInsurance to Support the Three-Child Policy - were released in July 2021. With the release of the three-child policy and its supportingfertility policy dividend as well as the trend of consumption upgrade, the domestic maternal and infant market will usher in a broaderspace for development. According to Nielsen, the proportion of high-end & mid-to-high-end products sales in the baby care segmentincreased by 2.5ppt in 2020. According to the Research and Investment Value Analysis Report on China’s Maternal and InfantIndustry Chain 2021 released by iiMedia Research, the maternal and infant market size in China exceeded 4 trillion yuan in 2020 andis expected to increase to7.546 trillion yuan by 2024.
3. Competitive position of the Company
(1) Medical consumables business
Winner Medical is a manufacturer with comprehensive leading advantage in China's medical consumables industry. It has establisheda medical-grade quality management system earlier in the industry and realized the whole industry chain operation mode from cottonprocurement to R & D, production and sales. As a leading enterprise in the medical dressings industry, the Company promotes theestablishment of the medical dressings branch of China Chamber of Commerce for Import and Export of Medicines and HealthProducts, and serves as the president of the medical dressings industry, leading the industry to continuously expand its internationalmarket share with innovative and high-quality products. After the outbreak of COVID-19, the Company has fully exerting its corebusiness principle, “social value before corporate value”, strictly controlled the quality of epidemic prevention products, and did notincrease the price of terminal products. Its products were highly praised by the country and the public, and the brand value wasgreatly improved.
(2) Healthy consumer goods business
Purcotton takes “cotton” as the core, covering multiple consumer groups, such as mothers and infants, children and adults, and spanmultiple product lines, such as high-end pure cotton tissue, female care, baby care, adult clothing, home textile products, etc. TheCompany takes the self-developed pure cotton spunlace non-woven fabric as the basic material carrier, and successfully realizes theexpansion of medical products to household products. The Company is the pioneer and industry leader of cotton non-wovenconsumer goods market. With its leading product R & D ability, medical-grade product quality and popular brand image, theCompany has rapidly increased the market share of cotton non-woven products. Purcotton has developed into a flagship nationalbrand among high-quality domestic consumer brands, which is one of the primary choices for consumers to buy cotton consumergoods.
The Company needs to comply with the disclosure requirements of the No. 10 Guideline of Shenzhen Stock Exchange's GEM Boardfor Information Disclosure of Listed Companies Engaging in Medical Device Business.
The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for IndustryInformation Disclosure of Listed Companies Engaging in Textile and Apparel Business.II. Discussion and Analysis of Operations
(1) Overview of business performance
During the reporting period, the COVID-19 pandemic has been effectively controlled in China, the Company’s quality and brandadvantages have been brought into full play, the sales volume of epidemic prevention products has increased significantly comparedwith that in the same period last year, and the sales price has gradually returned to normal. At the same time, the internationalcommunity still faces a severe epidemic situation during the reporting period, the turnover velocity of global cargo transportationslowed down dramatically, and the global transportation capacity was extremely tight, which promoted a substantial increase inexport freight, resulting in the delayed delivery of some of the Company’s overseas orders. The above factors caused the Company’srevenue of medical consumables business to drop to 2.127 billion yuan, a year-on-year decrease of 15.28%. Fortunately, domesticconsumer demand and consumption capacity have gradually recovered, the Company upgraded its products, and saw effectivemarketing and promotion results. The revenue of the Company’s healthy consumer goods business increased to 1.79 billion yuan, ayear-on-year increase of 20.64%.During the reporting period, the Company’s revenue reached 4.060 billion yuan, a decrease of 2.87% compared with the same periodof the previous year and an increase of 92.87% compared with the first half of 2019. The net profits attributable to shareholders ofthe listed company was 761 million yuan, a decrease of 26.27% compared with the same period of the previous year and an increaseof 230.87% compared with the first half of 2019. The incomes by channels and by products during the reporting period are asfollows:
1. Income from main operations through main channels
Unit: ’0,000 yuan
| Business type | Channel type | Income in 1H21 | Income in 1H20 | Changes over 1H20 | Income in 1H19 | Changes over 1H19 | YoY performance Reason for change |
| Medical consumables | Hospitals in China | 59,701.88 | 39,267.22 | 52.04% | 9,112.46 | 555.17% | Increase in brand’s influences, more channels, and more disposable operating room consumables accepted by hospitals in China |
| Domestic drugstores | 21,248.24 | 21,083.19 | 0.78% | 9,309.80 | 128.24% | No major changes | |
| E-commerceNote 1 | 35,272.19 | 10,128.90 | 248.23% | 1,261.90 | 2,695.16% | The Company’s anti-epidemic actions in last year were recognized by the community and its brand awareness and reputation on the consumer side increased significantly. As a key category and the product that helps drive traffic to the |
| Company, masks are gaining popularity among consumers, and introducing more and more home care products to customers. | |||||||
| Domestic direct selling | 1,719.83 | 72,488.42 | -97.63% | 2,511.44 | -31.52% | Larger purchase amount of enterprises and institutions as well as government departments in the same period last year due to severe pandemic situation | |
| Overseas sales | 94,714.23 | 108,037.64 | -12.33% | 39,355.57 | 140.67% | The slowdown in global cargo transportation leading to global capacity constraints and resulting in delays in the delivery of some of the Company’s overseas orders | |
| Subtotal | 212,656.37 | 251,005.37 | -15.28% | 61,551.17 | 245.50% | / | |
| healthy consumer goodsNote 2 | E-commerce | 110,278.98 | 99,304.17 | 11.05% | 71,641.20 | 53.93% | / |
| Among them: (1) Tmall, JD.com and other third-party e-commerce platform channels | 86,924.58 | 82,002.85 | 6.00% | 69,275.40 | 25.48% | / | |
| (2) Company-owned platform channels such as official website, Wechat mini program and APP | 23,354.40 | 17,301.32 | 34.99% | 2,365.80 | 887.17% | See Note 3 of the Table for details | |
| Offline stores Note 4 | 54,263.42 | 38,223.85 | 41.96% | 52,528.79 | 3.31% | Effective control of the COVID-19 pandemic in China enabling recovery of consumer demand and |
| spending power, resulting in store expansion and internal operational capacity improvement across the Company | |||||||
| Supermarket channels | 10,617.06 | 6,045.82 | 75.61% | 5,030.07 | 111.07% | Internal management improvement leading to the improvement of human efficiency; new product introduction; new maternal & infant stores and hypermarket chains | |
| Key Client | 3,874.40 | 4,832.25 | -19.82% | 3,494.48 | 10.87% | / | |
| Subtotal | 179,033.86 | 148,406.09 | 20.64% | 132,694.54 | 34.92% | / | |
| Pure cotton spunlace non-woven fabric | Direct selling | 9,835.25 | 15,236.24 | -35.45% | 1,3685.50 | -28.13% | Coil products more for private use, reducing external sales |
| Subtotal | 9,835.25 | 15,236.24 | -35.45% | 13,685.50 | -28.13% | / | |
| Total | 401,525.48 | 414,647.70 | -3.16% | 207,931.21 | 93.10% | / | |
Note 1: The “e-commerce” channel of medical consumables business includes domestic e-commerce platforms and cross-bordere-commerce platforms.Note 2: The healthy consumer goods business consists of Purcotton business and PureH2B business, of which PureH2B’s salesamounted to 24,564,700 yuan.Note 3: In terms of healthy consumer goods business, the reason for the change in the performance of “company-owned platformchannels such as official website, Wechat mini program and APP”: improving the purchase conversion of regular users by focusingon the operation of users and categories, resulting in a YoY increase of 24.9% in the purchase rate of regular users (“regular users”refers to users who made purchases in the previous year).In addition, the data of “company-owned platform channels such as official website, Wechat mini program and APP” of healthyconsumer goods business include the data driving from company-owned channels to online platforms, and the income hereof is97,425,600 yuan.Note 4: The data of the “offline stores” channel of healthy consumer goods business cover directly-operated stores and franchisedstores.
2. Income from main operations of main products
Unit: ’0,000 yuan
| Business type | Product type | Income in 1H21 | Income in 1H20 | Changes over 1H20 | Income in 1H19 | Changes over 1H19 | YoY performance Reason for change |
| Medical consumables | Traditional wound care and wound dressing | 25,573.22 | 24,141.90 | 5.93% | 28,780.08 | -11.14% | / |
| products | |||||||
| High-end wound dressing products | 4,374.06 | 4,113.21 | 6.34% | 4,123.15 | 6.09% | / | |
| Operating room infection control products | 22,804.66 | 10,333.10 | 120.70% | 11,522.11 | 97.92% | Benefiting from the product quality and environmentally-friendly pure cotton recognized by hospitals; improvement in the coverage rate of channels | |
| Disease prevention and control products | 146,319.30 | 199,058.52 | -26.49% | 8,330.68 | 1,656.39% | Effective control of COVID-19 pandemic in China, and sufficient supply of disease prevention and control products all over the world; gradual recovery of prices to normal | |
| Disinfection & cleaning products | 13,585.13 | 13,358.64 | 1.70% | 8,795.15 | 54.46% | / | |
| Subtotal | 212,656.37 | 251,005.37 | -15.28% | 61,551.17 | 245.50% | / | |
| Healthy consumer goods | Cotton tissues | 40,885.23 | 37,004.54 | 10.49% | 39,889.58 | 2.50% | / |
| Sanitary pads | 26,454.67 | 17,085.23 | 54.84% | 13,293.44 | 99.01% | Enhancing brand awareness and reputation by marketing activities; launching new products; attracting more young people | |
| Wet tissues | 9,019.84 | 9,627.70 | -6.31% | 10,032.28 | -10.09% | / | |
| Other non-woven consumer goods | 22,693.78 | 30,022.09 | -24.41% | 9,383.00 | 141.86% | / | |
| Baby supplies | 17,998.93 | 11,734.25 | 53.39% | 12,678.01 | 41.97% | Model, design and color enhancement of products; storytelling and theme enhancement on communication; digital automatic replenishment on | |
| Baby clothing | 20,690.19 | 14,612.59 | 41.59% | 15,684.13 | 31.92% | ||
| Adult clothing | 27,451.73 | 17,897.45 | 53.38% | 17,519.08 | 56.70% |
| Other textile consumer goods | 13,839.49 | 10,422.24 | 32.79% | 14,215.02 | -2.64% | new effect release | |
| Subtotal | 179,033.86 | 148,406.09 | 20.64% | 132,694.54 | 34.92% | / | |
| Pure cotton spunlace non-woven fabric | Pure cotton spunlace non-woven fabric | 9,835.25 | 15,236.24 | -35.45% | 13,685.50 | -28.13% | Coil products more for private use, reducing external sales |
| Subtotal | 9,835.25 | 15,236.24 | -35.45% | 13,685.50 | -28.13% | / | |
| Total | 401,525.48 | 414,647.70 | -3.16% | 207,931.21 | 93.10% | / | |
(2) Overview of operation and management
During the reporting period, the Company focused on the following work:
1. Digital transformation
The Company has adopted numerous reform measures since 2019 to promote “consumer-centric” and “digital and intelligentmanufacturing-driven” business transformation, and carry out the five digital strategies of “centralized commodity digital operation”,“omni-channel digital operation”, “consumer omni-channel operation”, “digital smart logistics digital operation” and “smartmanufacturing digital operation”. During the reporting period, the first phase of “omni-channel digital operation” and “centralizedcommodity digital operation” enabled the support of multiple e-commerce platforms, one inventory for online and offline, intelligentdistribution of orders, omni-channel price and unified membership rights across channels. Consumer omni-channel operation ismainly provided by Tencent’s CDP (Consumer Data Platform) and MA (Marketing Automation), which have created a domain-wideconsumer operation system and are committed to realizing the accurate matching of people, goods and fields at the data andtechnology levels. Digital smart logistics digital operation is mainly launched together with JDLogistics, which is committed totransforming the Company’s existing logistics system from a growth supporter to a revenue driver, and to building an integrated,intelligent, expandable and fast-responding active logistics system based on customer’s demand. Smart manufacturing digitaloperation also refers to the advice of top consulting firms, and is committed to creating a green, low-carbon and agile platform forecological synergy in industry chain and group unified control, promoting the Company to rapidly and significantly reducemanufacturing costs and continuously improve management, operational performance and overall competitiveness.In March 2021, the Company launched the SAP Reinvention Project, and partnered with the world’s largest information technologyand business solutions consulting firm again to upgrade and reinvent SAP ERP in order to make the system agile enough to supportmobile terminals, accelerate IoT and big data applications, improve operational efficiency, and better meet the challenges of a rapidlychanging market and globalization. With SAP Big Data solution, the Company will establish a unified information platform coveringR&D and innovation, commodity management, production operation and control, warehousing and logistics management, retailmanagement, financial management, human resource management and corporate decision-making, which will enhance theCompany’s capability of managing strategic decision making, operation control, technological innovation and comprehensiveinformation application and other related businesses.Through the Salesforce CRM solution, the Company has completed the foundation of CRM system and established end-to-enddigital capabilities for marketing and sales to support Winner Medical’s customer, marketing, sales and channel managementbusiness with efficient processes and business collaboration. During the reporting period, the CRM project has been launched onlineas a whole, which helps each sales department enable the full lifecycle management of customers and develop a unified salesconfiguration and quotation tool, aiming to improve customer acquisition capability and marketing ROI.
2. R&D and Innovation
In terms of medical consumables, the Company has successfully developed anti-bacterial and anti-viral masks, which have betterdisinfection and sterilization effect, to fight against the constantly changing pandemic and the variation of viruses, and protecteveryone’s health. At the same time, the Company develops 100% pure cotton triple resistance surgical gown, which improves thecomfort and is more environmentally friendly and biodegradable, to deal with problems of wearing protective clothing for a longtime and suffocation in surgical wear. Thanks to the aforementioned product advantages, the Company’s protective clothing is inshort supply in patchy distribution of affected area in many regions during the COVID-19 pandemic. To solve the problem of woundinfection, which is an annoying problem for clinicians, the Company has developed a variety of antibacterial dressings to solve theinfection problem at different stages of wound healing and different types of wounds, so as to reduce pain for patients, lower the costof care and mitigate the risk for a hospital bed shortage. In the concept of health and beauty, the product range has been expanded toinclude medical aesthetics, such as hyaluronic acid sheet mask (hyaluronic acid dressings) and scar repair products based on siliconegel technology.In terms of healthy consumer goods business, the Company successfully completed research and development of “soft and flexiblegauze free of additive”. Thanks to its independent innovation of new process of yarns, together with physical batting, the fabric issofter and more flexible. This kind of material is applied to pure cotton bedding and gauze toiletries, allowing more energy-savingand environmentally-friendly production as well as safer and healthier products. The “pure cotton antibacterial cooling fabric”developed by the Company integrates cooling microcapsules and herbal cotton antibacterial technology with pure cotton fabric,which can quickly absorb heat and achieve long-lasting cooling effect. This kind of fabric has 5A antibacterial effect, and can be usedfor baby and adult’s cooling T-shirts, pants, summer sleeping mats, etc. At the same time, the Company developed “pure cottonunidirectional moisture-guiding fabric” for children’s loungewear and baby supplies, which completely solves the pain point ofchildren who are easy to catch a cold after sweating. In terms of industry-university-research collaboration, the research project of“temperature scale of gauze quilt and sleep comfort” carried out by the Company and Soochow University has been completed,providing guidance for consumers to make rational choice in scientific parenting and sleep comfort.As the first and major drafter, Purcotton, a wholly-owned subsidiary of the Company, led the development of national standards forcotton tissues (GB/T 40276-2021), which requires that the fiber composition and content of cotton tissues shall be identified, and thefiber content tolerance shall comply with the provisions of GB/T 29862 (released on May 21, 2021 and implemented on December 1,2021). During the reporting period, the Company obtained 3 new invention patent certificates, 49 utility model patents and 44 designpatents. The certificates are conducive to the further establishment of product technology and competitive barriers and theenhancement of the core competitiveness of the Company.
3. Brand marketing
2021 marks the 30th anniversary of the founding of the Company. It plans to increase the investment in marketing activities toenhance brand influence. During the reporting period, Winner Medical enhanced its brand influences by involving in the shootingprojects of “Days and Nights in Wuhan”, the first documentary film in China focusing on the war against COVID-19 pandemic, and“Chinese Doctors”, a blockbuster adopted from the real story of Wuhan Jinyintan Hospital. It also worked with Shenzhen TV toproduce the “My White Gown 2: the Ace Sections”, Shenzhen TV’s first documentary observation program of doctors, to improveconsumer awareness in a way of pan-entertainment shows. Moreover, it strives to drive traffic to e-commerce and Wechat miniprogram through live-streaming with goods. In the professional academic field, Winner Medical influenced the professional marketthrough the dissemination of academic conferences at all levels. In the first half of the year, more than 2,000 people participated inthe “Winner Medical Academy (Sensitive Control)” and other thematic activities jointly sponsored by Winner Medical and BeijingInfection Control and Disinfection Technology Industry Association, and many renowned national experts delivered new concepts ofsensitive control and operating rooms. Through the Nurses’ Day thematic activities, the Company built partnerships with nearly 100hospitals and influenced key customers. It also attended CMEF, World Health Expo and other exhibitions to consolidate its influencein the industry. In addition, Winner Medical is promoting a clinical comparative observation program for surgical caps in the middleand large operating rooms, and strengthening clinical academic cooperation with domestic top hospitals.Purcotton continues to deepen communication with consumers, aiming to deliver the multiple advantages “cotton” in terms of
environmental protection, sustainable development, etc., and constantly communicate with consumers emotionally. During thereporting period, thanks to the upgrading of store image provided by an international team, the Company integrates cotton stories andits natural benefits into the core of the design. As a designated partner brand, it appeared in the “Kids Fashion Week 2021” of ChinaOil Painting Institute in Beijing, combining fashion trends with happiness and care and creating a secure and comfortableenvironment for children to grow up with its quality products, so as to lead the new trend of kids’ fashion. The Company also workedwith CCTV Technology Channel to produce “Fashion Technology Show”. The Programme led the public into the world of cotton todiscover the wonders of cotton, and enhanced the public’s attention to the brand of Purcotton, which is the pioneer and leader of purecotton tissue. On the occasion of the Earth Day, Purcotton held a “Cotton · Nature ·Excellent” conference in Beijing, and workedwith the authoritative color agency COLORO? to launch the “cotton” theme series color numbers for the first time, enabling peopleto sense the vitality of cotton and the beauty of diversity of the earth. On the 12th China International Cotton Conference held inSuzhou, Purcotton, as the first batch of participating companies on the consumer side, made a wonderful appearance and talked aboutthe sustainable development of cotton, aiming to create a quality image of “Chinese cotton”. In addition, Purcotton actively carriesout brand marketing activities through living stream, and invites KOLs in maternal & infant and travel segments to the living eventsto promote attractive cotton products. Thanks to the long-term activities of “normalized store livestream shopping” and “normalizedplant livestream shopping”, Purcotton can display its unique advantages of stores and plant industrial chain, and direct online andoffline traffic to each other.
4. Internal management
At the beginning of 2021, the Company launched a risk control system project and hired a well-known external consultant to sort outthe operational risks of each business module. The project consists of three parts: risk diagnosis, special governance and systemdevelopment. The external consultant has sorted out potential business risks and responsible departments at all levels, initiallycompleted the building of the organizational structure and operation process of risk control, established the internal controlmanagement committee, formulated the Comprehensive Risk Management System, the Mechanism for Regular Reporting of RiskInformation, the Mechanism for Emergency Handling of Sudden and Significant Risks, the Definition of Routine and SignificantRisk Events, and the Mechanism for Accountability for Risks, and established the normalized operation mechanism of riskmanagement. At present, the Company is sorting out risks one by one, and for each risk, carry out risk research, build risk warningfoundation and risk control mechanism, and develop a risk control and management platform, with a view to realizing thecontrollability, visibility, warning and transformation of risks.The company has always focused on strategic development and guided the strategic planning and execution of each business moduleat a strategic level. In addition to self-exploration, it has also engaged internationally renowned consultants for strategic projectcollaboration. In October 2020, the Company launched the “Process Diagnosis Project” to comprehensively scan the overall businessflow from the perspective of “strategic relevance” and “process maturity”, and sort out hundreds of processes at all levels coveringboth To B and To C. Starting from quick wins in a short term, agility in medium term and growth in long term, the Company carriesout special projects through professional project management to build short-, medium- and long-term business capabilities in ahierarchical and graded manner, so as to improve the Company’s overall management maturity. In addition, the Company hasformulated a “three-year enhancement and deployment project of process maturity”, aiming to complete process assetization by 2021,significantly improve process efficiency by 2022, and provide more professional products and services to customers through moreefficient management methods and tools by 2023.In 2021, the Company’s businesses entered a new round of rapid expansion, with a surge in demand for talents. To enhance theoverall competitiveness of the Company and deepen and thicken the talent pool, a group of experienced professional managementteams was introduced from the industry. The Company has recruited many talents in management, marketing and R&D from P&G,Wal-Mart, SF and Nielsen to further optimize the Company’s management strategy, improve marketing effectiveness and enhanceproduct creativity.
(3) Business strategy at later stages
In the field of medical consumables, operations are mainly carried out in the following three areas: channels, products and productioncapacity. In terms of channels, the Company will take advantages of brands and products to get new customers and increase itsmarket shares and coverage through domestic and overseas channels in 2020. In addition, it will invest more in academic and clinicalpromotion, and expand business in hospital channel for operating room consumables and high-end dressings. Thanks to its more than4 million fans, Winner Medical’s e-commerce in China has increased marketing investment, focused on the user and categoryoperations, and improved purchase conversion and customer unit price. In terms of products, the Company focuses on three areas:
wound care, infection control and home care, among which wound care products are expanding to high-end dressing from traditionalwound dressing, and after years of technology reserves of high-end dressings, its products have been widely recognized in theEuropean and American markets. Infection control products are expanding from the existing medical field to the personal protectionfield and other application fields, where the market space is larger, aiming to replace chemical fibers with cotton as much as possibleand make efforts for sustainable social development. Home care products are expanding in the direction of the consumer side, andexploring the adult incontinence, personal care and postoperation care of medical aesthetics based on the Company’s existingrespiratory protection, wound care and disinfection and cleaning business. The Company’s production capacity grew over last year.To create a more reasonable production capacity, the Company will further transform the automation equipment and eliminate theinefficient equipment.The operations of healthy consumer goods business are mainly carried out from such aspects as channels, products and brands. Interms of channels, the Company improved its business performance of the offline store channel through strategies such as upgradingthe image of stores, optimizing customer shopping circulation, enhancing scenario-based displays, creating experiential services, andstrengthening communication and cooperation with shopping malls. In addition, the Company takes advantages of the existing 33million users of Purcotton, and ultimately improves the business performance of the e-commerce channel by strengtheningoperational capabilities, increasing marketing efforts, expanding the customer base (especially the Gen Z). Finally, it reduces thepayback period of the supermarket channel through scale expansion and diversified category strategy. In terms of products, theCompany is committed to the development of pure cotton products in order to provide the customers with high-quality cottonproducts to meet the needs of different scenarios. It continues to focus on the unique advantages of fabric research and developmentefforts, thus reducing the quantity of long-tail ineffective products. It also increases the relevance of the product mix, improvesproduct refinement operation and management capabilities, and increases customer unit prices. In terms of branding, the Companystrictly follows “Quality before profit, brand before speed, social value before corporate value”, and insists on creating a full range ofpure cotton lifestyle. It strengthens the building of brand system, realizes brand unity to the outside world, enhances brand credibility,and increases brand communication through media matrix and precise marketing. It also gains deep insight into consumers,establishes warm communication and interaction, actively fulfills social responsibility and gives back to society.III. Analysis of Core Competitiveness
1. Advantages of Business Philosophy and Corporate Culture
With offering quality products as its mission, the Winner brand aims to lead in the medical dressing industry, to grow from a smallChinese enterprise to a large international enterprise offering high-quality products recognized by developed countries, bringingChinese medical dressings to the international stage. With "To enhance your health, life and well-being" as its vision, the brand keepsfocusing on product quantity and innovations, and making its way into the medical consumables and high-end medical dressingmarket. Cotton fiber has ten prominent advantages, including natural, safe, comfortable, naturally degradable, high output ratio,drought-resistant, salt and alkali-resistant, environmentally friendly, time-honored, and high social value. With its brand vision of"Purcotton Changes the World", Purcotton applies "comfortable, healthy, and environmentally friendly" cottons in household suppliesand home care products to help customers raise life quality, constantly bringing them happiness and reassurance. Sticking to the"cotton fiber only" principle in its operation, Purcotton aims to develop recyclable and renewable resources, gradually replacechemical fibers with natural fibers, and give full play to the use value and environmental protection value of cotton fibers, following
the path of sustainable development. With "Love, protect and enjoy nature" as its brand vision, PureH2B insists on the principle ofpursuing beauty without sacrificing health for health is beauty. PureH2B select natural cosmetics and toiletries, healthy food andhealth products, 3C and health equipment with excellent experience from around the world for customers. Meanwhile, thegroundbreaking, innovative natural products developed independently by PureH2B are winning the trust of consumers with theirapplicability and safety, meeting the needs of consumers who pursue both quality life and health and environmental protection. Thevisions and business philosophies regarding the company's three brands are focused on human health, environmental protection, andimproving the quality of life, which are in line with humans' sustainable development strategy.
The Company will always uphold its core operating principle of "Quality before profit, brand before speed, social value beforecorporate value", and stick by its core values of "Self-sacrifice / Responsible / Collaborative / Innovative / Tenacity / Self-criticism /Sustainable development". The Company promotes healthy sports such as running, mountain climbing, and ball games. TheCompany is weakening the power from titles to reduce bureaucracy, and creating open workplaces to ensure efficientcross-department communication. During the epidemic, the Company responded quickly and made every effort to ensure theproduction of protective products. It carried out a series of activities to improve the rapid response capability to market demand interms of decision-making management, process integration, product and equipment innovation, and industry chain integration.Within one month at the beginning of the epidemic outbreak in January 2020, the Company provided 108.9 million masks and114,000 pieces of protective clothing to major hospitals in Hubei, which played a key role in the initial absence of any reserves.During the outbreak of COVID-19 pandemic in Guangdong Province in May 2021 and in Nanjing City in July 2021, the Companyfully mobilized internal forces, and delivered medical protective products to customers immediately, so as to effectively helpfrontline medical staff and volunteers to fight against the pandemic.
2. Advantages of R&D and Innovation
The Company independently developed the pure cotton spunlace non-woven technology in 2005, and has built a completetechnology cluster based on the technology, obtaining patent licenses in more than 30 countries and regions including the UnitedStates, Europe, and Japan. The innovative application of pure cotton spunlace non-woven fabrics in infection prevention products,such as protective clothing, surgical gowns, and isolation gowns, has not only alleviated the shortage of raw materials during thepandemic but also improved the breathability and comfort of anti-pandemic products, which is safe and environmentally friendly. Inthe field of consumer products, the Company has developed pure cotton tissues, pure cotton wet tissues, sanitary pads with purecotton surface, as well as disposal cleansing towels, disposable underwear and other products. It has been invited to participate in the
development of 14 national standards and industry standards, drafting and developing performance requirements for pure cottonnon-woven surgical dressings, and technical specifications for contact trauma dressings and children's masks. As the first and majordrafter, Purcotton, a wholly-owned subsidiary of the Company, led the development of national standards for cotton tissues (GB/T40276-2021), which requires that the fiber composition and content of cotton tissues shall be identified, and the fiber contenttolerance shall comply with the provisions of GB/T 29862 (released on May 21, 2021 and implemented on December 1, 2021).Since its establishment, the Company has been attaching great importance to scientific and technological innovation and cooperation.It has carried out industry–university–research (IUR) projects with many universities and research institutes, including Hong KongPolytechnic University, Hong Kong Research Institute of Textiles and Apparel, Wuhan Textile University, and Soochow University.The Company worked with Soochow University to carry out “temperature scale of gauze quilt and sleep comfort” project, andpartnered with Wuhan Textile University to carry out “repolymer gauze” for spinning technology. The Company and the ShenzhenInstitute of Advanced Technology of the Chinese Academy of Sciences have jointly established the “Joint Lab for Wound DressingInnovative Technology Research” to conduct cutting-edge technology research and new product development of wound dressings Atpresent, the Company has two provincial R&D platforms, the “Guangdong Functional Cotton Engineering Technology ResearchCenter” and the “Guangdong Wound Repair Material Engineering Technology Research Center” that are dedicated to the research offunctional cotton and wound repair materials.As of June 30, 2021, the Company has obtained 41 invention patents, 460 utility model patents, and 264 design patents in China; 56invention patents and 6 utility model patents have been obtained overseas. The Company was regarded as a “Leading Enterprise inIndependent Innovation” by the Shenzhen Municipal People's Government, and a “Shenzhen Enterprise with Intellectual PropertyAdvantages” by the Shenzhen Administration for Market Regulation.
3. Advantages of quality control
The Company is one of the early companies that established a complete medical-grade quality management system in the industry,including SO13485, FDA21CFR820, China’s Good Manufacturing Practice for Medical Devices, and ISO9001, which have beencertified or approved. Its medical dressings meet the quality standards of many countries and regions, including Europe, the UnitedStates, Japan, and China, and have been accepted by these countries and regions. It also implements the quality control requirementsof medical devices when expanding its heath consumer goods business. In addition, the Company's R&D Center and Lads have theprofessional capabilities for product testing certified by the China National Accreditation Service for Conformity Assessment(CNAS). The medical masks have passed the Type I, Type II and Type IIR product certification of EU MDR, PPE certification, andLevel 1, Level 2 and Level 3 certification of FDA 510K in the United States, respectively, in overseas markets. The Company ranked1st in the white book for exporters of epidemic prevention materials issued by the General Administration of Customs and GeneralAdministration of Market Supervision of China during the epidemic in 2020. In China, the masks have passed the testing andcertification of Beijing Institute of Medical Device Testing, National Medical Products Administration. The protective clothing havebeen CE certified for EU Type 5 and Type 6. The Company‘s N95 masks and protective clothing are of good quality and highreputation, allowing it to be the designated reserve unit of the government's prevention and control command, as well as the mainmaterial supplier for Guangzhou, Shenzhen and Nanjing which have been hit by the COVID-19 pandemic in 2021. In addition, theCompany’s product quality has been widely recognized by the market. During the Tokyo Olympic Games, many athletes wear theCompany’s protective products, which protected athletes to ensure their excellent performance in the field.To ensure the safety of raw materials for its products, Purcotton uses high-quality cotton from around the world to produce its coreproducts, such as its pure cotton tissue, sanitary pads with pure cotton surface, and pure cotton wet tissues. All the workshops aremanaged according to the management requirements for the workshops of medical dressings, which can help strictly control bacterialcontamination and pollution sources. With its medical-level quantity management control system, Purcotton is able to providecustomers with high-quality consumer goods that are safe and environmentally friendly. Adhering to the concept of “medicine closeto life, Purcotton care for health”, Purcotton not only applies quality natural cotton but also attaches importance to the green weaving
and finishing process. To ensure that its products are safe and natural, no fluorescent brighteners are added to its products. Some ofits products are OEKO-TEX Standard 100 certified and Shenzhen Standard certified, the latter is used for advanced evaluation ofShenzhen Standard for infant textile and clothing product standards. Some non-woven products have passed the EU AP (2002) 1 andEC1935/2004 EU Food Contact Materials CE certification, and are in line with food-grade standard testing.
4. Product advantages
(1) Medical consumables
The Company's product categories include wound care, infection protection, and cleaning and disinfection, covering applicationscenarios like clinical and medical institutions and families, which can better meet clients' needs of one-stop procurement. In additionto traditional acute wound care products, the Company has also developed representative high-end wet dressings like silicone foamdressings, hydrocolloid dressings, and super absorbent pads for chronic wounds that are difficult to heal, which has further enrich itsproducts. For the clinical use scenarios, the Company is committed to changing from selling single products to providing customerswith integrated solutions. Its infection prevention products include dozens of surgical packs for various sections, such as heart andbrain, abdominal cavity, urology, reproduction, facial features, and limbs. In terms of disease protection and control, the Companyreplaces chemical fiber fabrics with pure cotton spunlace non-woven fabrics for masks, protective clothing, surgical gowns, andisolation gowns. Such innovative products not only meet infection prevention and control standards but also are more comfortableand environmentally friendly with better breathability. In the field of home care, the Company provides professional products forclinical use such as hyaluronic acid masks, saline cleaning pads, hydrocolloid band-aids and medical sheet masks to consumersthrough portable, sterilized and diversified packages. These professional health care products and services in daily home care helpcustomers reduce the frequency of going to the hospital.
(2) Healthy consumer goods
The Company's healthy consumer goods consist of non-woven consumer goods and textile consumer goods. The non-wovenconsumer goods include cotton tissues, sanitary pads, and wet tissues; the textile consumer goods include baby supplies, babyclothing, adult clothing, and bedding. The Company accurately captured the market demand for domestic high-quality consumerproducts under the backdrop of consumption upgrading, and took the lead in proposing the innovative concept of replacing chemicalfibers with cotton and getting rid of chemical stimulation, and provide consumers with healthy consumer goods of medical grade.And its cotton tissues are pioneering tissues in the industry, which can partially replace household paper. Pure cotton tissues are madeof degradable cotton after physical processing. There are less chemical stimulation and the tissues can be reused. Both the productionand use of the tissues are more comfortable, safe, and environmentally friendly, so consumer acceptance of the tissues has beensignificantly improved, and there are many imitators in the market. For pure cotton wet tissues and sanitary pads with pure cottonsurface, cotton materials are innovatively used in the parts of these products that contact human skin to replace traditional chemicalfiber and effectively reduce chemical irritation, so they are popular in the markets of baby and female consumers. Due to theexcellent breathability and softness of gauze fabrics, the Company's woven consumer products such as gauze bedding and bathtowels are getting more popular.
5. Brand advantages
(1) Brand advantages in the field of medical consumables
As one of the market leaders in the field of medical consumables, the Company attaches great importance to product quality andservice, and holds exhibitions worldwide to launches the “Winner Medical Academy”, aiming to invite experts to educate, organizeand participate in academic forums and public welfare activities, thus promoting the brand, allowing “Winner Medical” to enjoy ahigh reputation in the industry, and enabling the products to be widely recognized by customers at home and abroad. During theCOVID-19 pandemic, the Company’s actions were highly recognized by the government of China. Winner Medical was praised bythe Joint Prevention and Control Mechanism of the State Council as a well-deserved “ordnance factory” in fighting the pandemic.
Winner Medical (Huanggang) was awarded the title of “National Advanced Unit for Fighting the COVID-19 Pandemic” by the CPCCentral Committee and the State Council. The Company's medical consumables are mainly sold to developed countries and regionssuch as Europe, Japan and the United States, and the products under its brand Winner are mainly sold to developing countries andregions such as Asia, Africa, and Latin America. The Company are providing services for world-renowned medical suppliescompanies such as M?lnlycke, Lohmann, and PAUL HARTMANN. According to statistics from the China Chamber of Commercefor Import and Export of Medicines and Health Products (CCCMHPIE), the Company has been ranked among the top three exportersof Chinese medical dressings for many consecutive years. The products of “Winner Medical” brands have covered all public andmost private hospitals in Hong Kong. In May 2021, Winner Medical was selected by the Federation of Shenzhen Industries as the“Benchmarking Enterprise in China’s Medical Consumables Sector” and at the same time recognized as an “International RenownedBrand” by the United Nations Industrial Development Organization.
(2) Brand advantages in the field of healthy consumer goods
Consumers' demand for high-quality products is increasing due to consumption upgrading. Sticking to the “cotton fiber only”principle in its operations, Purcotton insists on offering “comfortable, healthy, and environmentally friendly” cotton products withhigh quality to consumers to constantly bring them happiness and quality products, which makes Purcotton products popular amongconsumers. Adhering to the concept of “medicine close to life, Purcotton care for health”, Purcotton advocates the use of cotton, toreduce environ mental pollution and to enable consumers to return to a natural and sustainable lifestyle with pure cotton. The purecotton tissues developed by Purcotton is a pioneering category. Purcotton is creating new categories and lifestyles by applying cottonmaterials in its core products , including pure cotton wet tissues, sanitary pads with pure cotton surface, BBNice, as well as gauzetextile products and clothing. It has shaped an brand image of “new Chinese products” with cotton as the core material and excellentproduct quality. Its brand awareness is increasing and its reputation is improving year by year, forming effective competition barriersand bringing powerful added value of products for Purcotton.
6. Advantages of sales channels
(1) Advantages of online channels
In terms of online channels, the Company’s “Winner Medical” and “Purcotton” have completed the deployment of mainstreamthird-party e-commerce platforms, including Tmall, JD.com and Amazon. With the huge user traffic gathered, its sales has coveredmost online shopping consumer groups, and the sales data indicated that the sales of its products rank among the top in the relevantproduct categories in major e-commerce platforms. At the same time, Purcotton is also actively exploring cooperation with newsocial retail and e-commerce platforms by the way of setting brand counters in these platforms, which helps it open up new salesgrowth channels. With the attributes of “sales + social”, Purcotton’s official website is an important platform for its product display,user interaction, and brand promotion. In addition, its self-own official platform, Wechat mini program and APP are also importantparts of the Company's marketing channels.
(2) Advantages of offline channels
In the medical consumables section, the Company’s domestic medical business distributors (hospital market) have covered over3,000 hospitals in more than 30 provinces (incl. municipalities and autonomous regions); retail pharmacy market distributors havecovered nearly 110,000 retail pharmacies in more than 20 provinces (incl. municipalities and autonomous regions); foreign medicalbusiness customers and distributors have covered more than a hundred countries and regions such as Europe, Japan and the UnitedStates.As for healthy consumer goods section, the Company has opened a total of 302 offline stores as of June 30, 2021. Among them,Purcotton has opened 279 offline stores (including 10 franchisees) in more than 60 mid- and high-end shopping malls in Shenzhen,Shanghai, Beijing, Guangzhou and other key cities in China; Purunderwear opened 14 offline stores; and PureH2B opened 9 offlinestores. The Company integrates its brand concept into its store design. It hires well-known designers at home and abroad to upgradeits store image and to enhance its consumer experience with an exhibition-style product display balancing both aesthetics and
richness of products. It also adds an experience area to highlight product display and user experience, which has helped increase theCompany's sales revenue and further increase its brand awareness.As for offline terminals like chain stores and supermarkets, based on Purcotton's positioning of high-quality consumer goods, theCompany mainly deploys Purcotton products in High-end boutique supermarkets and local leading supermarkets. Meanwhile, theCompany also has set up dedicated sales teams to cover the bulk purchase or customized purchase needs of corporate clients. TheCompany’s core products, such as Purcotton’s cotton tissue and Nice Princess, have successfully entered supermarket chains,convenience store chains and offline maternal & infant stores and communities, including about 5,500 outlets of China ResourcesVanguard, Ole' Supermarket, Yonghui Supermarket, Sam's Clubs, Wal-Mart and other mainstream supermarket chains, over 6,000outlets of 7-11, Rosen, Convenience Bee, Today, Every Day and other convenience store chains, as well as offline maternal & infantstores in over 20 provinces and cities.
(3) Advantages of integration between online and offline channels
The omnichannel retail model is a newly emerging retail form that provides consumers with a consistent shopping experience byintegrating physical channels, e-commerce channels, and mobile e-commerce channels. In such form, the convenience of onlinechannels and the consumer experience of offline channels can complement each other. Having a deep insight into the developmenttrend of integrating online and offline channels, the Company thoroughly optimized and integrated various channels to integratetraffic and sales of offline stores and online Wechat mini programs, thereby further improving its operating efficiency andperformance. Online channels can meet offline consumers subsequent consumption needs while offline channels can provide onlineconsumers further product information and service experience. Flows of traffics can be directed between the two kinds of channels,so online and offline traffic can be effectively obtained. As of the end of the reporting period, the number of Purcotton users hasexceeded 33 million, including 15 million registered members of its private platforms (6.17 million store registered members, andnearly 9 million registered members of its official website and WeChat mini programs).
7. Advantages of full industrial chain
Since its establishment, the Company has always been attaching great importance to its product quality, cost and deliverymanagement and control. It has built a full industrial chain with advantages from raw material procurement, production, sterilization,warehousing, to delivery. The Company has seven wholly-owned production subsidiaries in Hubei, covering a total area of more thanone million square meters, including 105,000 square meters of clean workshops. The seven factories supply large quantities ofhigh-quality medical supplies and daily necessities to all over the world each year. Established in 2005 with an area of 550,000square meters, Winner Medical (Huanggang) is the main production site of pure cotton spunlace non-woven fabrics, cotton tissues,sanitary pads, and masks; with an area of 67,000 square meters, Winner Medical (Jingmen) is the main production site of gauzeclothing, degreased medical bleached gauze, and dyed medical gauze; with an area of 93,000 square meters, Winner Medical (Jiayu)has four product categories with pure cotton as basic materials, i.e. the cleaning, disinfection, beauty, and care categories, and twoproduct collections: medical and daily use products; established in 2001 with an area of 140,000 square meters, Winner Medical(Chongyang) is the Company's main force of producing its disposable medical consumables, disposable surgical kits, all kinds ofcotton balls and cotton pads; established in 2017 with a total area of about 467,000 square meters of its phase I and phases II sites,Winner Medical (Wuhan) has brought in electron beam sterilization and international modern cotton spunlace production line;established in 2000, Winner Medical (Tianmen) is the production base of medical gauze in China for trade; established in 1999,Winner Medical (Yichang) is the main production base for its grey cloth.With constant improvement, the Company's excellent production management system has been upgraded from 1.0 to 3.0, coveringseven modules (i.e. standardization, visualization, automation, Just-in-Time, rapid response, value engineering, organizationalguarantee). It has gradually established and improved its daily management system in factory. It has improved its productionefficiency through equipment innovation. For example, its self-developed soft ear loop mask manufacturing equipment truly realizethe unmanned manufacturing of masks with high-efficient equipment; it has basically realized the fully automated production of its
products like cotton tissues and wet tissues; it has preliminarily replace manual production with machinery production for cottonswabs, cotton balls, cotton pads, makeup cotton, packages, and drapes, which has greatly supported its rapid production and supply.The Company is also going to explore and build smart factories. It will realize "unmanned production, process-based management,and process digitalization" step by step.IV. Analysis of Main Business
OverviewPlease refer to the relevant information in “I. Main Business of the Company During Reporting Period”.YoY changes in key financial data
Unit: yuan
| Current reporting period | Same period last year | Year-on-year increase/decrease | Reason for change | |
| Revenue | 4,059,865,654.92 | 4,179,778,883.27 | -2.87% | No major changes |
| Costs | 1,921,789,702.47 | 1,900,091,985.00Note 1 | 1.14% | No major changes |
| Selling expenses | 825,805,820.57 | 655,948,904.24 | 25.89% | For details, please refer to “3. selling expenses and Composition” of “V. Other information required by the disclosure guidelines for textile and apparel-related sectors” below. |
| Administrative expenses | 310,652,551.64 | 158,666,340.89 | 95.79% | This is mainly due to the YoY increase in share-based payment expenses of 142,429,497.69 yuan, and the administrative expenses after deducting the equity incentive fees increased by 6.02% compared with the same period of the previous year |
| Financial expenses | (12,616,456.80) | (465,911.33) | -2,607.91% | This is mainly due to the increase in revenues from daily cash management of self-owned funds |
| Income tax expenses | 143,286,407.76 | 173,749,962.63 | -17.53% | No major changes |
| R&D expenses | 189,917,265.47 | 168,845,188.59 | 12.48% | This is mainly due to the increase in R&D investment |
| Net cash flow from operating activities | 197,604,865.77 | 2,473,405,982.25 | -92.01% | Please refer to Note 2 at the end of the Table for details |
| Net cash flow from investing activities | 1,134,322,825.18 | (517,565,700.23)(517,565,700.23) | 319.16% | This is mainly due to the increase in cash management funds recovered in the reporting period |
| Net cash flow from financing activities | (821,629,805.97)(821,629,805.97) | (201,673,801.32)(201,673,801.32) | 307.41% | This is mainly due to the increase in dividends distributed to shareholders in the reporting period |
| Net increase in cash and cash equivalents | 510,599,067.48 | 1,754,428,329.70 | -70.90% | See the explanation of changes in cash flow from operating activities, investment activities and financing activities |
| Investment income | 50,073,259.81 | 7,158,219.52 | 599.52% | This is mainly due to the increase in cash management revenues |
| Other incomes | 86,754,859.99 | 19,765,789.73 | 338.91% | This is mainly due to the increase in government subsidies related to operations |
| Gains from asset disposal | (37,621.25) | 15,447.79 | -343.54% | This is mainly due to the increase in the loss on disposal of long-current assets |
| Income from changes in fair value | 31,408,220.30 | 0.00 | 100.00% | This is mainly due to the increase in cash management revenues |
| Credit impairment Loss | 11,808,406.71 | (787,646.99) | -1,599.20% | This is mainly due to the recovery of other receivables and the decrease in credit impairment losses |
| Non-revenue | 2,339,463.94 | 13,659,135.49 | -82.87% | This is mainly due to the |
| decrease in government subsidies not related to operations | ||||
| Non-operating expenses | 8,502,804.42 | 21,986,722.02 | -61.33% | This is mainly due to the decrease in the scrapping loss of non-current assets |
The amount of costs disclosed in the review report for the same period of the previous year was 1,767,729,037.00 yuan, and thedifference of 132,362,948.00 yuan of the comparative data disclosed in the current period is the reclassification adjustment of freightcosts. When the review report for the same period of the previous year was disclosed, there was no clear regulation on the adjustmentof freight costs to the main costs as performance costs in the new income guidelines, so this reclassification was not completed forthe same period of the previous year. The reclassification adjustment was made to the data of the same period of the previous year inthe comparative data of the current reporting period.Note 2: (1) Cash received from the sales of goods and services decreased by 1,548 million yuan during the reporting period comparedwith the same period of the previous year, mainly due to the decrease in advance payments from customers. In the same period of lastyear, the Company adopted a credit policy of 100% advance payment for protection products, and the credit policy returned to thenormal level during the reporting period. (2) The increase of 899 million yuan in cash paid for operating activities in this reportingperiod was mainly due to the better performance and the higher provision for various taxes in the previous year, resulting in anincrease of 403 million yuan in various taxes paid after remittance in this reporting period compared with the same period of theprevious year. In addition, the higher provision for performance bonuses in the previous year led to an increase of 160 million yuan inemployee compensation paid in this reporting period compared with the same period of the previous year. (3) The above two pointswere the main reasons for the decrease of 2,276 million yuan in net cash flow from operating activities in this reporting periodcompared with the same period of the previous year, a decrease of 92.01% year-on-year.
Significant changes in the profit composition or profit source of the Company during the reporting period
□ Applicable √ Not applicable
No major change occurred in the profit composition or profit source of the Company during the reporting period.Products or services accounting for more than 10%
√Applicable □ Not applicable
Unit: ’0,000 yuan
| Revenue | Costs | Gross margin ratio | Year-on-year increase/decrease of revenue | Increase or decrease in costs over the same period of the previous year | Year-on-year increase/decrease of gross margin ratio | |
| By products or services | ||||||
| Medical consumables - protective products | 146,319.30 | 59,260.95 | 59.50% | -26.49% | -19.16% | -3.67% |
| Healthy consumer goods - | 40,885.23 | 21,649.58 | 47.05% | 10.49% | 8.73% | 0.86% |
Note: The incomes in this Table are from main businesesThe Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for IndustryInformation Disclosure of Listed Companies Engaging in Textile and Apparel Business.
Unit: yuan
cotton tissues
| Revenue | Costs | Gross margin ratio | Year-on-year increase/decrease of revenue | Increase or decrease in costs over the same period of the previous year | Year-on-year increase/decrease of gross margin ratio | |
| By sectors | ||||||
| Medical consumables | 2,126,563,787.23 | 1,014,408,882.34 | 52.30% | -15.28% | -1.90% | -6.50% |
| Healthy consumer goods | 1,790,338,558.90 | 820,820,906.35 | 54.15% | 20.64% | 10.03% | 4.42% |
| By products | ||||||
| Medical consumables - protective products | 1,463,192,999.33 | 592,609,477.85 | 59.50% | -26.49% | -19.16% | -3.67% |
| Healthy consumer goods - cotton tissues | 408,852,296.85 | 216,495,822.12 | 47.05% | 10.49% | 8.73% | 0.86% |
| By regions | ||||||
| Domestic | 2,905,937,643.85 | 1,407,515,963.89 | 51.56% | -3.63% | -4.07% | -0.22% |
| Abroad | 1,109,317,192.89 | 491,678,856.56 | 55.68% | -1.93% | 19.45% | -7.94% |
Note: The incomes in this Table are from main businesesIn the event that the statistical caliber of the Company’s main business data is adjusted in the reporting period, the Company shallfollow the main business data in the past year adjusted by the caliber at the end of the reporting period
□ Applicable √ Not applicable
Whether the Company has sales terminals in brick-and-mortar stores
√ Yes □ No
Distribution of brick-and-mortar stores
| Types of stores | Number of stores | Area of stores | Number of new stores during the reporting period | Number of stores closed at the end of the reporting period | Reasons for store closings | Brands involved |
| Direct-sale stores | 292 | 116,141 | 26 | 5 | The closed stores | 269 stores for |
| are under the brand of Purcotton, resulting mainly the Company’s active strategies against the epidemic control and contract expirations. | Purcotton, 9 stores for PureH2B, and 14 stores for Purunderwear | |||||
| Franchises | 10 | 2,313 | 5 | 0 | N/A | Purcotton |
Total area and performances of direct-sale stores
| Levels of areas | Number of stores | Total area (m2) | Revenue in 1H21 (‘0,000 YUAN) | Same period last year (‘0,000 YUAN) |
| Less than 300m2 | 87 | 17,559.99 | 14,444.07 | 12,062.82 |
| 300-500㎡ | 57 | 21,240.98 | 11,768.80 | 9,200.96 |
| 500-800㎡ | 56 | 35,106.97 | 13,475.58 | 9,957.72 |
| More than 800m2 | 23 | 21,754.81 | 5,680.43 | 4,289.98 |
| Total | 223 | 95,662.75 | 45,368.88 | 35,511.48 |
Note: The above are the stores of Purcotton that have opened for more than 12 months as of June 30, 2021.Top 5 Stores in terms of Operating Revenues
| S/N | Name of stores | Opening date | Revenue (yuan) | Average performance of the store |
| 1 | The Store in Shenzhen Uniwalk Center | October 25, 2017 | 7,299,509.88 | 18,077.04 |
| 2 | The Store in Futian COCOPARK | May 15, 2010 | 5,547,610.13 | 8,528.22 |
| 3 | The Store in Suzhou Center Mall | November 11, 2017 | 5,495,739.33 | 4,955.58 |
| 4 | The Store in Beijing Jinyuan Yansha Mall | August 6, 2012 | 4,968,968.10 | 8,497.01 |
| 5 | The Store in Shenzhen UpperHills | January 18, 2018 | 4,736,947.06 | 3,553.60 |
| Total | -- | -- | 28,048,774.50 | 6,872.86 |
New stores of listed companies
√ Yes □ No
| Name of stores | Address of stores | Opening time | Contract area (m2) | Investment amount (yuan) | Product Category | Business type | Business model | Property ownership | Number of |
| status | stores | ||||||||
| Direct-sale stores of Purcotton | Northeast China | 2021 | 288.00 | 1,881,019.90 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 1 |
| Direct-sale stores of Purcotton | North China | 2021 | 1,715.88 | 8,644,405.33 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 6 |
| Direct-sale stores of Purcotton | East China | 2021 | 1,223.00 | 6,134,151.79 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 4 |
| Direct-sale stores of Purcotton | South China | 2021 | 2,148.30 | 11,788,677.11 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 7 |
| Direct-sale stores of Purcotton | Central China | 2021 | 650.92 | 2,377,684.39 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 1 |
| Direct-sale stores of Purcotton | Southwest China | 2021 | 859.76 | 4,720,649.18 | Healthy consumer goods | Retail | Direct-sale stores | Purcotton leasing | 3 |
| Purcotton franchises | North China | 2021 | 280.00 | 685,918.96 | Healthy consumer goods | Retail | Franchises | Franchisee leasing | 1 |
| Purcotton franchises | East China | 2021 | 208.00 | 510,670.55 | Healthy consumer goods | Retail | Franchises | Franchisee leasing | 1 |
| Purcotton franchises | Southwest China | 2021 | 477.00 | 884,673.16 | Healthy consumer goods | Retail | Franchises | Franchisee leasing | 3 |
| Total | 7,850.86 | 37,627,850.37 | 27 |
Note: The number of new stores in this table is for Purcotton only, excluding the new stores of Purunderwear and PureH2B
Does the Company disclose the information on Top 5 franchises
□Yes √No
V. Other information required by the disclosure guidelines for textile and apparel-relatedsectors
1. Production capacity
The Company’s own production capacity
| Current reporting period | Same period last year |
More than 10% YoY change in production capacity utilization rate
√ Yes □ No
| Business category | Product Category | Unit | January-June 2021 | January-June 2020 | Percentage of change in production capacity utilization rate | Change reason description | ||||
| Production capacity | Output | Production capacity Utilization rate | Production capacity | Output | Production capacity Utilization rate | |||||
| Medical consumables | Gauze | ton | 5,275.63 | 3,210.30 | 60.85% | 4,960.33 | 2,605.50 | 52.53% | 8.32% | No major changes |
| Cotton | ton | 1,029.60 | 856.96 | 83.23% | 947.70 | 718.40 | 75.80% | 7.43% | No major changes | |
| Mask | ’0,000 pieces | 197,350.56 | 148,799.00 | 75.40% | 89,678.00 | 88,405.00 | 98.58% | -23.18% | Production capacity gradually increased in 2H20, and thanks to the further control of pandemic in 1H21, the demands and outputs decreased | |
| Protective clothing | ’0,000 suits | 780.00 | 517.40 | 66.33% | 468.00 | 386.95 | 82.68% | -16.35% | Production capacity gradually increased in 2H20, and thanks to the further control of pandemic in 1H21, the demands and outputs decreased |
| Surgical gowns | ’0,000 suits | 1,560.00 | 1,214.66 | 77.86% | 468.00 | 453.27 | 96.85% | -18.99% | Production capacity gradually increased in 2H20, and thanks to the further control of pandemic in 1H21, the demands and outputs decreased |
| Medical combo kits | ’0,000 kits | 2,595.00 | 2,219.00 | 85.51% | 2,160.00 | 1,971.00 | 91.25% | -5.74% | No major changes | |
| Healthy consumer goods | Cotton tissues | ’0,000 kits | 13,821.95 | 6,934.47 | 50.17% | 13,821.95 | 5,889.35 | 42.61% | 4.56% | No major changes |
| Sanitary pads | ’0,000 pieces | 25,039.87 | 18,925.16 | 75.58% | 25,039.87 | 12,164.64 | 48.58% | 27.00% | In the first half of last year, the production staff focused on the production of anti-pandemic products, resulting in fewer production staff available for this category and a corresponding decrease in outputs | |
| Pure cotton spunlace non-woven fabric | Pure cotton spunlace non-woven | ton | 24,089.86 | 12,435.18 | 51.62% | 24,089.85 | 15,468.99 | 64.21% | -14.60% | Thanks to the effective control of COVID-19 |
| fabric | pandemic in the first half of 2021, the demand for cotton protective clothing, isolation gowns and surgical gowns declines, and the corresponding demand for semi-finished products for self-use declines |
Is there overseas production capacity?
□Yes √No
2. Sales model and channels
Sales channels and actual operation of productsThe Company’s healthy consumer goods and 100% cotton spunlace non-woven fabrics are involved in textile and apparel industries.The sales channels for healthy consumer goods include e-commerce, direct chains and supermarkets, key accounts and franchisees;while the sales channel of 100% cotton spunlace non-woven fabrics is direct selling.
Unit: yuan
| Sales channels | Revenue | Costs | Gross margin ratio | Year-on-year increase/decrease of revenue | Increase or decrease in costs over the same period of the previous year | Year-on-year increase/decrease of gross margin ratio |
| Online sales | 1,102,789,788.54 | 554,967,079.25 | 49.68% | 109,748,088.69 | 4,941,000.57 | 5.06% |
| Direct selling | 537,968,951.60 | 207,218,926.91 | 61.48% | 156,659,256.47 | 53,154,686.76 | 1.89% |
| Franchising | 4,665,282.20 | 3,618,471.16 | 22.44% | 3,736,462.32 | 2,885,741.13 | 1.33% |
| Supermarket channels | 106,170,642.36 | 36,192,846.86 | 65.91% | 45,712,399.52 | 15,080,909.44 | 0.83% |
| Key Client | 38,743,894.20 | 18,823,582.17 | 51.42% | (9,578,527.42) | (1,224,460.72) | -7.10% |
| Subtotal of healthy living consumer product | 1,790,338,558.90 | 820,820,906.35 | 54.15% | 306,277,679.58 | 74,837,877.18 | 4.42% |
| Direct selling | 98,352,490.63 | 63,965,031.74 | 34.96% | (54,009,938.04) | (34,760,398.95) | -0.24% |
| Subtotal of pure cotton spunlace non-woven fabrics | 98,352,490.63 | 63,965,031.74 | 34.96% | (54,009,938.04) | (34,760,398.95) | -0.24% |
Reasons for changeAs the Company has only two businesses involved in the textile and apparel: healthy consumer goods and pure cotton spunlacenon-woven fabric, the above-mentioned revenue and costs by channel are not equal to the total revenue and costs in the consolidatedstatements. The Company’s gross margin ratio for each channel fluctuated by less than 10% in the first half of 2021, without anysignificant changes.
3. Selling expenses and composition
Unit: yuan
| Selling expenses | January-June 2021 | January-June 2020 | Year-on-year increase/decrease | Description of significant changes |
| Employee compensation | 229,922,405.33 | 218,246,955.67 | 5.35% | No major changes |
| Travel expenses | 5,786,992.03 | 2,213,199.29 | 161.48% | This is mainly due to the travel restrictions against the pandemic in the same period last year |
| Office communication costs | 3,075,901.11 | 7,111,983.72 | -56.75% | This is mainly due to the decrease in office and network expenses |
| Sales commission | 98,622,807.60 | 97,068,184.37 | 1.60% | No major changes |
| Insurance premiums | 2,574,426.91 | 2,271,675.17 | 13.33% | No major changes |
| Depreciation and amortization | 113,209,102.14 | 29,276,701.85 | 286.69% | This is mainly due to the increase in amortization of the right-of-use asset added for the first application of the new lease standard in 2021 |
| Advertising and marketing expenses | 233,984,397.50 | 115,342,907.94 | 102.86% | This is mainly due to the increase in advertising and marketing expenses for e-commerce channels of |
| Purcotton’s consumer products and medical consumables on third-party platforms | ||||
| Rent | 85,737,804.97 | 139,580,079.91 | -38.57% | This is mainly due to the decrease in lease payment as a result of first application of the new lease standard in 2021 |
| Others | 52,891,982.98 | 44,837,216.32 | 17.96% | No major changes |
| Total | 825,805,820.57 | 655,948,904.24 | 25.89% | No major changes overall |
Note: The amount of selling expenses in the review report for the same period last year was 788,311,852.24 yuan, of which theamount of freight was 132,362,948.00 yuan (the amount after deducting the freight was 655,948,904.24 yuan). Since the newrevenue standard had not yet specified the adjustment of freight to the main cost at the time of the disclosure of the review report inthe same period last year, there was no reclassification, which was only completed in Annual Report 2020. During this reportingperiod, the freight costs for the same period last year were reclassified into main costs.
4. Franchising and distribution
The proportion of franchisees and distributors’ sales revenues exceeds 30%
□Yes √No
Top 5 franchisees
| S/N | Name of franchisee | Time of cooperation | A related party or not | Total sales (RMB) | Level of franchisee |
| 1 | First | May 01, 2020 | No | 1,706,157.78 | The Stores in Lhasa Shenli Times Square / Shanshan Outlets in Xining Wangfujing Daxiangcheng |
| 2 | Second | November 09, 2020 | No | 1,008,109.52 | The Store in Hengyang Shanshan Outlets |
| 3 | Third | June 12, 2020 | No | 679,182.25 | The store in Yinchuan CCPark |
| 4 | Fourth | December 24, 2020 | No | 566,673.13 | The Store in Dujiangyan IMIX Park |
| 5 | Fifth | March 31, 2021 | No | 372,386.66 | The Store in Yongsheng Shopping Mall, Jinhua, Zhejiang |
| Total | -- | -- | -- | 4,332,509.34 | -- |
Top 5 distributors
| S/N | Name of franchisee | Time of cooperation | A related party or not | Total sales (RMB) |
5. Online sales
The proportion of online sales in sales revenues exceeds more than 30%
□Yes √No
Is there a self-built sales platform?
√ Yes □ No
| Operation starting time | January 06, 2014 |
| Number of registered users | 15,060,000 |
| Average number of monthly active users | 2,100,000 |
Does it work with a third-party sales platform?
√ Yes □ No
Unit: yuan
| Name of platform | Transaction amount during the reporting period | Payment to the platform | Return rate |
| Taobao (healthy consumer goods) | 594,184,171.14 | 102,049,089.66 | 1.46% |
| Jingdong (healthy consumer goods) | 215,144,181.52 | 42,294,085.90 | 0.98% |
| Amazon (medical consumables) | 104,636,793.87 | 7,157,281.14 | 1.86% |
Opening or closing online sales channels by the Company
□ Applicable √ Not applicable
Description of the impact on the current and future development of the CompanyNot applicable.
6. Agency operation
Does it adopt agency operation?
□Yes √No
7. Inventory
Inventory
| Main products | Inventory turnover in days | Inventory amount | YoY increase/decrease in inventory balance | Reasons |
| Medical consumables | 84 | 417,335,870.29 | (54,324,962.39) | Decreasing by 11.52% over |
| the end of last year without significant changes | ||||
| Healthy consumer goods | 192 | 802,311,473.15 | 111,929,167.50 | Increasing by 16.21% over the end of last year without significant changes |
| Pure cotton spunlace non-woven fabric | 149 | 44,818,211.81 | (9,625,590.07) | Decreasing by 17.68% over the end of last year without significant changes |
| Overall | 133 | 1,264,465,555.25 | 47,978,615.04 | Overall increasing by 3.94% over the end of last year without significant changes |
Provision accrual for inventory depreciation
| Product Category | Provision for inventory depreciation | Proportion of provision for depreciation | Net value of inventories | Original value of inventories | Inventory age | |||
| Within 1 year | 1-2 years | 2-3 years | 3 years and above | |||||
| Medical consumables | 31,640,302.41 | 7.0% | 417,335,870.29 | 448,976,172.70 | 442,044,603.45 | 4,946,095.99 | 1,257,351.66 | 728,121.60 |
| Healthy consumer goods | 110,608,892.04 | 12.1% | 802,311,473.15 | 912,920,365.18 | 853,857,341.61 | 45,109,105.91 | 9,366,905.80 | 4,587,011.86 |
| Pure cotton spunlace non-woven fabric | 2,639,304.64 | 5.6% | 44,818,211.81 | 47,457,516.46 | 46,720,391.53 | 734,084.29 | 718.63 | 2,322.01 |
| Total | 144,888,499.09 | 10.3% | 1,264,465,555.25 | 1,409,354,054.34 | 1,342,622,336.57 | 950,789,286.19 | 10,624,976.09 | 5,317,455.47 |
Inventory information of end channels such as franchises or distributorsPurcotton, a brand of the Company’s healthy consumer goods business, started franchises in 2020. Its business model requiresfranchisees to be responsible for the construction and daily operation of stores while Purcotton providing goods and supply chainsupports. After the sales of goods, Purcotton and franchisees realize their respective benefits through sharing. The ownership of thefranchisee’s inventory belongs to Purcotton, and as of June 30, 2021, the inventory balance of ten franchisees were 5.28 million yuan.
8. Brand building
Whether the company is involved in the production and sales of branded clothing, apparel and home textile products
√ Yes □ No
Private brand
| Brand name | Trademark name | Main product types | Features | Target customers | Main product price bands | Main market territory | Level of cities |
| Purcotton | Purcotton | Cotton tissues | Made of 100% high-quality natural cotton without fluorescent whitening agent; mild and non-irritating; meeting the daily needs of consumers | All-age customer base | 5-30 yuan /pack (100 pieces) | Nationwide | Second- and third-tier cities and above |
| Purcotton | Nice Princess | Sanitary pads | 100% cotton surface layer (surface layer, spacer, sanitary wing surface layer) | Female population at appropriate ages | 1.99-3.99 yuan /piece | Nationwide | Second- and third-tier cities and above |
| Purcotton | BBNice | BBNice | 100% cotton surface layer; unique in the market; made from natural cotton; 2mm ultra-thin core with 28 times ultra-high absorption capacity | Parental population | 3.32-4.14 yuan /piece | Nationwide | Second- and third-tier cities and above |
| Purcotton | Purcotton | Wet tissues | 100% cotton material; soft and non-slippery; gentle and non-irritating | All-age customer base | 20-40 yuan /pack | Nationwide | Second- and third-tier cities and above |
| Purcotton | Purcotton | Baby supplies/clothing | 100% cotton material without fluorescent nor formaldehyde; | Expecting mothers, newborns, toddlers, children | 100-400 yuan /piece | Nationwide | Second- and third-tier cities and above |
| the unique gauze fabric to provide more comfortable care | |||||||
| Purcotton | Purcotton | Clothing / intimate apparel for outing | 100% cotton material; high-quality cotton without fluorescent nor formaldehyde; soft to the touch; the unique gauze fabrics to provide more comfortable care | adults at appropriate ages, boys and girls | Outwear: 200-600 yuan /piece; home wear: 200-500 yuan /piece; thermal underwear: 100-500 yuan /piece; socks: 20-80 yuan /pair | Nationwide | Second- and third-tier cities and above |
| Purcotton | Purcotton | Bedding, toiletries | 100% cotton material; high-quality cotton without fluorescent nor formaldehyde; soft to the touch; the unique gauze fabrics to provide more comfortable care | Expecting mothers, newborns, toddlers and adult customer base | Baby/toddler bedding: 300-800 yuan /set; adult bedding: 500-2000 yuan /set; bathroom supplies: 50-200 yuan /piece | Nationwide | Second- and third-tier cities and above |
Partner brands
| Brand name | Trademark name | Main product types | Features | Target customers | Main product price bands | Main market territory | Level of cities | Brand and trademark rights ownership | Partner name | Cooperation mode | Cooperation period |
Licensed brand
| Brand name | Trademark name | Main product types | Features | Target customers | Main product price | Main market territory | Level of cities | Licensor | License period | Exclusive license or not |
| bands | ||||||||||
| Purcotton, Sanrio | Purcotton, Sanrio characters | Cotton tissue, baby clothing, underwear and loungewear | The product is made from 100% cotton material and designed with HELLO KITTY cartoon image | All-age customer base | 5-300 yuan /piece | Nationwide | Second- and third-tier cities and above | KT Licensing (Shanghai) Co., Ltd. | 2020.1.1-2021.12.31 |
Marketing and operation of each brand during the reporting periodPlease refer to the “Brand marketing” in “II. Discussion and Analysis of Operations” of “Section 3 Management Discussion andAnalysis” for details.Cases involved in trademark ownership disputes
□ Applicable √ Not applicable
9. Others
Whether the Company is engaged in apparel design-related business
√ Yes □ No
| The number of fashion designers in the Company | 37 | The number of contracted fashion designers | 1 |
| The operation of the built designer platform | Construction of PLM and 3D design platform were started in the second half of 2020 and would be put into operation in spring and summer of 2022. | ||
Did the company hold an order meeting?
□Yes √No
VI. Analysis of Non-main Business
□ Applicable √ Not applicable
VII. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: yuan
| End of the reporting period | End of the previous year | Increase/d | Description of significant changes |
| Amount | The proportion in total assets | Amount | The proportion in total assets | ecrease in proportions | ||
| Cash and cash equivalents | 4,700,529,527.85 | 35.85% | 4,162,539,245.78 | 32.01% | 3.84% | No major changes |
| Accounts receivable | 863,667,816.94 | 6.59% | 844,317,708.12 | 6.49% | 0.10% | No major changes |
| Inventory | 1,264,465,555.25 | 9.64% | 1,216,486,940.21 | 9.36% | 0.28% | No major changes |
| Long-term equity investment | 15,079,827.94 | 0.11% | 13,424,230.41 | 0.10% | 0.01% | No major changes |
| Fixed assets | 1,437,854,645.76 | 10.97% | 1,400,749,050.00 | 10.77% | 0.20% | No major changes |
| Construction in progress | 104,425,911.11 | 0.80% | 61,383,340.97 | 0.47% | 0.33% | It is mainly due to the increase in plant and equipment investment by subsidiaries |
| Right-of-use assets | 551,278,768.29 | 4.20% | 0.00% | 4.20% | It is mainly due to the first application of the new lease standard | |
| Short-term loans | 150,071,416.66 | 1.15% | -1.15% | It is mainly due to the repayment of matured short-term loans | ||
| Contract liabilities | 328,875,043.44 | 2.51% | 530,188,257.63 | 4.08% | -1.57% | It is mainly because the Company’s credit policy for medical protective materials has returned to normal levels |
| Lease liabilities | 616,985,285.44 | 4.71% | 0.00% | 4.71% | It is mainly due to the first application of the new lease standard | |
| TradableTradable financial assets | 2,707,384,233.24 | 20.65% | 4,131,178,589.44 | 31.77% | -11.12% | It is mainly due to structural adjustment of cash management products |
| Amounts receivable financing | 9,263,087.17 | 0.07% | 18,182,662.70 | 0.14% | -0.07% | It is mainly due to the decrease in bank acceptance bills that have not been transferred out |
| Advances to suppliers | 179,107,611.07 | 1.37% | 124,031,239.05 | 0.95% | 0.42% | It is mainly due to the increase in prepaid raw material purchases |
| Other current assets | 317,280,449.51 | 2.42% | 35,184,227.09 | 0.27% | 2.15% | It is mainly due to structural adjustment of cash management products |
| Other non-current assets | 133,729,374.90 | 1.02% | 63,807,415.75 | 0.49% | 0.53% | It is mainly due to the increase in prepaid long-term asset purchases |
| Notes payable | 69,765,505.06 | 0.53% | 29,418,100.00 | 0.23% | 0.30% | It is mainly due to the increase in outstanding bank acceptance bills payable |
| Taxes payable | 109,204,542.62 | 0.83% | 444,381,369.49 | 3.42% | -2.59% | It is mainly due to the decrease in corporate income tax after the annual settlement and payment |
| Dividends payable | 200,000,000.00 | 1.53% | 0.00 | 0.00% | 1.53% | It is mainly due to the increase in dividends payable to shareholders |
| Other current liabilities | 16,270,217.30 | 0.12% | 23,638,266.47 | 0.18% | -0.06% | It is mainly due to the decrease in the amount of sales tax to be transferred. |
2. Major overseas assets
□ Applicable √ Not applicable
3. Assets and liabilities measured at fair value
√Applicable □ Not applicable
Unit: yuan
| Item | Opening balance | Gain/loss from changes in fair value for the period | Accumulated fair value changes included in equity | Impairment in accrual of current period | Purchase amount during the reporting period | Sales amount during the reporting period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. TradableTradable financial assets (excluding derivative financial assets) | 4,131,178,589.44 | 16,205,643.80 | 0.00 | 0.00 | 2,650,000,000.00 | 4,090,000,000.00 | 0.00 | 2,707,384,233.24 |
| Financial assets subtotal | 4,131,178,589.44 | 16,205,643.80 | 0.00 | 0.00 | 2,650,000,000.00 | 4,090,000,000.00 | 0.00 | 2,707,384,233.24 |
| Total of the above | 4,131,178,589.44 | 16,205,643.80 | 0.00 | 0.00 | 2,650,000,000.00 | 4,090,000,000.00 | 0.00 | 2,707,384,233.24 |
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Other changesNot applicable.Whether there were any significant changes in the measurement attributes of the Company’s major assets during the reporting period
□Yes √No
4. Restricted rights to assets as of the end of the reporting period
The breakdown of monetary funds with restrictions on use due to mortgages, pledges or freezes, as well as those placed outsideChina with restrictions on repatriation of funds, is as follows:
Unit: yuan
| Item | Ending book value | Causes for restriction |
| L/C deposit | 34,512,382.24 | It is mainly the deposit made for domestic Letters of Credit |
| Performance bond | 2,200,068.49 | It is mainly the deposit made for transactions with customers |
| Other restricted monetary fund balances | 3,483,315.26 | It refers to the balance of special deposit accounts for restricted non-budget units opened by Shenzhen Purcotton in accordance with the regulations of prepaid card issuance formulated by the Ministry of Commerce. |
| Total | 40,195,765.99 |
VIII. Analysis of Investment Situation
1. Overall situation
√Applicable □ Not applicable
| Investment amount in the reporting period (yuan) | Investment amount in the same period of the previous year (yuan) | Change percentage |
| 2,855,178,484.95 | 0.00 | 100.00% |
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Significant non-equity investments in progress during the reporting period
√Applicable □ Not applicable
Unit: yuan
| Project name | Investme | Investme | Industrie | Investme | Cumulat | Source | Project | Estimat | Cumula | Reasons | Date of | Disclos |
| nt method | nt in fixed assets or not | s involved in investment projects | nt amount in the current reporting period | ive actual investment amount as of the end of the reporting period | of funds | progress | ed income | tive realized gains as of the end of the reporting period | for not meeting the scheduled progress and projected earnings | disclosure (if any) | ure index (if any) | |
| High-end dressing production line construction project | Independent | Yes | Medical consumables | 2,804,999.18 | 29,324,138.24 | Proceeds | 13.52% | 0.00 | 0.00 | N/A | ||
| Marketing network construction project | Independent | Yes | Healthy consumer goods | 43,867,371.69 | 166,159,286.32 | Proceeds | 23.58% | 0.00 | 0.00 | N/A | ||
| R&D Center construction project | Independent | Yes | Medical consumables + healthy consumer goods | 6,006,827.09 | 56,703,185.36 | Proceeds | 24.09% | 0.00 | 0.00 | N/A | ||
| Digital management system project | Independent | Yes | Medical consumables + healthy consumer goods | 17,203,176.12 | 75,514,151.15 | Proceeds | 28.09% | 0.00 | 0.00 | N/A | ||
| Winner Industrial Park (Jiayu) Project | Independent | Yes | Medical consumables | 37,910,000.00 | 37,910,000.00 | Proceeds | 9.48% | 0.00 | 0.00 | N/A | ||
| Phase II Expansion Project of Winner Medical Wuhan | Independent | Yes | Medical consumables + healthy consumer goods | 97,386,110.87 | 102,386,110.09 | Proceeds | 17.06% | 0.00 | 0.00 | N/A | ||
| Total | -- | -- | -- | 205,178, | 467,996, | -- | -- | 0.00 | 0.00 | -- | -- | -- |
| 484.95 | 871.16 |
4. Financial assets measured at fair value
√Applicable □ Not applicable
Unit: yuan
| Asset classes | Initial investment cost | Gain/loss from changes in fair value for the period | Accumulated fair value changes included in equity | Purchase amount in the current reporting period | Sales amount in the current reporting period | Accumulated investment income | Closing balance | Source of funds |
| Trust products | 200,000,000.00 | 0.00 | 350,000,000.00 | 50,000,000.00 | 5,856,502.39 | 500,000,000.00 | Self-owned funds | |
| Others | 3,920,000,000.00 | 16,205,643.80 | 0.00 | 2,300,000,000.00 | 4,040,000,000.00 | 42,490,809.79 | 2,207,384,233.24 | Proceeds + self-owned funds |
| Total | 4,120,000,000.00 | 16,205,643.80 | 0.00 | 2,650,000,000.00 | 4,090,000,000.00 | 48,347,312.18 | 2,707,384,233.24 | -- |
5. The use of proceeds
√Applicable □ Not applicable
(1) The overall use of proceeds
√Applicable □ Not applicable
Unit: ’0,000 yuan
| Total amount of proceeds | 355,884.93 |
| Total amount of proceeds invested during the reporting period | 20,517.84 |
| Total accumulated amount raised for proceeds | 110,699.68 |
| Total amount of proceeds for alteration purposes during the current reporting period | 0 |
| Total accumulated amount of proceeds for alteration purposes during the current reporting period | 0 |
| Proportion of total amount of proceeds for alteration purposes during the current reporting period | 0.00% |
| Description of the overall use of proceeds | |
| The China Securities Regulatory Commission (CSRC) approved that, in its “CSRC License [2020] No. 1822” document, the Company made an initial public offering of 50 million yuan ordinary shares (A shares) at an offer price of 74.30 yuan per share, | |
(2) Committed proceeds projects
√Applicable □ Not applicable
Unit: ’0,000 yuan
and the total proceeds amounted to 3,715.0000 million yuan. After deducting issuance fees of 156.1507 million yuan (excludingtax), net proceeds totaled 3,558.8493 million yuan. The above-mentioned proceeds were in place in September 2020 and verifiedby BDO Certified Public Accountants (Special General Partnership) with a “Capital Verification Report” (Xin Kuai Shi Bao Zi[2020] No. ZI10584). As of June 30, 2021, the Company mobilized 1,106,996,800,000 yuan of proceeds (of which467,996,800,000 yuan of proceeds were actual used for fund-raising projects and 639,000,000 yuan of idle proceeds forpermanently replenishing the working capital), 25,531,200,000 yuan of revenues from bank financial products (tax included), and1,055,900,000 yuan of net amount of interest income from special account deposits deducting bank charges. As of June 30, 2021,the balance of unused proceeds of the Company was 2,487.9396 yuan million, of which: the balance of cash management was2,385.0000 million yuan and the balance deposited in the proceeds account was 102.9396 million yuan.
Committedinvestment projects
and investment ofover-raised proceeds
| Committed investment projects and investment of over-raised proceeds | Whether the project has been changed (including partial change) | Total investment in committed proceeds | Adjusted total investment (1) | Investment amount in the current reporting period | Cumulative investment amount as of the end of the reporting period (2) | Investment progress as of the end of the reporting period (3) = (2)/(1) | The project reaches the intended usable status date | Benefits realized in the current reporting period | Cumulative benefits realized as of the end of the reporting period | Whether projected benefits are met | Whether there is a significant change in project feasibility |
| Committed investment projects | |||||||||||
| High-end dressing production line construction project | No | 21,685.86 | 21,685.86 | 280.5 | 2,932.42 | 13.52% | October 01, 2022 | 0 | 0 | N/A | No |
| Marketing network construction project | No | 70,456.87 | 70,456.87 | 4,386.73 | 16,615.92 | 23.58% | October 01, 2023 | 0 | 0 | N/A | No |
| R&D Center construction project | No | 23,542.15 | 23,542.15 | 600.69 | 5,670.33 | 24.09% | October 01, 2022 | 0 | 0 | N/A | No |
| Digital management system project | No | 26,881.05 | 26,881.05 | 1,720.31 | 7,551.4 | 28.09% | October 01, 2022 | 0 | 0 | N/A | No |
| Subtotal of committed investment projects | -- | 142,565.93 | 142,565.93 | 6,988.23 | 32,770.07 | -- | -- | 0 | 0 | -- | -- |
| Investment of over-raised proceeds | |||||||||||
| Winner Industrial Park (Jiayu) Project | 40,000 | 40,000 | 3,791 | 3,791 | 9.48% | June 01, 2023 | 0 | 0 | N/A | No | |
| Phase II Expansion Project of Winner Medical Wuhan | 60,000 | 60,000 | 9,738.61 | 10,238.61 | 17.06% | December 01, 2022 | 0 | 0 | N/A | No | |
| Bolster working capital (if any) | -- | 63,900 | 63,900 | 0 | 63,900 | 100.00% | -- | -- | -- | -- | -- |
| Subtotal of use of over-raised proceeds | -- | 163,900 | 163,900 | 13,529.61 | 77,929.61 | -- | -- | 0 | 0 | -- | -- |
| Total | -- | 306,465.93 | 306,465.93 | 20,517.84 | 110,699.68 | -- | -- | 0 | 0 | -- | -- |
| Information on and reasons for not meeting the scheduled progress or projected earnings (by specific project) | N/A | ||||||||||
| Description of significant changes in project feasibility | N/A | ||||||||||
| Amount, purpose and progress of use of over-raised proceeds | Applicable | ||||||||||
| On October 12, 2020, the 13th meeting of the Second Board of Directors and the seventh meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Some Over-raised Proceeds To Permanently Supplement the Working Capital”, and agreed that the Company could allocate 639.00 million yuan of the over-raised proceeds to permanently supplement the working capital. As of November 2, 2020, 639.00 million yuan of over-raised proceeds have been used to bolster working capital. On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Over-raised Proceeds for the Investment in Winner Industrial Park (Jiayu) Project”. The main body of the Proposal is as follows: The Company plans to allocate 400.0000 million yuan of the over-raised proceeds to the investment in the Winner Industrial Park (Jiayu) Project. The total investment in Winner Industrial Park (Jiayu) Project is estimated at 900.0000 million yuan, and the implementing entity is Winner Medical (Jiayu) Co., Ltd. The project is located in Hubei Jiayu Economic Development Zone, adjacent to the Park’s 2nd Road in the north, 3rd Road in the south, Jiayu Avenue in the east, and Shijingpu Road in the west. The total land area is about 451 mu. The project relies on independent research and development of patented technology achievements, and based on the existing advantages of the Company in the industry, considers natural cotton as the main raw material to innovate and improve degreasing and spunlace technology. It adopts comprehensive use of high-pressure “water needle” and other high-efficiency production technologies, and plans to build production projects in relation to spunlace, wash care, wet tissues, medical cotton/gauze/non-woven fabrics, hand sanitizer and other products. As of June 30, 2021, the total amount invested in the above project is 37.9100 million yuan. On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of | |||||||||||
| Over-raised Proceeds for the Phase II Expansion Project of Winner Medical Wuhan”. The main body of the Proposal is as follows: The Company plans to allocate 600.0000 million yuan of the over-raised proceeds to the investment in the Phase II Expansion Project of Winner Medical Wuhan. The total investment in Phase II Expansion Project of Winner Medical Wuhan totals 1,500.0000 million yuan, and the implementing entity is Winner Medical (Wuhan) Co., Ltd. The project includes non-woven coil center, sterilization processing center, domestic medical sales and marketing center, intelligent distribution center of Hubei regional headquarters, regional headquarters in Central China and the second R&D center of the Group, which are fully invested and independently operated by the Company. Thanks to the project construction, the Company’s production capacity and market share will be increased, enabling it to become a global leader in overall technical level and product quality scale. As of June 30, 2021, the total amount invested in the above project is 102.3861 million yuan. | |
| Change of location for the implementation of the proceeds investment project | Applicable |
| Occurred in the previous year | |
| On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding Capital Increase in Wholly owned Subsidiaries with Some of the Proceeds, Changes to Implementing Entity of the Fundraising Projects, and Addition of Implementation Sites of Some Fundraising Projects”. The main body of the Proposal is as follows: To further improve the production, management efficiency and comprehensive utilization rate of resources, seize market development opportunities, and better promote the implementation of fundraising projects, the Company plans to use some of the proceeds to increase the capital of the wholly-owned subsidiaries and change the implementing entity of the fundraising projects, and add new implementation sites for the fundraising projects. Among them, the original implementing entity of the “R&D Center Construction Project” was Winner Medical (Wuhan) Co., Ltd. According to the Company’s development strategy and actual business needs, it plans to include Winner Medical Products Co., Ltd. as the implementing entity of “R&D Center Construction Project”, a fundraising project. A new implementation site in Winner Industrial Park, No. 660 Bulong Road, Longhua New District, Shenzhen is also included accordingly. | |
| Adjustment of the implementation mode of the proceeds investment project | N/A |
| Pre-investment and replacement of the proceeds investment project | Applicable |
| On October 12, 2020, the 13th meeting of the Second Board of Directors and the seventh meeting of the Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of Proceeds to Replace Self-raised Funds Pre-invested in the Fundraising Project”, respectively, and agreed that the Company could replace the self-raised funds pre-invested in the fundraising project with 233.7173 million yuan of proceeds. It has been verified by the “Special Auditor’s Report on Proceeds Replacement of Winner Medical Products Co., Ltd.” issued by BDO Certified Public Accountants (Special General Partnership) on October 12, 2020. Among them: the actual investment amount of the Company’s self-raised funds pre-invested in the proceeds investment project is 233.7173 million yuan, of which: 26.5062 million |
| yuan was invested in high-end dressing production line construction project, 110.0794 million yuan was invested in marketing network construction project, 50.2174 million yuan was invested in R&D center construction project, 46.9143 million yuan was invested in digital management system project. In October and November 2020, the Company transferred 73.4204 million yuan and 160.2968 million yuan respectively from the special account for proceeds to replacing the self-raised funds that had been invested in advance in the proceeds project. On February 26, 2021, the 18th meeting of the Second Board of Directors and the 12th meeting of the Second Board of Supervisors were held by the Company to deliberate and approve the “Proposal Regarding the Opening of Bank Accounts and Replacement of Pre-invested Self-raised Funds for the New Project of Over-raised Proceeds”. The meetings agreed that the Company could use over-raised funds of 100.1742 million yuan to replace the self-raised funds invested in new fund-raising projects in advance. It has been verified by the “Special Auditor’s Report on Proceeds Replacement of Winner Medical Products Co., Ltd.” ([2021] No. ZI10031) issued by BDO Certified Public Accountants (Special General Partnership) on February 23, 2021. Among them: the pre-investment of self-raised funds of Phase II Expansion Project of Winner Medical Wuhan was 85,894,200 yuan and that of self-raised funds of Winner Industrial Park (Jiayu) Project was 14,280,000 yuan, totaling 100.1742 million yuan. | |
| Temporary replenishment of working capital with idle proceeds | N/A |
| Amount of and reasons for the balance of proceeds resulting from project implementation | N/A |
| Usage and purposes of proceeds not used during the current reporting period | As of June 30, 2021, the balance of unused proceeds of the Company was 2,487.9396 million yuan, of which: the balance of cash management was 2,385.0000 million yuan and the balance deposited in the proceeds account was 102.9396 million yuan. |
| Problems or other circumstances in the use and disclosure of proceeds | NA |
(3) Changes in proceeds projects
□ Applicable √ Not applicable
The Company did not have any change in the proceeds project during the reporting period.
6. Information of entrusted financial management, derivatives investment and entrusted loans
(1) Information of entrusted financial management
√Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: ’0,000 yuan
| Specific type | Source of funds for entrusted financial management | Amount incurred in entrusted financial management | Outstanding balance | Overdue amount not recovered | The amount of impairment for overdue financial management |
| Bank financial products | Proceeds | 204,606.56 | 204,606.56 | 0 | 0 |
| Bank financial products | Self-owned funds | 25,500.00 | 16,131.86 | 0 | 0 |
| Trust financial products | Self-owned funds | 50,000.00 | 50,000.00 | 0 | 0 |
| Total | 280,106.56 | 270,738.42 | 0 | 0 | |
Specific circumstance of high-risk entrusted financing with significant single amount or with low security, poor liquidity and notbreak-even
□ Applicable √ Not applicable
The entrusted financing is expected not to recover the principal or has other circumstances that may cause impairment
□ Applicable √ Not applicable
(2) Derivatives investment
□ Applicable √ Not applicable
No derivative investment in the Company during the reporting period
(3) Information of entrusted loans
□ Applicable √ Not applicable
The Company had no entrusted loan during the reporting period.
IX. Sales of Significant Asset and Equity
1. Information of significant assets for sale
□ Applicable √ Not applicable
The Company did not sell any significant assets during the reporting period.
2. Information of significant equity for sale
□ Applicable √ Not applicable
X. Analysis of Major Holding Companies and Joint Stock Companies
√Applicable □ Not applicable
Information on major subsidiaries and joint stock companies with an impact of 10% or more on the Company’s net profit
Unit: yuan
| Company name | Company type | Principal operation | Registered capital | Total assets | Net assets | Revenue | Operating profit | Net profit |
| Winner Medical (Huanggang) Co., Ltd. | Subsidiaries | It is mainly responsible for the production of pure cotton spunlace non-woven fabrics and cotton tissues | 259,459,200.00 | 1,260,590,795.96 | 1,123,306,948.24 | 708,821,921.35 | 127,247,689.65 | 104,794,838.11 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Not applicable
Description of major holding companies and joint stock companiesThe operating revenues of the above subsidiaries include sales to the parent company and other subsidiaries in the Group.
XI. Structured Subjects Controlled by the Company
□ Applicable √ Not applicable
XII. Risks to the company and countermeasures
1. Risk of earnings volatility due to the COVID-19 outbreak and countermeasuresWith the sudden outbreak of the epidemic in early 2020, the global demand for protective products grew geometrically. TheCompany overcame all difficulties to increase production capacity and secure supply, resulting in significant growth in theperformance in 2020, especially in the third quarter when sales and profits of overseas CDC protective products surged in a shortperiod of time and reached a peak. However, with the effective prevention and control of the global epidemic, the significant growthin production capacity of CDC protective products, and the perfection of global supply chain of protective products, prices havereturned to normal. The Company expects to see a decrease in the volume and price of protective products exported abroad in thethird quarter of 2021 compared to that in the same period of 2020.Although the sales and profits of protective products cannot maintain substantial growth in 2020, after the baptism of the epidemic,the country, hospitals and the public have raised the requirements for a hygienic environment, the Company’s brand awareness,reputation and influence has been greatly enhanced, and the sales channels have been further expanded. Based on the widespreadimpact of the COVID-19 pandemic, public awareness of epidemic control and prevention has been significantly enhanced, and CDC
protective products become essential for public travel. Governments and hospitals around the world will increase the stockpile andquality of protective products, so the demand for medical protective products will increase substantially than that before thepandemic. The Company will seize the market opportunity to rapidly increase its market shares and coverage of medicalconsumables, further enhance the reputation and awareness of the Winner Medical brand, and establish a far-leading market positionin the industry.
2. Risk of raw material price fluctuations and countermeasures
The Company’s main raw materials are cotton as well as cotton yarn and cotton greige fabric for medical use made from cotton. Theprices of cotton are affected by multiple factors such as planting area, natural production, inventory cycle, agricultural price policy oforigin, consumer demand and even futures prices. In addition, the prices of imported cotton are also affected by other factors such asinternational trade policies and exchange rate fluctuations. If the purchase price of raw materials such as cotton continues to rise inthe future, it will have a greater cost pressure on the Company’s production and operation. If the Company fails to the adjustment ofsales price with that of raw material price, it may have a negative impact on the stability of the Company’s profitability.To deal with the risk of cotton price fluctuations, the Company usually purchases forward contracts when the cotton price isrelatively low, and when the cotton price rises to a certain level, it will adjust the sales price appropriately to reduce the negativeimpact on the Company’s profitability.
3. Exchange rate risks and countermeasures
Medical consumables are the main exports of the Company, which are settled in major international currencies such as US dollars. Inrecent years, the Company’s foreign sales amount accounted for a high proportion of the main business income, and with theaccelerated pace of RMB internationalization and further marketization of the RMB exchange rate formation mechanism, theexchange rate flexibility of RMB against the above currencies has increased. Fluctuations in the RMB exchange rate will, on the onehand, affect the Company’s product export sales prices; on the other hand, it will also cause the Company to generate exchange gainsand losses. If there is a significant appreciation of RMB in the future, it will affect the price competitiveness of the Company inoverseas markets, and cause exchange losses, which will adversely affect the Company’s operating revenues and profits.To reduce the impact of exchange rate fluctuations on the Company’s performance, (1) for long-term stable customers, the Companyhas an agreed price adjustment mechanism, and in case of significant fluctuations in key elements affecting the price, the price shallbe adjusted normally according to the agreed price adjustment mechanism; and at the same time, the Company adjusts the quotationcycle for new orders received, shortens the quotation cycle, and adjusts the quotation exchange rate in a timely manner; (2) theCompany carries out forward settlement and sale of foreign exchange for the purpose of hedging, and locks the forward settlementexchange rate in advance to reduce the risk and hedge the exchange rate risk in international business; and (3) The Company willstrengthen its research and analysis of exchange rates, pay attention to changes in the international market environment in real time,and adjust its business strategies in a timely manner to minimize the risk of exchange rate fluctuations.
4. Risk of fluctuations in downstream market demand and less-than-expected customer development and countermeasuresThanks to its three brands, i.e., “Winner Medical”, “Purcotton” and “PureH2B”, the Company realized synergetic development ofmedical and consumer sectors. Its business and development prospects depend on the sustainable and healthy development of macroeconomy, the continued growth of national per capita disposable income, and the consumers’ increasing attention to the concept ofhealth and environmental protection. Therefore, in the event of a macroeconomic downturn, a decline in national per capitadisposable income or purchasing power, or an uncertain expected economic outlook, the downstream demand situation of the Issuer,especially consumers’ willingness and ability to purchase high-quality products, may be affected, which would adversely affect theCompany’s operating results. In addition, after more than ten years of rapid development, the growth of e-commerce in China hasslowed down and the difficulty of acquiring customers has increased. If the Company cannot adjust its business strategy based onmarket conditions, it may not be able to continuously expand its customer base and reduce customer acquisition costs, which wouldadversely affect the Company’s long-term profitability.
5. Risk of changes in industry policies and standards and countermeasures
Medical device, which directly affects the life and health safety of users, has been a key supervised industry. In recent years, as Chinafurther deepens the reform of the medical and health system, relevant government departments have introduced a series ofregulations and policies on industry standards, bidding, price formation mechanisms, circulation systems, etc., which have a wide andprofound impact on the development of the medical device industry. As the Company gradually make more efforts in the investmentand development in the domestic market of medical consumables, its domestic sales of medical consumables are expected to furtherincrease in the future. Affected by the COVID-19 pandemic, the foreign economic environment has been relatively sluggish, whichmay lead to medical budget cuts, and the price sensitivity of medical products has increased, resulting in a risk of furthercompressing the operating profits. If the Company fails to adapt to profound changes in industry policies in a timely manner, it mayhave an impact on the Company’s operations.
6. Risk of not receiving reimbursement for the Medical Investment Project of Winner Medical (Heyuan) andcountermeasuresDue to the planning of the square of Heyuan High-speed Railway Station and the surrounding high-speed railway new town along theJiangxi-Shenzhen High-speed Railway, the“Agreement on Investment and Construction of Medical Combo Kits and CottonHousehold Products Production Project” entered into by and between the Company and the People’s Government of Zijin County,Heyuan City in May 2016 could not be fulfilled. In November 2019, the International Arbitration Court in Ganjiang New Districtissued an “Award” confirming the termination of the “Investment and Construction Agreement of Medical Combo Kits and CottonHousehold Products Production Project”, and the People’s Government of the Zijin County shall compensate the Company foreconomic losses of 550 million yuan, with 50% to be paid by the People’s Government of Zijin County by December 31, 2019 and50% by February 29, 2020. As of the disclosure date of the report, the company has received a land transfer deposit of 3 million yuanand a compensation payment of 314 million yuan returned by the People’s Government of Zijin County. There is a risk that theremaining amount may not be received on time in accordance with the “Award”. The Company is currently closely following up onthe subsequent payment plan of the People’s Government of Zijin County, Heyuan City.
7. Risks of proceeds projects and countermeasures
The Company plans to allocate the proceeds from this issuance to the construction projects of high-end dressing production lines,marketing network, R&D Center and digital management system, Winner Industrial Park (Jiayu) Project, and Phase II ExpansionProject of Winner Medical Wuhan. The development progress and operation of such projects will contribute to the Company’sdevelopment and profitability in the next few years.Based on the forecast of the future market, the Company has conducted a prudential and sufficient feasibility study anddemonstration of the proceeds investment project. Thanks to the Company’s rich business experience and market foundationaccumulated over the years, it is expected that the proceeds investment project could realize good investment income. However, ifthere are changes in external factors such as the industry market, it cannot rule out that some projects may not be implemented asscheduled or the actual investment returns may be lower than expected. In accordance with changes in the external market and theinternal control and management system of proceeds projects, the Company will strictly control the progress of capital investment invarious projects and keep an eye on the risk of project investment.
XIII. Registration forms for receptions of surveys, communication, interviews and otheractivities during the reporting period
√Applicable □ Not applicable
| Time | Location | Method | Types of objects | Objects | Main contents of discussions and documents provided | Basic information index of surveys |
| January 22, | Headquarters | Telephone | Institutions | 267 investors | Operation status and | For details, please |
| 2021 | conference rooms | communication | including Invesco Great Wall, Great Wall Fund, China Southern Fund | development plan of each business segment | refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) | |
| February 19, 2021 | Headquarters conference rooms | Telephone communication | Institutions | 151 investors including China Life Asset Management, Harvest Fund, and BOCOM Schroders Fund | Operation status of each business segment | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) |
| March 18, 2021 | Winner Medical (Huanggang) Co., Ltd., Winner Medical (Chongyang) Co., Ltd., Winner Medical (Jiayu) Co., Ltd. | Field surveys | Institutions | E Fund, Da Cheng Fund, Manulife Teda and many other institutions | Information related to each production base | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) |
| April 20, 2021 | Panorama studio | Others | Institutions | TF Securities, CITIC Securities, Bosera Funds and other investors | Operation status of each business segment | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) |
| April 28, 2021 | Headquarters conference rooms | Telephone communication | Institutions | China Post Fund, Fullgoal Fund, Qian He Capital and other investors | Operation status of each business segment | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) |
| May 10, 2021 | Headquarters conference rooms | Field surveys | Institutions | GF Securities, Bosera Funds, Guosen Securities and other investors | Operation status of each business segment | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) |
| May 14, 2021 | Panorama | Others | Institutions | Investors | Operation status of each business segment | For details, please refer to Shenzhen |
| Stock Exchange Interactive (http://irm.cninfo.com) | ||||||
| May 24, 2021 | Headquarters conference rooms | Field surveys | Institutions | Da Cheng Fund, Baoying Fund | Operation status of each business segment | For details, please refer to Shenzhen Stock Exchange Interactive (http://irm.cninfo.com) |
Section 4 Corporate GovernanceI. Information about the annual general meeting of shareholders and extraordinary generalmeeting of shareholders held during the reporting period
1. General meeting of shareholders during the reporting period
| Meeting session | Meeting type | Investor participation proportion | Convening date | Date of disclosure | Resolutions of the meeting |
| 2020 Annual General Meeting of Shareholders | Annual general meeting of shareholders | 89.42% | May 10, 2021 | May 11, 2021 | Announcement of Resolutions of the 2020 Annual General Meeting of Shareholders (Announcement No.:2021-025), disclosure website: http://www.cninfo.com.cn/new/index |
2. The preferred shareholders with voting rights restored request an extraordinary general meeting of
shareholders
□ Applicable √ Not applicable
II. Change of directors, supervisors and senior management
□ Applicable √ Not applicable
There were no changes in the directors, supervisors and senior management of the Company during the reporting period. See the2020 Annual Report for details.
III. Profit distribution and capitalization of capital reserve during the reporting period
□ Applicable √ Not applicable
The Company does not plan to distribute cash dividends, transfer shares or increase the share capital of the common reserve fundwithin half a year.
IV. Implementation of the company's equity incentive plan, employee stock ownership plan orother employee incentive measures
√Applicable □ Not applicable
On November 27, 2020, the Company held the 15th meeting of the Second Board of Directors and the 9th meeting of the SecondBoard of Supervisors, and on December 15, 2020, it held the 6th extraordinary general meeting of shareholders in 2020. TheCompany deliberated and agreed Proposal on the Company's Restricted Stock Incentive Plan in 2020 (Draft) and Its Abstract at themeetings, and proposed to grant 6.5 million of Class II restricted stocks. For details, please refer to Company's Restricted StockIncentive Plan in 2020 (Draft) disclosed by the Company on the website (http://www.cninfo.com.cn) on November 30, 2020.On December 18, 2020, the Company held the 17th meeting of the Second Board of Directors and the 11th meeting of the SecondBoard of Supervisors. It deliberated and agreed Proposal on the Proposal on the First Grant of Restricted Stocks to the IncentiveObjects, and determined that 5.833 million of of Class II restricted stocks should be granted to 1,036 eligible incentive objects. Fordetails, please refer to relevant announcement disclosed by the Company on the website (http://www.cninfo.com.cn) on December 22,2020.
Section 5 Environmental Protection and Social ResponsibilityI. Major environmental issuesWhether the listed company and its subsidiaries are key pollutant discharging units announced by environmental protectionauthorities
√ Yes □ No
| Company or subsidiary name | Names of main pollutants and characteristic pollutants | Emission mode | Number of discharge outlets | Distribution of discharge outlets | Emission concentration | Pollutant emission standards implemented | Total emissions | Total emissions approved | Emissions beyond standards |
| Winner Medical (Chongyang) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 7mg/m?, <3mg/m?, 160mg/m? | 20mg/m?, 50mg/m?, 200mg/m? | NOX: 1.57T, SO2: 0.037T | NOX: 13.28T/a, SO2: 3.32 T/a | Not exceeding the standard |
| Winner Medical (Chongyang) Co., Ltd. | PH, COD, BOD, NH3-N, SS | Direct discharge | 1 | Sewage discharge outlet | 7.95, 41mg/L, 15.3mg/L, 0.476mg/L, 5mg/L | 6-9, 80mg/L, 20mg/L, 10mg/L, 50mg/L | COD: 7.86T, NH3-N: 0.227T | COD: 57.6T/a, NH3-N: 7.27 T/a | Not exceeding the standard |
| Winner Medical (Jiayu) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 5.5mg/m?, <3mg/m?, 90mg/m? | 20mg/m?, 50mg/m?, 200mg/m? | NOX: 1.26T, SO2: 0.034T | NOX: unlicensed, SO2: unlicensed | Not exceeding the standard |
| Winner Medical (Jiayu) Co., Ltd. | PH, COD, BOD, NH3-N, SS | Direct discharge | 1 | Sewage discharge outlet | 7.8, 24.7mg/L, 7.4mg/L, 0.319mg/L, 9mg/L | 6-9, 100mg/L, 20mg/L, 15mg/L, 70mg/L | COD: 5.87T, NH3-N: 0.01T | COD: 34.29T/a, NH3-N: 1.19T/a | Not exceeding the standard |
| Winner Medical (Huanggang) Co., Ltd. | PM, SO2, NOX | / | 2 | 1#2# boiler discharge outlet | 19/13mg/m?, <3/<3mg/m?, 125/68mg/m? | 20mg/m?, 50 mg/m?, 200mg/m? | NOX: 3.41T, SO2: 0.414T | NOX: 23.52T/a, SO2: unlicensed | Not exceeding the standard |
| Winner Medical (Huanggang | PH, COD, BOD, | Indirect discharge | 1 | Sewage discharge | 8.2, 47mg/L, 13.3mg/L, | 6-9, 500mg/L, 300mg/L, | COD: 27.59T, NH3-N: | COD: 90T/a, NH3-N: | Not exceeding |
| ) Co., Ltd. | NH3-N, SS | outlet | 0.354mg/L, 9mg/L | 45mg/L, 400mg/L | 0.376T | 13.5 T/a | the standard | ||
| Winner Medical (Tianmen) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 6.0mg/m?, <3mg/m?, 122mg/m? | 20mg/m?, 50mg/m?, 200mg/m? | NOX: 1.71T, SO2: 0.05T | NOX: 16.235T/a, SO2: 4.059T/a | Not exceeding the standard |
| Winner Medical (Tianmen) Co., Ltd. | PH, COD, BOD, NH3-N, SS | Indirect discharge | 1 | Sewage discharge outlet | 7.54, 72mg/L, 19.4mg/L, 0.440mg/L, 8mg/L | 6-9, 400mg/L, 150mg/L, 30mg/L, 250mg/L | COD: 10.9T/NH3-N: 1.08T | COD: 132.52T/a, NH3-N: 16.57 T/a | Not exceeding the standard |
| Winner Medical (Wuhan) Co., Ltd. | PM, SO2, NOX | / | / | / | / | / | / | No boiler, no license | / |
| Winner Medical (Wuhan) Co., Ltd. | PH, COD, BOD, NH3-N, | Indirect discharge | 1 | Sewage discharge outlet | 7.79, 35mg/L, 11.7mg/L, 1.48mg/L, 2 | 6-9, 500mg/L, 300mg/L, 45mg/L, 64 | COD: 8.1T, NH3-N: 0.8T | COD: 61T/a, NH3-N: 6.1T/a | Not exceeding the standard |
| Winner Medical (Jingmen) Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | 4.9mg/m?, <3 mg/m?, 80mg/m? | 20mg/m?, 50mg/m?, 150mg/m | NOX: 1.426T, SO2: 0.055T | NOX: 10.83T/a, SO2: 3.11T/a | Not exceeding the standard |
| Winner Medical (Jingmen) Co., Ltd. | PH, COD, BOD, NH3-N, SS | Indirect discharge | 1 | Sewage discharge outlet | 8.43, 26mg/L, 12.4mg/L, 0.79mg/L, 11mg/L | 6-9, 280mg/L, 150mg/L, 25mg/L, 210mg/L | COD: 7.36T, NH3-N: 0.736T | COD: 19.48T/a, NH3-N: 1.95T/a | Not exceeding the standard |
| Yichang Winner Medical Textile Co., Ltd. | PM, SO2, NOX | / | 1 | Boiler discharge outlet | Plan to monitor in H2 | 20mg/m?, 50mg/m?, 150mg/m? | Unlicensed | Unlicensed | Not exceeding the standard |
| Yichang Winner Medical Textile Co., Ltd. | PH, COD, BOD, NH3-N, SS | Indirect discharge | 1 | Sewage discharge outlet | Plan to monitor in H2 | 6-9, 500mg/L, 300mg/L, 45mg/L, 400mg/L | Without production waterwater | Unlicensed | Not exceeding the standard |
Construction and operation of pollution prevention and control facilitiesIn order to ensure the normal operation of environmental protection facilities, the Company selects advanced, mature and technicallyfeasible environmental protection facilities and treatment processes, formulates environmental protection responsibility system,emergency management system, safe operation rules of environmental protection facilities, etc., assigns special personnel to be
responsible for the operation and maintenance of environmental protection facilities, formulates maintenance plan, makes operationrecords and daily monitoring of environmental protection facilities. The environmental protection facilities operate normally, and allthe pollutant discharge indexes meet the requirements of pollutant discharge permit.All subsidiaries build hazardous waste rooms, manage the whole process of hazardous waste, sign entrusted disposal agreements withthird-party companies, and regularly transfer them to third parties for treatment.
Environmental impact assessment of construction projects and other administrative permits for environmental protectionThe branches and subsidiaries of Winner Medical Co., Ltd. have implemented the environmental impact assessment system and the"three simultaneities" system as required, and have done a good job in the environmental protection acceptance after completion.Winner Medical (Chongyang) Co., Ltd.: “Medical absorbent gauze series product line” obtained the EIA approval fromEnvironmental Protection Bureau of Chongyang County on September 21, 2005, and passed the environmental protection acceptanceafter completion of Environmental Protection Bureau of Chongyang County on August 22, 2008; “the project of sterile packagingand sterile production line” obtained the EIA approval (C.H.S.H [2013] No.07) from Environmental Protection Bureau of ChongyangCounty on March 29, 2013, and passed the environmental protection acceptance after completion of Environmental ProtectionBureau of Chongyang County on June 26, 2014; “Qingshan plant construction project” went through the environmental impactassessment in July 2014 and obtained EIA approval from Environmental Protection Bureau of Chongyang County on November 18,2015; the new 6390M2 workshop project” of Xianning Winner Medical (Chongyang) Co., Ltd. completed the declaration ofregistration form on May 17, 2017.Winner Medical (Jiayu) Co., Ltd.: “Absorbent cotton project with annual production of 800 tons ” obtained the EIA approval fromEnvironmental Protection Bureau of Jiayu County on March 20, 2013, and passed the environmental protection acceptance aftercompletion of Environmental Protection Bureau of Jiayu County on September 20, 2014. “Winner Purcotton construction project”obtained the EIA approval (J.H.S [2014] No.083) from Environmental Protection Bureau of Jiayu County on December 25, 2014,and passed the environmental protection acceptance after completion of Environmental Protection Bureau of Jiayu County onSeptember 28, 2017. The environmental impact assessment report of the Winner Industrial Park (Jiayu) Project was approved by theXianning Municipal Bureau of Ecology and Environment on March 15, 2021, with the approval document number Xian Huan Shen[2021] No. 21.Yichang Winner Medical Textile Co., Ltd.: “Medical gauze project with an annual output of 90 million meters” obtained the EIAapproval from Environmental Protection Bureau of Zhijiang City on December 19, 2014, and passed the environmental protectionacceptance after completion of Environmental Protection Bureau of Zhijiang City on October 14, 2015.Winner Medical (Tianmen) Co., Ltd.: “Cotton spun laced non-woven fabric and medical dressing products production project”obtained the EIA approval (T.H.H. [2015] No.35) from Environmental Protection Bureau of Tianmen City on March 11, 2015. Atpresent, phase I of the project has been completed and passed the environmental protection acceptance after completion ofEnvironmental Protection Bureau of Tian men City on January 25, 2017; the independent acceptance of phase II will be completedon May 10, 2020. “Medical dressing production line automation upgrading and transformation project” obtained the EIA approval(T.H.H. [2016] No.23) from Environmental Protection Bureau of Tianmen City on January 19, 2016, and completed the independentacceptance on March 23, 2018.Winner Medical (Jingmen) Co., Ltd.: “30 million meters per year medical gauze bleaching and refining production line expansionproject” obtained the EIA approval from Environmental Protection Bureau of Jingmen City on October 18, 1999, and passed theenvironmental protection acceptance after completion of Environmental Protection Bureau of Jingmen City on December 14, 2001;“renovation and expansion project o f gauze pad, gauze sheet and shrinkage bandage” obtained the EIA approval from EnvironmentalProtection Bureau of Jingmen City on September 23, 2003 and passed the environmental protection acceptance after completion ofEnvironmental Protection Bureau of Dongbao District, Jingmen City on August 3, 2005; “degreasing and bleaching medical gauzeproject with annual production of 1,500 tons” obtained the EIA approval from Environmental Protection Bureau of Dongbao District,
Jingmen City on April 5, 2006, and accepted together with the construction project of Purcotton on September 27, 2017; “WinnerPurcotton construction project” obtained the EIA approval (D.H.H [2016] No.138) from Environmental Protection Bureau ofJingmen City on October 19, 2016, and passed the environmental protection acceptance of Environmental Protection Bureau ofJingmen City on September 27, 2017; the expansion project of absorbent gauze production line (Purcotton phase II expansion project)obtained the EIA approval (J.H.S. [2020] No.112) from Jingmen Municipal Bureau of Ecology and Environment on December 24,2020.Winner Medical (Huanggang) Co., Ltd.: “Cotton spun laced non-woven fabric production project (phase I and phase II)” obtainedthe EIA approval (E.H.H. [2011] No.628) from Environmental Protection Department of Hubei Province on August 5, 2011; thephase I project passed the environmental protection acceptance after completion (E.H.H.[2012] No.348) of Environmental ProtectionDepartment of Hubei Province on May 8, 2012. The Phase II project obtained the EIA approval (H.H.H. [2015] No.304) fromEnvironmental Protection Bureau of Huanggang City on December 31, 2015, and the Phase I project passed the environmentalprotection acceptance after completion of Environmental Protection Bureau of Huanggang City on January 24, 2017; “the newproject of Purcotton distribution center” obtained the EIA approval (H.H.H. [2016] No.114) from Environmental Protection Bureauof Huanggang City on June 27, 2016, and the independent acceptance of the project was completed on October 10, 2018; the “boilertransformation project” obtained the EIA approval (H.H.H. [2018] No.20) from Environmental Protection Bureau of Huanggang Cityon January 29, 2018, and completed self acceptance on November 14, 2019; the “foam coiled material production line project(expansion)” obtained the EIA approval (H.H.H. [2018] No.26) from Environmental Protection Bureau of Huanggang City onFebruary 5, 2018, and completed the project's independent acceptance on October 8, 2018; the “construction project of high-enddressing production line” obtained the EIA approval (H.H.H. [2018] No.178) from Environmental Protection Bureau of HuanggangCity on November 6, 2018, and the project is currently in the construction period and has not been completed; the “upgrading andtransformation project of medical protective products” obtained the EIA approval (H.H.H. [2020] No.109) from HuanggangMunicipal Bureau of Ecology and Environment on July 20, 2020, which is under acceptance.Winner Medical (Wuhan) Co., Ltd.: “Hubei Winner Medical Co., Ltd. cotton spunlace non-wovens and products productionproject” obtained the EIA approval (X.S.P.Zi [2017] No.68) from Administrative Approval Bureau of Xinzhou District, Wuhan Cityon July 12, 2017 (see Annex 3 for the approval), and completed the independent acceptance of Phase I on January 18, 2020; “R&Dcenter construction project” obtained the EIA approval (X.S.P.Zi [2018] No.193) from Administrative Approval Bureau of XinzhouDistrict, Wuhan City on December 24, 2018 (see Annex 4 for the approval), but the project has not started construction yet; “newelectron accelerator irradiation device project” obtained the EIA approval (W.H.G. [2018] No.5) from Wuhan EnvironmentalProtection Bureau on January 15, 2018, and the independent acceptance of phase I was completed on May 15, 2020. Theenvironmental impact report form of the protective product upgrading project was approved by Administrative Approval Bureau ofXinzhou District on May 7, 2021, with the approval number of Xin Shen Pi Zi [2021] No. 95.
Emergency plan for environmental emergenciesIn order to further improve the emergency management system of environmental pollution accidents, improve the ability of branchesand subsidiaries of Winner Medical Co., Ltd. to deal with major environmental pollution accidents to ensure the safety of productionand operation, improve the ability of employees to deal with accidents, standardize the Company's emergency management andcorresponding emergency procedures, and implement emergency rescue work in a timely and effective manner, prevent and reducethe occurrence of accidents to the greatest extent, branches and subsidiaries of Winner Medical Co., Ltd. have set up anenvironmental accident emergency leading group and formulated the Emergency Plan for Environmental Accidents. The branchesand subsidiaries of Winner Medical Co., Ltd. have prepared the emergency plans for environmental accidents according to therequirements, and sent them to the local environmental protection authorities for record. They also conduct regular emergency drillsfor environmental emergencies.
Environmental self-monitoring scheme
The Company implements the environmental self-monitoring scheme according to the requirements of the pollutant discharge permit,and detects the pollutants through the methods of manual testing + entrusted monitoring + online monitoring. The online monitoringsystem of enterprises with production wastewater discharge carries out real-time monitoring and networking with the competentgovernment departments. The entrusting party of the online monitoring equipment carries out the operation and maintenance of theonline monitoring equipment, and the manual testing and entrusted monitoring results are released in time on the provincial pollutantplatform.Note: the self-monitoring scheme is stipulated in the pollutant discharge permit, and the pollutant discharge permit andself-monitoring scheme are made public on the national pollutant discharge permit management platform. Monitoring data shall beentered into the pollution source monitoring information management platform of Hubei Province.
Administrative penalties imposed due to environmental issues during the reporting period
| Company or subsidiary name | Reasons for penalty | Violations | Punishment | Impacts on the production and operation of listed companies | Rectification measures of the Company |
| None | None | None | None | None | None |
Other environmental information that should be disclosedNoneOther information related to environmental protectionNoneThe Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for IndustryInformation Disclosure of Listed Companies Engaging in Textile and Apparel Business.Environmental compliance of the Company during the reporting periodII. Social responsibilityWinner Medical has been founded for almost thirty years, and kept on upholding the determinations of “To enhance your health, lifeand well-being” and “Purcotton Changes the World” to continue to promote the progress of and efforts to medical consumables, so asto provide consumers with better quality products and explore more beneficial practices for the benefit of mankind.
(1) Pick up courage to move forward and fight against the pandemic.
Time is of the essence, and Winner Medical is always at the warfront against the pandemic. After the outbreak of COVID-19pandemic, the Mask Shop of Winner Medical (Huanggang), as well as Protective Product Shops of Winner Medical (Jiayu) andWinner Medical (Chongyang), as the manufacturer who supplying the protective materials that were badly needed at frontlines, keptworking overtime during the Spring Festival, so as to fully guarantee the production and supply of protective materials. TheCompany overcame the huge impact on production caused by the shortage of raw materials and supplies as well as rising prices, andsuccessfully achieved a several-fold expansion of production capacity. The Company provided 108.9 million masks and 114,000pieces of protective clothing on January 26, 2020; nearly 300 million masks and 3 million pieces of protective clothing on March 31,2020; and 700 million masks, 5 million pieces of protective clothing, and 5 million surgical and isolation gowns on May 31, 2020.Most of these were delivered to the most urgently needed hospitals and pandemic prevention institutions in China. At the end ofDecember 2020, a total of nearly 4 billion masks and more than 86 million pieces of protective clothing, isolation and surgical gownswere delivered to the most affected areas around the world.
(2) Be honesty and fulfill the dream of pure cotton
Since the creation of the first piece of cotton tissue in Purcotton in 2009, the Company has sold more than 13 million pure cottongarments and bedding, more than 21.5 billion cotton tissues and more than 6.8 million non-woven environmental protection shoppingbags, which help reduce the use and emission of tens of thousands of tons of chemical fibers, and protect tens of thousands of treesfrom being cut down. The innovation is conductive to environmentally-friendly development.
(3) Support the frontline, and assume social responsibility
In January 2021, Hebei Province was hit by the COVID-19 pandemic for a second time. The Company donated materials worth of600,000 yuan (incl. N95 masks and disposable protective clothing) to Pandemic Prevention and Control Office of Luancheng District,Shijiazhuang City, aiming to help Hebei Province to fight against the pandemic.In late July 2021, Henan Province was hit by torrential rains that touched the nation's attention. The Company and its subsidiary,Purcotton, donated about 18 million yuan worth of pure cotton tissues, wet tissues, baby diapers, sanitary pads and other disasterrelief materials to Henan Women's Federation and Henan Women's and Children's Development Foundation through ShenzhenWomen's Federation and Shenzhen Women's and Children's Development Foundation. Winner Medical donated about 3.3 millionyuan worth of medical and health materials to Zhengzhou Welfare Institute, Zhengzhou Women's and Children's Hospital, the FirstAffiliated Hospital of Zhengzhou University and other institutions and hospitals to make a modest contribution to the disaster reliefwork.
(4) Care for women and children, guard people’s health
In March 2021, Purcotton, the subsidiary of the Company, participated in the Care Action themed on “Assisting Women to BrightlyBloom” organized by Shenzhen Women's and Children's Development Foundation in celebration of the Women’s Day, to presentgifts for female workers at the frontlines of pandemic control and women in need in the community, including masks, sanitary pads,cotton tissues and other feminine care products, as well as socks, gauze square towels, alcohol tablets and other daily needs.In May 2021, on the occasion of Nurses' Day, the Company donated masks worth a total of 945,000 yuan to dozens of hospitals inChina to help healthcare workers prevent occupational exposure and protect themselves from infection control. In the same month,on the National Disability Day, the Company as a member of “Dingdong FSC Pharmaceutical Alliance” donated a total of 370,000yuan worth of medicines and medical kits to help people with disabilities.In June 2021, the Company donated 25,000 pieces of “Wow! Shadow” theme co-branded masks to SUSTECH ExperimentalEducation Group No. 1 Primary School in Shenzhen to help elementary school students realize their entrepreneurial dreams andspread traditional Chinese culture. In the same month, as a co-sponsor of the # Weaving Youth Action # public welfare project,Purcotton, the subsidiary of the Company, donated a total of 8.9 million yuan worth of cotton materials such as classic pure cottontissue, cotton wet tissues and cotton knitting sets, in the hope of bringing peace of mind and happiness to children in the depths of themountains and protecting the healthy growth of young people.In the past 30 years, Winner Medical which has three top brands including Winner, Purcotton and PureH2B has strived to achievesynergistic development of the medical and consumer sectors, and will not waver to continue to implement innovation-driven andhigh-quality development strategy. It will make efforts to build resource-saving and environmentally friendly development model,continue to improve the Company's social responsibility system, and truly put into practice the development vision of “making lifebetter” and “Purcotton Changes the World”.
Section 6 Important Issues
1. Commitments of the Company's actual controller, shareholders, related parties, acquirersand other parties related to the Company's commitments that have been fulfilled during thereporting period and those that have been overdue as of the end of the reporting period
□ Applicable √ Not applicable
During the reporting period, there were no commitments of the Company's actual controller, shareholders, related parties, acquirersand other parties related to the Company's commitments that have been fulfilled during the reporting period and those that have beenoverdue as of the end of the reporting periodII. Non-operating occupation of funds of listed companies by controlling shareholders andother related parties
□ Applicable √ Not applicable
No non-operating occupation of funds of listed companies by controlling shareholders and their related parties during the reportingperiod.III. Illegal external guarantee
□ Applicable √ Not applicable
No illegal external guarantee of the Company during the reporting period.
4. Appointment of and dismissal of accounting firms
Whether the semi-annual financial report is audited
□Yes √No
The Company's semi-annual report has not been audited.
V. Explanations of the Board of Directors and the Board of Supervisors on the “Non-standardAuditor's Report” of the Accounting Firm During the Reporting Period
□ Applicable √ Not applicable
VI. Explanation of the Board of Directors on the “Non-standard Auditor's Report” of thePrevious Year
□ Applicable √ Not applicable
VII. Matters Related to Bankruptcy and Reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization of the Company during the reporting period.
VIII. Litigation mattersMajor litigation and arbitration matters
√Applicable □ Not applicable
| Basic information of litigation (arbitration) | Amount involved (RMB 10,000) | Whether to form estimated liabilities | Progress of litigation (arbitration) | Trial result and influence of litigation (arbitration) | Implementation of litigation (arbitration) judgment | Date of disclosure | Disclosure index |
| Winner Medical (Tianmen), Shenzhen Purcotton, Winner Medical (Huanggang) v. China National Intellectual Property Administration, administrative dispute case of patent invalidation | 0 | No | On June 2, 2020, the Reexamination and Invalidation Department of the Patent Office of China National Intellectual Property Administration issued the Decision on Examination of Invalidation Request, which decided to declare the patent right of “production method of cotton non-woven medical dressings” (Patent No. ZL200510033147.1, | If the lawsuit does not support the plaintiff's claim, the patent is finally found to be invalid. The reason for the patent invalidation decision is not that the Company and / or the patent infringes the rights of others. Therefore, the Company can still use the technology and will not have a significant adverse impact on the normal production and operation of the company | N/A |
| heard by the Beijing Intellectual Property Court, and as of the disclosure date of the report, the Beijing Intellectual Property Court has not yet made sentences. | |||||||
| Winner Medical v. the People's Government of Zijin County, arbitration case of contract dispute [Case No.: (2019) G.G.Z Zi No. 095] | 55,565.53 | No | The Company has received the award of (2019) G.G.Z Zi No. 095 Case. | The ruling confirmed that the original Investment Agreement was terminated, and the People's Government of Zijin County had to bear the lawyer's fees, legal costs and other expenses totaling 2.6553 million yuan, return 3 million yuan of land transfer deposit to the Company, and compensate for economic losses of 550 million yuan. The land, above-ground buildings, equipment and facilities and relevant | As of the disclosure date of the report, the company has received a land transfer deposit of 3 million yuan and a compensation payment of 314 million yuan returned by the People’s Government of Zijin County. The Company has handed over the project site, above-ground buildings, equipment and facilities and supporting materials to the People’s Government of Zijin County. |
Other litigation matters
√Applicable □ Not applicable
supportingmaterials ofHeyuan Winnerinvestment andconstructionproject werehanded over to thePeople'sGovernment ofZijin County.There will be noadverse impact onthe Company.Basic informationof litigation(arbitration)
| Basic information of litigation (arbitration) | Amount involved (RMB 10,000) | Whether to form estimated liabilities | Progress of litigation (arbitration) | Trial result and influence of litigation (arbitration) | Implementation of litigation (arbitration) judgment | Date of disclosure | Disclosure index |
| Total of other small claims | 297.61 | No | In the process of proceeding according to the litigation process, the plaintiffs of some cases withdrew, some cases were closed through mediation, and the departmental cases are under trial | No significant impacts on the Company's production and operation | The case closed by mediation has been fulfilled |
IX. Punishment and rectification
□ Applicable √ Not applicable
No punishment or rectification of the Company during the reporting period.
X. Credit conditions of the company, its controlling shareholders and actual controllers
√Applicable □ Not applicable
During the reporting period, the Company and its controlling shareholder and the actual controller did not have any outstanding courtjudgments or outstanding debts of significant amount due to be settled.XI. Major connected transactions
1. Connected transactions related to daily operation
□ Applicable √ Not applicable
There were no connected transactions related to the daily operation of the Company during the reporting period.
2. Connected transactions arising from the acquisition or sale of assets or equity
□ Applicable √ Not applicable
No connected transactions arising from the acquisition or sale of assets or equity of the Company during the reporting period.
3. Connected transaction of joint foreign investments
□ Applicable √ Not applicable
No connected transactions of joint foreign investment of the Company during the reporting period.
4. Related credit and debt transactions
√Applicable □ Not applicable
Whether there are non-operating related debt transactions
□Yes √No
The Company does not have non-operating related debt transactions during the reporting period.
5. Transactions with the related finance companies and the finance companies controlled by theCompany
□ Applicable √ Not applicable
There are no deposits, loans, credits or other financial operations between the Company and the finance companies with which it hasaffiliated relationships, or between the finance companies controlled by the Company and related parties.
6. Other major connected transactions
□ Applicable √ Not applicable
No other major connected transactions of the Company during the reporting period.
XII. Major contracts and their performance
1. Trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No contracting of the Company during the reporting period.
(3) Lease
√Applicable □ Not applicable
Lease descriptionThe Company's major leased assets are self-operated store leases, all of which have been recognized as right-of-use assets inaccordance with the requirements of the new leasing standards, and there are no other significant leased assets. For details, seeSection 10. Financial Statements \7. Notes to consolidated financial statements \25. Right-of-use assets.Project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to the Company
□ Applicable √ Not applicable
No lease project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to theCompany during the reporting period.
2. Major guarantee
□ Applicable √ Not applicable
No major guarantees of the Company during the reporting period.
3. Major contracts for daily operation
Unit:
| Name of the Company to the contract | Name of the other party to the contract | Total contract amount | Progress of contract performance | Amount of sales revenue recognized during the reporting period | Cumulative amount of sales revenue recognized | Collection status of accounts receivable | Any significant change in the conditions that may affect the performance of major contracts | Any significant risk that may hamper the performance of contracts |
4. Other major contracts
□ Applicable √ Not applicable
No other major contracts of the Company during the reporting period.
13. Explanation of other major matters
□ Applicable √ Not applicable
There are no other significant matters that the Company needs to explain in the reporting period.
14. Major matters of the Company's subsidiaries
□ Applicable √ Not applicable
Section 7 Changes in Shares and Shareholders
I. Change in shares
1. Change in shares
Unit: share
| Before this change | Increase/decrease (+, -) | After this change | |||||||
| Quantity | Proportion | New issue of shares | Share donation | Share capital increase from reserved funds | Others | Subtotal | Quantity | Proportion | |
| I. Restricted shares | 381,502,451 | 89.45% | (2,543,539) | (2,543,539) | 378,958,912 | 88.85% | |||
| 1. State shareholding | |||||||||
| 2. State legal person shareholding | 8,535,444 | 2.00% | (43,136) | (43,136) | 8,492,308 | 1.99% | |||
| 3. Other domestic holdings | 82,525,726 | 19.35% | (2,497,970) | (2,497,970) | 80,027,756 | 18.76% | |||
| Wherein: domestic legal person shareholding | 77,572,687 | 18.19% | (11,535) | (11,535) | 77,561,152 | 18.19% | |||
| Domestic natural person shareholding | 12,655 | 0.00% | (12,655) | (12,655) | 0 | 0.00% | |||
| Fund financial products, etc. | 4,940,384 | 1.16% | (2,473,780) | (2,473,780) | 2,466,604 | 0.58% | |||
| 4. Foreign shareholding | 290,441,281 | 68.10% | (2,433) | (2,433) | 290,438,848 | 68.10% | |||
| Wherein: foreign legal person shareholding | 290,441,281 | 68.10% | (2,433) | (2,433) | 290,438,848 | 68.10% | |||
| Foreign natural person shareholding | 0 | ||||||||
| II. Unrestricted shares | 44,989,85 | 10.55% | 2,543,539 | 2,543,539 | 47,533,39 | 11.15% | |||
| 7 | 6 | ||||||||
| 1. RMB common share | 44,989,857 | 10.55% | 2,543,539 | 2,543,539 | 47,533,396 | 11.15% | |||
| 2. Foreign shares listed in China | |||||||||
| 3. Foreign shares listed abroad | |||||||||
| 4. Others | |||||||||
| III. Total amount of shares | 426,492,308 | 100.00% | 0 | 0 | 426,492,308 | 100.00% |
Causes for change in shares
√Applicable □ Not applicable
The 2,965,739 shares restricted for sale under the offline placement at the time of the Company's initial public offering were listed forcirculation on March 17, 2021 upon the expiration of the six-month lock-up period, resulting in a decrease of 2,965,739 shares in theCompany's restricted shares. In addition, the number of shares lent under the China International Capital Corporation Limited - ChinaMerchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management planfor the strategic placement decreased by 422,200 shares, resulting in an increase of 422,200 shares in the Company's restricted shares.In summary, the Company's restricted shares decreased by 2,543,539 shares during the reporting period.Approval of changes in shares
□ Applicable √ Not applicable
Transfer of share changes
□ Applicable √ Not applicable
Implementation progress of share repurchase
□ Applicable √ Not applicable
Implementation progress of reducing repurchased shares by centralized competitive bidding
□ Applicable √ Not applicable
Influence of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the companyand other financial indexes in the most recent year and the most recent period
□ Applicable √ Not applicable
Other information the company deems necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√Applicable □ Not applicable
Unit: share
| Shareholder's name | Number of restricted shares at the beginning of the period | Number of shares released from restricted sale in current period | Number of restricted shares increased in current period | Number of restricted shares at the end of the period | Reasons for restricted sale | The proposed date of lifting the restricted sale |
| IPO offline placement of restricted shares | 2,965,739 | 2,965,739 | 0 | 0 | 10% of the final allocated accounts of the offline issuance part of the IPO are restricted according to the lottery results | March 17, 2021 |
| China International Capital Corporation Limited - China Merchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan | 2,044,404 | 0 | 422,200 | 2,466,604 | Strategic placement | September 17, 2021 |
| Total | 5,010,143 | 2,965,739 | 422,200 | 2,466,604 | -- | -- |
II. Securities issuance and listing
□ Applicable √ Not applicable
III. Number and shareholding of the Company's shareholders
Unit: share
| Total number of common shareholders at the end of the reporting period | 33,529 | Total number of preferred shareholders with voting rights restored at the end of the reporting period (if any) (see Note 8) | 0 | Total number of shareholders holding special voting shares (if any) | 0 | ||||||
| Shareholding of common stockholders holding more than 5% of the shares or the top 10 shareholders | |||||||||||
| Shareholder's name | Shareholder nature | Shareholding ratio | Number of shares held at the end of | Increase or decrease during the reportin | Number of shares held with limited | Number of shares held with unlimited sales condition | Pledge, mark or frozen | ||||
| Status of shares | Quantity | ||||||||||
| the reporting period | g period | sales conditions | s | |||||
| Wenjian Group Company Limited | Overseas legal person | 68.10% | 290,438,848 | 0 | 290,438,848 | 0 | ||
| Beijing Sequoia Xinyuan Equity Investment Center (limited partnership) | Domestic non-state legal person | 8.09% | 34,500,000 | 0 | 34,500,000 | 0 | ||
| Shenzhen Kangsheng Investment Partnership (limited partnership) | Domestic non-state legal person | 5.01% | 21,371,232 | 0 | 21,371,232 | 0 | ||
| Shenzhen Kangxin Investment Partnership (limited partnership) | Domestic non-state legal person | 2.66% | 11,334,400 | 0 | 11,334,400 | 0 | ||
| Shenzhen Capital Group Co., Ltd. | State legal person | 1.99% | 8,492,308 | 0 | 8,492,308 | 0 | ||
| Shenzhen Kanglong Investment Partnership (limited partnership) | Domestic non-state legal person | 1.60% | 6,844,432 | 0 | 6,844,432 | 0 | ||
| Shenzhen Kangli Investment Partnership (limited partnership) | Domestic non-state legal person | 0.82% | 3,511,088 | 0 | 3,511,088 | 0 | ||
| China | Others | 0.58% | 2,466, | 422,200 | 2,466, | 0 |
| International Capital Corporation Limited - China Merchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan | 604 | 604 | ||||||
| Schroder Investment Management (Hong Kong) Limited - Schroder ISF* China A. Fund (Exchange) | Overseas legal person | 0.45% | 1,937,125 | 1,937,125 | 0 | 1,937,125 | ||
| Schroder Investment Management (Hong Kong) Limited - Schroder ISF* Greater China (Exchange) | Overseas legal person | 0.40% | 1,703,765 | 1,703,765 | 0 | 1,703,765 | ||
| Situation of strategic investors or general legal persons becoming the top 10 shareholders due to the allotment of new shares (if any) (see note 3) | China International Capital Corporation Limited - China Merchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan has been frozen for one year due to the placement of new shares for Top 10 shareholders of the Company. The plan will be released on September 17, 2021. | |||||||
| Description of the above-mentioned shareholder association or concerted action | N/A | |||||||
| Description of the above shareholders involved in entrusting / entrusted voting right and waiver of voting right | N/A | ||
| Special note on the existence of repurchase special accounts among the Top 10 shareholders (see Note 11) | N/A | ||
| Shareholding of top 10 shareholders with unlimited sales conditions | |||
| Shareholder's name | Number of shares with unlimited sales conditions held at the end of the reporting period | Share type | |
| Share type | Quantity | ||
| Schroder Investment Management (Hong Kong) Limited - Schroder ISF* China A. Fund (Exchange) | 1,937,125 | RMB common share | 1,937,125 |
| Schroder Investment Management (Hong Kong) Limited - Schroder ISF* Greater China (Exchange) | 1,703,765 | RMB common share | 1,703,765 |
| JPMORGAN CHASE BANK, NATIONAL ASSOCIATION | 899,457 | RMB common share | 899,457 |
| China Construction Bank Corporation－Bank of Communications Schroder kernel driven hybrid securities investment funds | 835,031 | RMB common share | 835,031 |
| China CITIC Bank Co., Ltd.－Bank of Communications Schroder new vitality flexible allocation of hybrid securities investment funds | 773,160 | RMB common share | 773,160 |
| Schroder Investment Management (Hong Kong) Limited - Schroder ISF* China Opportunities (Exchange) | 625,871 | RMB common share | 625,871 |
| China Construction Bank Corporation - Zhong Ou GEM One-Year Interval | 535,897 | RMB common share | 535,897 |
| Hybrid Fund | |||
| Hong Kong Securities Clearing Company Ltd. | 514,788 | RMB common share | 514,788 |
| Schroder Investment Management Co., Ltd. - Schroder China Equity Alpha Fund | 416,400 | RMB common share | 416,400 |
| Agricultural Bank of China Limited－Bank of Communications Schroder regular payment double interest balanced hybrid securities investment funds | 385,027 | RMB common share | 385,027 |
| Description of the association or concerted action between top 10 public shareholders with unlimited sales conditions, and between top 10 public shareholders with unlimited sales conditions and top 10 shareholders | N/A | ||
| Explanation of Top 10 common shareholders’ participation in the securities margin trading (if any) (see Note 4) | N/A | ||
Whether the company has a voting rights differential arrangement
□ Applicable √ Not applicable
Whether the Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions agreed on arepurchase transaction during the reporting period
□Yes √No
The Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions did not agree on arepurchase transaction during the reporting periodIV. Changes in shareholdings of directors, supervisors and senior management
□ Applicable √ Not applicable
There were no changes in the shareholdings of directors, supervisors and senior management of the Company during the reportingperiod. See the 2020 Annual Report for details.
V. Changes in controlling shareholders or actual controllersChange of controlling shareholders during the reporting period
□ Applicable √ Not applicable
No change in controlling shareholders during the reporting period.Changes in actual controller during the reporting period
□ Applicable √ Not applicable
No change in actual controller during the reporting period.
Section 8 Preferred Shares-related Information
□ Applicable √ Not applicable
No preferred shares of the Company during the reporting period.
Section 9 Bond-related Information
□ Applicable √ Not applicable
Section 10 Financial Statements
I. Auditor's ReportWhether the semi-annual report is audited
□Yes √No
The Company's semi-annual financial statements have not been audited.
II. Financial StatementsUnit of statements in financial notes: RMB
1. Consolidated Balance Sheet
Prepared by: Winner Medical Co., Ltd.
June 30, 2021
Unit: yuan
| Item | June 30, 2021 | December 31, 2020 |
| Current assets: | ||
| Cash and cash equivalents | 4,700,529,527.85 | 4,162,539,245.78 |
| Deposit reservation for balance | ||
| Lending funds | ||
| Tradable monetary assets | 2,707,384,233.24 | 4,131,178,589.44 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 863,667,816.94 | 844,317,708.12 |
| Accounts receivable financing | 9,263,087.17 | 18,182,662.70 |
| Advances to suppliers | 179,107,611.07 | 124,031,239.05 |
| Insurance premiums receivables | ||
| Reinsurance premium receivable | ||
| Receivable reserve for reinsurance contract | ||
| Other receivables | 343,344,829.42 | 458,174,652.72 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Monetary assets purchased under |
| resale agreements | ||
| Inventory | 1,264,465,555.25 | 1,216,486,940.21 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due within a year | ||
| Other current assets | 317,280,449.51 | 35,184,227.09 |
| Total current assets | 10,385,043,110.45 | 10,990,095,265.11 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investment | 15,079,827.94 | 13,424,230.41 |
| Other equity instrument investments | ||
| Other non-current financial assets | ||
| Investment in real estates | ||
| Fixed assets | 1,437,854,645.76 | 1,400,749,050.00 |
| Construction in progress | 104,425,911.11 | 61,383,340.97 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 551,278,768.29 | |
| Intangible assets | 205,887,320.95 | 208,325,103.79 |
| Development expenditure | ||
| Goodwill | ||
| Long-term unamortized expenses | 130,081,773.95 | 121,335,007.33 |
| Deferred income tax assets | 149,595,514.56 | 143,132,351.08 |
| Other non-current assets | 133,729,374.90 | 63,807,415.75 |
| Total non-current assets | 2,727,933,137.46 | 2,012,156,499.33 |
| Total assets | 13,112,976,247.91 | 13,002,251,764.44 |
| Current liabilities | ||
| Short-term loans | 150,071,416.66 | |
| Borrowings from the Central Bank | ||
| Borrowing funds |
| Tradable monetary liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 69,765,505.06 | 29,418,100.00 |
| Accounts payable | 568,615,255.29 | 726,577,306.94 |
| Advance from customers | ||
| Contract liabilities | 328,875,043.44 | 530,188,257.63 |
| Monetary assets sold for repurchase | ||
| Deposits from customers and interbank | ||
| Acting trading securities | ||
| Acting underwriting securities | ||
| Payroll payable | 125,171,666.85 | 169,957,077.81 |
| Taxes payable | 109,204,542.63 | 444,381,369.49 |
| Other payables | 615,888,545.12 | 352,543,008.89 |
| Including: Interest payable | ||
| Dividends payable | 200,000,000.00 | |
| Fees and commissions payable | ||
| Dividend payable for reinsurance | ||
| Liabilities held for sales | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | 16,270,217.30 | 23,638,266.47 |
| Total current liabilities | 1,833,790,775.69 | 2,426,774,803.89 |
| Non-current liabilities | ||
| Reserve fund for insurance contracts | ||
| Long-term loans | ||
| Bonds payable | ||
| Including: Preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | 616,985,285.44 | |
| Long-term payable | ||
| Long-term payroll payable | ||
| Estimated liabilities |
| Deferred income | 115,665,393.69 | 94,921,260.87 |
| Deferred income tax liabilities | 13,473,459.98 | 12,165,608.24 |
| Other non-current liabilities | ||
| Total non-current liabilities | 746,124,139.11 | 107,086,869.11 |
| Total liabilities | 2,579,914,914.80 | 2,533,861,673.00 |
| Owner's equity: | ||
| Capital stock | 426,492,308.00 | 426,492,308.00 |
| Other equity instruments | ||
| Including: Preferred stock | ||
| Perpetual bond | ||
| Additional paid-in capital | 4,613,368,622.92 | 4,481,709,983.24 |
| Less: treasury stock | ||
| Other comprehensive income | (1,251,154.32) | (1,111,035.08) |
| Special reserve | ||
| Surplus reserve | 420,212,778.13 | 420,212,778.13 |
| General risk reserve | ||
| Undistributed profit | 5,059,853,948.96 | 5,126,630,011.14 |
| Total shareholders’ equity attributable to the owners of parent company | 10,518,676,503.69 | 10,453,934,045.43 |
| Noncontrolling interest | 14,384,829.42 | 14,456,046.01 |
| Total shareholders’ equity | 10,533,061,333.11 | 10,468,390,091.44 |
| Total liabilities and equity | 13,112,976,247.91 | 13,002,251,764.44 |
Legal representative: Li Jianquan Chief Financial Officer: Fang Xiuyuan Head of accountingoffice : Wu Kezhen
2. Balance sheet of parent company
Unit: yuan
| Item | June 30, 2021 | December 31, 2020 |
| Current assets: | ||
| Cash and cash equivalents | 3,860,008,726.73 | 3,669,286,043.43 |
| Tradable financial assets | 1,664,858,598.16 | 3,779,510,798.34 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 566,565,311.15 | 679,644,839.39 |
| Accounts receivable financing | 9,263,087.17 | 26,281,743.01 |
| Advances to suppliers | 1,994,666,629.63 | 1,141,185,179.88 |
| Other receivables | 224,254,705.29 | 361,160,139.37 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventory | 273,636,246.87 | 244,264,320.15 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due within a year | ||
| Other current assets | 236,311,739.18 | 2,986,600.60 |
| Total current assets | 8,829,565,044.18 | 9,904,319,664.17 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investment | 919,730,512.09 | 738,074,914.56 |
| Other equity instrument investments | ||
| Other non-current financial assets | ||
| Investment in real estates | ||
| Fixed assets | 49,946,853.37 | 47,677,210.41 |
| Construction in progress | 5,509,692.70 | 625,889.08 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 69,456,113.49 | |
| Intangible assets | 11,576,658.89 | 11,093,821.43 |
| Development expenditure | ||
| Goodwill | ||
| Long-term unamortized expenses | 4,435,315.80 | 4,270,865.79 |
| Deferred income tax assets | 27,997,121.37 | 18,761,956.53 |
| Other non-current assets | 30,473,036.20 | 7,420,450.61 |
| Total non-current assets | 1,119,125,303.91 | 827,925,108.41 |
| Total assets | 9,948,690,348.09 | 10,732,244,772.58 |
| Current liabilities | ||
| Short-term loans | 120,071,416.66 |
| Tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 8,757,000.00 | |
| Accounts payable | 399,264,345.80 | 734,959,933.53 |
| Advance from customers | ||
| Contract liabilities | 278,286,169.30 | 483,370,540.77 |
| Payroll payable | 27,635,972.03 | 57,086,457.61 |
| Taxes payable | 53,338,428.78 | 332,551,933.15 |
| Other payables | 484,550,934.28 | 261,840,719.70 |
| Including: Interest payable | ||
| Dividends payable | 200,000,000.00 | |
| Liabilities held for sales | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | 5,383,827.69 | 14,855,171.12 |
| Total current liabilities | 1,248,459,677.88 | 2,013,493,172.54 |
| Non-current liabilities | ||
| Long-term loans | ||
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | 70,238,412.51 | |
| Long-term payable | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 21,413,050.50 | 22,798,583.10 |
| Deferred income tax liabilities | 3,728,789.72 | 1,426,619.75 |
| Other non-current liabilities | ||
| Total non-current liabilities | 95,380,252.73 | 24,225,202.85 |
| Total liabilities | 1,343,839,930.61 | 2,037,718,375.39 |
| Owner's equity: | ||
| Capital stock | 426,492,308.00 | 426,492,308.00 |
| Other equity instruments | ||
| Including: preferred stock |
| Perpetual bond | ||
| Capital reserve | 4,638,775,385.27 | 4,507,116,745.59 |
| Less: treasury stock | ||
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserve | 411,397,111.21 | 411,397,111.21 |
| Undistributed profit | 3,128,185,613.00 | 3,349,520,232.39 |
| Total owners' equities | 8,604,850,417.48 | 8,694,526,397.19 |
| Total liabilities and owners' equities | 9,948,690,348.09 | 10,732,244,772.58 |
3. Consolidated Income Statement
Unit: yuan
| Item | Six Months Ended June 30, 2021 | Six Months Ended December 31, 2020 |
| I. Total revenue | 4,059,865,654.92 | 4,179,778,883.27 |
| Including: Revenue | 4,059,865,654.92 | 4,179,778,883.27 |
| Interest revenue | ||
| Premium earned | ||
| Fee and commission revenue | ||
| II. Total costs | 3,268,705,562.33 | 2,916,563,382.74 |
| Including: Costs of sales | 1,921,789,702.47 | 1,900,091,985.00 |
| Interest expense | ||
| Fee and commission expense | ||
| Surrender value | ||
| Net payments for insurance claims | ||
| Net withdrawal of insurance liability reserve | ||
| Bond insurance expense | ||
| Reinsurance costs | ||
| Taxes and surcharges | 33,156,678.98 | 33,476,875.35 |
| Selling and marketing | 825,805,820.57 | 655,948,904.24 |
| General and administrative | 310,652,551.64 | 158,666,340.89 |
| Research and development | 189,917,265.47 | 168,845,188.59 |
| Financial expenses | (12,616,456.80) | (465,911.33) |
| Including: Interest expense | 13 ,939,734.50 | 1,935,306.63 |
| Interest revenue | 35,424,028.29 | 2,586,023.70 |
| Plus: Other incomes | 86,754,859.99 | 19,765,789.73 |
| Income from investment (loss expressed with “-”) | 50,073,259.81 | 7,158,219.52 |
| Including: Income from investment in joint venture and cooperative enterprise | 1,655,597.53 | 2,288,557.50 |
| Income from derecognition of financial assets measured at amortized cost | ||
| Foreign exchange gain (loss expressed with “-”) | ||
| Net exposure of hedging gain (loss expressed with “-”) | ||
| Income from fair value changes (loss expressed with “-”) | 31,408,220.30 | |
| Credit impairment losses (loss expressed with “-”) | 11,808,406.71 | (787,646.99) |
| Assets impairment losses (loss expressed with “-”) | (60,597,532.59) | (72,609,085.32) |
| Gain ondisposal of assets (loss expressed with “-”) | (37,621.25) | 15,447.79 |
| III. Operating profits (loss expressed with “-”) | 910,569,685.56 | 1,216,758,225.26 |
| Plus: Non-operating income = | 2,339,463.94 | 13,659,135.49 |
| Less: Non-operating expense | 8,502,804.42 | 21,986,722.02 |
| IV. Total profits (total loss expressed with “-”) | 904,406,345.08 | 1,208,430,638.73 |
| Less: Income tax expenses | 143,286,407.76 | 173,749,962.63 |
| V. Net profits (net loss expressed with “-”) | 761,119,937.32 | 1,034,680,676.10 |
| (I) Classified by business continuity | ||
| 1. Net profits from continuing operations(net loss expressed with | 761,119,937.32 | 1,034,680,676.10 |
| “-”) | ||
| 2. Net profits from discontinued operations (net loss expressed with “-”) | ||
| (II) Classified by ownership | ||
| 1. Net profit (loss) attributable to common shareholders | 761,038,730.24 | 1,032,218,689.91 |
| 2. * Net profits (loss) attributable to noncontrolling interest | 81,207.08 | 2,461,986.19 |
| VI. After-tax other comprehensive income | (292,542.91) | 280,240.87 |
| Net amount of after-tax other comprehensive income attributed to common shareholders | (140,119.24)(140,119.24) | 194,140.97 |
| (I) Other comprehensive income not reclassified as profit or loss | ||
| 1. Changes from defined benefit plans remeasurement | ||
| 2. Other comprehensive income notclassified as profit or loss based on equity method | ||
| 3. Changes in fair value for other equity instruments investment | ||
| 4. Changes in fair value for the enterprise credit risks | ||
| 5. Others | ||
| (II) Other comprehensive income reclassified as profit or loss | (140,119.24)(140,119.24) | 194,140.97 |
| 1. Other comprehensive income reclassified asprofit or losse based on equity method | ||
| 2. Changes in the fair value of other debt investment | ||
| 3. The amount of financial asset reclassified as other |
| comprehensive income | ||
| 4. Provisions for other debt investment impairment | ||
| 5. Cash flow hedging instrument | ||
| 6. foreign currency reporting translation discrepancy | (140,119.24)(140,119.24) | 194,140.97 |
| 7. Others | ||
| Net amount of after-tax other comprehensive income attributed to noncontrolling interest | (152,423.67) | 86,099.90 |
| VII. Total comprehensive income | 760,827,394.41 | 1,034,960,916.97 |
| Total comprehensive income attributable to common shareholders | 760,898,611.00 | 1,032,412,830.88 |
| Total comprehensive income attributed to noncontrolling interest | (71,216.59)(71,216.59) | 2,548,086.09 |
| VIII. Earnings per share | ||
| (I) Basic earnings per share | 1.7844 | 2.7417 |
| (II) Diluted earnings per share | 1.7715 | 2.7417 |
In the case of merger and acquisition under the same control, the net profits of acquired entity prior to acquisition is 0 yuan duringthe current period. The net profits of the acquired entity prior to the acquisition is 0 yuan in the prior period.
Legal representative: Li Jianquan Head of accounting work: Fang Xiuyuan Head of accounting body: Wu Kezhen
4. Income statement of the parent company
Unit: yuan
| Item | Six Months Ended June 30, 2021 | Six Months Ended December 31, 2020 |
| I. Revenue | 2,152,770,959.97 | 2,664,223,582.83 |
| Subtract: Costs | 1,237,349,900.78 | 1,506,375,076.61 |
| Taxes and surcharges | 8,841,847.49 | 14,189,199.10 |
| Selling and marketing | 120,613,735.57 | 143,989,392.45 |
| General and administrative | 206,394,645.48 | 62,551,090.14 |
| Research and development | 82,054,298.04 | 87,372,077.51 |
| Financial expenses | (22,564,403.10) | (1,185,532.96) |
| Including: Interest expense | 1,399,298.44 | 1,352,621.03 |
| Interest revenue | 31,213,130.97 | 2,125,568.15 |
| Plus: Other incomes | 43,098,834.69 | 9,868,657.45 |
| Income from investment (loss expressed with “-”) | 45,603,797.04 | 6,637,748.79 |
| Including: Income from investment in joint venture and cooperative enterprise | 1,655,597.53 | 2,288,557.50 |
| Income from derecognition of financial assets measured at amortized cost | ||
| Net exposure of hedging gain (loss expressed with “-”) | ||
| Income from fair value changes (loss expressed with “-”) | 28,642,089.79 | |
| Credit impairment losses (loss expressed with “-”) | 17,063,895.54 | 3,179,193.78 |
| Assets impairment losses (loss expressed with “-”) | (13,698,792.65) | (7,168,074.65) |
| Gain onfrom disposal of assets (loss expressed with “-”) | 15,447.79 | |
| II. Operating profit (loss to be filled out with the minus sign "-") | 640,790,760.12 | 863,465,253.14 |
| Plus: Non-operating income | 810,681.71 | 20,698.49 |
| Less: Non-operating expense | 152,332.97 | 3,422,613.71 |
| III. Total profit (total loss to be filled out with the minus sign "-") | 641,449,108.86 | 860,063,337.92 |
| Less: Income tax expenses | 95,097,573.86 | 135,279,734.35 |
| IV. Net profit (net loss to be filled out with the minus sign "-") | 546,351,535.00 | 724,783,603.57 |
| (I) Net profits from continuing operations (net loss expressed with “-”) | 546,351,535.00 | 724,783,603.57 |
| (II) Net profits from discontinued operations (net loss expressed with “-”) |
| V. Net amount of after-tax other comprehensive income | ||
| (I) Other comprehensive income not reclassified as profit or loss | ||
| 1. Changes from defined benefit plans remeasurement | ||
| 2. Other comprehensive income notclassified as profit or loss based on equity method | ||
| 3. Changes in fair value for other equity instruments investment | ||
| 4. Changes in fair value for the enterprise credit risks | ||
| 5. Others | ||
| (II) Other comprehensive income reclassified as profit or loss | ||
| 1. Other comprehensive income reclassified asprofit or losse based on equity method | ||
| 2. Changes in the fair value of other debt investment | ||
| 3. The amount of financial asset reclassified as other comprehensive income | ||
| 4. Provisions for other debt investment impairment | ||
| 5. Cash flow hedging instrument | ||
| 6. foreign currency reporting translation discrepancy | ||
| 7. Others | ||
| VI. Total comprehensive income | 546,351,535.00 | 724,783,603.57 |
| VII. Earnings per share | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated Cash Flow Statement
Unit: yuan
| Item | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 |
| I. Cash flow from financing activities: | ||
| Cash collected from sales of goods or rendering of service | 4,211,780,432.64 | 5,760,224,442.10 |
| Net increase of customer deposit and deposit from other banks | ||
| Net increase of borrowings from central bank | ||
| Net increase of borrowing funds from other financial institutions | ||
| Cash from obtaining original insurance contract premium | ||
| Cash received from insurance premium of original insurance contract | ||
| Net increase of deposit and investment of insured | ||
| Cash from interest, handling charges and commissions | ||
| Net increase of borrowing funds | ||
| Net increase of repurchase of business funds | ||
| Net cash from acting trading securities | ||
| Refund of tax and levies | 24,562,159.29 | 8,509,312.90 |
| Other cash received related to operating activities | 150,416,678.31 | 71,859,754.40 |
| Subtotal of cash inflow from operating activities | 4,386,759,270.24 | 5,840,593,509.40 |
| Cash paid to buy products and accept labor services | 2,731,814,025.31 | 2,415,280,745.46 |
| Net increase of customer loans and advances | ||
| Net increase of amount due from the Central Bank and interbank |
| Cash paid for original insurance contract claims payment | ||
| Net increase of lending funds | ||
| Cash paid for interest, handling charges and commissions | ||
| Cash paid for insurance policy dividend | ||
| Cash paid to and for employees | 596,881,901.63 | 436,533,307.90 |
| Taxes and fees paid | 573,374,688.67 | 170,689,857.22 |
| Other cash paid related to operating activities | 287,083,788.86 | 344,683,616.57 |
| Subtotal of cash inflow from operating activities | 4,189,154,404.47 | 3,367,187,527.15 |
| Net cash flow from operating activities | 197,604,865.77 | 2,473,405,982.25 |
| II. Cash flow from investment activities: | ||
| Cash from investment withdrawal | 4,090,000,000.00 | |
| Cash from investment income | 63,620,238.79 | 4,869,662.02 |
| Net cash from the disposal of fixed assets, intangible assets and other long-term assets | 153,218,248.95 | 141,831,006.66 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Other cash received related to investment activities | 100,000,000.00 | |
| Subtotal of cash inflow from investment activities | 4,306,838,487.74 | 246,700,668.68 |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long term assets | 327,515,662.56 | 153,731,218.78 |
| Cash paid for investment | 2,845,000,000.00 | 610,535,150.13 |
| Net cash received from reinsurance business | ||
| Net cash paid for obtaining subsidiaries and other business units |
| Other cash paid related to investment activities | ||
| Subtotal of cash inflow from investment activities | 3,172,515,662.56 | 764,266,368.91 |
| Net cash flow from investing activities | 1,134,322,825.18 | (517,565,700.23)(517,565,700.23) |
| III. Cash flow from financing activities: | ||
| Receipts from equity securities | ||
| Including: Cash received from subsidies’ absorption of minority shareholders’ investment | ||
| Cash received from borrowings | 150,000,000.00 | |
| Other cash received related to financing activities | ||
| Subtotal of cash inflow from financial activities | 150,000,000.00 | |
| Cash repayments of amounts borrowed | 150,000,000.00 | 249,210,746.07 |
| Cash paid for distribution of dividends or profits and for interest expenses | 568,137,284.96 | 100,660,939.62 |
| Including: Dividends and profits paid by subsidiaries to minority shareholders | ||
| Other cash paid related to financing activities | 103,492,521.01 | 1,802,115.63 |
| Subtotal of cash inflow from financial activities | 821,629,805.97 | 351,673,801.32 |
| Net cash flow from financing activities | (821,629,805.97)(821,629,805.97) | (201,673,801.32)(201,673,801.32) |
| IV. Impact of exchange rate movements on cash and cash equivalents | 301,182.50 | 261,849.00 |
| V. Net increase of cash and cash equivalents | 510,599,067.48 | 1,754,428,329.70 |
| Plus: Cash and cash equivalents at the beginning of the period | 4,149,734,694.38 | 459,169,719.65 |
| Cash and cash equivalents at the end of the period | 4,660,333,761.86 | 2,213,598,049.35 |
6. Cash flow statement of the parent company
Unit: yuan
| Item | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 |
| I. Cash flow from financing activities: | ||
| Cash Received from Sales of Goods or Rendering of Service | 2,095,126,701.06 | 4,300,448,536.45 |
| Refund of tax and levies | 15,568,316.68 | 5,633,329.18 |
| Other cash received related to operating activities | 320,575,959.00 | 122,048,510.32 |
| Subtotal of cash inflow from operating activities | 2,431,270,976.74 | 4,428,130,375.95 |
| Cash paid to buy products and accept labor services | 2,269,677,579.57 | 2,145,062,671.93 |
| Cash paid to and for employees | 144,426,888.77 | 83,100,928.44 |
| Taxes and fees paid | 418,581,781.00 | 87,300,152.40 |
| Other cash paid related to operating activities | 552,812,218.15 | 60,954,639.88 |
| Subtotal of cash inflow from operating activities | 3,385,498,467.49 | 2,376,418,392.65 |
| Net cash flow from operating activities | (954,227,490.75) | 2,051,711,983.30 |
| II. Cash flow from investment activities: | ||
| Cash from investment withdrawal | 3,705,000,000.00 | |
| Cash from investment income | 43,683,535.21 | 4,349,191.29 |
| Net cash from disposal of fixed assets, intangible assets and other long-term assets | 54,520,000.00 | 50,000.00 |
| Net cash received from the disposal of subsidiaries and other business entities | ||
| Other cash received related to investment activities | 100,000,000.00 | |
| Subtotal of cash inflow from investment activities | 3,803,203,535.21 | 104,399,191.29 |
| Cash paid for the purchase and construction of fixed assets, intangible assets and other long | 30,867,495.67 | 65,432,616.94 |
| term assets | ||
| Cash paid for investment | 1,949,823,493.17 | 349,986,884.33 |
| Net cash paid for obtaining subsidiaries and other business units | ||
| Other cash paid related to investment activities | ||
| Subtotal of cash inflow from investment activities | 1,980,690,988.84 | 415,419,501.27 |
| Net cash flow from investing activities | 1,822,512,546.37 | (311,020,309.98) |
| III. Cash flow from financing activities: | ||
| Receipts from equity securities | ||
| Cash received from borrowings | 120,000,000.00 | |
| Other cash received related to financing activities | ||
| Subtotal of cash inflow from financial activities | 120,000,000.00 | |
| Cash repayments of amounts borrowed | 120,000,000.00 | 60,000,000.00 |
| Cash paid for distribution of dividends or profits and for interest expenses | 566,402,956.84 | 99,026,262.05 |
| Other cash paid related to financing activities | 1,802,115.63 | |
| Subtotal of cash inflow from financial activities | 686,402,956.84 | 160,828,377.68 |
| Net cash flow from financing activities | (686,402,956.84) | (40,828,377.68) |
| IV. Impact of exchange rate movements on cash and cash equivalents | 8,840,584.52 | 217,162.14 |
| V. Net increase of cash and cash equivalents | 190,722,683.30 | 1,700,080,457.78 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 3,669,286,043.43 | 183,064,001.14 |
| Plus: Balance of cash and cash equivalents at the beginning of the period | 3,860,008,726.73 | 1,883,144,458.92 |
7. Consolidated Statement on Changes in Owners' Equity
Current amount
Unit: yuan
| Item | Six Months Ended June 30, 2021 | ||||||||||||||
| Owners' equities attributable to the owners of parent company | Minority equity | Total owners' equities | |||||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Others | Subtotal | |||||
| Preferred stock | Perpetual bond | Others | |||||||||||||
| I. Balance at the end of previous year | 426,492,308.00 | 4,481,709,983.24 | (1,111,035.08) | 420,212,778.13 | 5,126,630,011.14 | 10,453,934,045.43 | 14,456,046.01 | 10,468,390,091.44 | |||||||
| Plus: Changes in accounting policies | (60,128,638.03) | (60,128,638.03) | (60,128,638.03) | ||||||||||||
| Prior period error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Beginning balance in current year | 426,492,308.00 | 4,481,709,983.24 | (1,111,035.08) | 420,212,778.13 | 5,066,501,373.11 | 10,393,805,407.40 | 14,456,046.01 | 10,408,261,453.41 | |||||||
| III. Increase/decrease in the current period (less to be filled out | 131,658,639.68 | (140,119.24)(140,119.24) | (6,647,424.15) | 124,871,096.29 | (71,216.59)(71,216.59) | 124,799,879.70 | |||||||||
| with the minus sign "-) | |||||||||||||||
| (I) Total comprehensive income | (140,119.24)(140,119.24) | 761,038,730.24 | 760,898,611.00 | (71,216.59)(71,216.59) | 760,827,394.41 | ||||||||||
| (II) Owner’s invested and decreased capital | 131,658,639.68 | 131,658,639.68 | 131,658,639.68 | ||||||||||||
| 1. Common stock invested by the owner | |||||||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | 131,658,639.68 | 131,658,639.68 | 131,658,639.68 | ||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | (767,686,154.39) | (767,686,154.39) | (767,686,154.39) | ||||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk preparation | |||||||||||||||
| 3. Distribution of owners (or shareholders) | (767,686,154.39) | (767,686,154.39) | (767,686,154.39) | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal transfer of owner’s equity |
| 1. Capital surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 3. Earned surplus covering the deficit | |||||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | |||||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Draw in this current | |||||||||||||||
| 2. Use in this current | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 426,492,308.00 | 4,613,368,622.92 | (1,251,154.32) | 420,212,778.13 | 5,059,853,948.96 | 10,518,676,503.69 | 14,384,829.42 | 10,533,061,333.11 |
Last term amount
Unit: yuan
| Item | Six Months Ended June 30, 2020 | ||
| Owners' equities attributable to the owners of parent company | Minorit | Total | |
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profit | Others | Subtotal | y equity | owners' equities | |||
| Preferred stock | Perpetual bond | Others | |||||||||||||
| I. Balance at the end of previous year | 376,492,308.00 | 948,913,284.10 | 44,623.87 | 116,855,107.20 | 1,718,075,177.67 | 3,160,380,500.84 | 3,167,502.50 | 3,163,548,003.34 | |||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Prior period error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Beginning balance in current year | 376,492,308.00 | 948,913,284.10 | 44,623.87 | 116,855,107.20 | 1,718,075,177.67 | 3,160,380,500.84 | 3,167,502.50 | 3,163,548,003.34 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 194,140.97 | 933,718,689.91 | 933,912,830.88 | 2,548,086.09 | 936,460,916.97 | ||||||||||
| (I) Total comprehensive income | 194,140.97 | 1,032,218,689.91 | 1,032,412,830.88 | 2,548,086.09 | 1,034,960,916.97 | ||||||||||
| (II) Owner’s | |||||||||||||||
| invested and decreased capital | |||||||||||||||
| 1. Common stock invested by the owner | |||||||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | (98,500,000.00) | (98,500,000.00) | (98,500,000.00) | ||||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk preparation | |||||||||||||||
| 3. Distribution of owners (or shareholders) | (98,500,000.00) | (98,500,000.00) | (98,500,000.00) | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | |||||||||||||||
| 2. Earned surplus transfer to paid-in |
| capital (or capital stock) | |||||||||||||||
| 3. Earned surplus covering the deficit | |||||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | |||||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Draw in this current | |||||||||||||||
| 2. Use in this current | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 376,492,308.00 | 948,913,284.10 | 238,764.84 | 116,855,107.20 | 2,651,793,867.58 | 4,094,293,331.72 | 5,715,588.59 | 4,100,008,920.31 |
8. Statement on changes in owners' equity of the parent company
Current amount
Unit: yuan
| Item | Six Months Ended June 30, 2021 | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total owners' equities | |||
| Preferred stock | Perpetual bond | Others | ||||||||||
| I. Balance at the end of previous year | 426,492,308.00 | 4,507,116,745.59 | 411,397,111.21 | 3,349,520,232.39 | 8,694,526,397.19 | |||||||
| Plus: Changes in accounting policies | ||||||||||||
| Prior period error correction | ||||||||||||
| Others | ||||||||||||
| II. Beginning balance in current year | 426,492,308.00 | 4,507,116,745.59 | 411,397,111.21 | 3,349,520,232.39 | 8,694,526,397.19 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 131,658,639.68 | (221,334,619.39) | (89,675,979.71) | |||||||||
| (I) Total comprehensive income | 546,351,535.00 | 546,351,535.00 | ||||||||||
| (II) Owner’s invested and decreased capital | 131,658,639.68 | 131,658,639.68 | ||||||||||
| 1. Common stock invested by the owner | ||||||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share-based payment included in the | 131,658,639.68 | 131,658,639.68 |
| owner’s equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | (767,686,154.39) | (767,686,154.39) | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution of owners (or shareholders) | (767,686,154.39) | (767,686,154.39) | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal transfer of owner’s equity | ||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 3. Earned surplus covering the deficit | ||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | ||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Draw in this current |
| 2. Use in this current | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 426,492,308.00 | 4,638,775,385.27 | 411,397,111.21 | 3,128,185,613.00 | 8,604,850,417.48 |
Last term amount
Unit: yuan
| Item | Six Months Ended June 30, 2020 | |||||||||||
| Capital stock | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total owners' equities | |||
| Preferred stock | Perpetual bond | Others | ||||||||||
| I. Balance at the end of previous year | 376,492,308.00 | 974,320,046.45 | 108,039,440.28 | 717,801,193.98 | 2,176,652,988.71 | |||||||
| Plus: Changes in accounting policies | ||||||||||||
| Prior period error correction | ||||||||||||
| Others | ||||||||||||
| II. Beginning balance in current year | 376,492,308.00 | 974,320,046.45 | 108,039,440.28 | 717,801,193.98 | 2,176,652,988.71 | |||||||
| III. Increase/decrease in the current period (less to be filled out with the minus sign "-) | 626,283,603.57 | 626,283,603.57 | ||||||||||
| (I) Total comprehensive income | 724,783,603.57 | 724,783,603.57 | ||||||||||
| (II) Owner’s invested and decreased capital | ||||||||||||
| 1. Common stock invested by the owner | ||||||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share-based payment included in the owner’s equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | (98,500,000.00) | (98,500,000.00) | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution of owners (or shareholders) | (98,500,000.00) | (98,500,000.00) | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal transfer of owner’s equity | ||||||||||||
| 1. Capital surplus transfer to paid-in capital (or capital stock) | ||||||||||||
| 2. Earned surplus transfer to paid-in capital (or capital stock) |
| 3. Earned surplus covering the deficit | ||||||||||||
| 4. Carryforward retained earnings in variation of defined benefit plan | ||||||||||||
| 5. Carryforward retained earnings of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Draw in this current | ||||||||||||
| 2. Use in this current | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 376,492,308.00 | 974,320,046.45 | 108,039,440.28 | 1,344,084,797.55 | 2,802,936,592.28 |
III. Basic status of CompanyWinner Medical Co., Ltd. (hereinafter referred to as the “the Company” or “our company”), formerly known asWinner Industries (Shenzhen) Co., Ltd. (hereinafter referred to as “Winner Industries”), is a wholly foreign-ownedenterprise established on August 24, 2000 with the approval of Shenzhen Municipal Administration for Industryand Commerce. The original business license number of the Company is: Q.D.Y.S.Z.Zi No. 307199. The originalregistered capital is HKD 30 million, and the total investment is HKD 60 million. The Company is wholly ownedby Winner International Trading Corporation. The registered capital was invested in three phases. On April 2,2001, the registered capital of HKD 18,023,154.30 was invested in monetary funds, which was verified by thecapital verification report (Z.T.Z.T. No.Y2001-1133) of Zhuhai Zhongtuo Zhengtai Accounting Firm. Thebusiness scope of the original company is: the production and operation of sanitary materials, dressings and theirproducts, medical clothing, textiles, non-woven products and moulded packaging (excluding the products subjectto national export license management).On May 18, 2001, the Board of Directors of the Company decided to increase the registered capital from HKD
30.00 million to HKD 60.00 million, and the total investment from HKD 60.00 million to HKD 120.00 million,which was paid in three installments since the date of registration of the Company. On June 5, 2001, the Companyobtained the changed business license of the enterprise legal person issued by Shenzhen Municipal Bureau forIndustry and Commerce and amended the Articles of Association accordingly.As of December 21, 2001, it has received the second installment of the registered capital paid by WinnerInternational Trading Corporation. Winner International Trading Corporation contributed HKD 31,445,194.91 inmonetary funds, and t his investment was verified by Shenzhen Zhongpeng Certified Public Accountants, Ltd.(S.P.K.Y. Zi [2002] No.037 capital verification report). As of February 21, 2002, it has received the thirdinstallment of the registered capital totaling HKD 6,005,722.20 paid by Winner International Trading Corporation,including HKD 3,665,722.20 in currency and HKD 2,340,000.00 in kind. This investment was verified byShenzhen Lishang Certified Public Accountants Co., Ltd . (S.L.S.Y. Zi [2002] No.039 capital verification report)On October 8, 2002, the Board of Directors of the Company decided to increase the Company’s registered capitalfrom HKD 60.00 million to HKD 70.00 million, and the total investment from HKD 120.00 million to HKD
134.00 million. On December 10, 200 2, the Company obtained the changed business license of the enterpriselegal person issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles ofAssociation accordingly. As of May 27, 2003, it has received the fourth installment of the registered capitaltotaling HKD 14,525,928.59 paid by (Hong Kong) Winner International Trading Corporation. This capitalincrease was verified by Shenzhen Yuehua Certified Public Accountants Co., Ltd. (S.Y.H.Y. Zi [2003] No.339capital verification report).On May 25, 2003, with the approval of the Board of Directors of the Company, the shareholder WinnerInternational Trading Corporation signed the Equity Transfer Agreement with Winner Group Limited, underwhich Winner International Trading Corporation transferred 100% of its equity to Winner Group Limited. On July28, 2003, the Company obtained the changed business license of the enterprise legal person issued by ShenzhenMunicipal Bureau for Industry and Commerce and amended the Articles of Association accordingly.On June 8, 2006, the Board of Directors of the Company decided to increase the Company’s registered capitalfrom HKD 70.00 million to HKD 126.00 million, and the total investment from HKD 134.00 million to HKD
270.00 million. The newly increased registered capital was invested within half a year after the registration of thechange. On June 30, 2006, the Company obtained the changed business license of the enterprise legal personissued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Associationaccordingly.As of August 30, 2006, the Company transferred undistributed profits HKD 49,423,804.00 to paid -in capital, andthe paid-in capital after the change was HKD 119,423,804.00. This capital increase was verified by the ShenzhenBranch of Beijing Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi [2007] No.043 capitalverification report).On December 2, 2006, the Board of Directors of the Company decided to change the original investment period ofthe shareholders from June 30, 2006 to December 31, 2006 into June 30, 2006 to June 30, 2007. On December 6,2006, the Company was approved by General Administration for Industry and Commerce of Shenzhen to changeits type of enterprise from a wholly foreign-owned enterprise into a limited liability company (wholly owned byforeign legal person) and change its business term.As of March 15, 2007, the Company transferred undistributed profits HKD 6,576,196.00 to paid -in capital, andthe cumulative paid-in capital after the change was HKD 126.00 million. This capital increase was verified byShenzhen Hengping Certified Public Accountants Co., Ltd. (S.H.P.W.Y. Zi [2007] No.0004 capital verificationreport). On August 13, 2007, the Company obtained the changed business license of the enterprise legal personissued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Association
accordingly. The registration number was changed from Q.D.Y.S.Z. Zi No. 307199 to 440306503230896.On June 8, 2009, the Board of Directors of the Company decided to add sterilization technology services to thebusiness scope. On June 30, 2009, the Company obtained the changed business license of the enterprise legalperson issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles ofAssociation accordingly.On April 1, 2010, the Board of Directors of the Company decided to increase the Company’s registered capitalfrom HKD 126.00 million to HKD 192.00 million, and the total investment from HKD 270.00 million to HKD
380.00 million. The increased amount of the registered capital was contributed by the original shareholders incash in foreign currency.As of June 18, 2010, it has received the registered capital totaling USD 8,473,500.00 (equivalent to HKD66,000,653.75) paid by Winner Group Limited. This capital increase was verified by Shenzhen HengpingCertified Public Accountants LLP (S.H.P.S. (W.) Y. Zi [2010] No.13 capital verification report). On July 2, 2010,the Company obtained the changed business license of the enterprise legal person issue d by ShenzhenAdministration for Market Regulation (since September 9, 2009, Shenzhen Municipal Bureau for Industry andCommerce has been integrated into Shenzhen Administration for Market Regulation) and amended the Articles ofAssociation accordingly.On April 27, 2011, with the approval of General Administration for Industry and Commerce of Shenzhen, the Company changed its residence from No. 1 Wenjian Avenue, Bulong Road, Longhua Street, Bao‘an District,Shenzhen City to Winner Industrial Park beside Bulong Road, Longhua Street, Bao’an District, Shenzhen City.On February 20, 2013, the Board of Directors of the Company decided and agreed to increase the Company’sregistered capital by HKD 4,271,300. The registered capital after the change was HKD 19,6271,300, and the totalinvestment was still HKD 380.00 million.
The shareholder, Winner Group Limited made capital contribution with its equity in the six enterprises.The equity contribution is as follows:
| Name of invested entity | Proportion (%) | Book value of equity contribution net assets (RMB 10,000) | Amount of equity contribution (RMB 10,000) | Amount included in capital surplus (RMB 10,000) | Amount of equity contribution (Convert to HKD 10,000) |
| (a) | (b) | (c)=(a)-(b) | (D)=(b)*Converted exchange rate | ||
| Winner Medical (Chongyang) Co., Ltd. (formerly known as “Chongyang Winner Medical Textile Co., Ltd.”) | 100.00 | 3,232.93 | 32.33 | 3,200.60 | 39.94 |
| Winner Medical (Jiayu) Co., Ltd. (formerly known as “Jiayu Winner Medical Textile Co., Ltd.”) | 100.00 | 3,520.95 | 35.21 | 3,485.74 | 43.50 |
| Winner Medical (Jingmen) Co., Ltd. (formerly known as “Jingmen Winner Medical Textile Co., Ltd.”) | 100.00 | 2,527.24 | 25.27 | 2,501.97 | 31.22 |
| Yichang Winner Medical Textile Co., Ltd. | 100.00 | 1,800.69 | 18.01 | 1,782.68 | 22.25 |
| Winner Medical (Huanggang) Co., Ltd. | 75.00 | 19,729.30 | 197.29 | 19,532.01 | 243.76 |
| Winner Medical (Tianmen) Co., Ltd. (formerly known as “Hubei Winner Textile Co., Ltd.”) | 100.00 | 3,760.89 | 37.61 | 3,723.28 | 46.46 |
| Total | 34,572.00 | 345.72 | 34,226.28 | 427.13 |
After the capital increase, the original shareholders still have 100% of the Company's equity, and the above sixcompanies become the Company's subsidiaries. On July 25, 2013, the Company obtained the changed businesslicense of the enterprise legal person issued by Shenzhen Municipal Bureau for Industry and Commerce andamended the Articles of Association accordingly. This capital increase was verified by the Shenzhen Branch ofZhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi [2013] No.102 capital verification report).On September 2, 2013, the Board of Directors of the Company decided to increase the Company’s registeredcapital by HKD 18,068,200. The registered capital after the change was HKD 214,339,500, and the totalinvestment was still HKD 380.00 million. The new investment was subscribed by Shenzhen KangshengInvestment Partnership (limited partnership) (hereinafter referred to as the “Kangsheng Investment”), ShenzhenKangxin Investment Partnership (limited partnership) (hereinafter referred to as the “Kangxin Investment”),Shenzhen Kanglong Investment Partnership (limited partnership) (hereinafter referred to as the “KanglongInvestment”) with HKD 10,322,400, HKD 4,414,500 and HKD 3,331,300 respectively. After the completion ofthe capital increase, the Company’s ownership structure was changed as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 19,627.13 | 91.5703 |
| Kangsheng Investment | 1,032.24 | 4.8159 |
| Kangxin Investment | 441.45 | 2.0596 |
| Kanglong Investment | 333.13 | 1.5542 |
| Total | 21,433.95 | 100.0000 |
On October 17, 2013, the Company obtained the changed business license of the enterprise legal person issued byShenzhen Administration for Market Regulation and amended the Articles of Association accordingly. This capitalincrease was verified by Shenzhen Hengping Certified Public Accountants LLP (S.H.P.S.Y. Zi [2013] No.035capital verification report).On October 26, 2013, the Board of Directors of the Company decided to change its residence from WinnerIndustrial Park beside Bulong Road, Longhua Street, Bao’an District, Shenzhen City to Winner Industrial Park,No. 660 Bulong Road, Longhua New District, Shenzhen City. On November 4, 2013, the Company completed theindustrial and commercial registration of changes, obtained the changed business license of the enterprise legalperson issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles ofAssociation accordingly.On July 1, 2014, the Board of Directors of the Company decided and agreed to increase the Company’s registeredcapital by HKD 3646,600. The registered capital after the change was HKD 217,986,100, and the total investmentwas still HKD 380.00 million. The capital increase was made by the original shareholder, Kangsheng Investment,which subscribed HKD 3,646,600 with RMB 13.585 million, and the increased registered capital was paid in two
installments. After the completion of the capital increase, the Company’s ownership structure was changed asfollows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 19,627.13 | 90.0385 |
| Kangsheng Investment | 1,396.90 | 6.4082 |
| Kangxin Investment | 441.45 | 2.0251 |
| Kanglong Investment | 333.13 | 1.5282 |
| Total | 21,798.61 | 100.0000 |
On July 24, 2014, the Company obtained the changed business license of the enterprise legal person issued byShenzhen Administration for Market Regulation and amended the Articles of Association accordingly. This capitalincrease was verified by Shenzhen Hengping Certified Public Accountants LLP (S.H.P.S.Y. Zi [2014] No.030 andS.H.P.S.Y. Zi [2015] No.003 capital verification reports.On July 28, 2014, the Board of Directors of the Company decided to agree that the shareholder of the Company,Winner Group Limited, would transfer its 2.9503% equity of the Company to Kangxin Investment, KanglongInvestment, and the newly introduced shareholder, Shenzhen Kangli Investment Partnership (limited partnership)(hereinafter referred to as “Kangli Investment”). After the completion of the equity transfer, the Company’sownership structure was changed as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 18,984.01 | 87.0882 |
| Kangsheng Investment | 1,396.90 | 6.4082 |
| Kangxin Investment | 740.83 | 3.3985 |
| Kanglong Investment | 447.37 | 2.0523 |
| Kangli Investment | 229.50 | 1.0528 |
| Total | 21,798.61 | 100.0000 |
On August 29, 2014, the Company obtained the changed business license of the enterprise legal person issued byShenzhen Administration for Market Regulation and amended the Articles of Association accordingly.On September 28, 2014, the Board of Directors of the Company decided and agreed to increase the Company’sregistered capital by HKD 22,550,300. The registered capital after the change was HKD 240,536,400, and thetotal investment was still HKD 380.00 million. The new registered capital was subscribed by Beijing SequoiaXinyuan Equity Investment Center (limited partnership) (hereinafter referred to as “Sequoia Xin yuan”) with
300.00 million yuan. After the completion of the capital increase, the Company’s ownership structure waschanged as follows:
| Investor | Capital contribution amount (HKD ten thousand) | Proportion (%) |
| Winner Group Limited | 18,984.01 | 78.9236 |
| Kangsheng Investment | 1,396.90 | 5.8074 |
| Kangxin Investment | 740.83 | 3.0800 |
| Kanglong Investment | 447.37 | 1.8599 |
| Kangli Investment | 229.50 | 0.9541 |
| Sequoia Xinyuan | 2,255.03 | 9.3750 |
| Total | 24,053.64 | 100.0000 |
As of October 31, 2014, it has received 300.00 million yuan from Sequoia Xinyuan in monetary funds. OnNovember 06, 2014, the Company obtained the changed business license of the enterprise legal person issued byShenzhen Administration for Market Regulation and amended the Articles of Association accordingly. This capitalincrease was verified by the Shenzhen Branch of Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi[2014] No.087 capital verification report).On April 30, 2015, through the resolution of the Board of Directors of the Company, with February 28, 2015 asthe base date, Winner Industries was wholly changed into a limited liability Company, with a registered capital of368 million yuan. In accordance with the provisions of the Sponsorship Agreement and Articles of Association,the shareholders converted their audited net assets as of February 28, 2015 of 1,058,194,956.32 yuan into 368million shares at a ratio of 1:0.3478, par value of each share was 1 yuan, and the total share capital was 368million yuan and held separately by the original shareholders in accordance with their original proportions; theremaining 690,194,956.32 yuan was included in the capital surplus (due to the change of calculation policy ofCompany’s receivables bad debt provision during the reporting period, the audited net assets of the Company as ofthe base date of share reform were adjusted to 1,050,812,354.45 yuan, and the corresponding share conversionratio was adjusted to 1: 0.3502). June 4, 2015, with the approval of Economy, Trade and Information Commissionof Shenzhen Municipality, Winner Industries was wholly changed into a limited liability company, renamed as“Winner Medical Co., Ltd.”, and obtained the business license of enterprise legal person with the registrationnumber of 440306503230896.On May 28, 2018, after voted through and approved by the extraordinary general meeting of shareholders, theCompany agreed to increase the registered capital by 8,492,308 yuan, with the registered capital after the changeof 376,492,308 yuan. The new registered capital was subscribed by Shenzhen Capital Group Co., Ltd. (hereinafterreferred to as “SCGC”) with 300.00 million yuan. After the completion of the capital increase, the Company’sownership structure was changed as follows:
| Investor | Amount of contribution (RMB 10,000) | Proportion (%) |
| Winner Group Limited | 29,043.8848 | 77.1434 |
| Kangsheng Investment | 2,137.1232 | 5.6764 |
| Kangxin Investment | 1,133.4400 | 3.0105 |
| Kanglong Investment | 684.4432 | 1.8179 |
| Kangli Investment | 351.1088 | 0.9326 |
| Sequoia Xinyuan | 3,450.0000 | 9.1635 |
| SCGC | 849.2308 | 2.2556 |
| Total | 37,649.2308 | 100.0000 |
As of June 13, 2018, it has received 300.00 million yuan from SCGC in monetary funds. On June 15, 2018,Shenzhen Administration for Market Regulation issued the Notice of Change (Filing) (No.: 21801665051) on thischange and approved the capital increase. The Company amended the Articles of Association in respect of theabove matters. The Company amended the Articles of Association in respect of the above matters. This capitalincrease was verified by BDO China Shu Lun Pan Certified Public Accountants LLP (X.K.S.B.Zi [2018]No.ZI10525 capital verification report).On February 28, 2018, the Company obtained the renewed business license of the enterprise legal person issuedby Shenzhen Administration for Market Regulation with the unified social credit code 91440300723009295R.On August, 18, 2020, after the reply of China Securities Regulatory Commission on Approval of the Registrationof the Initial Public Offering of Winner Medical Co., Ltd. (Z.J.X.K. [2020] No.1822), the Company issued 50million RMB ordinary shares to the public, which was listed on the Shenzhen Stock Exchange on September 17,2020. Upon completion of the issuance, the registered capital of the Company was 426,492,308 yuan.The Company belongs to textile industry.
Business term: sustainable operation.Business scope: production and operation of Class II, III 6864 medical hygiene materials, medical biologicalmaterials, dressings and products, medical clothing, protective articles, textiles, non-woven products and moldedpackaging (the above products do not include the goods subject to national export license administration) andrelated products, disposable consumables and molded packaging; engaging in wholes ale, import and export, retail(including online sales) and other related ancillary businesses of all Class I medical devices, all Class II medicaldevices (excluding in vitro diagnostic reagents), Class III medical devices: medical hygiene materials anddressings, medical suture materials and adhesives, medical polymer materials and products (except disposabletransfusion apparatus (needle)), general diagnostic instruments, medical cold treatment, low temperature,refrigerating equipment and tools, cotton household articles, cotton clothing, cotton costume, cotton spun lacednon-woven fabric and its manufactured products, cotton, disinfection products, daily necessities, cosmetics,protective equipment and instruments and meters (if it does not involve goods subject to state trading, or involvesgoods subject to quotas, license management and other special provisions, it shall apply in accordance withrelevant regulations of the state); provide the technical consulting, technical services and after-sales services ofabove-mentioned products; sterilization technical services (if it needs to obtain relevant qualifications to operate,it shall apply in accordance with relevant regulations); enterprise management consulting, business informationconsulting, economic information consulting, warehouse services (excluding hazardous chemicals, precursorchemicals, refined oil and other dangerous goods), own property leasing (it can be operated only with the legalreal estate ownership certificate under the company's name). The above business scope does not include the itemssubject to special administrative measures for access stipulated by the state, and those involving the record andlicensing qualifications need to obtain the relevant certificates before operation.Corporate domicile: Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City; F42,Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District,Shenzhen City
The financial statements were approved by the Board of Directors of the Company on XXXX, 2021.
As of June 30, 2021, the subsidiaries in the consolidated financial statements of the Company are asfollows:
Subsidiary nameWinner Medical (Jingmen) Co., Ltd. (hereinafter referred to as “Winner Medical (Jingmen)”)
Winner Medical (Jingmen) Co., Ltd. (hereinafter referred to as “Winner Medical (Jingmen)”)Yichang Winner Medical Textile Co., Ltd. (hereinafter referred to as “Winner Medical (Yichang)”)
| Yichang Winner Medical Textile Co., Ltd. (hereinafter referred to as “Winner Medical (Yichang)”) |
| Winner Medical (Tianmen) Co., Ltd. (hereinafter referred to as “Winner Medical (Tianmen)”) |
| Winner Medical (Chongyang) Co., Ltd. (hereinafter referred to as “Winner Medical (Chongyang)”) |
| Winner Medical (Jiayu) Co., Ltd. (hereinafter referred to as “Winner Medical (Jiayu)”) |
Winner Medical (Hong Kong) Ltd. (hereinafter referred to as “Hong Kong Winner”)Winner (Huanggang) Cotton Processing & Trading Co., Ltd. (hereinafter referred to as “Winner (Huanggang) Cotton”)
| Winner (Huanggang) Cotton Processing & Trading Co., Ltd. (hereinafter referred to as “Winner (Huanggang) Cotton”) |
| Winner Medical (Huanggang) Co., Ltd. (hereinafter referred to as “Winner Medical (Huanggang)”) |
Shenzhen Purcotton Technology Co., Ltd. (hereinafter referred to as “Shenzhen Purcotton”)Guangzhou Purcotton Medical Technology Co., Ltd. (hereinafter referred to as “Guangzhou Purcotton”)
| Guangzhou Purcotton Medical Technology Co., Ltd. (hereinafter referred to as “Guangzhou Purcotton”) |
| Beijing Purcotton Technology Co., Ltd. (hereinafter referred to as “Beijing Purcotton”) |
| Shanghai Purcotton Technology Co., Ltd. (hereinafter referred to as “Shanghai Purcotton”) |
| Shenzhen Qianhai Purcotton E-Commerce Co., Ltd. (hereinafter referred to as “Qianhai Purcotton”) |
Winner Medical Malaysia Sdn. Bhd. (hereinafter referred to as “Winner Medical Malaysia”)Winner Medical (Heyuan) Co., Ltd. (hereinafter referred to as “Winner Medical (Heyuan)”)
| Winner Medical (Heyuan) Co., Ltd. (hereinafter referred to as “Winner Medical (Heyuan)”) |
| Winner Medical (Wuhan) Co., Ltd. 2* (hereinafter referred to as “Winner Medical (Wuhan)”) (former name: Hubei Winner Medical Co., Ltd.) |
| Shenzhen PureH2B Technology Co., Ltd. 3* (hereinafter referred to as “PureH2B”) |
Pure HB (Shanghai) Co., Ltd. 4* (hereinafter referred to as “Pure HB (Shanghai)”)Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd. 5* (hereinafter referred to as “Purunderwear”)
| Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd. 5* (hereinafter referred to as “Purunderwear”) |
| Huanggang Purcotton Ltd. 6* (hereinafter referred to as “Huanggang Purcotton”) |
1*: Heyuan Winner was established on May 18, 2016.2*: Winner Medical (Wuhan) was established on January 23, 2017, of which the former name was Hubei WinnerMedical Co., Ltd. (abbreviated as “Hubei Winner”). On August 28, 2020, Hubei Winner was renamed as WinnerMedical (Wuhan) Co., Ltd.3*: PureH2B was established on January 25, 2018.4*: Pure HB (Shanghai) was established on March 16, 2018.5*: Purunderwear was established on July 9, 2019.6*: Huanggang Quanmian was established on September 27, 2020.
The scope of the consolidated financial statements for this reporting period and its changes are detailed inthe notes “VIII. Consolidation scope changes” and “IX. Interests in other entities”.
IV. Preparation Basis of Financial Statements
1. Preparation basis
This financial statement is prepared in accordance with the Accounting Standard for Business Enterprises -- BasicStandard issued by the Ministry of Finance, various special accounting standards, guideline for application ofaccounting standard for business enterprises, ASBE interpretations and other relevant regulations (hereinaftercollectively referred to as “Accounting Standard for Business Enterprises”) and No.15 of Compilation Rules forInformation Disclosure by Companies Offering Securities to the Public - General Provisions of Financial Reportsissued by China Securities Regulatory Commission.
2. Continual operation
There are no events affecting the Company's going-concern ability and it is expected that the Company will beable to operate as a going concern within the next 12 months. The Company's financial statements are prepared onthe basis of the assumption of going concern.
V. Significant accounting policy and accounting estimateSpecific accounting policy and accounting estimate:
The following significant accounting policy and accounting estimate of the Company are formulated inaccordance with the Accounting Standards for Business Enterprises. The business not mentioned is implementedin accordance with the relevant accounting policies in the Accounting Standards for Business Enterprises.
1. Statement of compliance with Accounting Standards for Business EnterprisesThese financial statements comply with the requirements of the Accounting Standards for Business Enterprisesissued by the Ministry of Finance, and truly and completely reflect the consolidated and parent company financialposition of the Company on June 30, 2021 and the business performance and cash flows of the Company in thefirst half of 2021.
2. Accounting period
The fiscal year of the Company runs from January 1 to December 31 of each calendar year.
3. Operating cycle
The operating cycle of the Company is 12 months.
4. Reporting currency
The reporting currency of the Company is RMB.
5. Accounting treatment of business combination involving enterprises under and not under commoncontrolBusiness combination involving enterprises under the same control: the assets and liabilities acquired by themerging party in the business combination (including the goodwill formed by the final controlling party bypurchasing the merged party) shall be measured on the basis of the book value of the assets and liabilities of themerged party in the consolidated financial statements of the final controlling party on the merger date. Thedifference between the book value of the net assets obtained and the consideration paid for the combination (ortotal par value of issued shares) is adjusted against capital reserve (capital stock premium); if the capital reserve(capital stock premium) is not sufficient to absorb the difference, the retained earnings shall be adjusted.Business combination not involving enterprises under common control: the cost of combination is the fair value ofthe assets paid, liabilities incurred or assumed and equity securities issued by the acquirer on the acquiring datefor acquisition of the control right of the acquiree. If the cost of combination is greater than the share of the fairvalue of the acquiree's identifiable net assets acquired in the combination, the difference is recognized as goodwill;if the cost of combination is less than the share of the fair value of the acquiree's identifiable net assets acquired inthe combination, the difference is included in the profit and loss of the current period. The acquiree's identifiableassets, liabilities and contingent liabilities obtained by the acquirer in the combination meeting the recognitionconditions are measured at fair value on the acquiring date.The directly related expenses incurred for the business combination are included in the profit and loss of thecurrent period; the transaction costs associated with the issue of equity or debt securities for the businesscombination are included in the initially recognized amounts of the equity or debt securities.
6. Methods for preparing consolidated financial statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on a control basis and includes theCompany and all subsidiaries. Control means that the Company has the power over the invested entity, enjoysvariable returns by participating in the relevant activities of the invested entity, and has the ability to use the powerto influence the amount of returns.
(2) Consolidation procedures
The Company regards the whole enterprise group as an accounting entity and prepares consolidated financialstatements in accordance with unified accounting policies to reflect the overall financial position, operatingresults and cash flow of the enterprise group. The impact of internal transactions between the Company and itssubsidiaries and between the subsidiaries are offset. If the internal transaction indicates that impairment loss hasoccurred to relevant assets, such loss shall be recognized in full. If the accounting policies and the accountingperiods adopted by the subsidiaries are inconsistent with those of the Company, necessary adjustments shall be
made in accordance with the accounting policies and the accounting periods of the Company when preparing theconsolidated financial statements.The minority shareholders' share of the subsidiary's owners' equity, current net profit and loss and currentcomprehensive income shall be separately listed under the owners' equity item in the consolidated balance sheet,under the net profit item and under the total comprehensive income item in the consolidated income statement. Ifthe current loss shared by the minority shareholders of the subsidiary exceeds their share in the owner's equity ofthe subsidiary at the beginning of the period, the minority equity shall be offset by the balance.
1) Increase of subsidiaries or business
During the reporting period, if subsidiaries or business are increased due to business combination involvingenterprises under the same control, the operating results and cash flow from the beginning of the current period tothe end are incorporated into the consolidated financial statements, and the opening balance in the consolidatedfinancial statements and the related items in comparative statements are adjusted, which shall be regarded that thereporting subject after combination has been existed since the initial control point of the ultimate controllingparty.If the invested party under the same control is controlled by the additional investment and other reasons, theequity investment held before obtaining the control of the merged party, and the relevant profits and losses, othercomprehensive income and other net assets and other net assets changes between the date of acquisition of theoriginal equity and the date on which the merging party and the merged party are under the same control(whichever is later) and the merger date shall offset the period of between the opening retained earnings or currentprofits and losses in the comparative reporting period.During the reporting period, if subsidiaries or business are increased due to business combination of enterprisesnot under the same control, it shall be included in the consolidated financial statements as of the acquisition dateon the basis of the fair value of all identifiable assets, liabilities and contingent liabilities determined on theacquisition date.If it is able to exercise control over the invested entity that is not under the same control due to additionalinvestment or other reasons, the equity held by the acquiree before the acquisition date shall be re-measuredaccording to the fair value of the equity on the acquisition date, and the difference between the fair value and thebook value shall be included into the current investment income. Other comprehensive income, which can bereclassified into profit and loss in the future, and other changes in owners' equity under the equity method asrelated to the acquiree's equity held before the acquisition date are converted to the investment income of thecurrent period as of the acquisition date.
2) Disposal of subsidiary
① General disposal method
When the Company loses the control right over the invested entity due to disposal of part of the equity investmentor other reasons, the residual equity investment after the disposal shall be re-measured at its fair value on the dateof losing the control right. The difference between the sum of the consideration acquired by disposal of the equityand the fair value of the residual equity, minus the sum of the share of the net assets of the original subsidiarycontinuously calculated from the acquisition date or the merging date and the goodwill according to the originalshareholding ratio, shall be included in the investment income in the period of lose of the control right. Othercomprehensive income related to the equity investment of the original subsidiary that can be reclassified intoprofit and loss in the future, and other changes in owners' equity under the equity method are converted to theinvestment income in the period of lose of the control right.
② Disposal of subsidiary by steps
For disposal of the equity investment in the subsidiary by steps through multiple transactions till loss of the
control right, the terms, conditions and economic impact of the disposal on each transaction in respect of theequity investment of the subsidiary are subject to one or more of the following circumstances, which generallyindicate that the multiple transactions are package deals:
i. The transactions were entered into simultaneously or with consideration of their mutual influence;ii. These transactions as a whole can only achieve a complete business result;iii. The occurrence of one transaction depends on the occurrence of at least one other transaction;iv. A transaction is not economical alone, but economic when considered with other transactions.If each transaction belongs to a package deal, each transaction shall be subject to accounting treatment as a dealfor disposal of subsidiary and loss of the control right; the difference between the disposal price and the share ofnet assets of the subsidiary corresponding to the disposal of investment before the loss of control right isrecognized as other comprehensive income in the consolidated financial statements and transferred into thecurrent profit and loss in the period of loss of control right.If each transaction does not belong to a package deal, the equity investment of the subsidiary shall be subject toaccounting treatment without loss of control right before losing the control right; and accounting treatment shallbe carried out in accordance with the general disposal method of the subsidiary when losing the control right.
(3) Purchase of the minority equity of the subsidiaries
The difference between the long-term equity investment obtained due to the purchase of minority equity and theshare of the net assets to be enjoyed and continuously calculated from the acquisition date or merging dateaccording to the increased shareholding ratio is adjusted against the capital stock premium in the capital reserve inthe consolidated balance sheet; if the capital stock premium in the capital reserve is not sufficient to offset thedifference, the retained earnings shall be adjusted.
(4) Partial disposal of equity investment in subsidiaries without loss of control rightThe difference between the disposal price and the disposal of long-term equity investment and the share of the netassets to be enjoyed and continuously calculated from the acquisition date or merging date, is adjusted against thecapital stock premium in the capital reserve in the consolidated balance sheet; if the capital stock premium in thecapital reserve is not sufficient to offset the difference, the retained earnings shall be adjusted.
7. Joint venture arrangements classification and Co-operation accounting treatmentThe joint venture arrangement is divided into joint management and joint venture.Joint management means the joint venture arrangement in which the joint venture parties enjoy the assets andassumes the liabilities related to the arrangement.The Company confirms the following items related to the share of interests in the joint operation:
(1) Recognize the assets held solely by the Company and the assets jointly held according to the share of theCompany;
(2) Recognize the liabilities undertaken solely by the Company and the liabilities jointly undertaken accordingto the share of the Company;
(3) Recognize the income generated from the sale of the Company’s share of the joint operation output;
(4) Recognize the income generated from the sale of outputs of the joint operation according to the share of the
Company;
(5) Recognize the expenses incurred separately and the expenses incurred in joint operation according to theshare of the CompanyThe Company's investment in the joint venture shall be accounted by the equity method. See Note “V. 22
Long-term equity investment" for details.
8. Determining standards of cash and cash equivalents
Cash represents the Company’s cash on hand and the deposit readily available for payment. Cash equivalentsrepresent the short-term, highly liquid investments that are readily convertible into known amounts of cash andthat are subject to an insignificant risk of change in value.
9. Foreign currency transaction and foreign currency statement translation
(1) Foreign Currency Business
Foreign currency transaction adopts the spot exchange rate on the date of the transaction as the conversionexchange rate to convert the foreign currency amount into RMB for reporting.At the balance sheet date, the balance of foreign currency monetary items are converted by using the spotexchange rates at the balance sheet date. Exchange differences arising therefrom are recognized in current profitand loss, except the exchange differences related to a specific-purpose borrowing denominated in foreign currencythat qualify for capitalization are treated according to the capitalization of borrowing costs.
(2) Conversion of financial statements denominated in foreign currencies
The asset and liability items in the foreign currency balance sheets shall be translated at a spot exchange rate onthe balance sheet date. Among the owner's equity items, except the ones as “undistributed profits”, others shall betranslated at the spot exchange rate at the time when they are incurred. The income and expense items in theincome statement are converted at the spot rate on the date of transaction.When disposing of the overseas operation, the balance of the financial statements denominated in foreigncurrencies related to the overseas operation shall be transferred from the owner's equity item to the profit and lossof the disposal period.
10. Financial instruments
The Company recognizes a financial asset, financial liability or equity instrument when becoming a party of thefinancial instrument contract.
(1) Classification of financial instruments
According to the Company's business model of managing financial assets and the contractual cash flowcharacteristics of financial assets, the financial assets are classified at the initial recognition as: financial assetsmeasured at the amortized cost, financial assets measured at fair value of which changes are recorded into othercomprehensive income, and financial assets at fair value of which changes are recorded in current profit and loss.
The Company classifies the financial assets that meet the following conditions and are not designated to bemeasured at fair value and whose changes are recorded into the profits and losses of the current period as financialassets measured at the amortized cost:
- The business model is aimed at collecting contract cash flows;- The contract cash flow is only the payment of the principal and interest based on the outstanding principal
amount.The Company classifies the financial assets that meet the following conditions and are not designated to bemeasured at fair value and whose changes are recorded into the profits and losses of the current period as financialassets measured at fair value of which changes are recorded into other comprehensive income (debt instrument):
- The business model is aimed at collecting contract cash flows and the sale of such financial assets;- The contract cash flow is only the payment of the principal and interest based on the outstanding principalamount.For non-trading equity instrument investments, the Company may, at the time of initial recognition, irrevocablydesignate them as financial assets measured at fair value of which changes are recorded into other comprehensiveincome (equity instrument). The designation is made on a single investment basis and the related investmentsmeet the definition of an equity instrument from an issuer's perspective.
Except the above financial assets measured at the amortized cost and the financial assets measured at fair value ofwhich changes are recorded into other comprehensive income, the Company classifies all other financial assets asfinancial assets at fair value of which changes are recorded in current profit and loss. Upon initial recognition, ifaccounting mismatches can be eliminated or significantly reduced, the Company can irrevocably designate thefinancial assets that should have been classified as those measured at the amortized cost or measured at fair valueof which changes are recorded into other comprehensive income as the financial assets measured at fair value ofwhich changes are recorded in current profit and loss.
Financial liabilities are classified at the initial recognition as: financial liabilities measured at fair value of whichchanges are recorded in current profit and loss and financial liabilities measured at the amortized cost.
Financial liabilities that meet one of the following conditions may be designated at the initial recognition as thefinancial liabilities measured at fair value of which changes are recorded in current profit and loss.
1) This designation can eliminate or significantly reduce accounting mismatches.
2) Manage and conduct performance evaluation of the financial liability portfolio or financial assets andfinancial liability portfolio on the basis of fair value according to the enterprise risk management orinvestment strategy set forth in the official written documents, and rep ort to the key managementpersonnel within the enterprise on this basis.
3) The financial liability contains embedded derivatives that need to be split separately.
(2) Recognition basis and measurement method of financial instruments
① Financial asset measured on the basis of post-amortization costs
The financial assets measured at the amortized costs include bills receivable, accounts receivable, otherreceivables, long-term receivables, debt investment, etc., which shall be initially measured at fair value, and therelevant transaction expenses are included in the initial recognized amount; the receivables excluding majorfinancing components and the accounts receivable that the Company decides not to consider the financingcomponents of less than one year shall be initially measured at the contract transaction price.The interest calculated by the effective interest rate method during the holding period is recorded into the currentprofit and loss.Upon recovery or disposal, the difference between the price obtained and the book value of the financial assetsshall be recorded into the current profit or loss.
② Financial assets measured at fair value of which changes are recorded into other comprehensive income (debt
instrument)Financial assets measured at fair value of which changes are recorded into other comprehensive income (debtinstrument), including receivables financing and other debt investments, are initially measured at fair value andrelated transaction costs are included in the initial recognized amount. The financial asset is subsequentlymeasured at its fair value, and changes in the fair value are recorded in other comprehensive income, except theinterest, impairment loss or gains and exchange gain and loss calculated by the effective interest rate method.Upon the de-recognition, the accumulated gains or losses previously recorded in other comprehensive income willbe transferred from other comprehensive income to current profit and loss.
③ Financial assets measured at fair value of which changes are recorded into other comprehensive income (equityinstrument)Financial assets measured at fair value of which changes are recorded into other comprehensive income (equityinstrument), including other equity instrument investment, are initially measured at fair value and relatedtransaction costs are included in the initial recognized amount. Such financial assets are subsequently measured atthe fair value and the change in the fair value is recorded into other comprehensive income. The dividendsobtained are recorded in current profit and loss.Upon the de-recognition, the accumulated gains or losses previously recorded in other comprehensive income willbe transferred from other comprehensive income to retained earnings.
④ Financial assets measured with fair value and with the changes included in current profit and lossFinancial assets measured at fair value of which changes are recorded in current profit and loss, including tradablefinancial assets, derivative financial assets, other non-current financial assets, etc., are initially measured at fairvalue and related transaction expenses are recorded in current profit and loss. Such financial assets aresubsequently measured at the fair value and the change in the fair value is recorded into current profit and loss.
⑤ Financial liabilities measured at fair values, changes of which recorded in the current profits or lossesFinancial liabilities measured at fair value of which changes are recorded in current profit and loss, includingtradable financial liabilities, derivative financial liabilities, etc., are initially measured at fair value and relatedtransaction expenses are recorded in current profit and loss. Such financial liabilities are subsequently measured atthe fair value and the change in the fair value is recorded into current profit and loss.Upon the de-recognition, the difference between its book value and the consideration paid is recorded in currentprofit and loss.
⑥ Financial liabilities measured at the amortized cost
Financial liabilities measured at amortized cost, including short-term loans, notes payable, accounts payable, otherpayables, long-term borrowings, bonds payable and long-term payables, are initially measured at fair value, andrelated transaction expenses are included in the initial recognized amount.The interest calculated by the effective interest rate method during the holding period is recorded into the currentprofit and loss.Upon the de-recognition, the difference between the consideration paid and the book value of such financialliability is recorded in current profit and loss.
(3) De-recognition and transfer of financial assets
The Company shall derecognize the financial assets if one of the following conditions is satisfied:
- Termination of the contractual right to collect the cash flow of financial assets;- The financial assets have been transferred, and almost all the risks and remuneration in its ownership have beentransferred to the transferee;- The financial assets have been transferred, and while the Company has neither transferred nor retained virtuallyall of the risks and remuneration in the ownership of the financial assets, it has not retained control of the financial
assets.
In the event of a financial asset transfer, if almost all the risks and remuneration in the ownership of the financialasset are retained, the recognition of the financial asset will not be terminated.
The principle of substance over form is adopted when judging whether the transfer of financial assets meets theabove conditions for de-recognition of financial assets.The Company divides the transfer of financial assets into the whole transfer of financial assets and the partialtransfer of financial assets. If the overall transfer of the financial asset meets the de-recognition conditions, thedifference between the following two amounts shall be recorded into the current profits and losses:
① The book value of the transferred financial asset;
② The sum of the consideration received from the transfer and the cumulative amount of the fair value changesoriginally included in owner’s equity directly (where the financial asset involved in the transfer is measured at fairvalue and the change is recorded in other comprehensive income (debt instrument)).If the partial transfer of the financial asset meets the de-recognition conditions, the book value of the overalltransferred financial asset is distributed between the derecognized and non-derecognized part according to therelative fair value and the difference between the following two amounts is included in current profit and loss:
① The book value of derecognized part;
② Sum of the consideration of the derecognized part and the amount of corresponding derecognized part in thetotal fair value changes originally included in owner’s equity directly (where the financial asset involved in thetransfer is measured at fair value and the change is recorded in other comprehensive income (debt instrument)).If the transfer of the financial asset does not meet the conditions of de-recognition, such financial asset shallcontinue to be recognized and the consideration received shall be recognized as a financial liability.
(4) De-recognition of financial liabilities
Where the current obligation of a financial liability has been discharged in whole or in part, such financial liabilityor part thereof shall be derecognized; if the Company enters into an agreement with the creditor to replace theexisting financial liabilities by assuming new financial liabilities, and the contract terms of the new financialliabilities and the existing financial liabilities are substantially different, the Company shall derecognize theexisting financial liabilities and recognize the new financial liabilities at the same time.If all or part of the contract terms of the existing financial liabilities are substantially modified, the existingfinancial liability or part thereof shall be derecognized, and the financial liabilities after the modification shall berecognized as new financial liabilities.When a financial liability is derecognized in whole or in part, the difference between the book value of thederecognized financial liability and the consideration paid (including non-cash asset transferred out or the newfinancial liability undertaken) is recorded in current profit and loss.If the Company repurchases part of the financial liability, it shall allocate the overall book value of the financialliability on the repurchase date according to the relative fair value of the continuing recognition part and thede-recognition part. The difference between the book value allocated to the derecognized part and theconsideration paid (including non-cash asset transferred out or the liability undertaken) is recorded in currentprofit and loss.
(5) Fair value determination method of financial assets and financial liabilitiesThe fair value of a financial instrument with an active market shall be recognized based on the quotation in the
active market. The fair value of a financial instrument without an active market shall be recognized by means ofvaluation techniques. Upon valuation, the Company adopts valuation techniques applicable to the current situationand supported by sufficient available data and other information, selects input values consistent with the asset orliability characteristics considered by market participants in the transaction of related assets or liabilities, andgives priority to relevant observable input values. The Company uses non-observable input values only whenrelevant observable input values cannot be obtained or are not practicable to obtain.
(6) Test method and accounting treatment method of financial assets impairmentThe Company estimates the expected credit losses of financial assets measured at amortized cost, financial assetsmeasured at fair value of which changes are recorded into other comprehensive income (debt instrument) andfinancial guarantee contracts on a single or combined basis.
The Company calculates the probabilistic weighted amount of the present value of the difference between the cashflows receivable under the contracts and the cash flows expected to be received and recognizes the expected creditloss, taking into account reasonable and evidential information concerning past events, current conditions andprojections of future economic conditions, and weighting the risk of default.If the credit risks of such financial instrument have increased significantly since the initial recognition, theCompany shall measure its loss provision according to the amount equivalent to the expected credit loss in theentire duration of such financial instrument. If the credit risks of such financial instrument have not increasedsignificantly since the initial recognition, the Company shall measure the loss provision according to the amountequivalent to the expected credit loss of such financial instrument in the next 12 months. The amount of theincrease or reversal of the loss provision resulting therefrom shall be recorded into the current profit and loss as animpairment loss or profit.By comparing the risk of default of financial instruments on the balance sheet date with the risk of default on theinitial recognition date, the Company determines the change of the default risk during the expected duration of thefinancial instruments, so as to assess whether the credit risks of financial instruments have significantly increasedsince the initial recognition. In general, the Company will consider that the credit risks of the financial instrumenthas increased significantly if it is more than 30 days overdue, unless there is conclusive evidence that the creditrisks of such financial instrument have not increased significantly since the initial recognition.If the credit risks of the financial instrument is low on the balance sheet date, the Company considers that thecredit risks of the financial instrument have not increased significantly since the initial recognition.If there is objective evidence that a certain financial asset has suffered credit impairment, the Company shall makeprovision for the impairment of the financial asset on an individual basis.For receivables and contract assets formed by transactions regulated by Accounting Standards for BusinessEnterprises No.14 - Revenue (2017), the Company always measures its loss provision at an amount equivalent tothe expected credit loss over the entire duration, whether o r not it contains major financing components.For lease receivable, the Company shall always measure its loss provision according to the amount equivalent tothe expected credit loss within the entire duration.If the Company no longer reasonably expects that the contract cash flow of a financial asset can be recovered inwhole or in part, it will directly write down the book balance of such financial asset.
11. Notes receivable
(1) Impairment of notes receivable and accounts receivable
For notes receivable and accounts receivable, whether or not they contain major financing components, theCompany always measures its loss provision at an amount equivalent to the expected credit loss over the entireduration, and the increase or reversal amount of the loss provision thus formed is recorded into the current profitand loss as impairment loss or gain.For notes receivable, the Company shall always measure its loss provision according to the amount equivalent tothe expected credit loss within the entire duration. Based on the credit risk characteristics of notes receivable, it isdivided into different portfolios:
| Item | Basis for recognition of combination and accrual method of provision for bad debt |
| Banker's acceptance bill | If the acceptor is a bank with higher credit rating (such as large state-owned commercial banks and listed joint-stock commercial banks), no provision for bad debts shall be made; if the acceptor is another bank or financial company, the expected credit loss is analyzed based on historical information and judged whether it is necessary to make provision for bad debts. |
| Trade acceptance | If the acceptor is a non-financial institution, its division is the same as that of accounts receivable (if accounts receivable are transferred to notes receivables, the age of accounts is calculated continuously). |
The Company combines the notes receivable-trade acceptance, accounts receivable (except in the consolidation)and prepayments with similar credit risk characteristics (aging), and estimates the proportion of bad debt provisionfor notes receivable -trade acceptance, accounts receivable and prepayments based on all reasonable and informedinformation, including forward-looking information, as follows:
| Aging | Accruing proportion of accounts receivable (%) | Accruing proportion of trade acceptance (%) | Accruing proportion of prepaid accounts (%) |
| Within 1 year (including 1 year) | 5 | 5 | 0 |
| 1-2 years | 10 | 10 | 0 |
| 2-3 years | 30 | 30 | 50 |
| 3-4 years | 50 | 50 | 100 |
| 4-5 years | 80 | 80 | 100 |
| More than 5 years | 100 | 100 | 100 |
If there is objective evidence that a certain note receivable, account receivable or prepayment has incurred creditimpairment, the Company shall make a provision for bad debts for the note receivable or account receivable orprepayment separately and recognize the expected credit loss.
12. Accounts receivable
Please refer to this Note 5-11: Notes receivable.
13. Amounts receivable financing
For the recognition methods and accounting treatment methods of the Company's expected credit loss onfinancing receivables, please refer to Note “V. 10. Financial Instruments (6) Test method and accounting treatmentmethod of financial assets impairment".
14. Other receivables
Recognition method and accounting treatment method of the expected credit loss of other receivables
For the measurement of impairment loss of other receivables other than accounts receivable and notes receivable(including other receivables, long-term receivables, etc.), it shall be treated by referring to the “V. 10. Financialinstruments (6) Test method and accounting treatment method of financial assets impairment”.
15. Inventory
(1) Classification and cost of inventories
The inventories are classified as raw materials, low priced and easily worn articles, merchandise inventory, workin progress, goods shipped in transit, goods processed by commission, wrappage, etc.Inventories are initially measured at cost. The inventory cost includes procurement costs, processing costs, andother expenses incurred to bring the inventory to its current location and condition.
(2) Valuation method of delivered inventory
The sales of purchased finished products are priced according to the moving weighted average method at the timeof shipment; the sales of self-produced products are priced according to the standard cost method at the time ofshipment, and the difference between the actual cost and the standard cost shall be apportioned according to theinventory and sales ratio at the end of the period.
(3) Recognition basis of net realizable value of different types of inventoriesThe inventories shall be measured on the balance sheet date according to the cost of inventories or net realizablevalue, whichever is lower. If the cost of the inventories is higher than the net realizable value, the inventory fallingprice reserves shall be withdrawn. The net realizable value of inventories is the amount of the estimated sale priceof the inventories subtracted by the estimated cost about to occur in completion, estimated selling expenses andrelated taxes in daily activities.For the finished products, merchandise inventory, materials for sale and other merchandise inventories directlyused for sale, the net realizable value is recognized by the amount of the estimated sale price of the inventoriessubtracted by the estimated selling expenses and related taxes in normal production and operation process; for thematerial inventory required to be processed, the net realizable value is recognized by the amount of the estimatedsale price of the finished products subtracted by the estimated cost about to occur in completion, estimated sellingexpenses and related taxes in normal production and operation process; for the inventories held to perform thesales contract or labor contract, the net realizable value is calculated on the basis of contract price. If the numberof the inventories held is greater than the quantity ordered in the sales contract, the net realizable value of theexcessive inventories is calculated on the basis of general sale price.
If the influence factors writing down the inventory value before have disappeared after withdrawal of theinventory falling price reserves, resulting in the net realizable value of the inventories higher than the book value,the amount written down is reversed within the originally withdrawn amount of inventory falling price reservesand the amount reversed is included in current profits and losses.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization methods of low priced and easily worn articles and wrappage
(1) The 50-50 amortization method is adopted for low-value consumables;
(2) The packaging adopts the one-time write-off method.
16. Contract assets
(1) Methods and standards for the recognition of contract assets
The Company lists the contractual assets or contractual liabilities in the balance sheet according to the relationshipbetween performance obligations and customer payment. The Company's rights to receive consideration for thetransfer of goods or services to the customer (and such rights are subject to factors other than the passage of time)are listed as contractual assets. The contractual assets and contractual liabilities under the same contract are listedin the net amount. The rights that the Company owns and unconditionally (depending only on the passage of time)to collect consideration from the customer are listed separately as receivables.
(2) Recognition method and accounting treatment method of the expected credit loss of contractual assetsFor the recognition methods and accounting treatment methods of the expected credit loss of the contract assets,please refer to Note “V. 10. Financial Instruments (6) Test method and accounting treatment method of financialassets impairment".
17. Contract cost
Contract cost includes the contract performance cost and the contract acquisition cost.If the cost incurred by the Company for the performance of the contract is not within the scope of relevantstandards for inventory, fixed assets or intangible assets, it shall be recognized as an asset as a contractperformance cost when the following conditions are met:
? The cost is directly related to a current or anticipated contract.? The cost increases the Company’s future resources to meet its performance obligations.? The cost is expected to be recoverable.If the Company is expected to recover the incremental cost incurred in acquiring the contract, it shall berecognized as an asset as the contract acquisition cost.Assets related to contract costs are amortized on the same basis as income recognition of goods or services relatedto the asset; however, if the amortization period of the contract acquisition cost is less than one year, the Companyshall record it into the current profit and loss when it is incurred.
If the book value of an asset related to the contract cost is higher than the difference between the following twoitems, the Company shall draw an impairment provision for the excess portion and recognize it as the assetsimpairment loss:
① Remaining consideration expected to be obtained as a result of the transfer of the goods or services related tothe asset;
② The costs is estimated and to be incurred for the transfer of the relevant goods or services.If the factors of impairment in the previous period change so that the difference above is higher than the bookvalue of the asset, the Company shall reverse the withdrawn impairment provision and include it into the currentprofit and loss, but the book value of the reversed asset shall not exceed the book value of such asset on thereversal date if the impairment provision is not withdrawn.
18. Assets held for sales
If the book value of an asset is recovered mainly through the sale (including the non-monetary assets exchange ofcommercial nature) rather than continuous use of a non-current asset or disposal group, such asset is classified asan asset held for sale.The Company classifies non-current assets or disposal groups as held for sale if they meet the followingconditions simultaneously:
(1) Immediately available for sale under current conditions in accordance with the usual practice of selling suchtype of assets or disposal groups in similar transactions;
(2) The sale is highly likely, that is, the Company has resolved a sale plan and obtained a firm purchasecommitment, and the sale is expected to be completed within one year. Where the relevant provisions requirethe approval of the relevant authority or regulatory authority of the Company before the sale, the approvalhas been obtained.Where it is classified as non-current assets (not including financial assets and deferred income tax assets, theassets formed by the employee compensation) or disposal groups held for sale, if its book value is higher than thenet amount of the fair value minus the selling expense, the book value is written down to the net amount of thefair value minus the selling expense, the amount written down is recognized as the assets impairment loss andincluded in the current profit and loss. The provision for impairment of available for sale assets is withdrawn.
19. Debt investment
20. Other debt investments
21. Long-term receivables
22. Long-term equity investment
(1) Criteria for determining joint control and significant influence
Joint control refers to the joint control over an arrangement in accordance with the relevant agreement, and therelated activities of the arrangement can only be decided upon the unanimous consent of the parties sharing thecontrol. Where the Company and other joint venture parties jointly exercise joint control over the invested entityand enjoy rights over the net assets of the invested entity. The invested entity shall be the joint venture of the
Company.Significant influence means the power to participate in the formulation of financial and operating decisions of theinvested entity, but not the power to control or jointly control the formulation of these policies together with otherparties. If the Company is able to exert significant influence on the invested entity, the invested entity is a jointventure of the Company.
(2) Recognition of initial investment cost
① Long-term equity investment formed by business combination
For the long-term equity investment in a subsidiary formed by business combination under common control, theshare of the book value of the owner’s equity of the combining party in the consolidated financial statements ofthe final controlling party, on the combination date, is regarded as the initial cost of the long-term equityinvestment. The difference between the initial cost of the long-term equity investment and the book value of paidconsideration shall adjust the capital stock premium in capital reserve. If the capital stock premium in capitalreserve is insufficient to offset, the retained earnings shall be adjusted. Where it implements the control upon theinvested entity under the same control due to additional investment or other reasons, the difference between theinitial investment cost of the long-term equity investment recognized according to the above principle and the sumof the book value of the long-term equity investment before the combination plus the book value of the newconsideration for the acquisition of further shares on the merging date shall adjust the capital stock premium. Ifthe capital stock premium is insufficient to offset, the retained earnings shall be offset.For the long-term equity investment in a subsidiary formed by business combination not under common control,the combined cost recognized on the acquisition date is regarded as the initial cost of the long-term equityinvestment. Where it implements the control upon the invested entity not under the same control due to additionalinvestment and other reasons, the sum of the book value of the original equity investment plus the new investmentcost is taken as the initial investment cost.
② Long-term equity investment acquired by means other than business combination
If the long-term equity investment is acquired by means of cash payment, the initial investment cost shall be thepurchase price actually paid.If the long-term equity investment is acquired by issuing equity securities, the initial investment cost shall be thefair value of the equity securities issued.
(3) Subsequent Measurement and Approach for the Determination of Profit and Loss
① Long-term equity investment checked by cost method
The long-term equity investment made by the Company in its subsidiaries adopts the cost method, unless theinvestment meets the conditions of holding for sale. Except for cash dividends or profits already declared but notyet paid that are included in the price or consideration actually paid upon acquisition of the investment, theCompany recognize the investment income in current period in accordance with the attributable share of cashdividends or profit distributions declared by the invested entity.
② Long-term equity investment checked by equity method
The long-term equity investment of joint ventures and cooperative enterprises shall be calculated by the equitymethod. The initial in vestment cost of the long-term equity investment is not adjusted if it is greater than thedifference between the fair value share of the net identifiable assets of the invested entity in the investment; if theinitial investment cost of the long-term equity investment is less than the difference between the fair value shareof the net identifiable assets of the invested entity in the investment, it is recorded in current profit and loss andthe cost of the long-term equity investment is adjusted.
The Company recognizes the investment income and other comprehensive income according to its share of netprofit or loss and other comprehensive income of the invested entity, and adjusts the boot value of the long-termequity investment accordingly; the Company decreases the book value of the long-term equity investmentaccordingly in accordance with the share of the profit distribution or cash dividends declared by the investedentity; for changes in owner’s equity of the invested entity other than those arising from its net profit o r loss,other comprehensive income and profit distribution (abbreviated as “other changes in owner’s equity”), theCompany adjusts the book value of the long-term equity investment and records in the owner’s equity.Upon recognizing the share of the net profit and loss, other comprehensive income and other changes in owner'sequity of the invested entity, it shall be recognized after adjusting the net income and other comprehensive incomeof the invested entity on the basis of the fair value of the identifiable net assets of the invested entity whenobtaining the investment, and in accordance with the Company's accounting policies and accounting periods.The profits and losses of unrealized internal transactions between the Company and joint ventures, cooperativeenterprises shall be calculated according to the proportion that should be enjoyed by the Company and shall beoffset. On this basis, investment income shall be recognized, except that the assets invested or sold constitutebusiness. The unrealized internal deal loss between the Company and the invested entity is recognized in fullamount if attributable to the assets impairment loss.The net loss incurred by the Company to the cooperative enterprise or joint venture, except for the liability foradditional loss, shall be written down to zero by the book value of long-term equity investment and otherlong-term equity substantially constituting the net investment in the cooperative enterprise or joint venture. If thecooperative enterprise or joint venture achieves the net profits in the later periods, the Company recovers torecognize the gain sharing amount after making up for the unrecognized loss sharing amount with the gain sharingamount.
③ Disposal of long-term equity investment
On disposal of the long-term equity investment, the balance between the book value of the equity disposed of andthe actual price obtained is charged to current profit and loss.If part of the long-term equity investment is disposed of by the equity method, and the remaining equity is stillaccounted by the equity method, the other comprehensive income recognized by the original equity method shallbe carried forward on the same basis as the relevant assets or liabilities directly disposed of by the invested entityat the corresponding proportion, and the changes in other owners' equity shall be carried forward to the currentprofit and loss on a proportional basis.If the joint control or significant influence on the invested entity is lost due to the disposal of equity investment orother reasons, other comprehensive income of the original equity investment recognized by the equity methodshall be subject to accounting treatment through adopting the basis for the direct disposal of relevant assets ordebts when the equity method is terminated. Other changes in owners' equity will be transferred to current profitand loss when the equity method is terminated.If the Company loses its control rights over the invested entity due to the disposal of part of the equity investment,when preparing individual financial statement, in case of the residual equity with joint control or significantinfluence on the invested entity, the Company shall calculate and adjust the residual equity with equity method asupon obtaining. Other comprehensive income recognized before the acquisition of the control right of the investedentity shall be carried forward proportionately on the same basis as the direct disposal of relevant assets orliabilities by the invested entity, and other changes in owners' equity recognized by the equity method shall becarried forward proportionately to the current profit and loss. If the residual equity cannot exercise joint control orexert significant influence on the invested entity, it shall be recognized as financial assets, the difference betweenits fair value and book value on the date of loss of control shall be included in the current profit and loss, and all
other comprehensive income and other changes in owner’s equity recognized before obtaining the control right ofthe invested entity shall be carried forward.If the deals for disposal of the subsidiary’s equity investment by steps through several times of transaction untilthe loss of the control right belong to a package deal, the deals shall be subject to accounting treatment as a dealfor disposal of the equity investment in the subsidiary and loss of the control right; the difference between eachdisposal price and the book value of the long-term equity investment corresponding to the equity disposed ofbefore the loss of control right is, in individual financial statements, recognized as other comprehensive incomeand then transferred into the current profit and loss in the period of loss of control right. If it does not belong to apackage deal, each deal shall be accounted for separately.
23. Investment real estates
Measurement mode of investment real estateN/A
24. Fixed assets
(1) Recognition conditions
The fixed assets refer to the tangible assets which are held for production of goods, provision of labor, lease or operatingmanagement and whose service life exceeds a fiscal year. The fixed assets can be recognized when meeting the following conditions:
(1) The expected economic benefits related to the fixed assets are likely to flow to the enterprise; and (2) The cost of the fixed assetscan be reliably measured. The fixed assets are initially measured according to the cost (and the influence of the expected disposalcost factors).Subsequent expenditure related to fixed assets, if the economic benefits related may flow in and the cost can be reliably measured, isincluded in the fixed asset cost; and the book value of the replaced part is derecognized; all other subsequent expenditures arerecorded into current profit and loss when incurred.
(2) Depreciation method
| Class | Depreciation method | Depreciation life | Residual rate | Yearly depreciation |
| Houses and building | Straight-line depreciation | 10-35 | 10.00 | 2.57-9.00 |
| Machinery equipment | Straight-line depreciation | 2-15 | 10.00 | 6.00-45.00 |
| Transportation equipment | Straight-line depreciation | 3-10 | 10.00 | 9.00-30.00 |
| Electronic equipment and office equipment, etc. | Straight-line depreciation | 2-10 | 10.00 | 9.00-45.00 |
Depreciation of fixed assets is calculated by straight-line depreciation method and the depreciation rate isdetermined according to the category, expected useful life and expected net residual rate of the fixed assets. Forfixed assets with provision for impairment, the amount of depreciation shall be recognized in future periodsaccording to the book value after deducting the provision for impairment and based on the usable life. If the
components of the fixed assets have different useful life or provide economic benefits for the Company indifferent ways, the depreciation is calculated respectively by different depreciation rates or depreciation methods.The fixed assets leased by financial leasing shall adopt the depreciation policy consistent with the own fixedassets. Where it can be reasonably determined that the ownership of the leased assets can be acquired upon theexpiration of the lease term, depreciation shall be calculated and withdrawn within the service life of the leasedassets; where it is impossible to reasonably determine that the ownership of the leased assets can be acquired uponthe expiration of the lease term, the depreciation shall be calculated and withdrawn within a shorter period of thelease term and the service life of the leased assets.The depreciation method, expected service life, ratio of remaining value and yearly depreciation of various fixedassets are as follows:
(3) Recognition basis, valuation and depreciation methods of fixed assets under financing leaseIf one of the following conditions is stipulated in the lease agreement between the Company and the lessor, it shall be recognized asthe assets acquired under finance leases: (1) The ownership of the leased assets will belong to the Company upon the expiration ofthe lease term; (2) The Company has the option to purchase the asset, and the purchase price is much lower than the fair value of theasset when exercising the option; (3) The lease period accounts for most of the service life of the leased asset; (4) There is nosignificant difference between the present value of the minimum lease payment on the beginning date of the lease and the fair valueof the asset; and (5) The property of the leased asset is special. If no major transformation is made, only the lessee can use it.Upon commencement of the lease term, the Company takes the lower of the fair value of the leased asset on the lease commencementdate and the present value of the minimum lease payment as the entry value of the leased asset, and the minimum lease payment asthe entry value of the long-term payables, and their balance as the unrecognized finance fees.
25. Construction in progress
The construction in progress is measured according to the actual cost incurred. Actual costs include constructioncosts, installation costs, borrowing costs eligible for capitalization, and other expenses necessary to bring theconstruction in progress to a predetermined usable state. When the construction in progress reaches the intendedserviceable condition. it is transferred into fixed assets and begin to withdraw the depreciation since the nextmonth.
26. Borrowing costs
(1) Recognition principle of capitalization of borrowing costs
If the borrowing costs incurred by the Company can be directly attributed to the purchase, construction orproduction of the assets eligible for capitalization, they shall be capitalized and recorded into the cost of therelevant assets; other borrowing costs shall be recognized as expenses according to the amount incurred at thetime of occurrence and shall be recorded into the current profit and loss.Assets meeting the capitalization conditions refer to the fixed assets, investment real estate, inventories and otherassets which can reach the intended usable or marketable status only after quite a long time of construction orproduction activities.
(2) Capitalization period of borrowing costs
Capitalization period refers to the period from the time point at which borrowing costs begin to be capitalized tothe time point at which borrowing costs cease to be capitalized, excluding the period during which thecapitalization of borrowing costs is suspended. Capitalization begins when borrowing costs meet the followingconditions:
① Asset expenditures have been incurred, including expenditures incurred in the form of cash payment, transferof non-cash assets or undertaking interest-bearing liabilities for the purchase and construction of or production ofassets eligible for capitalization;
② Borrowing costs have been incurred;
③ The purchase, construction or production activities which are necessary to prepare the asset for its intended useor sale have started.When the purchase, construction or production of assets that meet the capitalization conditions reach thepredetermined usable or marketable state, the capitalization of borrowing costs shall cease.
(3) Capitalization suspension period
If the assets that meet the capitalization conditions are abnormally interrupted in the process of purchase andconstruction or production, and the interruption period is more than 3 consecutive months, the capitalization ofborrowing costs shall be suspended; if the interruption is necessary for the purchase, construction or production ofthe assets that meet the capitalization conditions to reach the predetermined usable state or marketable state, theborrowing costs shall continue to be capitalized. The borrowing costs incurred during the interruption period arerecognized as the current profit and loss, until the borrowing costs continue to be capitalized after the purchaseand construction or the production activities of the assets are restarted.
(4) Calculation method of capitalization rate and capitalization amount of borrowing costsFor the specific borrowing for the purchase and construction or production of assets eligible for capitalization, thecapitalization amount of borrowing costs shall be recognized by the borrowing costs actually occurring in thecurrent period of specific borrowing, minus the amount of the interest income obtained by depositing the unusedborrowing funds in the bank or the investment income obtained by making temporary investment.For the general borrowing occupied for the purchase, construction or production of assets that meet thecapitalization conditions, the amount of borrowing expenses to be capitalized for the general borrowing shall becalculated and recognized according to the weighted average of the accumulated asset expenditure exceeding thespecific borrowing multiplied by the capitalization rate of the general borrowing occupied. The capitalization rateis calculated and recognized according to the weighted average effective interest rate of the general borrowing.During the capitalization period, the difference between the exchange of the principal and interest of the specificforeign currency borrowing shall be capitalized and recorded into the cost of the assets eligible for capitalization.The exchange difference arising from the principal and interest of foreign currency borrowings other than specificforeign currency borrowing is recorded into the current profit and loss.
27. Biological assets
28. Oil and gas assets
29. Right-of-use assets
The right-of-use asset is initially measured at cost, which includes:
1) The initial measurement amount of the lease liabilities;
2) If there is a lease incentive for the lease payment paid on or before the start of the lease term, the
amount of the granted lease incentive shall be deducted;
3) The initial direct expenses incurred by the Company;
4) Costs expected to be incurred by the Company to disassemble and remove a leased asset, restore the site
where the leased asset is located, or restore the leased asset to the condition agreed upon under theterms of the lease (excluding costs incurred to produce inventory).After the commencement date of the lease term, the Company adopts the cost model for subsequent measurementof the right-of-use assets.If it can be reasonably determined that the ownership of the leased asset can be obtained at the end of the leaseterm, the depreciation shall be accrued within the remaining service life of the leased asset. If it is impossible toreasonably determine that the ownership of the leased asset can be obtained at the end of the lease term, thedepreciation shall be accrued within the shorter of the lease term and the remaining service life of the leased asset.For right-of-use assets with provision for impairment, the amount of depreciation shall be recognized in futureperiods according to the book value after deducting the provision for impairment with reference to the aboveprinciples.
30. Intangible assets
(1) Valuation method, service life and impairment test
① Pricing methods for intangible assets
1) The intangible assets are initially measured according to the cost;
The costs of purchased intangible assets include the purchase price, related taxes as well as other expensesincurred to make the assets reach the intended serviceable conditions and attributable to the assets.
2) Subsequent measurement
The Company analyzes and judges the useful life of the intangible assets when obtaining.The intangible assets with limited useful life are amortized within the period when the intangible assets bringeconomic benefits to the Company; the intangible assets that cannot be expected to bring economic benefits to theCompany are deemed to have uncertain life and are not amortized.
② Estimation of useful life of intangible assets with limited life
| Item | Expected useful life | Basis |
| Land use right | 50 | Term of use specified in the land-use right certificate |
| Software use right | 2-8 years | Useful life estimated by the management |
| Trademark right | 5-10 years | Benefit period specified in the certificate of trademark use |
| Patent right | 5-10 years | Benefit period specified in the certificate of patent use |
| Franchised use right | 3 years | Term of use stipulated in the contract |
③ Basis for judging intangible assets with uncertain service life and the procedures for reviewing theirservice lifeDuring this reporting period, the Company has no intangible assets with uncertain service life.
(2) Accounting policy of expenditure for internal research and development
① Specific criteria for dividing research stage and development stage
The expenditure of the Company's internal R&D projects is classified into the expenditure at the research stageand the expenditure at the development stage.Research stage: the stage of original, planned investigation and research activities to acquire and understand newscientific or technical knowledge, etc.Development stage: the stage in which research or other knowledge is applied to a plan or design to produce newor substantially improved materials, devices, products, etc., prior to commercial production or use.
② Specific conditions for the capitalization of expenditures in the development stageThe expenditure at the research stage is charged to the current profit and loss in occurrence. The expenditure at thedevelopment stage can be recognized as intangible assets only when meeting the following conditions and chargedto the current profit and loss if not meeting the following conditions:
1) Technically feasible to complete the intangible assets, so that they can be used or sold;
2) It is intended to finish and use or sell the intangible assets;
3) Ways of intangible assets to generate economic benefits, including those can prove that the products generated
by the intangible assets can be sold or the intangible assets themselves can be sold and prove that the intangibleassets to be used internally are useful;
4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with thesupport of sufficient technologies, financial resources and other resources; and
5) The development expenditures of the intangible assets can be reliably measured
If the expenditure at the research stage and the expenditure at the development stage cannot be distinguished, theR&D expenditure incurred is fully charged to the current profit and loss.Companies are required to comply with the disclosure requirements of “Guidelines of Shenzhen Stock Exchange on InformationDisclosure by Growth Enterprises Market No. 10: Listed Companies Engaged in Medical Device Business”
31. Long-term assets impairment
Long-term assets such as long-term equity investment, fixed assets, construction in progress, intangible assetswith limited service life, and oil and gas assets, which show signs of impairment on the balance sheet date, shallbe subject to impairment tests. If the impairment test results show that recoverable amount of the asset is below itsbook value, the provision for impairment is withdrawn according to the balance and charged to the impairmentloss. The recoverable amount is determined according to the higher of the net amount of the assets fair value
subtracted by the disposal costs and the present value of the expected future cash flow of the assets. The provisionfor impairment of assets is calculated and recognized on the basis of single asset. The Company recognizes therecoverable amount of the asset group based on the asset group to which the asset belongs if the recoverableamount of the single asset is difficult to estimate. An asset group is the smallest group of assets that can generatecash inflows independently.The goodwill formed due to business combination, intangible assets with uncertain service life and intangibleassets that have not yet reached the usable state shall be subject to impairment test at least at the end of each yearregardless of whether there are signs of impairment.The Company conducts the goodwill impairment tests. For the book value of the goodwill formed due to businesscombination, it shall be apportioned to the relevant asset group by a reasonable method from the date of purchase;if it is difficult to apportion to the relevant asset group, it shall be apportioned to the relevant asset groupcombination. The relevant asset group or asset group combination is an asset group or asset group combinationthat can benefit from the synergies of business combination.When conducting impairment test on the relevant asset group or asset group combination containing goodwill, ifthere are signs of impairment in the asset group or asset group combination related to goodwill, conductimpairment test on the asset group or asset group combination without goodwill at first, calculate the recoverableamount and recognize the corresponding impairment loss compared with the relevant book value. Then conductan impairment test on the asset group or asset group combination containing goodwill to compare its book valuewith the recoverable amount. If the recoverable amount is less than the book value, the amount of impairment lossshall first offset the book value of goodwill amortized to the asset group or asset group combination, and thenoffset the book value of other assets proportionally according to the proportion of the book value of assets otherthan goodwill in the asset group or asset group combination. The above impairment loss of assets will not bereserved in subsequent accounting periods once recognized.
32. Long-term unamortized expenses
Long-term unamortized expenses refer to the expenses that have occurred but shall be burdened in current periodand later periods with the apportionment period more than one year.Amortization method: long-term unamortized expenses are amortized on an average basis over the benefit period.
33. Contract liabilities
The Company lists the contractual assets or contractual liabilities in the balance sheet according to the relationshipbetween performance obligations and customer payment. The obligations of the Company to transfer goods orprovide services to customers for which consideration has been received or receivable are listed as contractualliabilities. The contractual assets and contractual liabilities under the same contract are listed in the net amount.
34. Employee compensation
(1) Short-term compensation accounting method
The Company recognizes the short-term compensation incurred actually during the accounting period when theemployees provide services for the Company as the liabilities and includes in current profits and losses or relatedasset costs.For the social insurance premiums and housing funds paid by the Company for the employees as wells as the
labor union expenditure and personnel education fund withdrawn according to the provisions, the correspondingemployee compensation amount is recognized according to the stipulated accruing basis and accruing proportionduring the accounting period when the employees provide services for the Company.The employee welfare expenses incurred by the Company shall be recorded into the current profit and loss orrelevant asset cost according to the actual amount when actually incurred, and the non-monetary welfare shall bemeasured at its fair value.
(2) Post-employment benefits accounting method
① Defined contribution plan
The Company pays the basic endowment insurance and unemployment insurance for the employees according torelevant provisions of the local government, calculates the amount payable according to local payment base andproportion in the accounting period when the employees provide services for the Company, recognizes the amountpayable as the liabilities and includes in current profits and losses or related asset costs. In addition, the Companyhas also participated in the corporation pension plan / supplementary pension insurance fund approved by therelevant departments of the state. The Company pays the fees to the pension plan / local social security institutionaccording to a certain proportion of the total employee wages and includes corresponding expenses in currentprofits and losses or related asset costs.
② Defined benefit plan
The Company attributes the welfare obligations generated from the defined benefit plan to the period when theemployees provide services by the formula recognized according to the expected cumulative welfare unit methodand includes in current profits and losses or related asset costs.The deficit or surplus formed from the present value of the defined benefit plan obligation subtracted by the fairvalue of the defined benefit plan assets is recognized as a net liability or net asset of the defined benefit plan. Incase of surplus in the defined benefit plan, the Company measures the net assets of the defined benefit planaccording to the lower of the surplus and asset upper limits of the defined benefit plan.All defined benefit plan obligations, including the obligations for payment within 12 months after the end of theexpected annual reporting period in which the employees provide services, are discounted according to thenational debts matching the defined benefit plan obligatory term and currency or the market return of thehigh-quality corporation bonds active in the market on the balance sheet date.The service costs generated from the defined benefit plan and the net interest of the net liabilities or net assets ofthe defined benefit plan are included in current profits and losses or related asset costs; the changes fromre-measurement of the net liabilities or net assets of the defined benefit plan are included in other comprehensiveincome and not written back to the profits and losses in subsequent accounting period. Upon the termination of theoriginal defined benefit plan, the part originally recorded into other comprehensive income within the scope ofrights and interests shall be carried forward to undistributed profit.In the settlement of the defined benefit plan, the settlement profits or losses are recognized according to thebalance between the present value of the defined benefit plan obligation and the settlement price recognized onthe settlement date.
(3) Termination benefits accounting method
When providing dismission welfare, the Company shall recognize the employee compensation liabilities arisingfrom the dismission welfare and record it in the current profit and loss whenever is earlier below: when the
Company fails to unilaterally withdraw the dismission welfare due to termination of labor relation plan ordownsizing suggestions; when the Company recognizes the costs or expenses related to restructuring involvingpayment of dimission welfare.
(4) Other long-term employee benefits accounting method
35. Lease liabilities
The Company initially measures the lease liabilities at the present value of the lease payments outstanding at thecommencement date of the lease term. The lease liability is initially measured at the present value of the leasepayments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, ifthat rate cannot be readily determined, the Company’s incremental borrowing rate is used. Lease paymentsinclude:
1) Fixed payment and actual fixed payment after deducting the relevant amount of lease incentives;
2) Variable lease payments that depend on an index or rate;
3) If the Company reasonably determines that the option will be exercised, the lease payment includes theexercise price of the purchase option;
4) If the lease term reflects that the Company will exercise the option to terminate the lease, the leasepayment includes the amount required to be made at the time of exercising the option to terminate thelease;
5) The amount to be paid shall be estimated based on the residual value of the guarantee provided by theCompany.The Company calculates the interest expense of the lease liability during each period of the lease term accordingto a fixed discount rate, and includes it in the current profit and loss or the cost of related assets.Variable lease payments that are not included in the measurement of the lease liabilities should be included incurrent profit or loss or the cost of the related asset when they are actually incurred.
36. Estimated liabilities
The estimated liabilities are recognized when the obligation related to contingencies meets the followingconditions simultaneously:
(1) The obligation is the current obligation undertaken by the Company;
(2) Performance of the obligation is likely to lead to the outflow of economic benefits;
(3) The amount of the obligation can be reliably measured.
The estimated liabilities are initially measured at the best estimate of the expenditure required to perform therelevant current obligations.In recognizing the best estimate, factors such as risk, uncertainty and time value of money related to contingenciesare taken into account. If the time value of money has a significant impact, the best estimate is determined bydiscounting the relevant future cash outflows.If there is a continuous range of expenditure required and the probability of various outcomes within this range isthe same, the best estimate is recognized according to the middle value within this range; in other cases, the bestestimates are handled as follows:
? When a contingency involves a single item, the best estimate is recognized by the most possible amount.
? When a contingency involves more than one item, the best estimate is recognized according to a variety ofpossible outcomes and related probabilities.When all or some of the expenses necessary for the liquidation of an estimated liabilities is expected to becompensated by a third party, the compensation shall be separately recognized as an asset only when it is virtuallycertain that the reimbursement will be obtained. Besides, the amount recognized for the reimbursement shall notexceed the book value of the estimated liabilities.The Company reviews the book value of the estimated liabilities on the balance sheet date, and if there isconclusive evidence that the book value cannot reflect the current best estimate, it shall adjust the book valueaccording to the current best estimate.
37. Share-based payment
The Company's share-based payment refers to a transaction in which the company grants equity instruments orundertakes equity-instrument-based liabilities in return for services from employee or other parties. TheCompany's share-based payments shall consist of equity-settled share-based payments and cash-settledshare-based payments.
(1) Equity-settled share-based payments and equity instruments
Where the equity-settled share-based payment is exchanged for the services provided by the employee, it shall bemeasured at the fair value of the equity instrument granted to the employee. For share-based payment transactionswith exercisable rights immediately after the grant, it shall be included in the relevant costs or expenses inaccordance with the fair value of the equity instrument on the grant date, and the capital reserves shall beincreased accordingly. For the share-based payment transaction where the service within the waiting period iscompleted after the grant or specified performance conditions are met, on every balance sheet date of the waitingperiod, the Company shall include the service obtained at the current period into relevant costs or expensesaccording to the fair value of the grant date on the basis of the best estimate of the number of equity instrumentswith exercisable rights, and increase the capital reserve accordingly.If the terms of the equity-settled share-based payment are modified, the services acquired are recognized at leastin terms of the unmodified terms. In addition, any modification that increases the fair value of the equityinstrument granted, or that is beneficial to the employee at the date of modification, recognizes an increase in theacquisition of services.During the waiting period, if the granted equity instrument is canceled, the company will treat the canceled equityinstrument as the accelerated exercise of power, and immediately include the balance that shall be recognized inthe remaining waiting period into the current profit and loss, and simultaneously confirm the capital reserve.However, if a new equity instrument is granted and the new equity instrument granted is deemed to be areplacement for the cancelled equity instrument on the grant date, the granted replacement equity instrument willbe handled in the same manner as any amendment to the terms and conditions of the original equity instrument.
(2) Cash-settled share-based payments and equity instrument
The share-based payment settled by cash will be measured according to the fair value of the liability confirmedbasing on the shares borne by the company and other equity instruments. For share-based payment transactionswith exercisable rights immediately after the grant, the Company shall include it in the relevant costs or expensesin accordance with the fair value of the equity instrument on the grant date, and the liabilities shall be increasedaccordingly. If the rights can only be exercised after the situation that service within the waiting period iscompleted and set performance is achieved, the service obtained in the current period, according to the fair value
of the liabilities borne by the Company, and basing on the best estimate for the condition of exercising rights, willbe recorded into relevant costs or expenses on each and every balance sheet date during the waiting period, andcorrespondingly recorded into the liabilities. Each and every balance sheet date and settlement before relevantliability settlement, the fair value of liability will be remeasured, of which changes occurred will be counted intothe current period.
38. Preferred shares, perpetual bonds and other financial instruments
At the time of initial recognition, the Company classifies the financial instrument or its components as a financialasset, financial liability or equity instrument based on the terms of the contract and the economic substancereflected in the issued preferred stock / perpetual bond, and not solely in legal form.In case that the financial instrument such as perpetual bond / preferred stock issued by the Company meet one ofthe following conditions, it, in whole or in part thereof, is classified as financial liabilities at the time of initialrecognition:
(1) There are contractual obligations which the Company cannot unconditionally avoid fulfilling by deliveringcash or other financial assets;
(2) It contains contractual obligations of delivering a variable number of its own equity instruments forsettlement;
(3) It contains derivative instrument (such as equity transfer, etc.) that is settled with its own equity, and suchderivative instrument does not exchange a fixed number of its own equity instruments for a fixed amount ofcash or other financial assets for settlement;
(4) There are contract clauses that indirectly form contractual obligations;
(5) When the issuer liquidates, the perpetual bonds are in the same order of liquidation as the ordinary bonds andother debts issued by the issuer.In case that the financial instrument such as perpetual bond / preferred stock issued by the Company does notmeet one of the above conditions, it, in whole or in part thereof, is classified as equity instrument at the time ofinitial recognition.
39. Income
Accounting policies for income recognition and measurementThe Company has fulfilled its contractual obligation to recognize income when the customer acquires control ofthe relevant goods or services. Obtaining control of the relevant goods or services is the ability to dominate theuse of the goods or services and gain almost all economic benefits from them.If the contract contains two or more performance obligations, the Company shall, on the commencement date ofthe contract, apportion the transaction price to each individual performance obligation according to the relativeproportion of the individual selling price of the goods or services committed by each individual performanceobligation. The Company's income shall be measured according to the transaction price apportioned to eachindividual performance obligation.The transaction price means the amount of consideration that the Company is expected to be entitled to collect forthe transfer of goods or services to the customer, excluding payments collected on behalf of third parties andamounts expected to be returned to the customer. The Company determines the transaction price in accordance
with the terms of the contract and in combination with its past practices, and in determining the transaction price,it takes into account the impact of variable consideration, material financing elements in the contract, non-cashconsideration, consideration payable to customers and other factors. The Company determines the transactionprice including the variable consideration by an amount not exceeding the amount of accumulated recognizedincome which is highly unlikely to be materially reversed when the relevant uncertainty is eliminated. If there is amaterial financing component in the contract, the Company shall determine the transaction price based on theamount payable in cash when the customer acquires control of the goods or services, and shall amortize thedifference between the transaction price and the contract consideration by the effective interest method during thecontract period.If one of the following conditions is satisfied, it shall be deemed to have performed its performance obligationwithin a certain period of time; otherwise, it shall be deemed to have performed its performance obligation at acertain time point:
? The customer obtains and consumes the economic benefits arising from the Company’s performance at thesame time of the Company’s performance.? The customer can control the goods under construction during the Company’s performance.? The goods produced by the Company during the performance are of irreplaceable use, and the Companyshall be entitled to receive payment for the accumulated part of the performance completed so far during thewhole contract period.For the performance obligations performed within a certain period of time, the Company shall recognize theincome in accordance with the performance progress during that period, except where the performance progresscannot be reasonably determined. Taking into account the nature of the goods or services, the Company will usethe output method or input method to determine the performance schedule. If the performance schedule cannot bereasonably determined and the cost already incurred is expected to be compensated, the Company shall recognizethe income according to the cost already incurred until the performance schedule can be reasonably determined.For performance obligations performed at a certain time point, the Company recognizes income at the time pointwhen the customer acquires control of the relevant goods or services. In determining whether the customer hasacquired control of goods or services, the Company considers the following indications:
? The Company has the current collection right for the goods or services, that is, the customer has the currentpayment obligation for the goods or services.? The Company has transferred legal ownership to the goods to the customer, that is, the customer has legalownership of the goods.? The Company has physically transferred the goods to the customer, that is, the customer has physicallypossessed the goods.? The Company has transferred the main risk and remuneration in the ownership of the goods to the customer,that is, the customer has acquired the main risk and remuneration in the ownership of the goods.? The customer has accepted the goods or services, etc.
40. Government subsidies
(1) Type
Government subsidies refer to the monetary assets or non-monetary assets obtained free of charge by theCompany from the government, and are classified into asset related government subsidies and the income relatedgovernment subsidies.Government subsidies related to assets refer to the government subsidies obtained by the Company for the
purchase and construction of long-term assets or the formation of long-term assets by other means. Governmentsubsidies related to income refer to government subsidies in addition to government subsidies related to assets.The Company's classifying government subsidies as related to assets is subject to the following specific criteria:
the government documents clearly stipulate the use of funds, and the expected use direction of the funds isexpected to form related assets;The Company's classifying government subsidies as related to income is subject to the following specific criteria:
the government documents do not stipulate the use purpose, and the expected use direction of the funds is tosupplement working capital;If the subsidy object is not clearly specified in the government documents, the judgment basis for the Company toclassify the government subsidy as related to assets or related to income is as follows: except that the Companydesignates its purpose as related to assets, it will be included in the current profit and loss.
(2) Recognition time point
Government subsidies will be recognized when the conditions attached to them are met and received by theCompany.
(3) Accounting treatment
The government subsidies related to assets write down the book value of the relevant assets or is recognized asdeferred income. If it is recognized as deferred income, it shall be recorded into the current profit and loss bystages in accordance with reasonable and systematic methods during the service life of the relevant assets (if it isrelated to the daily activities of the Company, it shall be recorded into other income; those not related to the dailyactivities of the Company shall be included in non-revenue);If the government subsidy related to the income is used to compensate the Company's related costs, expenses orlosses in the following period, it shall be recognized as deferred income and recorded into the current profit andloss during the period of recognition of the relevant costs, expenses or losses (if it is related to the Company'sdaily activities, it shall be recorded into other income; if it is not related to the daily activities of the Company, itshall be included in non-revenue) or write down relevant costs, expenses or losses; those used to compensate therelevant costs, expenses or losses incurred by the Company shall be directly recorded into the current profit andloss (if it is related to the daily activities of the Company shall be recorded into other income; if it is not related tothe daily activities of the Company, it shall be included in non-revenue or write down relevant costs, expenses orlosses.The interest subsidy on policy-based preferential loans obtained by the Company shall be accounted for under thefollowing two conditions:
① If the finance department allocates the interest subsidy fund to the lending bank, and the lending bank providesthe loan to the Company at the policy-based preferential interest rate, the Company shall take the loan amountactually received as the entry value of the borrowing, and calculate the relevant borrowing cost in accordance withthe loan principal and the policy-based preferential interest rate.
② If the finance department allocates the interest subsidy fund directly to the Company, the Company will offsetthe corresponding interest subsidy against the related borrowing costs.
41. Deferred income tax assets and deferred income tax liabilities
The income tax includes current income tax and deferred income tax. Except for the income tax arising from thebusiness combination and the transaction or item directly booked into the owners’ equity (including othercomprehensive income), the Company will record the current income tax and deferred income tax into the currentprofit and loss.
Deferred income tax assets and deferred income tax liabilities shall be calculated and recognized on the basis ofthe difference (temporary difference) between the tax basis of the assets and liabilities and their book value.For the deferred income tax assets recognized through deductible temporary difference, it is limited to the amountof taxable income which is likely to be obtained to offset the deductible temporary difference in the future period.For the deductible loss and tax deduction that can be carried forward to the subsequent year, the correspondingdeferred income tax assets are recognized within the limit of the future taxable income amount that is possiblyobtained to deduct the deductible loss and tax deduction.For taxable temporary differences, except in special circumstances, the deferred income tax liability is recognized.Special circumstances in which deferred income tax assets or deferred income tax liabilities are not recognizedinclude:
? Initial recognition of goodwill;? Transaction or item that is neither a business combination nor does it affect accounting profit and taxable
income (or deductible loss) at the time of occurrence.For the taxable temporary difference related to the investment of the subsidiaries, associated enterprises and jointventures, relevant deferred income tax liabilities are not recognized, unless the Company can control thetemporary difference write-back time and the temporary difference will probably not be written back in theforeseeable future. For the deductible temporary difference related to the investment of the subsidiaries, jointventures and cooperative enterprises, deferred income tax assets are recognized when it is likely to write back thetemporary difference in the foreseeable future or to obtain the income tax payable used to offset the deductibletemporary difference in the future.The deferred income tax assets and deferred income tax liabilities are measured on the balance sheet dateaccording to the tax law and the applicable tax rate in the period of expected recovery of relevant assets ofliquidation of relevant liabilities.On the balance sheet date, the Company reviews the book value of the deferred income tax assets. If it is likelynot to obtain sufficient income tax payable to deduct the interests of the deferred income tax assets in the future,the book value of the deferred income tax assets is written down. If it is likely to obtain sufficient income taxpayable, the amount written down is written back.When the Company has the legal right to settle with net amount and intends to settle with net amount or obtain theassets and liquidate the liabilities simultaneously, the income tax assets and income tax liabilities in the currentperiod are presented by the net amount after offset.On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are listed in netamount after offset when both of the following conditions are met:
? The tax payer has the legal right to settle the current income tax assets and current income tax liabilities on a
net basis;? The deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the
same tax col lection and management department from the same subject of tax payment or from different
subjects of tax payment but the subject of tax payment involved intends to settle the current income tax
assets and liabilities with the net amount or obtain the assets and liquidate the liabilities simultaneously in
each future important period when the deferred income tax assets and liabilities are written back.
42. Leased
(1) Accounting treatment method of operating lease
Accounting policy effective on January 1, 2021.Lease refers to a contract in which the lessor transfers the right to use the asset to the lessee within a certain periodof time to for consideration. On the commencement date of the contract, the Company assesses whether thecontract is a lease or contains a lease. If a party to the contract transfers the right to control the use of one or moreidentified assets within a certain period in exchange for consideration, the contract is a lease or contains a lease.
① Split of lease contracts
When a contract contains several separate leases, the Company will split the contract and conduct accountingtreatments for each of the separate leases.When a contract contains both lease and non-lease components, the Company splits the lease and non-leasecomponents, and the lease component is accounted for in accordance with the lease standard, while the non-leasecomponent should be accounted for in accordance with other applicable corporate accounting standards.
② Consolidation of lease contracts
If two or more contracts containing leases entered into by the Company and the same counterparty or its relatedparties at the same or at a similar time, the contracts shall be combined into one contract for accounting purposesin any of the following conditions:
(1) If the two or more contracts are entered into for a general business purpose and constitute a package deal, thegeneral business purpose of the contracts cannot be identified unless considered as a whole.
(2) The amount of consideration for one of the two or more contracts depends on the pricing or performance of
the other contract(s).
(3) The rights to use assets assigned by the two or more contracts together constitute a single lease.
③ Accounting treatment for the Company as a lessee
At the beginning of the lease term, in addition to short-term leases and low-value asset leases that apply simplifiedprocessing, the Company recognizes the right-of-use assets and lease liabilities for leases.
(1) Short-term leases and low-value asset leases
Short-term leases are leases that do not include purchase options and the lease term does not exceed 12 months. Alow-value asset lease is a lease with a lower value when the single leased asset is a new asset.
(2) See this Note V. 29/ V. 35 for accounting policies for right-of-use assets and lease liabilities.
④ Accounting treatment for the Company as a lessor
(1) Classification of lease
The Company classifies leases as finance leases and operating leases at the lease commencement date. Financelease refers to a lease that has substantially transferred almost all the risks and rewards related to the ownership ofthe leased asset, and its ownership may or may not be transferred in the end. Operating leases refer to leases otherthan financial leases.The Company usually classifies a lease as a finance lease if it is in any one or more of the followingcircumstances:
1) The ownership of the leased asset is transferred to the lessee when the term of lease expires;
2) The lessee has the option to buy the leased asset at a price which is expected to be lower enough than the
fair value of the leased asset at the date when the option becomes exercisable. Thus, on the leasebeginning date, it can be reasonably determined that the option will be exercised by the lessee;
3) Even if the ownership of the asset is not transferred, the lease term covers the major part of the use life of
the leased asset;
4) The present value of the lease payments on the lease beginning date amounts to substantially all of thefair value of the leased asset;
5) The leased assets are of a specialized nature that only the lessee can use them without making majormodifications.The Company may also classify a lease as a finance lease if it has any one or more of the following signs:
1) If the lessee cancels the lease, the loss caused by the cancellation to the lessor shall be borne by the
lessee.
2) Gains or losses arising from fluctuations in the fair value of the residual value of assets shall be borne bythe lessee.
3) The lessee has the ability to continue the lease to the next period at a rent much lower than the marketlevel.
(2) Accounting treatment method of finance lease
On the commencement date of the lease term, the Company recognizes finance lease receivables for financeleases and derecognizes the finance lease assets.When the finance lease receivable is initially measured, the sum of the unguaranteed residual value and thepresent value of the lease receipts that have not been received at the commencement date of the lease, discountedat the interest rate implicit in the lease, is used as the entry value of the finance lease receivables. Lease receiptsinclude:
1) Fixed payment and actual fixed payment after deducting the relevant amount of lease incentives;
2) Variable lease payments that depend on an index or rate;
3) When it is reasonably determined that the lessee will exercise the purchase option, the lease paymentincludes the exercise price of the purchase option;
4) If the lease term reflects that the lessee will exercise the option to terminate the lease, the lease receivableincludes the amount required to be made by the lessee at the time of exercising the option to terminate thelease;
5) The residual value of the guarantee provided to the lessor by the lessee, a party related to the lessee, andan independent third party that has the financial ability to perform the guarantee obligation.The Company calculates and recognizes interest income for each period of the lease term based on the fixedinterest rate implicit in the lease. Variable lease payments obtained that are not included in the net leaseinvestment measurement are included in profit or loss when they are actually incurred.
(3) Accounting treatment method of operating lease
During each period of the lease term, the Company adopts the straight-line method or other systematic andreasonable methods to recognize the lease receipts from operating leases as rental income; the initial direct costsincurred related to operating leases are capitalized and amortized over the lease term on the same basis as rentalincome, and is included in the current profit and loss in installments; variable lease payments related to operatingleases that are not included in the lease receipts are included in the current profit and loss when they actuallyoccur.
⑤ Sale-leaseback
The Company evaluates and determines whether the asset transfer in the sale and leaseback transaction is a sale inaccordance with the principles described in this Note “V. 39 Revenue”.
(1) As a lessee
If the transfer of an asset in a sale-and-leaseback transaction is a sale, the Company, as the lessee, measures theright-of-use asset resulting from the sale-and-leaseback at the portion of the original asset's book value that relates
to the right to use acquired by the leaseback, and recognizes a gain or loss related to the right transferred to thelessor only; if the transfer of an asset in a sale-and-leaseback transaction is not a sale, the Company, as the lessee,continues to recognize the transferred asset and at the same time recognizes a financial liability equal to thetransfer income. See this Note “V. 10 Financial instruments” for the accounting treatment of financial liabilities.
(2) As a lessor
If the transfer of assets in a sale-and-leaseback transaction is a sale, the Company, as a lessor, accounts for thepurchase of the assets, and accounts for the lease of the assets in accordance with the aforementioned policy of “4.The Company as a lessor"; if the transfer of assets in a sale-and-leaseback transaction is not a sale, the Company,as a lessor, does not recognize the transferred assets, but recognizes a financial asset equal to the transfer income.See this Note “V. 10 Financial instruments” for the accounting treatment of financial assets.
Accounting policy before January 1, 2021Leases are classified into finance lease and operating lease. Finance lease refers to the lease where all risks andrewards related to asset ownership have been substantively transferred. Operating leases refer to leases other thanfinancial leases.
1. Accounting treatment method of operating lease
(1) The lease payments made by the Company for leased assets shall be amortized on a straight-line basis(reminder: if other reasonable methods are used, please specify) over the entire lease term without deductingthe rent-free period and included in the current expense. The initial direct expenses paid by the Company inconnection with the lease transaction are included in the current expenses.When the lessor of the asset bears the lease-related expenses that should be borne by the Company, the Companyshall deduct such expenses from the total rent, apportion the deducted rent expenses in the lease term and recordthem into the current expenses.
(2) The lease payments received by the Company for leasing assets shall be amortized on a straight-line basis(reminder: if other reasonable methods are used, please specify) over the entire lease term without deductingthe rent-free period and recognized as lease-related income. The initial direct expenses paid by the Companyin connection with the lease transaction shall be included in the current expenses; if the amount is large, itwill be capitalized and recorded into the current income by stages according to the same basis as thelease-related income recognition throughout the lease period.When the Company bears the lease-related expenses that should be borne by the leasee, the Company shall deductsuch expenses from the total rental income, apportion them according to the deducted rental expenses during thelease period.
2. Accounting treatment method of finance lease
(1) Assets acquired under finance leases: upon commencement of the lease term, the Company takes the lower
of the fair value of the leased asset on the lease commencement date and the present value of the minimumlease payment as the entry value of the leased asset, and the minimum lease payment as the entry value ofthe long-term payables, and their balance as the unrecognized finance fees. The Company adopts theeffective interest rate method to amortize the unrecognized financing costs within the period of the assetlease and record them into financial expenses. The initial direct expenses incurred by the Company shall beincluded in the value of the leased assets.
(2) Assets rent out under finance leases: upon commencement of the lease, the Company recognizes the
difference between the s um of the receivable finance lease amount and the unguaranteed residual value andits present value as unrealized financing income, and recognizes it as rental income in each period in whichthe rent is received in the future. The initial direct expenses incurred by the Company in connection with the
leasing transaction shall be included in the initial measurement of the finance lease receivable, and theamount of income recognized during the lease term shall be reduced.
(2) Accounting treatment method of finance lease
43. Other significant accounting policy and accounting estimate
(1) Discontinued operation
Discontinued operation is a separate component that meets one of the following conditions and has been disposedof or classified into the held for sale category by the Company:
① The component represents an independent principal business or an independent principal area of operation;
② The component is part of an associated plan proposed to dispose of an independent principal business or anindependent principal area of operation;
③ The component is a subsidiary acquired exclusively for resale.
(2) Hedge accounting
Classification of hedging
① A fair value hedge refers to a hedge of the fair value change risk of an asset or liability that has beenrecognized and a certain commitment that has not been recognized (except foreign exchange risk).
② A cash flow hedge refers to a hedge of the risk of changes in cash flow arising from a particular type of riskrelating to a recognized asset or liability, an anticipated transaction that is likely to occur, or the foreign exchangerisk contained in an unrecognized firm commitment
③ A hedge of net investment in overseas operations refers to a hedge of foreign exchange risks of net investmentof overseas operations. Net investment in overseas operations refers to the equity share of the enterprise in the netassets of overseas operations.
Designation of hedging relationship and identification of hedging effectivenessAt the beginning of the hedging relationship, the Company has a formal designation of the hedging relationshipand has prepared formal written documents on the hedging relationship, risk management objectives and hedgingstrategies. The documents specify the nature and quantity of the hedging instrument, the nature and quantity of thehedged items, the nature of the hedged risk, type of hedging, and the Company's evaluation of the effectiveness ofthe hedging instrument. Hedging effectiveness refers to the degree to which the change in the fair value or cashflow of the hedging instrument can offset the change in the fair value or cash flow of the hedged item caused bythe hedged risk.The Company continuously evaluates the effectiveness of hedging and judges whether the hedging meets therequirements of hedging accounting for effectiveness during the accounting period in which the hedgingrelationship is designated. If it is not satisfied, the hedging relationship shall be terminated.The application of hedge accounting shall meet the following requirements for the effectiveness of hedging:
① There is an economic relationship between the hedged item and the hedging instrument.
② In the value changes caused by the economic relationship between the hedged item and the hedging instrument,the influence of credit risk does not play a dominant role.
③ Adopting the appropriate hedge ratio will not cause the imbalance between the relative weight of the hedged
item and the hedging instrument, thus generating accounting results inconsistent with the hedge accountingobjectives. If the hedge ratio is no longer appropriate, but the hedging risk management objectives have notchanged, the number of hedged items or hedging instruments shall be adjusted to make the hedge ratio meet therequirements of effectiveness again.
Hedge accounting treatment methods
① Fair value hedging
Changes in the fair value of hedge derivative instruments are recorded in the current profit and loss. Changesformed by the fair value of the hedged item due to the hedging risk shall be included in the current profit and loss,and the book value of the hedged item shall be adjusted simultaneously.For fair value hedging related to financial instruments measured at amortized cost, the adjustments to the bookvalue of the hedged item are amortized during the remaining period between the adjustment to the due date andrecorded in the current profit and loss. Amortization under the effective interest rate method may commenceimmediately after the book value adjustment and shall not be later than the adjustment of fair value changes in thetermination of hedging risks by the hedged item.If the hedged item is terminated, the unamortized fair value is recognized as the current profit and loss.Where the hedged item is a firm commitment that has not been recognized, the accumulative change in the fairvalue of the firm commitment caused by the hedging risk is recognized as an asset or liability, and the relevantgains or losses are recorded into the current profits and losses. Changes in the fair value of hedging instrumentsare also recorded in the current profit and loss.
② Cash flow hedging
The part of the gain or loss of the hedging instrument that belongs to the effective hedging shall be directlyrecognized as other comprehensive income, while the part that belongs to the invalid hedging shall be recordedinto the current profit and loss.If the hedged transaction affects the current profit and loss, such as when the hedged financial income or financialexpense is recognized or when the expected sale occurs, the amount recognized in other comprehensive incomewill be transferred to the current profit and loss. If a hedged item is the cost of a non-financial asset ornon-financial liability, the amount originally recognized in other comprehensive income amount is transferred outand recorded into the amount of initial recognition of the non-financial asset or non-financial liability (or theamount originally recognized in other comprehensive income is transferred out during the same period as thenon-financial asset or non-financial liability affecting the profit and loss, and recorded into the current profit andloss).If the expected transaction or firm commitment is not expected to occur, the accumulated gains or losses of thehedging instrument previously recorded in other comprehensive income are transferred out and recorded in thecurrent profit and loss. If the hedging instrument has expired, been sold, the contract terminated or exercised (butnot replaced or renewed), or the designation of the hedging relationship is withdrawn, the amount previouslyrecorded in other comprehensive income is not transferred out until the anticipated transaction or firmcommitment affects the current profit or loss.
③ Hedging of net investment in overseas operations
The hedging of net investment in overseas operations, including the hedging of monetary items that are part of thenet investment, shall be treated similarly to the cash flow hedging. In the gain or loss of the hedging instrument,the part that is recognized as effective hedging is recorded in other comprehensive income, while the part that isinvalid hedging is recognized as current profit and loss. When disposing of overseas operations, any accumulatedgains or losses previously recorded in other comprehensive income will be transferred out and recorded into
current profit and loss.
(3) Segmental reporting
The Company determines the operating segments based on the internal organizational structure, managementrequirements and internal reporting system, and determines the reporting segments based on the operatingsegments and discloses the information of the segments.Operating segments refer to the components of the Company that meet the following conditions at the same time:
(1) The component is able to generate revenue and incur expenses in its daily activities; (2) The management ofthe Company can regularly evaluate the operating results of the component to determine the allocation ofresources to it and evaluate its performance; (3) The Company can obtain relevant accounting information such asthe financial position, operating results and cash flow of the component. If two or more operating segments havesimilar economic characteristics and meet certain conditions, they may be merged into one operating segment.
44. Significant accounting policy and accounting estimate change
(1) Changes in significant accounting policies
√Applicable □ Not applicable
| Content and reasons of changes in accounting policies | Approval procedures | Remark |
| Since January 1, 2021, the Company has implemented the Accounting Standards for Business Enterprises No. 21 - Leases (revised 2018) developed by Ministry of Finance. |
1. Impacts the new lease standards on the Company
Since January 1, 2021, the Company has implemented the Accounting Standards for Business Enterprises No. 21 -Leases (revised 2018) developed by Ministry of Finance. See this Note V. 42. for details of the revised accountingpolicy.The cumulative effect amount of the first execution adjusts the amounts of the relevant items in the financialstatements at the beginning of the period in which the first execution occurs (January 1, 2021) and does not adjustthe information for comparable periods.Impacts of the new lease standards on the relevant items in the balance sheet at the beginning of the current periodare listed as follows:
| Item | December 31, 2020 | Cumulative effect amount | January 01, 2021 | ||
| Reclassi?cations | Remeasurement | Subtotal | |||
| Right-of-use assets | 504,205,737.73 | 504,205,737.73 | 504,205,737.73 | ||
| Total assets | 504,205,737.73 | 504,205,737.73 | 504,205,737.73 |
| Lease liabilities | 564,334,375.76 | 564,334,375.76 | 564,334,375.76 | ||
| Total liabilities | 564,334,375.76 | 564,334,375.76 | 564,334,375.76 |
| Undistributed profit | 5,126,630,011.14 | (60,128,638.03) | (60,128,638.03) | 5,066,501,373.11 | |
| Total owners' equities | 5,126,630,011.14 | (60,128,638.03) | (60,128,638.03) | 5,066,501,373.11 |
Note: The above table presents only the affected items in the financial statement and does not include theunaffected ones; therefore, the subtotals and totals disclosed cannot be recalculated from the figures presented inthe above table.
(2) Changes in major accounting estimates
□ Applicable √ Not applicable
(3) The adjustment of the financial statements at the beginning of the year for the first implementation ofthe new lease standards from 2021
ApplicableWhether to adjust the balance sheet accounts at the beginning of the year
√ Yes □ No
Consolidated Balance Sheet
Unit: yuan
| Item | December 31, 2020 | January 1, 2021 | Adjusted figure |
| Current assets: | |||
| Cash and cash equivalents | 4,162,539,245.78 | 4,162,539,245.78 | |
| Deposit reservation for balance | |||
| Lending funds | |||
| Tradable financial assets | 4,131,178,589.44 | 4,131,178,589.44 | |
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 844,317,708.12 | 844,317,708.12 | |
| Accounts receivable financing | 18,182,662.70 | 18,182,662.70 | |
| Advances to suppliers | 124,031,239.05 | 124,031,239.05 | |
| Insurance premiums receivables | |||
| Reinsurance premium receivable |
| Receivable reserve for reinsurance contract | |||
| Other receivables | 458,174,652.72 | 458,174,652.72 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Monetary assets purchased under resale agreements | |||
| Inventory | 1,216,486,940.21 | 1,216,486,940.21 | |
| Contract assets | |||
| Assets held for sales | |||
| Non-current assets due within a year | |||
| Other current assets | 35,184,227.09 | 35,184,227.09 | |
| Total current assets | 10,990,095,265.11 | 10,990,095,265.11 | |
| Non-current assets: | |||
| Loans and advances | |||
| Debt investment | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investment | 13,424,230.41 | 13,424,230.41 | |
| Other equity instrument investments | |||
| Other non-current financial assets | |||
| Investment in real estates | |||
| Fixed assets | 1,400,749,050.00 | 1,400,749,050.00 | |
| Construction in progress | 61,383,340.97 | 61,383,340.97 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 504,205,737.73 | 504,205,737.73 |
| Intangible assets | 208,325,103.79 | 208,325,103.79 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term unamortized expenses | 121,335,007.33 | 121,335,007.33 | |
| Deferred income tax assets | 143,132,351.08 | 143,132,351.08 | |
| Other non-current assets | 63,807,415.75 | 63,807,415.75 | |
| Total non-current assets | 2,012,156,499.33 | 2,516,362,237.06 | 504,205,737.73 |
| Total assets | 13,002,251,764.44 | 13,506,457,502.17 | 504,205,737.73 |
| Current liabilities | |||
| Short-term loans | 150,071,416.66 | 150,071,416.66 | |
| Borrowings from the Central Bank | |||
| Borrowing funds | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 29,418,100.00 | 29,418,100.00 | |
| Accounts payable | 726,577,306.94 | 726,577,306.94 | |
| Advance from customers | |||
| Contract liabilities | 530,188,257.63 | 530,188,257.63 | |
| Monetary assets sold for repurchase | |||
| Deposits from customers and interbank | |||
| Acting trading securities | |||
| Acting underwriting securities | |||
| Payroll payable | 169,957,077.81 | 169,957,077.81 | |
| Taxes payable | 444,381,369.49 | 444,381,369.49 |
| Other payables | 352,543,008.89 | 352,543,008.89 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Fees and commissions payable | |||
| Dividend payable for reinsurance | |||
| Liabilities held for sales | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 23,638,266.47 | 23,638,266.47 | |
| Total current liabilities | 2,426,774,803.89 | 2,426,774,803.89 | |
| Non-current liabilities | |||
| Reserve fund for insurance contracts | |||
| Long-term loans | |||
| Bonds payable | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Lease liabilities | 564,334,375.76 | 564,334,375.76 | |
| Long-term payable | |||
| Long-term payroll payable | |||
| Estimated liabilities | |||
| Deferred income | 94,921,260.87 | 94,921,260.87 | |
| Deferred income tax liabilities | 12,165,608.24 | 12,165,608.24 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 107,086,869.11 | 671,421,244.87 | 564,334,375.76 |
| Total liabilities | 2,533,861,673.00 | 3,098,196,048.76 | 564,334,375.76 |
| Owner's equity: |
| Capital stock | 426,492,308.00 | 426,492,308.00 | |
| Other equity instruments | |||
| Including: Preferred stock | |||
| Perpetual bond | |||
| Capital reserve | 4,481,709,983.24 | 4,481,709,983.24 | |
| Less: treasury stock | |||
| Other comprehensive income | (1,111,035.08) | (1,111,035.08) | |
| Special reserve | |||
| Surplus reserve | 420,212,778.13 | 420,212,778.13 | |
| General risk reserve | |||
| Undistributed profit | 5,126,630,011.14 | 5,066,501,373.11 | (60,128,638.03) |
| Total shareholders’ equity attributable to the owners of parent company | 10,453,934,045.43 | 10,393,805,407.40 | (60,128,638.03) |
| Noncontrolling interest | 14,456,046.01 | 14,456,046.01 | 0.00 |
| Total shareholders’ equity | 10,468,390,091.44 | 10,408,261,453.41 | (60,128,638.03) |
| Total liabilities and equity | 13,002,251,764.44 | 13,506,457,502.17 | 504,205,737.73 |
Adjustment descriptionBalance sheet of parent company
Unit: yuan
| Item | December 31, 2020 | January 1, 2021 | Adjusted figure |
| Current assets: | |||
| Cash and cash equivalents | 3,669,286,043.43 | 3,669,286,043.43 | |
| Tradable financial assets | 3,779,510,798.34 | 3,779,510,798.34 | |
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 679,644,839.39 | 679,644,839.39 | |
| Amounts receivable financing | 26,281,743.01 | 26,281,743.01 | |
| Advances to suppliers | 1,141,185,179.88 | 1,141,185,179.88 |
| Other receivables | 361,160,139.37 | 361,160,139.37 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventory | 244,264,320.15 | 244,264,320.15 | |
| Contract assets | |||
| Assets held for sales | |||
| Non-current assets due within a year | |||
| Other current assets | 2,986,600.60 | 2,986,600.60 | |
| Total current assets | 9,904,319,664.17 | 9,904,319,664.17 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investment | 738,074,914.56 | 738,074,914.56 | |
| Other equity instrument investments | |||
| Other non-current financial assets | |||
| Investment real estates | |||
| Fixed assets | 47,677,210.41 | 47,677,210.41 | |
| Construction in progress | 625,889.08 | 625,889.08 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 11,093,821.43 | 11,093,821.43 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term unamortized expenses | 4,270,865.79 | 4,270,865.79 |
| Deferred income tax assets | 18,761,956.53 | 18,761,956.53 | |
| Other non-current assets | 7,420,450.61 | 7,420,450.61 | |
| Total non-current assets | 827,925,108.41 | 827,925,108.41 | |
| Total assets | 10,732,244,772.58 | 10,732,244,772.58 | |
| Current liabilities | |||
| Short-term loans | 120,071,416.66 | 120,071,416.66 | |
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 8,757,000.00 | 8,757,000.00 | |
| Accounts payable | 734,959,933.53 | 734,959,933.53 | |
| Advance from customers | |||
| Contract liabilities | 483,370,540.77 | 483,370,540.77 | |
| Payroll payable | 57,086,457.61 | 57,086,457.61 | |
| Taxes payable | 332,551,933.15 | 332,551,933.15 | |
| Other payables | 261,840,719.70 | 261,840,719.70 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Liabilities held for sales | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 14,855,171.12 | 14,855,171.12 | |
| Total current liabilities | 2,013,493,172.54 | 2,013,493,172.54 | |
| Non-current liabilities | |||
| Long-term loans | |||
| Bonds payable | |||
| Including: preferred stock | |||
| Perpetual bond |
| Lease liabilities | |||
| Long-term payable | |||
| Long-term payroll payable | |||
| Estimated liabilities | |||
| Deferred income | 22,798,583.10 | 22,798,583.10 | |
| Deferred income tax liabilities | 1,426,619.75 | 1,426,619.75 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 24,225,202.85 | 24,225,202.85 | |
| Total liabilities | 2,037,718,375.39 | 2,037,718,375.39 | |
| Owner's equity: | |||
| Capital stock | 426,492,308.00 | 426,492,308.00 | |
| Other equity instruments | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Capital reserve | 4,507,116,745.59 | 4,507,116,745.59 | |
| Less: treasury stock | |||
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 411,397,111.21 | 411,397,111.21 | |
| Undistributed profit | 3,349,520,232.39 | 3,349,520,232.39 | |
| Total owners' equities | 8,694,526,397.19 | 8,694,526,397.19 | |
| Total liabilities and owners' equities | 10,732,244,772.58 | 10,732,244,772.58 |
Adjustment description
(4) Description of retrospective adjustment of the previous comparative data for the first implementationof the new lease standard from 2021
□ Applicable √ Not applicable
45. Others
VI. Taxes
1. Main tax categories and tax rates
| Tax category | Taxation basis | Tax rate |
| Added value tax | Calculate the substituted money on VAT on the basis of the income from selling goods and taxable services according to the tax law. After deduction of the withholdings on VAT allowed to deduct in current period, the balance is the VAT payable | 13%, 9%, 6%, 3% |
| Consumption tax | N/A | N/A |
| Urban maintenance and construction tax | Actual paid value added tax (including the exemption part) and consumption tax | 7%, 5% |
| Corporate income tax | Levied by income tax payable | 25%, 20%, 16.5%, 15% |
| Education surcharge | Actual paid value added tax (including the exemption part) and consumption tax | 3% |
If there are taxpayers with different enterprise income tax rates, the disclosure statement shall present
| Name of taxpayer | Income tax rate |
| The Company, Winner Medical (Huanggang) | 15% |
| Winner Medical (Tianmen) | 15% |
| Winner Medical (Jingmen), Winner Medical (Chongyang), Winner Medical (Jiayu) | 15% |
| Winner Medical Malaysia | 25% |
| Qianhai Purcotton | 15% |
| Winner Medical (Hong Kong) | 16.5% |
| Pure HB (Shanghai) | 20% |
| Other subsidiaries within the scope of consolidation | 25% |
2. Tax preference
(1) On October 16, 2018, according to the Notice on Publicizing the List of First Batch of High-tech Enterprises
to be Identified in Shenzhen in 2018 issued by the Leading Group Office of National High-tech EnterpriseAccreditation Administration, the Company passed the High-tech Enterprise Qualification Reexamination(Certificate No. GR201844200237). The prepayment of corporate income tax shall be at a rate of 15% in2021.
(2) According to the Notice on Publicizing the List of the Second Batch of High-tech Enterprises to be Identified
in Hubei Province in 2019, Winner Medical (Huanggang) was identified as the second batch of high-tech
enterprises with the certificate number GR201942002414. In 2021, it can pay corporate income tax at thepreferential tax rate of 15.00%. The prepayment of corporate income tax shall be at a rate of 15% in 2021.
(3) Qianhai Purcotton was established on July 21, 2015, with its domicile located in Shenzhen QianhaiShenzhen-Hong Kong Cooperation Zone. According to the Notice of Enterprise Income Tax PreferentialPolicies and Preferential Directory in Shenzhen Qianhai Shenzhen-Hong Kong Modern Service IndustryCooperation Zone of Hengqin New Fujian Pingtan Comprehensive Experimental Area (C.S. [2014] No. 26)issued by the Ministry of Finance and State Taxation Administration, Qianhai Purcotton pays its enterpriseincome tax at the tax rate of 15.00%.
(4) According to the Notice on Publicizing the List of First Batch of High-tech Enterprises to be Identified inHubei Province in 2018 issued by the Leading Group Office of National High-tech Enterprise AccreditationAdministration on November 15, 2018, Winner Medical (Jingmen) obtained the High-tech EnterpriseCertificate (Certificate No. GR201842001123) on November 15, 2018. The prepayment of corporate incometax shall be at a rate of 15% in 2021.
(5) According to the Notice on Publicizing the List of Second Batch of High-tech Enterprises to be Identified inHubei Province in 2018 issued by the Leading Group Office of National High-tech Enterprise AccreditationAdministration on November 30, 2018, Winner Medical (Tianmen)obtained the High -tech EnterpriseCertificate (Certificate No. GR201842001959) on November 30, 2018. The prepayment of corporate incometax shall be at a rate of 15% in 2021. According to the Notice on Publicizing the List of Second Batch ofHigh-tech Enterprises to be Identified in Hubei Province in 2018 on November 30, 2018, Winner Medical(Chongyang) and Winner Medical (Jiayu) obtained the High-tech Enterprise Certificates (Certificate No.GR201842001585, GR201842002393) on November 30, 2018. The prepayment of corporate income taxshall be at a rate of 15% in 2021.
(6) Pure HB (Shanghai) was established on March 16, 2018 and registered in Pudong New Area, Shanghai City.According to the Notice on Implementing the Preferential Tax Reduction Policy for Small and Micro-sizedEnterprises (C.S. [2019] No. 13) issued by the Ministry of Finance and State Taxation Administration, thetaxable income of Pure HB (Shanghai) in 2021 shall not exceed 1 million yuan, which shall be reduced by25% and included into the taxable income, and the corporate income tax shall be paid at the tax rate of 20%.
3. Others
VII. Notes to Items in Consolidated Financial Statements
1. Cash and cash equivalents
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Cash on hand | 77,810.79 | 49,287.18 |
| Bank deposit | 4,663,700,220.18 | 4,149,685,407.20 |
| Other cash and cash equivalents | 36,751,496.88 | 12,804,551.40 |
| Total | 4,700,529,527.85 | 4,162,539,245.78 |
| Where: total amount deposited abroad | 14,925,419.89 | 95,608,086.45 |
| Total amount of funds with | 40,195,765.99 | 12,804,551.40 |
Other descriptionThe breakdown of monetary funds with restrictions on use due to mortgages, pledges or freezes, as well as those placed outsideChina with restrictions on repatriation of funds, is as follows:
restrictions on use due to mortgage, pledgeor freeze
Item
| Item | Ending book value | Causes for restriction |
| L/C deposit | 34,512,382.24 | It is mainly the deposit made for domestic Letters of Credit |
| Performance bond | 2,200,068.49 | It is mainly the deposit made for transactions with customers |
| Other restricted monetary fund balances | 3,483,315.26 | It refers to the balance of special deposit accounts for restricted non-budget units opened by Shenzhen Purcotton in accordance with the regulations of prepaid card issuance formulated by the Ministry of Commerce. |
| Total | 40,195,765.99 |
2. Tradable financial assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Financial assets measured with fair value and with the changes included in current profit and loss | 2,707,384,233.24 | 4,131,178,589.44 |
| Including: | ||
| Others | 2,207,384,233.24 | 3,931,178,589.44 |
| Trust products | 500,000,000.00 | 200,000,000.00 |
| Including: | ||
| Total | 2,707,384,233.24 | 4,131,178,589.44 |
Other description: Other components of tradable financial assets include: the invested principal of structural deposit is2,180,000,000.00 yuan and its fair value change income is 9,852,767.52 yuan, and the fair value change income from future foreignexchange settlement is 17,531,465.72 yuan.
3. Derivative financial assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Derivative financial assets |
Other description:
4. Notes receivable
(1) Classified presentation of notes receivable
Unit: yuan
| Item | Closing Balance | Beginning balance |
Unit: yuan
| Class | Closing Balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Including: | ||||||||||
| Including: | ||||||||||
Provision for bad debt by single item:
Unit: yuan
| Name | Closing Balance | |||
| Book balance | Provision for bad debt | Accruing proportion | Reasons for provision | |
Provision for bad debt by combination:
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
Description of the basis for determining the combination:
If the bad debt provision of notes receivable is withdrawn according to the general model of expected credit loss, please refer to thedisclosure method of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Others | |||
Where the amount of bad debt provision recovered or reversed is important:
□ Applicable √ Not applicable
(3) Notes receivable pledged by the Company at the end of the period
Unit: yuan
| Item | Pledged amount at the end of the period |
(4) Notes receivable endorsed or discounted by the Company at the end of the period and not expired yeton the balance sheet date
Unit: yuan
| Item | Amount with recognition terminated at the end of the period | Amount with recognition not terminated at the end of the period |
(5) Notes transferred to accounts receivable by the Company at the end of the period due to failure of thedrawer to perform
Unit: yuan
| Item | Amount transferred to accounts receivable at the end of the period |
Other description
(6) Notes receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important notes receivable:
Unit: yuan
| Unit name | Nature of notes receivable | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from connected transactions |
Description of write-off notes receivable:
5. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
| Class | Closing Balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportio | Amount | Accruing | Amount | Proportio | Amount | Accruing | |||
| n | proportion | n | proportion | |||||||
| Including: | ||||||||||
| Accounts receivable of provision for bad debt by combination | 909,715,973.83 | 100.00% | 46,048,156.89 | 5.06% | 863,667,816.94 | 888,816,011.14 | 100.00% | 44,498,303.02 | 5.01% | 844,317,708.12 |
| Including: | ||||||||||
| Total | 909,715,973.83 | 100.00% | 46,048,156.89 | 5.06% | 863,667,816.94 | 888,816,011.14 | 100.00% | 44,498,303.02 | 5.01% | 844,317,708.12 |
Provision for bad debt by single item: There is no accounts receivable of provision for bad debt by single item at the end of thisreporting period.
Unit: yuan
| Name | Closing Balance | |||
| Book balance | Provision for bad debt | Accruing proportion | Reasons for provision | |
Provision for bad debt by single item:
Unit: yuan
| Name | Closing Balance | |||
| Book balance | Provision for bad debt | Accruing proportion | Reasons for provision | |
Provision for bad debt by combination: aging analysis method
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 1 year (including 1 year) | 900,638,842.88 | 45,031,942.14 | 5.00% |
| 1~2 years (including 2 years) | 8,780,214.88 | 878,021.49 | 10.00% |
| 2~3 years (including 3 years) | 226,746.87 | 68,024.06 | 30.00% |
| More than 5 years | 70,169.20 | 70,169.20 | 100.00% |
| Total | 909,715,973.83 | 46,048,156.89 | -- |
Description of the basis for determining the combination:
Recognition criteria and description of bad debts by combination: On June 30, 2021, the Company reviewed the appropriateness ofthe provision for bad debts of receivables in the previous year according to the historical bad debt loss, and believed that the defaultprobability has a strong correlation with the aging of accounts, and the account age is still a sign of whether the credit risk of thecompany's receivables has significantly increased. Therefore, the Company's credit risk loss on June 30, 2021 is estimated based onthe aging of accounts and estimated at the original loss ratio.Provision for bad debt by combination:
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
Description of the basis for determining the combination:
If the bad debt provision of accounts receivable is withdrawn according to the general model of expected credit loss, please refer tothe disclosure method of other receivables to disclose the relevant information of bad debt provision:
√Applicable □ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Closing Balance |
| Within 1 year (including 1 year) | 900,638,842.88 |
| 1~2 years | 8,780,214.88 |
| 2~3 years | 226,746.87 |
| More than 3 years | 70,169.20 |
| More than 5 years | 70,169.20 |
| Total | 909,715,973.83 |
(2) Provision, recovery or reversal of bad debt reserves in the current periodProvision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Others | |||
| Provision for bad debt of accounts receivable | 44,498,303.02 | 10,631,457.77 | 9,081,603.90 | 46,048,156.89 | ||
| Total | 44,498,303.02 | 10,631,457.77 | 9,081,603.90 | 46,048,156.89 | ||
Where the amount of bad debt provision recovered or reversed is important:
Unit: yuan
| Unit name | Amount recovered or reversed | Recovery way |
(3) Accounts receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important accounts receivable:
Unit: yuan
| Unit name | Nature of accounts receivable | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from connected |
Description of write-off accounts receivable:
(4) Accounts receivable with Top 5 ending balances by debtor
Unit: yuan
transactionsUnit name
| Unit name | Ending balance of accounts receivable | Proportion in total other ending balance of accounts receivable | Ending balance of bad debt provision |
| First | 192,013,204.61 | 21.11% | 9,600,660.23 |
| Second | 31,273,460.19 | 3.44% | 1,563,673.01 |
| Third | 29,435,075.96 | 3.24% | 1,471,753.80 |
| Fourth | 26,500,414.91 | 2.91% | 1,350,096.92 |
| Fifth | 25,904,708.42 | 2.85% | 1,295,235.42 |
| Total | 305,126,864.09 | 33.55% |
(5) Accounts receivable derecognized due to transfer of financial assets
(6) Amount of assets and liabilities formed by transferring accounts receivables and continuing
involvementOther description:
6. Amounts receivable financing
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Notes receivable - banker's acceptance bill | 9,263,087.17 | 18,182,662.70 |
| Total | 9,263,087.17 | 18,182,662.70 |
Changes in the increase and decrease of receivables financing and changes in the fair value in the current period
□ Applicable √ Not applicable
If the impairment provision of receivables financing is withdrawn according to the general model of expected credit loss, please referto the disclosure method of other receivables to disclose the relevant information of impairment provision:
□ Applicable √ Not applicable
Other description:
7. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: yuan
| Aging | Closing Balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 173,005,830.85 | 96.59% | 124,030,319.05 | 100.00% |
| 1~2 years | 6,101,780.22 | 3.41% | 920.00 | |
| Total | 179,107,611.07 | -- | 124,031,239.05 | -- |
Reasons for non-timely settlement of important advances from customers with the aging more than 1 year:
There is no important advances aged for more than one year during this reporting period.
(2) Advances to suppliers with Top 5 ending balances by prepayment objectThe amount of advances to suppliers with Top 5 ending balances by prepayment object was 114,979,693.79yuan, accounting for 64.20% of the total balance of prepayments at the end of the period.Other description:
8. Other receivables
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Other receivables | 343,344,829.42 | 458,174,652.72 |
| Total | 343,344,829.42 | 458,174,652.72 |
(1) Interest receivable
1) Classification of interest receivable
Unit: yuan
| Item | Closing Balance | Beginning balance |
2) Important overdue interest
Unit: yuan
| Borrower | Closing Balance | Overdue time | Overdue reason | Whether there is impairment and its judgment basis |
Other description:
3) Provision for bad debt
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable
Unit: yuan
| Project (or invested unit) | Closing Balance | Beginning balance |
2) Important dividends receivable with the aging more than 1 year
Unit: yuan
| Project (or invested unit) | Closing Balance | Aging | Reason for non-recovery | Whether there is impairment and its judgment basis |
3) Provision for bad debt
□ Applicable √ Not applicable
Other description:
(3) Other receivables
1) Other receivables classified by nature
Unit: yuan
| Nature of payment | Ending book balance | Beginning book balance |
| Compensation for investment and construction project of Winner Medical (Heyuan) | 238,655,320.00 | 387,655,320.00 |
| Margin and deposit | 106,164,775.32 | 98,537,244.23 |
| Export drawback | 7,809,612.57 | |
| Employee pretty cash | 3,635,864.16 | 2,496,966.71 |
| Others | 25,865,681.87 | 6,013,308.92 |
| Total | 374,321,641.35 | 502,512,452.43 |
2) Provision for bad debt
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) |
| Balance on January 1, 2021 | 44,123,702.07 | 214,097.64 | 44,337,799.71 | |
| Balance on January 1, 2021 in the current period | —— | —— | —— | —— |
| Accrual in current period | 1,678,265.15 | 1,678,265.15 | ||
| Reversal in current period | 15,039,252.93 | 15,039,252.93 | ||
| Balance on June 30, 2021 | 30,762,714.29 | 214,097.64 | 30,976,811.93 |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Closing Balance |
| Within 1 year (including 1 year) | 135,043,390.01 |
| 1~2 years | 238,744,293.11 |
| 2~3 years | 136,679.80 |
| More than 3 years | 397,278.43 |
| 3~4 years | 171,378.43 |
| 4~5 years | 11,900.00 |
| More than 5 years | 214,000.00 |
| Total | 374,321,641.35 |
3) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Others | |||
| Provision for bad debts of other receivables | 44,337,799.71 | 1,678,265.15 | 15,039,252.93 | 30,976,811.93 | ||
| Total | 44,337,799.71 | 1,678,265.15 | 15,039,252.93 | 30,976,811.93 | ||
Where the amount of bad debt provision reversed or recovered is important:
Unit: yuan
| Unit name | Amount reversed or recovered | Recovery way |
4) Other receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important other receivables:
Unit: yuan
| Unit name | Nature of other receivables | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from connected transactions |
Description of write-off of other receivables
5) Other receivables with Top 5 ending balances by debtor
Unit: yuan
| Unit name | Nature of payment | Closing Balance | Aging | Proportion in total other ending balance receivable | Ending balance of bad debt provision |
| First | Compensation for investment and construction project of Winner Medical (Heyuan) | 238,655,320.00 | 1~2 years | 63.76% | 23,865,532.00 |
| Second | Margin and deposit | 7,669,567.22 | Within 1 year | 2.05% | 383,478.36 |
| Third | Margin and deposit | 2,746,332.73 | Within 1 year | 0.73% | 137,316.64 |
| Fourth | Margin and deposit | 1,285,230.90 | Within 1 year | 0.34% | 64,261.55 |
| Fifth | Margin and deposit | 1,075,384.10 | Within 1 year | 0.29% | 53,769.21 |
| Total | -- | 251,431,834.95 | -- | 67.17% | 24,504,357.76 |
6) Accounts receivable involving government subsidies
Unit: yuan
| Unit name | Name of government subsidy project | Closing Balance | Ending aging | Estimated collection time, amount and basis |
7) Other receivables derecognized due to transfer of financial assets
8) Amount of assets and liabilities formed by transferring other receivables and continuing involvementOther description:
9. Inventory
Does the Company need to follow the disclosure requirements of real estate industryNo
(1) Inventory classification
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Inventory falling price reserves or provision for impairment of contract performance costs | Book value | Book balance | Inventory falling price reserves or provision for impairment of contract performance costs | Book value | |
| Raw materials | 283,521,540.55 | 16,713,937.46 | 266,807,603.09 | 376,925,094.86 | 8,304,812.08 | 368,620,282.78 |
| Work in process | 162,384,699.45 | 3,520,744.28 | 158,863,955.17 | 131,194,111.13 | 4,032,195.26 | 127,161,915.87 |
| Merchandise inventory | 941,129,937.55 | 124,391,922.47 | 816,738,015.08 | 772,693,263.07 | 136,714,538.94 | 635,978,724.13 |
| Semi-finished products shipped in transit | 13,768,628.69 | 13,768,628.69 | 76,790,690.31 | 76,790,690.31 | ||
| Low priced and easily worn articles | 8,549,248.10 | 261,894.88 | 8,287,353.22 | 8,170,543.67 | 235,216.55 | 7,935,327.12 |
| Total | 1,409,354,054.34 | 144,888,499.09 | 1,264,465,555.25 | 1,365,773,703.04 | 149,286,762.83 | 1,216,486,940.21 |
(2) Inventory falling price reserves and provision for impairment of contract performance costs
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amount decreased in current period | Closing Balance | ||
| Accrual | Others | Reversal or write-back | Others | |||
| Raw materials | 8,304,812.08 | 10,666,869.50 | 2,257,744.12 | 16,713,937.46 | ||
| Work in process | 4,032,195.26 | 2,773,130.67 | 3,284,581.65 | 3,520,744.28 | ||
| Merchandise inventory | 136,714,538.94 | 39,806,770.85 | 52,129,387.32 | 124,391,922.47 | ||
| Low priced and easily worn | 235,216.55 | 26,678.33 | 261,894.88 | |||
| articles | ||||||
| Total | 149,286,762.83 | 53,273,449.35 | 57,671,713.09 | 144,888,499.09 |
Note: The Company's provision and reversal of provision for inventory depreciation are mainly calculated based on the principle thatthe net realizable value is lower than the cost. The inventory depreciation provisions for write-offs in the current period are mainlydue to the cost of acquisition or sales carry-over.
(3) Description of ending balance of inventory containing the capitalized amount of borrowing costs
(4) Description of current amortization amount of contract performance cost
10. Contract assets
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
Amount and reason of significant change in the book value of contract assets in current period:
Unit: yuan
| Item | Amount of change | Reason for change |
If the bad debt provision of contract assets is accrued according to the general model of expected credit loss, please refer to thedisclosure method of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
Provision for impairment of contract assets in current period
Unit: yuan
| Item | Accrual in current period | Reversal in current period | Write off/verification in current period | Reasons |
Other description:
11. Assets held for sales
Unit: yuan
| Item | Ending book balance | Provision for impairment | Ending book value | Fair value | Estimated disposal cost | Estimated disposal time |
Other description:
12. Non-current assets due within a year
Unit: yuan
| Item | Closing Balance | Beginning balance |
Important debt investments/other debt investments
Unit: yuan
| Debt item | Closing Balance | Beginning balance | ||||||
| Book value | Coupon rate | Actual rate | Maturity date | Book value | Coupon rate | Actual rate | Maturity date | |
Other description:
13. Other current assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Return cost receivable | 2,188,464.68 | 1,449,440.77 |
| VAT input tax to be deducted / uncertified input tax | 70,168,411.24 | 31,138,563.62 |
| Prepaid corporate income tax | 4,539,423.46 | |
| Unamortized expenses | 7,097,277.96 | 2,595,244.40 |
| Others | 233,286,872.17 | 978.30 |
| Total | 317,280,449.51 | 35,184,227.09 |
Other description:
14. Debt investment
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
Important debt investments
Unit: yuan
| Debt item | Closing Balance | Beginning balance | ||||||
| Book value | Coupon rate | Actual rate | Maturity date | Book value | Coupon rate | Actual rate | Maturity date | |
Provision for impairment
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2021 in the current | —— | —— | —— | —— |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Other description:
NA
15. Other debt investments
Unit: yuan
periodItem
| Item | Beginning balance | Accrued interest | Fair value change in current period | Closing Balance | Cost | Accumulated fair value change | Accumulated provision for loss recognized in other comprehensive income | Remark |
Important other debt investments
Unit: yuan
| Other debt item | Closing Balance | Beginning balance | ||||||
| Book value | Coupon rate | Actual rate | Maturity date | Book value | Coupon rate | Actual rate | Maturity date | |
Provision for impairment
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2021 in the current period | —— | —— | —— | —— |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Other description:
16. Long-term receivables
(1) Long-term receivables
Unit: yuan
| Item | Closing Balance | Beginning balance | Discount rate |
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | range |
Impairment of provision for bad debt
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2021 in the current period | —— | —— | —— | —— |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
(2) Long-term receivables derecognized due to transfer of financial assets
(3) Amount of assets and liabilities formed by transferring long-term receivables and continuinginvolvementOther description
17. Long-term equity investment
Unit: yuan
| Invested unit | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end of period | |||||||
| Further investment | Capital reduction | Investment gains and losses recognized by the equity method | Adjustment of other comprehensive income | Changes in other equity | Declared payment of cash dividends or profits | Provision for impairment | Others | ||||
| I. Cooperative enterprise | |||||||||||
| II. Joint venture | |||||||||||
| Chengdu Winner | 13,424,230.41 | 1,655,597.53 | 15,079,827.94 | ||||||||
| Subtotal | 13,424,230.41 | 1,655,597.53 | 15,079,827.94 | ||||||||
| Total | 13,424,230.41 | 1,655,597.53 | 15,079,827.94 | ||||||||
Other description
18. Other equity instrument investments
Unit: yuan
| Item | Closing Balance | Beginning balance |
Itemized disclosure of the current non-trading equity instrument investment
Unit: yuan
| Project name | Recognized dividend income | Accumulated gains | Accumulated losses | Amount of other comprehensive income transferred into retained income | Reasons for designating to be measured at fair value and its changes are recorded into other comprehensive income | Reasons for other comprehensive income transferring into retained income |
Other description:
19. Other non-current financial assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
20. Investment real estates
(1) Investment real estates using cost measurement mode
□ Applicable √ Not applicable
(2) Investment real estates using fair value measurement mode
□ Applicable √ Not applicable
(3) Investment real estates without certificate of title
Unit: yuan
| Item | Book value | Reasons for not obtaining the certificate of title |
Other descriptionNA
21. Fixed assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Fixed assets | 1,437,854,645.76 | 1,400,749,050.00 |
| Total | 1,437,854,645.76 | 1,400,749,050.00 |
(1) Fixed assets
Unit: yuan
| Item | Houses and building | Machinery equipment | Transportation equipment | Electronic equipment and office equipment, etc. | Total |
| I. Original book value | |||||
| 1. Beginning balance | 926,386,555.07 | 1,064,281,471.00 | 20,440,318.74 | 92,956,202.87 | 2,104,064,547.68 |
| 2. Amount increased in current period | 55,719,324.57 | 63,799,256.91 | 941,251.89 | 14,660,241.10 | 135,120,074.47 |
| (1) Purchase | 35,542,887.44 | 29,678,393.33 | 941,251.89 | 14,044,175.05 | 80,206,707.71 |
| (2) Transfer from construction in progress | 20,176,437.13 | 34,120,863.58 | 616,066.05 | 54,913,366.76 | |
| (3) Increase by business combination | |||||
| 3. Amount decreased in current period | 1,111,741.08 | 16,033,323.67 | 47,744.07 | 334,692.26 | 17,527,501.08 |
| (1) Disposal or scrap | 1,111,741.08 | 16,033,323.67 | 47,744.07 | 334,692.26 | 17,527,501.08 |
| 4. Closing Balance | 980,994,138.56 | 1,112,047,404.24 | 21,333,826.56 | 107,281,751.71 | 2,221,657,121.07 |
| II. Accumulated depreciation |
| 1. Beginning balance | 196,666,419.77 | 343,952,942.83 | 10,785,778.37 | 45,364,340.26 | 596,769,481.23 |
| 2. Amount increased in current period | 20,322,693.11 | 52,018,814.79 | 895,993.41 | 6,660,442.11 | 79,897,943.42 |
| (1) Accrual | 20,322,693.11 | 52,018,814.79 | 895,993.41 | 6,660,442.11 | 79,897,943.42 |
| 3. Amount decreased in current period | 143,063.51 | 7,024,914.81 | 12,028.50 | 254,151.63 | 7,434,158.45 |
| (1) Disposal or scrap | 143,063.51 | 7,024,914.81 | 12,028.50 | 254,151.63 | 7,434,158.45 |
| 4. Closing Balance | 216,846,049.37 | 388,946,842.81 | 11,669,743.28 | 51,770,630.74 | 669,233,266.20 |
| III. Provision for impairment | |||||
| 1. Beginning balance | 47,897,289.81 | 58,276,333.59 | 372,393.05 | 106,546,016.45 | |
| 2. Amount increased in current period | 8,368,601.00 | 42,487.88 | 8,411,088.88 | ||
| (1) Accrual | 8,368,601.00 | 42,487.88 | 8,411,088.88 | ||
| 3. Amount decreased in current period | 150,809.70 | 237,086.52 | 387,896.22 | ||
| (1) Disposal or scrap | 150,809.70 | 237,086.52 | 387,896.22 | ||
| 4. Closing Balance | 47,897,289.81 | 66,494,124.89 | 177,794.41 | 114,569,209.11 | |
| IV. Book value | |||||
| 1. Ending book value | 716,250,799.38 | 656,606,436.54 | 9,664,083.28 | 55,333,326.56 | 1,437,854,645.76 |
| 2. Beginning book value | 681,822,845.49 | 662,052,194.58 | 9,654,540.37 | 47,219,469.56 | 1,400,749,050.00 |
(2) Fixed assets that are temporarily idle
Unit: yuan
| Item | Original book value | Accumulated depreciation | Provision for impairment | Book value | Remark |
| Machinery equipment | 5,497,962.48 | 3,327,964.75 | 390,044.34 | 1,779,953.39 |
(3) Fixed assets leased out by operating lease
Unit: yuan
| Item | Ending book value |
(4) Fixed assets without certificate of title
Unit: yuan
| Item | Book value | Reasons for not obtaining the certificate of title |
| Winner Medical (Tianmen) Building | 15,448,162.59 | The formalities have not yet been completed |
| Winner Medical (Tianmen) Main plant of Phase II | 16,519,946.51 | The formalities have not yet been completed |
| Winner Medical (Tianmen) grey cloth warehouse | 961,131.76 | The formalities have not yet been completed |
| Winner Medical (Jingmen) Office Building | 5,887,225.60 | The formalities have not yet been completed |
| Winner Medical (Jingmen) Dormitory Building | 10,911,991.40 | The formalities have not yet been completed |
| Winner Medical (Jingmen) New Canteen | 1,499,930.10 | The formalities have not yet been completed |
| Others | 830,689.34 | The formalities have not yet been completed |
| Total | 52,059,077.30 |
Other description
(5) Liquidation of fixed assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description
22. Construction in progress
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Construction in progress | 104,425,911.11 | 61,383,340.97 |
| Total | 104,425,911.11 | 61,383,340.97 |
(1) Construction in progress
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Winner Medical (Tianmen) Infrastructure Construction | 7,034,138.03 | 7,034,138.03 | 3,103,139.22 | 3,103,139.22 | ||
| Winner Medical (Chongyang) engineering project | 4,759,315.92 | 4,759,315.92 | 3,920,741.93 | 3,920,741.93 | ||
| Winner Medical (Jiayu) engineering project | 0.00 | 0.00 | 206,839.83 | 206,839.83 | ||
| Winner Medical (Yichang) Infrastructure Construction | 1,289,415.85 | 1,289,415.85 | 829,816.92 | 829,816.92 | ||
| Winner Medical (Jingmen) Infrastructure Construction | 3,171,222.24 | 3,171,222.24 | 11,748,247.37 | 11,748,247.37 | ||
| Wuhan Winner engineering project | 41,951,961.01 | 41,951,961.01 | 25,508,709.25 | 25,508,709.25 | ||
| Winner Medical (Huanggang) Engineering Project | 576,758.94 | 576,758.94 | ||||
| Other equipment to be installed and sporadic projects | 47,103,506.96 | 1,460,407.84 | 45,643,099.12 | 17,526,254.29 | 1,460,407.84 | 16,065,846.45 |
| Total | 105,886,318.95 | 1,460,407.84 | 104,425,911.11 | 62,843,748.81 | 1,460,407.84 | 61,383,340.97 |
(2) Current changes in major projects under construction
Unit: yuan
| Project name | Budget number | Beginning balance | Amount increased in current period | Amount carried forward to fixed assets in current period | Other decreases in current period | Closing Balance | Proportion of total project input to the budget | Progress of works | Accumulated amount of interest capitalization | Including: interest capitalization funds in the current period | Interest capitalization rate in the current period | Source of funds |
| Winner Medical (Jingmen) office dormitory building | 21,000,000.00 | 11,654,612.45 | 7,094,513.67 | 18,749,126.12 | 0.00 | 89.28% | 100.00% | Others | ||||
| High-yield carding machine, equipment in de-dusting shop - Winner Medical (Wuhan) | 17,000,000.00 | 15,044,247.76 | 15,044,247.76 | 88.50% | 90.00% | Others | ||||||
| Total | 38,000,000.00 | 11,654,612.45 | 22,138,761.43 | 18,749,126.12 | 15,044,247.76 | -- | -- | -- |
(3) Provision for impairment of construction in progress in current period
Unit: yuan
| Item | Current accrued amount | Reason for accrual |
Other description
(4) Engineering materials
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
Other description:
23. Productive biological assets
(1) Productive biological assets using cost measurement mode
□ Applicable √ Not applicable
(2) Productive biological assets using fair value measurement mode
□ Applicable √ Not applicable
24. Oil and gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
Unit: yuan
| Item | House building | Total |
| I. Original book value | ||
| 1. Beginning balance | 836,548,177.77 | 836,548,177.77 |
| 2. Amount increased in current period | 151,011,360.09 | 151,011,360.09 |
| Leased | 151,011,360.09 | 151,011,360.09 |
| 3. Amount decreased in current period | 8,427,950.01 | 8,427,950.01 |
| Withdrawal of stores | 8,427,950.01 | 8,427,950.01 |
| 4. Closing Balance | 979,131,587.85 | 979,131,587.85 |
| II. Accumulated depreciation | ||
| 1. Beginning balance | 332,342,440.04 | 332,342,440.04 |
| 2. Amount increased in current period | 99,318,820.49 | 99,318,820.49 |
| (1) Accrual | 99,318,820.49 | 99,318,820.49 |
| 3. Amount decreased in current period | 3,808,440.97 | 3,808,440.97 |
| Withdrawal of stores | 3,808,440.97 | 3,808,440.97 |
| 4. Closing Balance | 427,852,819.56 | 427,852,819.56 |
| III. Book Value | ||
| 1. Ending book value | 551,278,768.29 | 551,278,768.29 |
| 2. Beginning book value | 504,205,737.73 | 504,205,737.73 |
Other description:
26. Intangible assets
(1) Intangible assets
Unit: yuan
| Item | Land use right | Patent right | Nonpatented technology | Trademark right | Software use right | Franchised use right | Total |
| I. Original book value | |||||||
| 1. Beginning balance | 215,498,508.06 | 1,573,637.86 | 1,710,590.99 | 44,776,668.88 | 10,228,226.53 | 273,787,632.32 | |
| 2. Amount increased in current period | 2,250,672.57 | 2,250,672.57 | |||||
| (1) Purchase | 2,250,672.57 | 2,250,672.57 | |||||
| (2) Internal R&D | |||||||
| (3) Increase by business combination | |||||||
| 3. Amount decreased in current period | |||||||
| (1) Disposal |
| 4. Closing Balance | 215,498,508.06 | 1,573,637.86 | 1,710,590.99 | 47,027,341.45 | 10,228,226.53 | 276,038,304.89 | |
| II. Accumulated amortization | |||||||
| 1. Beginning balance | 23,228,466.51 | 1,126,804.28 | 1,661,457.66 | 29,217,573.55 | 10,228,226.53 | 65,462,528.53 | |
| 2. Amount increased in current period | 2,183,816.53 | 60,508.54 | 6,700.00 | 2,437,430.34 | 4,688,455.41 | ||
| (1) Accrual | 2,183,816.53 | 60,508.54 | 6,700.00 | 2,437,430.34 | 4,688,455.41 | ||
| 3. Amount decreased in current period | |||||||
| (1) Disposal | |||||||
| 4. Closing Balance | 25,412,283.04 | 1,187,312.82 | 1,668,157.66 | 31,655,003.89 | 10,228,226.53 | 70,150,983.94 | |
| III. Provision for impairment | |||||||
| 1. Beginning balance | |||||||
| 2. Amount increased in current period | |||||||
| (1) Accrual | |||||||
| 3. Amount decreased in current period | |||||||
| (1) Disposal |
| 4. Closing Balance | |||||||
| IV. Book value | |||||||
| 1. Ending book value | 190,086,225.02 | 386,325.04 | 42,433.33 | 15,372,337.56 | 205,887,320.95 | ||
| 2. Beginning book value | 192,270,041.55 | 446,833.58 | 49,133.33 | 15,559,095.33 | 208,325,103.79 |
The proportion of intangible assets formed through internal R & D of the Company in the balance of intangible assets at the end ofcurrent period: 0.00%
(2) Land use right without certificate of title
Unit: yuan
| Item | Book value | Reasons for not obtaining the certificate of title |
Other description:
27. Development expenditure
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amount decreased in current period | Closing Balance | ||||
| Internal development expenditure | Others | Recognized as intangible assets | Transfer to current profit and loss | |||||
| Total | ||||||||
Other description
28. Goodwill
(1) Original book value of goodwill
Unit: yuan
| invested entity name or goodwill forming matter | Beginning balance | Increase in current period | Decrease in current period | Closing Balance | ||
| Formed by business combination | Disposal | |||||
| Original book value | ||||||
| Business combination not under common control - Acquisition of Winner Medical Malaysia | 2,681,232.09 | 2,681,232.09 | ||||
| Total | 2,681,232.09 | 2,681,232.09 |
(2) Provision for impairment of goodwill
Unit: yuan
| invested entity name or goodwill forming matter | Beginning balance | Increase in current period | Decrease in current period | Closing Balance | ||
| Accrual | Disposal | |||||
| Provision for impairment | ||||||
| Business combination not under common control - Acquisition of Winner Medical Malaysia | 2,681,232.09 | 2,681,232.09 | ||||
| Total | 2,681,232.09 | 2,681,232.09 | ||||
Information relating to the asset group or asset group combination of goodwillExplain the goodwill impairment test process, key parameters (such as forecast period growth rate at the present value of expectedfuture cash flow, steady period growth rate, profit margin, discount rate, forecast period, etc.) and recognition method of goodwillimpairment loss:
Impact of goodwill impairment testsOther description
29. Long-term unamortized expenses
Unit: yuan
| Item | Beginning balance | Amount increased in current period | Amortization amount in current period | Other decreases | Closing Balance |
| Decoration cost | 121,335,007.33 | 36,338,974.42 | 25,521,431.94 | 2,070,775.86 | 130,081,773.95 |
| Total | 121,335,007.33 | 36,338,974.42 | 25,521,431.94 | 2,070,775.86 | 130,081,773.95 |
Other description
30. Deferred income tax assets and deferred income tax liabilities
(1) Unoffset deferred income tax assets
Unit: yuan
| Item | Closing Balance | Beginning balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for impairment of assets | 339,347,756.10 | 62,401,248.11 | 342,367,005.23 | 65,132,073.97 |
| Unrealized profit of internal transaction | 218,425,773.62 | 33,265,658.66 | 218,425,773.62 | 33,265,658.66 |
| Deductible loss | 56,309,177.73 | 14,077,294.43 | 91,373,086.80 | 20,778,878.65 |
| Deferred income | 115,665,393.69 | 24,027,330.37 | 94,921,260.87 | 15,374,283.41 |
| Member points | 16,282,017.02 | 4,070,504.26 | ||
| Expected return | 4,452,940.23 | 1,113,235.06 | 1,316,336.08 | 329,084.02 |
| Advertising expenses in excess of the tax deductible limit | 256,467.28 | 64,116.82 | ||
| Equity incentive fee | 95,756,549.42 | 14,363,482.41 | 25,132,771.81 | 3,769,915.77 |
| Dismission welfare | 2,318,903.48 | 347,265.52 | 2,318,903.48 | 347,835.52 |
| Total | 832,276,494.27 | 149,595,514.56 | 792,393,622.19 | 143,132,351.08 |
(2) Unoffset deferred income tax liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Changes in fair value of tradable financial assets | 27,384,233.24 | 4,187,879.82 | 11,178,589.44 | 1,754,263.42 |
| Depreciation of fixed assets | 52,680,554.61 | 9,285,580.16 | 59,458,724.22 | 10,411,344.82 |
| Total | 80,064,787.85 | 13,473,459.98 | 70,637,313.66 | 12,165,608.24 |
(3) Deferred income tax assets or liabilities presented as net amount after offset
Unit: yuan
| Item | Ending offset amount of | Ending balance of | Beginning offset amount | Beginning balance of |
| deferred income tax assets and liabilities | deferred income tax assets and liabilities after offset | of deferred income tax assets and liabilities | deferred income tax assets and liabilities after offset | |
| Deferred income tax assets | 149,595,514.56 | 143,132,351.08 | ||
| Deferred income tax liabilities | 13,473,459.98 | 12,165,608.24 |
(4) Details of unrecognized deferred income tax assets
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Deductible loss | 160,202,701.39 | 100,460,644.28 |
| Provision for impairment of assets and amortization of depreciation | 4,067,851.22 | 5,508,170.07 |
| Total | 164,270,552.61 | 105,968,814.35 |
(5) Deductible losses on unrecognized deferred income tax assets will expire in the following year
Unit: yuan
| Year | Closing balance | Beginning amount | Remark |
| 2021 | 9,235,145.64 | ||
| 2022 | 14,402,997.46 | 305,751.35 | |
| 2023 | 28,934,144.08 | 23,804,062.08 | |
| 2024 | 40,569,090.20 | 31,489,882.74 | |
| 2025 | 46,594,868.27 | 38,128,355.56 | |
| No maturity date | 20,466,455.74 | 6,732,592.55 | |
| Total | 160,202,701.39 | 100,460,644.28 | -- |
Other description:
31. Other non-current assets
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Advance project payment / equipment purchase payment / advance store engineering and decoration payment | 133,729,374.90 | 133,729,374.90 | 63,807,415.75 | 63,807,415.75 | ||
| Total | 133,729,374.90 | 133,729,374.90 | 63,807,415.75 | 63,807,415.75 |
Other description:
32. Short-term loans
(1) Classification of short-term loans
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Guaranteed borrowing | 150,000,000.00 | |
| Borrowing interest | 71,416.66 | |
| Total | 150,071,416.66 |
Description of classification of short-term loans:
(2) short-term loans unpaid overdue
The total amount of overdue short-term loans at the end of the period is XXXX yuan, of which the important overdue short-termborrowings are as follows:
Unit: yuan
| Borrower | Closing Balance | Borrowing interest rate | Overdue time | Overdue interest rate |
Other description:
33. Tradable financial liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Including: | ||
| Including: |
Other description:
34. Derivative financial liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
35. Notes payable
Unit: yuan
| Type | Closing Balance | Beginning balance |
| Banker's acceptance bill | 69,765,505.06 | 29,418,100.00 |
| Total | 69,765,505.06 | 29,418,100.00 |
The total amount of notes payable due and have not been paid at the end of current period is 0.00 yuan.
36. Accounts payable
(1) Presentation of accounts payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Within 1 year (including 1 year) | 553,114,018.53 | 711,659,249.43 |
| 1~2 years (including 2 years) | 5,901,343.59 | 10,837,529.41 |
| 2~3 years (including 3 years) | 5,530,949.79 | 977,275.13 |
| More than 3 years | 4,068,943.38 | 3,103,252.97 |
| Total | 568,615,255.29 | 726,577,306.94 |
(2) Important accounts payable with the aging more than 1 year
Unit: yuan
| Item | Closing Balance | Reasons for failure of payment or carryover |
As of June 30, 2021, there is no important accounts payable with the aging more than 1 year.
37. Advance from customers
(1) Presentation of advance from customers
Unit: yuan
| Item | Closing Balance | Beginning balance |
(2) Important advances from customers with the aging more than 1 year
Unit: yuan
| Item | Closing Balance | Reasons for failure of payment or carryover |
38. Contract liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Customer consideration received | 309,372,350.35 | 513,906,240.61 |
| Member points | 19,502,693.09 | 16,282,017.02 |
| Total | 328,875,043.44 | 530,188,257.63 |
Amount and reasons for significant changes in book value during the reporting period
Unit: yuan
| Item | Amount of change | Reason for change |
39. Payroll payable
(1) Presentation of payroll payable
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| I. Short-term compensation | 159,456,636.87 | 538,498,543.58 | 582,654,360.12 | 115,300,820.33 |
| II. Welfare after dismission - defined contribution plan | 8,181,537.46 | 20,901,161.37 | 21,526,955.79 | 7,555,743.04 |
| III. Dismission welfare | 2,318,903.48 | 51,781.64 | 55,581.64 | 2,315,103.48 |
| IV. Other welfare due within 1 year | 16,320.00 | 16,320.00 | ||
| Total | 169,957,077.81 | 559,467,806.59 | 604,253,217.55 | 125,171,666.85 |
(2) Presentation of short-term compensation
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Salary, bonus, allowance and subsidy | 158,773,217.39 | 513,790,916.09 | 558,193,150.14 | 114,370,983.34 |
| 2. Welfare expenses for employees | 136,421.00 | 7,953,130.88 | 7,823,840.60 | 265,711.28 |
| 3. Social security | 392,645.68 | 12,242,509.55 | 12,251,727.96 | 383,427.27 |
| Including: medical insurance premium | 234,119.50 | 11,014,087.89 | 11,013,271.89 | 234,935.50 |
| Industrial injury | 105,246.18 | 627,532.24 | 637,566.65 | 95,211.77 |
| insurance premium | ||||
| Birth insurance premium | 53,280.00 | 600,889.42 | 600,889.42 | 53,280.00 |
| 4. Housing accumulation fund | 6,792.00 | 4,345,604.02 | 4,345,604.02 | 6,792.00 |
| 5. Union dues and staff education fund | 147,560.80 | 166,383.04 | 40,037.40 | 273,906.44 |
| Total | 159,456,636.87 | 538,498,543.58 | 582,654,360.12 | 115,300,820.33 |
(3) Presentation of defined contribution plans
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Basic endowment insurance | 8,064,367.91 | 20,078,691.89 | 20,694,722.66 | 7,448,337.14 |
| 2. Unemployment insurance premium | 117,169.55 | 822,469.48 | 832,233.13 | 107,405.90 |
| Total | 8,181,537.46 | 20,901,161.37 | 21,526,955.79 | 7,555,743.04 |
Other description:
40. Taxes payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Added value tax | 25,562,061.80 | 18,181,804.05 |
| Corporate income tax | 74,123,941.01 | 415,529,360.40 |
| Individual income tax | 1,652,734.14 | 2,036,312.66 |
| Urban maintenance and construction tax | 2,080,194.45 | 2,884,475.60 |
| Housing property tax | 2,063,511.69 | 2,317,520.34 |
| Education surcharge and local education surcharge | 1,694,904.72 | 2,193,371.26 |
| Land use tax | 1,757,490.00 | 721,674.83 |
| Environmental protection tax | 11,849.82 | 27,808.56 |
| Stamp duty | 257,855.00 | 489,041.79 |
| Total | 109,204,542.63 | 444,381,369.49 |
Other description:
41. Other payables
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Dividends payable | 200,000,000.00 | |
| Other payables | 415,888,545.12 | 352,543,008.89 |
| Total | 615,888,545.12 | 352,543,008.89 |
(1) Interest payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
Important overdue and unpaid interest:
Unit: yuan
| Borrower | Overdue amount | Overdue reason |
Other description:
(2) Dividends payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Common stock dividends | 200,000,000.00 | |
| Total | 200,000,000.00 |
Other explanations, including important dividends payable that have not been paid for more than 1 year, shall disclose the reasons fornon-payment: There are no dividends payable outstanding for more than 1 year during the period.
(3) Other payables
1) Other payables listed by nature
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Freight and other accrued expenses | 56,640,695.61 | 94,068,852.36 |
| Provision of commission | 104,148,018.24 | 68,139,060.51 |
| Margin and deposit | 159,311,016.09 | 154,311,464.02 |
| Intercourse | 2,269,784.84 | 14,357,347.93 |
| Others | 93,519,030.34 | 21,666,284.07 |
| Total | 415,888,545.12 | 352,543,008.89 |
2) Important other payable with the aging more than 1 year
Unit: yuan
| Item | Closing Balance | Reasons for failure of payment or carryover |
| Shenzhen Galaxy Real Estate Development Co., Ltd. | 150,000,000.00 | Margin for industrial park renewal project |
| Total | 150,000,000.00 | -- |
Other description
42. Liabilities held for sales
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
43. Non-current liabilities due within one year
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
44. Other current liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Refund payable | 4,452,940.23 | 2,765,776.85 |
| Output tax to be transferred | 11,817,277.07 | 20,872,489.62 |
| Total | 16,270,217.30 | 23,638,266.47 |
Increase/decrease of short-term bonds payable:
Unit: yuan
| Name of bond | Book value | Issue date | Maturity of bond | Issue amount | Beginning balance | Current issue | Accrued interest at book value | Amortization of premium and discount | Current repayment | Closing Balance |
Other description:
45. Long-term loans
(1) Classification of long-term borrowing
Unit: yuan
| Item | Closing Balance | Beginning balance |
Description of classification of long-term borrowing:
Other descriptions, including interest rate range:
46. Bonds payable
(1) Bonds payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
(2) Increase and decrease of bonds payable (excluding preferred shares, perpetual bonds and other
financial instruments classified as financial liabilities)
Unit: yuan
| Name of bond | Book value | Issue date | Maturity of bond | Issue amount | Beginning balance | Current issue | Accrued interest at book value | Amortization of premium and discount | Current repayment | Closing Balance | |
| Total | -- | -- | -- |
(3) Description of conditions and time of conversion of convertible corporate bonds
(4) Description of other financial instruments classified as financial liabilitiesBasic information of the outstanding preferred shares, perpetual bonds and other financial instruments at the end of the periodTable of changes in outstanding financial instruments, such as preferred shares, perpetual bonds at the end of the period
Unit: yuan
| Outstanding financial instruments | The beginning of the period | Increase in current period | Decrease in current period | The end of the period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
Description of the basis for the classification of other financial instruments into financial liabilitiesOther description
47. Lease liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
| House leasing - lease payments | 670,653,903.07 | 616,144,901.16 |
| House leasing - unrecognized financing expenses | (53,668,617.63) | (51,810,525.40) |
| Total | 616,985,285.44 | 564,334,375.76 |
Other description
48. Long-term payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
(1) Long-term payables listed by nature
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
(2) Special accounts payable
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance | Causes |
Other description:
49. Long-term payroll payable
(1) Table of long-term payroll payable
Unit: yuan
| Item | Closing Balance | Beginning balance |
(2) Changes in defined benefit plan
Present value of defined benefit plan obligations:
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Planned assets:
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Net liabilities (net assets) of defined benefit plan
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Description of the content of defined benefit plan and its related risks, impact on the Company's future cash flow, time anduncertainty:
Description of significant actuarial assumptions and sensitivity analysis results of defined benefit plan:
Other description:
50. Estimated liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance | Causes |
Other descriptions, including relevant important assumptions and estimation descriptions of important estimated liabilities:
51. Deferred income
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance | Causes |
| Government subsidies | 94,921,260.87 | 36,191,317.92 | 15,447,185.10 | 115,665,393.69 | Government subsidies related to assets |
| Total | 94,921,260.87 | 36,191,317.92 | 15,447,185.10 | 115,665,393.69 | -- |
Projects involving government subsidies:
Unit: yuan
| Liability item | Beginning balance | Amount of additional subsidy in current period | Amount included in current non-revenue | Amount included in other income in current period | Amount offsetting the cost in the current period | Other changes | Closing Balance | Asset/income related |
| Subsidy of 2012 Provincial high-tech industry development special project - | 277,085.67 | 29,166.68 | 247,918.99 | Asset related |
| Winner Medical (Huanggang) | ||||||||
| Subsidy of 2014 Hubei provincial science and technology support plan project (the second batch) - Winner Medical (Huanggang) | 712,500.00 | 75,000.00 | 637,500.00 | Asset related | ||||
| Subsidy for Huanggang Chibi Avenue demolition company planning change - Winner Medical (Huanggang) | 2,482,664.69 | 52,822.64 | 2,429,842.05 | Asset related | ||||
| Technology Center R & D project subsidy - Shenzhen Winner | 1,055,170.73 | 171,683.60 | 883,487.13 | Asset related | ||||
| new medical bandage factory land acquisition land use right grant fee remission of Winner company in Pailou Town, | 629,970.00 | 10,160.00 | 619,810.00 | Asset related |
| Jingmen - Winner Medical (Jingmen) | ||||||||
| Subsidy funds for municipal government project infrastructure construction - Winner Medical (Chongyang) | 9,270,412.50 | 206,775.00 | 9,063,637.50 | Asset related | ||||
| Park construction and sewage treatment project in Yuyue Town - Winner Medical (Jiayu) | 10,209,500.01 | 203,416.65 | 10,006,083.36 | Asset related | ||||
| 2015 Huanggang provincial budget investment plan, Huanggang Winner’s cotton spunlaced non-woven (Line 8) extension project subsidy - Winner Medical (Huanggang) | 285,000.00 | 30,000.00 | 255,000.00 | Asset related | ||||
| 2014 | 118,750.00 | 12,500.00 | 106,250.00 | Asset related |
| Huanggang urban industrial development special fund subsidy - Winner Medical (Huanggang) | ||||||||
| 2014 Hubei provincial budget industrial fixed assets investment plan, 10 billion gauze pad expansion project subsidy - Winner Medical (Tianmen) | 34,615.30 | 34,615.30 | Asset related | |||||
| 2015 Tianmen industrial enterprise key technical transformation and expansion project subsidy - Winner Medical (Tianmen) | 262,481.00 | 25,002.00 | 237,479.00 | Asset related | ||||
| 2015 urban industrial development special fund | 210,000.00 | 20,000.00 | 190,000.00 | Asset related | ||||
| Automatic transformati | 1,209,000.00 | 93,000.00 | 1,116,000.00 | Asset related |
| on of surgical consumables production line - Shenzhen Winner | ||||||||
| 2016 Tianmen industrial key technical transformation and expansion project reward - Winner Medical (Tianmen) | 312,485.00 | 25,002.00 | 287,483.00 | Asset related | ||||
| 2017 increase production and expansion equipment subsidy for Tianmen processing & trade - Winner Medical (Tianmen) | 100,000.00 | 7,500.00 | 92,500.00 | Asset related | ||||
| Yichang gas boiler subsidy - Winner Medical (Yichang) | 100,000.09 | 7,999.98 | 92,000.11 | Asset related | ||||
| Second batch of traditional industry transformati | 1,307,339.54 | 104,587.14 | 1,202,752.40 | Asset related |
| on subsidy in 2017 - Winner Medical (Huanggang) | ||||||||
| 2017 cotton spunlaced non-woven fabric project with the production of 15,000 tons - Winner Medical (Tianmen) | 475,471.79 | 39,622.62 | 435,849.17 | Asset related | ||||
| Key technical transformation and expansion projects | 702,703.00 | 54,054.00 | 648,649.00 | Asset related | ||||
| Production line project with an annual output of 120 million bales of cotton fabric in 2017 - Winner Medical (Tianmen) | 706,442.28 | 53,653.86 | 652,788.42 | Asset related | ||||
| Second batch of special funds for the transformation and upgrading of traditional | 181,250.08 | 12,499.98 | 168,750.10 | Asset related |
| industries - Winner Medical (Yichang) | ||||||||
| Technical innovation subsidy for the Purcotton Phase II Expansion Project - Winner Medical (Jingmen) | 4,491,886.85 | 83,183.10 | 4,408,703.75 | Asset related | ||||
| Key technical transformation and expansion projects | 841,666.71 | 49,999.98 | 791,666.73 | Asset related | ||||
| 20180311 Subsidies for research, science and innovation on the technology of thermo-responsive self-curing wound regeneration and repair materials - Shenzhen Winner | 1,034,412.37 | 120,849.00 | 913,563.37 | Asset related | ||||
| 2018 provincial traditional industry transformati | 1,391,904.76 | 26,428.57 | 1,365,476.19 | Asset related |
| on and upgrading special funds for the second batch of liquidation block fund subsidies - Winner Medical (Jiayu) | ||||||||
| Subsidies for first batch of technological transformation award of industrial enterprises in 2018 - Winner Medical (Chongyang) | 796,532.20 | 53,078.56 | 743,453.64 | Asset related | ||||
| Provincial traditional industry transformation and upgrading special funds for the first batch of block funds allocation plan in Tianmen City in 2019 - Winner Medical (Tianmen) | 1,160,689.66 | 68,275.86 | 1,092,413.80 | Asset related | ||||
| 2018 urban technical | 416,666.70 | 27,777.76 | 388,888.94 | Asset related |
| transformation fund of Huanggang City - Winner Medical (Huanggang) | ||||||||
| First batch of traditional subsidies in 2019 - Winner Medical (Huanggang) | 1,089,000.00 | 60,500.00 | 1,028,500.00 | Asset related | ||||
| 2019 district technical improvement subsidy - Winner Medical (Jingmen) | 378,461.60 | 14,556.18 | 363,905.42 | Asset related | ||||
| 2020 technical transformation project of Shenzhen COVID-19 epidemic prevention and control key material production enterprises - Shenzhen Winner (1*) | 19,500,000.00 | 1,000,000.00 | 18,500,000.00 | Asset related | ||||
| Municipal Economic and Information Bureau on the issuance of emergency | 1,189,565.22 | 375,648.00 | 813,917.22 | Asset related |
| material support system construction technical transformation special subsidy - Winner Medical (Huanggang) | ||||||||
| Central government's budget special fund for municipal financial mask extension energy - Winner Medical (Huanggang) | 282,352.94 | 112,941.18 | 169,411.76 | Asset related | ||||
| Production subsidy for COVID-19 epidemic prevention materials in 2020 - Winner Medical (Huanggang) (2*) | 10,260,000.00 | 3,420,000.00 | 6,840,000.00 | Asset related | ||||
| 2019 district technical improvement subsidy - Winner Medical (Jingmen) | 387,636.35 | 14,909.10 | 372,727.25 | Asset related | ||||
| 2019 special | 723,214.29 | 13,392.85 | 709,821.44 | Asset related |
| fund project of the transformation and upgrading of traditional industries - Winner Medical (Jiayu) | ||||||||
| Surgical gown production line project subsidy - Winner Medical (Chongyang) (3*) | 3,711,711.71 | 216,216.22 | 3,495,495.49 | Asset related | ||||
| Funds subsidy for purchasing epidemic prevention equipment in key enterprises of "Three Batches" - Winner Medical (Chongyang) (4*) | 5,543,025.21 | 281,848.74 | 5,261,176.47 | Asset related | ||||
| Project on implementing the technical reformation policy of “Zero Land” in Wuhan and the municipal | 7,708,855.65 | 291,144.36 | 7,417,711.29 | Asset related |
| industrial investment and technical transformation special fund project of Bureau for Science, Technology and Economic Information Technology of Xinzhou District - Hubei Winner (5*) | ||||||||
| Subsidy of COVID-19 epidemic prevention and control materials production enterprise for capacity expansion & technical upgrading project - Hubei Winner (6*) | 3,370,836.97 | 295,860.18 | 3,074,976.79 | Asset related | ||||
| Special funds for the high-quality development of manufacturing granted by Municipal Economic and Information | 3,000,000.00 | 140,186.92 | 2,859,813.08 | Asset related |
| Bureau - Winner Medical (Huanggang) | ||||||||
| Equipment purchase subsidy funds for key enterprise "Three Batches” at provincial levels granted by Municipal Economic and Information Bureau - Winner Medical (Huanggang) | 9,370,000.00 | 5,726,111.11 | 3,643,888.89 | Asset related | ||||
| Equipment subsidies during the COVID-19 pandemic - Winner Medical (Jingmen) | 6,800,000.00 | 1,700,000.00 | 5,100,000.00 | Asset related | ||||
| Equipment investment subsidies - Winner Medical (Tianmen) | 15,000,000.00 | 15,000,000.00 | Asset related | |||||
| 2020 Provincial special funds for the high-quality development | 1,000,000.00 | 43,859.65 | 956,140.35 | Asset related |
| of manufacturing - Winner Medical (Jiayu) | ||||||||
| 2020 Provincial special funds for the high-quality development of manufacturing granted by Economic and Information Bureau - Winner Medical (Wuhan) | 1,000,000.00 | 41,356.33 | 958,643.67 | Asset related | ||||
| Others | 21,317.92 | 0.00 | 21,317.92 | Asset related | ||||
| Total | 94,921,260.87 | 36,191,317.92 | 15,447,185.10 | 115,665,393.69 |
Other description:
52. Other non-current liabilities
Unit: yuan
| Item | Closing Balance | Beginning balance |
Other description:
53. Capital stock
Unit: yuan
| Beginning balance | Increase/decrease (+, -) | Closing Balance | |||||
| New issue of shares | Share donation | Share capital increase from reserved funds | Others | Subtotal | |||
| Total amount of shares | 426,492,308.00 | 426,492,308.00 | |||||
Other description:
54. Other equity instruments
(1) Basic information of the outstanding preferred shares, perpetual bonds and other financial
instruments at the end of the period
(2) Table of changes in outstanding financial instruments, such as preferred shares, perpetual bonds atthe end of the period
Unit: yuan
| Outstanding financial instruments | The beginning of the period | Increase in current period | Decrease in current period | The end of the period | ||||
| Quantity | Book value | Quantity | Book value | Quantity | Book value | Quantity | Book value | |
The increase and decrease of other equity instruments in current period, the reasons for the change, and the basis of relevantaccounting treatment:
Other description:
55. Capital reserve
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| Capital premium (capital stock premium) | 4,457,762,555.30 | 4,457,762,555.30 | ||
| Other capital surplus | 23,947,427.94 | 142,429,497.69 | 10,770,858.01 | 155,606,067.62 |
| Total | 4,481,709,983.24 | 142,429,497.69 | 10,770,858.01 | 4,613,368,622.92 |
Other description, including current increase/decrease and change reasons:
56. Treasury stock
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
Other description, including current increase/decrease and change reasons:
57. Other comprehensive income
Unit: yuan
| Item | Beginning balance | Amount incurred in current period | Closing Balance | |||||
| Amount before current | Less: amount included in other | Less: amount included | Less: Income tax | Attributable to the parent | Attributable to minority | |||
| income tax | comprehensive income in previous period transferred into profit and loss in current period | in other comprehensive income in previous period transferred into retained income in current period | expenses | company after tax | shareholders after tax | |||
| II. Other comprehensive income that will be reclassified into profit and loss | (1,111,035.08) | (292,542.91) | (140,119.24)(140,119.24) | (152,423.67) | (1,251,154.32) | |||
| Balance arising from the translation of foreign currency financial statements | (1,111,035.08) | (292,542.91) | (140,119.24)(140,119.24) | (152,423.67) | (1,251,154.32) | |||
| Total other comprehensive income | (1,111,035.08) | (292,542.91) | (140,119.24)(140,119.24) | (152,423.67) | (1,251,154.32) |
Other explanations, including the adjustment of the effective part of the cash flow hedging gains and losses transferred to the initialrecognized amount of the hedged item:
58. Special reserve
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
Other description, including current increase/decrease and change reasons:
59. Surplus reserve
Unit: yuan
| Item | Beginning balance | Increase in current period | Decrease in current period | Closing Balance |
| Statutory surplus reserves | 420,212,778.13 | 420,212,778.13 | ||
| Total | 420,212,778.13 | 420,212,778.13 |
Description of surplus reserves, including current increase/decrease and change reasons:
60. Undistributed profit
Unit: yuan
| Item | Current period | Prior period |
| Undistributed profit at the end of previous period before adjustment | 5,126,630,011.14 | 1,718,075,177.67 |
| Total undistributed profits at the beginning of the adjustment period (+ for increase and - for decrease) | (60,128,638.03) | |
| Undistributed profits at the beginning of the period after adjustment | 5,066,501,373.11 | 1,718,075,177.67 |
| Plus: Net profits attributable to the owners of parent company in the current period | 761,038,730.24 | 3,810,412,504.40 |
| Less: withdrawal legal surplus | 303,357,670.93 | |
| Common stock dividends payable | 767,686,154.39 | 98,500,000.00 |
| Undistributed profits at the end of the period | 5,059,853,948.96 | 5,126,630,011.14 |
Details of undistributed profits at the beginning of the adjustment period:
1). Due to retroactive adjustment of Accounting Standards for Business Enterprises and relevant new regulations, 0.00 yuan of theundistributed profit at the beginning of the period was affected.
2). Due to the change of accounting policy, (60,128,638.03) yuan of the undistributed profit at the beginning of the period wasaffected.
3). Due to the correction of major accounting errors, 0.00 yuan of the undistributed profit at the beginning of the period wasaffected.
4). Due to the change of consolidation scope caused by the same control, 0.00 yuan of the undistributed profit at the beginning of
the period was affected.
5). 0.00 yuan of the undistributed profit at the beginning of the period was affected by the total amount of other adjustments
61. Revenue and cost
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 4,015,254,836.74 | 1,899,194,820.44 | 4,146,476,965.99 | 1,878,803,687.95 |
| Other businesses | 44,610,818.18 | 22,594,882.03 | 33,301,917.28 | 21,288,297.05 |
| Total | 4,059,865,654.92 | 1,921,789,702.47 | 4,179,778,883.27 | 1,900,091,985.00 |
Income related information:
Unit: yuan
| Contract classification | Segment 1 (medical | Segment 2 (healthy | Segment 3 (pure cotton | Total |
| consumables) | consumer goods) | non-woven coil) | ||
| Type of goods | 2,171,174,605.39 | 1,790,338,558.90 | 98,352,490.63 | 4,059,865,654.92 |
| Including: | ||||
| Main business | 2,126,563,787.21 | 1,790,338,558.90 | 98,352,490.63 | 4,015,254,836.74 |
| Other businesses | 44,610,818.18 | 44,610,818.18 | ||
| Classified by operating area | 2,171,174,605.39 | 1,790,338,558.90 | 98,352,490.63 | 4,059,865,654.92 |
| Including: | ||||
| Domestic sales | 1,119,409,514.73 | 1,790,338,558.90 | 40,800,388.40 | 2,950,548,462.03 |
| Overseas sales | 1,051,765,090.66 | 57,552,102.23 | 1,109,317,192.89 | |
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: |
Information related to performance obligations:
NAInformation related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations signed but not yet performed or completed at the end of thisreporting period is 0.00 yuan.Other description
62. Taxes and surcharges
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Urban maintenance and construction tax | 13,351,264.31 | 16,497,725.24 |
| Education surcharge | 6,083,856.56 | 7,371,553.72 |
| Housing property tax | 4,009,111.81 | 2,028,629.48 |
| Land use tax | 3,601,190.09 | 710,896.16 |
| Vehicle and vessel use tax | 5,699.53 | 5,446.26 |
| Stamp duty | 1,751,155.99 | 2,185,782.68 |
| Surcharge for local education | 4,282,630.01 | 4,537,550.33 |
| Environmental protection tax | 71,770.68 | 95,680.48 |
| Embankment construction cost | 43,611.00 | |
| Total | 33,156,678.98 | 33,476,875.35 |
Other description:
63. Selling expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 229,922,405.33 | 218,246,955.67 |
| Travel expenses | 5,786,992.03 | 2,213,199.29 |
| Office communication costs | 3,075,901.11 | 7,111,983.72 |
| Sales commission | 98,622,807.60 | 97,068,184.37 |
| Insurance premiums | 2,574,426.91 | 2,271,675.17 |
| Depreciation and amortization | 113,209,102.14 | 29,276,701.85 |
| Advertising and promotion expenses | 233,984,397.50 | 115,342,907.94 |
| Rent | 85,737,804.97 | 139,580,079.91 |
| Others | 52,891,982.98 | 44,837,216.32 |
| Total | 825,805,820.57 | 655,948,904.24 |
Other description: (1) According to Accounting Standards for Business Enterprises No.14 -- Revenue (revised 2017), transportationexpenses shall be recognized as an asset and amortized on the same basis as commodity income recognition related to the asset, andshall be included in current profit and loss, carried forward to cost, and shall not be directly included in selling expenses whenincurred. The transportation expenses in the Semi-annual Report of 2020 therefore are adjusted to costs.
(2) The other fees are mainly maintenance fee, sample fee, credit card large gateway service fee, credit card quick payment servicefee, transaction service fee, etc.
64. Administrative expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 102,543,267.30 | 94,254,490.88 |
| Equity incentive fee | 142,429,497.69 | |
| Depreciation and amortization charge | 17,278,124.21 | 19,591,733.89 |
| Office allowance | 1,678,360.24 | 2,109,267.17 |
| Consultant and intermediary service fees | 5,420,967.74 | 2,503,028.59 |
| Water/electricity fee | 2,270,363.17 | 2,389,584.46 |
| Communication and network services, cloud service fees, etc. | 27,088,830.21 | 20,593,671.66 |
| Maintenance cost | 7,113,384.60 | 4,600,385.17 |
| Material consumption | 2,792,481.93 | 611,189.62 |
| Others | 2,037,274.55 | 12,012,989.45 |
| Total | 310,652,551.64 | 158,666,340.89 |
Other description:
65. R&D expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Employee compensation | 60,924,410.97 | 40,799,524.38 |
| Depreciation and amortization | 8,456,760.23 | 9,438,888.51 |
| Material | 81,191,111.26 | 96,722,100.92 |
| Other miscellaneous expenses | 39,344,983.01 | 21,884,674.78 |
| Total | 189,917,265.47 | 168,845,188.59 |
Other description:
66. Financial expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Interest expenditure | 13,939,734.50 | 1,935,306.63 |
| Less: Interest revenue | 35,424,028.29 | 2,586,023.70 |
| Exchange gain or loss | 8,101,623.57 | (864,201.47) |
| Others | 766,213.42 | 1,049,007.21 |
| Total | (12,616,456.80) | (465,911.33) |
67. Other incomes
Unit: yuan
| Other sources of income | Amount incurred in current period | Amount incurred in previous period |
| Government subsidies | 86,754,859.99 | 19,765,789.73 |
68. Investment income
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Long-term equity investment gains measured by employing the equity method | 1,655,597.53 | 2,288,557.50 |
| Investment income from purchasing financial | 48,417,662.28 | 4,869,662.02 |
| products | ||
| Total | 50,073,259.81 | 7,158,219.52 |
Other description:
69. Net exposure hedging
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Other description:
70. Income from changes in fair value
Unit: yuan
| Sources of gains from fair value change | Amount incurred in current period | Amount incurred in previous period |
| Tradable financial assets | 14,346,000.00 | |
| Structured deposit | 17,062,220.30 | |
| Total | 31,408,220.30 |
Other description:
71. Credit impairment Loss
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Loss on bad debts of other receivables | 13,360,426.19 | 5,788,420.86 |
| Loss on bad debts of accounts receivable | (1,552,019.48) | (6,576,067.85) |
| Total | 11,808,406.71 | (787,646.99) |
Other description:
72. Assets impairment losses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| II. Inventory falling price loss and impairment loss of contract performance costs | (52,186,443.71) | (67,352,614.01) |
| V. Impairment loss of fixed assets | (8,411,088.88) | (3,796,063.47) |
| VII. Impairment loss of construction in progress | (1,460,407.84) | |
| Total | (60,597,532.59) | (72,609,085.32) |
Other description:
73. Gains from asset disposal
Unit: yuan
| Source of income from disposal of assets | Amount incurred in current period | Amount incurred in previous period |
| Gains from disposal of non-current assets | 15,447.79 | |
| Including: Gains on disposal of fixed assets | 15,447.79 | |
| Loss on disposal of non-current assets | (37,621.25) | |
| Including: Loss on disposal of fixed assets | (37,621.25) |
74. Non-revenue
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | Amounts recorded in the non-recurring gains and losses of the current period |
| Government subsidies | 36,262.29 | 11,587,864.12 | 36,262.29 |
| Non-current assets scrap gains | 14,489.12 | 170,491.38 | 14,489.12 |
| Income from compensation or fines | 498,130.83 | 188,497.40 | 498,130.83 |
| Others | 1,790,581.70 | 1,712,282.59 | 1,790,581.70 |
| Total | 2,339,463.94 | 13,659,135.49 | 2,339,463.94 |
Government subsidies recorded in current profit and loss
Unit: yuan
| Subsidized project | Granting subject | Granting reason | Type of nature | Whether the subsidy affects the profit and loss of current year | Special subsidy or not | Amount incurred in current period | Amount incurred in previous period | Asset/income related |
Other description:
75. Non-operating expenses
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | Amounts recorded in the non-recurring gains and losses of the current period |
| External donations | 208,387.94 | 1,360,772.16 | 208,387.94 |
| Loss on damage and scrap of non-current assets | 7,968,231.63 | 17,105,877.65 | 7,968,231.63 |
| Including: Loss on scrap of fixed assets | 7,968,231.63 | 17,105,877.65 | 7,968,231.63 |
| Others | 326,184.85 | 3,520,072.21 | 326,184.85 |
| Total | 8,502,804.42 | 21,986,722.02 | 8,502,804.42 |
Other description:
76. Income tax expenses
(1) Income tax expense table
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Current income tax expenses | 152,217,622.09 | 203,104,000.70 |
| Deferred income tax expenses | (15,926,486.89) | (29,354,038.07) |
| Adjustment of the previous annual income tax amount in the current period | 6,995,272.56 | |
| Total | 143,286,407.76 | 173,749,962.63 |
(2) Accounting profit and income tax expense adjustment process
Unit: yuan
| Item | Amount incurred in current period |
| Total profit | 904,406,345.08 |
| Income tax expenses calculated at the appropriate/applicable tax rate | 135,660,951.76 |
| Impact of different tax rates applied on subsidiaries | 2,759,402.34 |
| Impact of income tax before adjustment | 6,995,272.56 |
| Impact of non-deductible costs, expenses and losses | 331,176.23 |
| Impact of temporary difference or deductible losses on unrecognized deferred income tax assets in the current period | 16,525,962.98 |
| Impact of weighted deduction of R&D costs | (18,939,560.94) |
| The impact of weighted deduction of disability payroll | (46,797.17) |
| Income tax expenses | 143,286,407.76 |
Other description
77. Other comprehensive income
See Note VII. 57 Other comprehensive income for details.
78. Cash flow statement items
(1) Other cash received related to operating activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Deposit, margin and quality guarantee deposit received | 5,168,682.39 | 22,023,613.71 |
| Interest income received | 35,424,028.29 | 2,375,610.63 |
| Government subsidies received | 107,535,255.10 | 34,521,331.79 |
| Others | 2,288,712.53 | 12,939,198.27 |
| Total | 150,416,678.31 | 71,859,754.40 |
Explanation on other cash received related to operating activities:
(2) Other cash paid related to operating activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Management costs paid in cash | 40,188,212.76 | 64,294,374.94 |
| Selling expenses paid in cash | 146,432,180.23 | 203,939,320.24 |
| Deposit, margin and quality guarantee deposit paid | 36,326,773.36 | 66,617,571.64 |
| Bank handling charge | 766,213.42 | 1,049,007.21 |
| Others | 63,370,409.09 | 8,783,342.54 |
| Total | 287,083,788.86 | 344,683,616.57 |
Description of other cash paid related to operating activities
(3) Other cash received related to investment activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Received compensation for relocation | 100,000,000.00 | |
| Total | 100,000,000.00 |
Description of other cash received related to investment activities:
(4) Other cash paid related to investment activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Description of other cash paid related to investment activities:
(5) Other cash received related to financing activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
Description of other cash received related to financing activities:
(6) Other cash paid related to financing activities
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Listing fees paid | 1,802,115.63 | |
| Lease payments made | 103,492,521.01 | |
| Total | 103,492,521.01 | 1,802,115.63 |
Description of other cash paid related to financing activities:
79. Further information on cash flow statement
(1) Further information on cash flow statement
Unit: yuan
| Further information | Current amount | Last term amount |
| 1. Reconciliation from net profits to cash flows from operating activities | -- | -- |
| Net profit | 761,119,937.32 | 1,034,680,676.10 |
| Plus: Provision for impairment of assets | 48,789,125.89 | 73,396,732.31 |
| Depreciation of fixed assets, oil and gas assets and productive biological assets | 79,903,000.47 | 103,513,593.92 |
| Depreciation of Right-of-use assets | 99,318,820.49 | |
| Amortization of intangible assets | 4,688,455.41 | 4,459,420.64 |
| Amortization of long-term deferred expenses | 25,521,431.94 | 33,482,757.15 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains expressed with “-”) | 37,621.25 | (15,447.79) |
| Loss on retirement of fixed assets (gains expressed with “-”) | 7,968,231.63 | 16,935,386.27 |
| Loss from fair value change (gains expressed with “-”) | (31,408,220.30) | |
| Financial expenses (gains expressed with “-”) | 13,939,734.50 | 1,935,306.63 |
| Investment losses (gains expressed with “-”) | (50,073,259.81) | (7,158,219.52) |
| Decreased in deferred income tax assets (increase expressed with “-”) | (6,463,163.49) | (39,807,965.92) |
| Increase in deferred income tax liabilities (decrease expressed with “-”) | 1,307,851.74 | 10,453,927.85 |
| Decrease in inventories (increase expressed with “-”) | (100,165,058.76) | (369,878,953.78) |
| Decrease in operating receivables (increase expressed with “-”) | (202,353,385.01) | (340,509,861.01) |
| Increase in operating payables (decrease expressed with “-”) | (606,929,030.07) | 1,951,918,629.40 |
| Others | 152,402,772.57 | |
| Net cash flow from operating activities | 197,604,865.77 | 2,473,405,982.25 |
| 2. Significant investment and financing activities not involving cash deposit and withdrawal: | -- | -- |
| Conversion of debt into capital | ||
| Convertible bonds due within 1 year | ||
| Fixed assets under financing lease | ||
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Ending balance of cash | 4,660,333,761.86 | 2,213,598,049.35 |
| Less: Beginning balance of cash | 4,149,734,694.38 | 459,169,719.65 |
| Plus: Ending balance of cash equivalents | ||
| Less: Ending balance of cash |
| equivalents | ||
| Net increase in cash and cash equivalents | 510,599,067.48 | 1,754,428,329.70 |
(2) Net cash paid for obtaining subsidiaries in current period
Unit: yuan
| Amount | |
| Including: | -- |
| Including: | -- |
| Including: | -- |
Other description:
(3) Net cash from disposal of subsidiaries in current period
Unit: yuan
| Amount | |
| Including: | -- |
| Including: | -- |
| Including: | -- |
Other description:
(4) Composition of cash and cash equivalents
Unit: yuan
| Item | Closing Balance | Beginning balance |
| I. Cash | 4,660,333,761.86 | 4,149,734,694.38 |
| Including: cash on hand | 77,810.79 | 49,287.18 |
| Bank deposit readily available for payment | 4,660,255,951.07 | 4,149,685,407.20 |
| III. Balance of cash and cash equivalents at end of period | 4,660,333,761.86 | 4,149,734,694.38 |
Other description:
80. Notes to items in statement of owner's equity
State the name of "other" items and the amount of adjustment to the ending balance of previous year:
81. Assets with ownership or use rights restricted
Unit: yuan
| Item | Ending book value | Causes for restriction |
| Cash and cash equivalents | 40,195,765.99 | Balance of the margin and performance deposit deposited for handling international and domestic letters of credit, and the special deposit accounts opened for restricted non-budget units by issuing prepaid cards |
| Total | 40,195,765.99 | -- |
Other description:
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: yuan
| Item | Ending balance in foreign currency | Conversion exchange rate | Ending balance converted to RMB |
| Cash and cash equivalents | -- | -- | 136,580,107.23 |
| Including: USD | 17,699,067.65 | 6.4601 | 114,337,746.93 |
| EUR | 481,524.53 | 7.6862 | 3,701,093.84 |
| HKD | 21,861,406.89 | 0.83208 | 18,190,439.45 |
| Yen | 3,847,134.00 | 0.058428 | 224,780.35 |
| Ringgit | 81,006.85 | 1.5560 | 126,046.66 |
| Accounts receivable | -- | -- | 175,306,471.03 |
| Including: USD | 25,452,596.79 | 6.4601 | 164,426,320.52 |
| EUR | 297,037.23 | 7.6862 | 2,283,087.56 |
| HKD | 8,488,333.25 | 0.83208 | 7,062,972.33 |
| Ringgit | 985,919.42 | 1.5560 | 1,534,090.62 |
| Long-term loans | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other receivables | 386,886.30 | ||
| HKD | 462,832.00 | 0.83208 | 385,113.25 |
| Ringgit | 1,139.49 | 1.5560 | 1,773.05 |
| Accounts payable | 550,596.74 | ||
| EUR | 45,616.00 | 7.6862 | 350,613.70 |
| HKD | 5,500.00 | 0.83208 | 4,576.44 |
| Yen | 3,344,400.00 | 0.058428 | 195,406.60 |
| Other payables | 103,175,622.45 | ||
| US dollar | 14,618,601.79 | 6.4601 | 94,437,629.42 |
| EUR | 11,475.00 | 7.6862 | 88,199.15 |
| HKD | 10,392,263.70 | 0.83208 | 8,647,194.78 |
| Yen | 23,179.00 | 0.058428 | 1,354.30 |
| Ringgit | 800.00 | 1.5560 | 1,244.80 |
Other description:
(2) Description of overseas operating entities, including for important overseas operating entities, themain overseas business place, recording currency and selection basis shall be disclosed, and thereasons for changes in recording currency shall also be disclosed.
□ Applicable √ Not applicable
83. Hedge
Disclose the qualitative and quantitative information of hedging items, related hedging instruments and hedged risks according to thehedging category:
84. Government subsidies
(1) Basic information of government subsidies
Unit: yuan
| Type | Amount | Presented item | Amount recorded in current profit and loss |
| 1. Government subsidies related to assets | |||
| Subsidy of 2012 Provincial high-tech industry development special project - Winner Medical (Huanggang) | 700,000.00 | Deferred income | 29,166.68 |
| Subsidy of 2014 Hubei provincial science and technology support plan project (the second batch) - Winner | 1,500,000.00 | Deferred income | 75,000.00 |
| Medical (Huanggang) | |||
| Subsidy for Huanggang Chibi Avenue demolition company planning change - Winner Medical (Huanggang) | 3,169,400.00 | Deferred income | 52,822.64 |
| Technology Center R & D project subsidy - Shenzhen Winner | 12,420,000.00 | Deferred income | 171,683.60 |
| New medical bandage factory land acquisition land use right grant fee remission of Winner company in Pailou Town, Jingmen - Winner Medical (Jingmen) | 812,850.00 | Deferred income | 10,160.00 |
| Subsidy funds for municipal government project infrastructure construction - Winner Medical (Chongyang) | 12,406,500.00 | Deferred income | 206,775.00 |
| Park construction and sewage treatment project in Yuyue Town - Winner Medical (Jiayu) | 11,430,000.00 | Deferred income | 203,416.67 |
| 2015 Huanggang provincial budget investment plan, Huanggang Winner’s cotton spunlaced non-woven (Line 8) extension project subsidy - Winner Medical (Huanggang) | 600,000.00 | Deferred income | 30,000.00 |
| 2014 Huanggang urban industrial development special fund subsidy - Winner Medical (Huanggang) | 250,000.00 | Deferred income | 12,500.00 |
| 2014 Hubei provincial budget industrial fixed assets investment plan, 10 billion gauze pad expansion project subsidy - Winner Medical (Tianmen) | 100,000.00 | Deferred income | 34,615.28 |
| 2015 Tianmen industrial enterprise key technical transformation and expansion project subsidy - Winner | 500,000.00 | Deferred income | 25,002.00 |
| Medical (Tianmen) | |||
| 2015 urban industrial development special fund | 400,000.00 | Deferred income | 20,000.00 |
| Automatic transformation of surgical consumables production line - Shenzhen Winner | 1,860,000.00 | Deferred income | 93,000.00 |
| 2016 Tianmen industrial key technical transformation and expansion project reward - Winner Medical (Tianmen) | 500,000.00 | Deferred income | 25,002.00 |
| 2017 increase production and expansion equipment subsidy for Tianmen processing & trade - Winner Medical (Tianmen) | 150,000.00 | Deferred income | 7,500.00 |
| Yichang gas boiler subsidy - Winner Medical (Yichang) | 160,000.00 | Deferred income | 7,999.98 |
| Second batch of traditional industry transformation subsidy in 2017 - Winner Medical (Huanggang) | 1,900,000.00 | Deferred income | 104,587.14 |
| 2017 cotton spunlaced non-woven fabric project with the production of 15,000 tons - Winner Medical (Tianmen) | 700,000.00 | Deferred income | 39,622.62 |
| Key technical transformation and expansion projects | 1,000,000.00 | Deferred income | 54,054.00 |
| Production line project with an annual output of 120 million bales of cotton fabric in 2017 - Winner Medical (Tianmen) | 930,000.00 | Deferred income | 53,653.86 |
| Second batch of special funds for the transformation and upgrading of traditional industries - Winner Medical (Yichang) | 250,000.00 | Deferred income | 12,499.98 |
| Technical innovation subsidy for the Purcotton Phase II Expansion Project - Winner Medical (Jingmen) | 4,755,300.00 | Deferred income | 83,183.10 |
| Key technical transformation | 1,000,000.00 | Deferred income | 49,999.98 |
| and expansion projects | |||
| 20180311 Subsidies for research, science and innovation on the technology of thermo-responsive self-curing wound regeneration and repair materials - Shenzhen Winner | 2,000,000.00 | Deferred income | 120,849.00 |
| 2018 provincial traditional industry transformation and upgrading special funds for the second batch of liquidation block fund subsidies - Winner Medical (Jiayu) | 1,480,000.00 | Deferred income | 26,428.57 |
| Subsidies for first batch of technological transformation award of industrial enterprises in 2018 - Winner Medical (Chongyang) | 1,000,000.00 | Deferred income | 53,078.56 |
| Provincial traditional industry transformation and upgrading special funds for the first batch of block funds allocation plan in Tianmen City in 2019 - Winner Medical (Tianmen) | 1,320,000.00 | Deferred income | 68,275.86 |
| 2018 urban technical transformation fund of Huanggang City - Winner Medical (Huanggang) | 500,000.00 | Deferred income | 27,777.76 |
| First batch of traditional subsidies in 2019 - Winner Medical (Huanggang) | 1,210,000.00 | Deferred income | 60,500.00 |
| 2019 district technical improvement subsidy - Winner Medical (Jingmen) | 410,000.00 | Deferred income | 14,556.18 |
| 2020 technical transformation project of Shenzhen COVID-19 epidemic prevention and control key material production enterprises - Shenzhen Winner (1*) | 20,000,000.00 | Deferred income | 1,000,000.00 |
| Municipal Economic and Information Bureau on the | 1,440,000.00 | Deferred income | 375,648.00 |
| issuance of emergency material support system construction technical transformation special subsidy - Winner Medical (Huanggang) | |||
| Central government's budget special fund for municipal financial mask extension energy - Winner Medical (Huanggang) | 320,000.00 | Deferred income | 112,941.18 |
| Production subsidy for COVID-19 epidemic prevention materials in 2020 - Winner Medical (Huanggang) (2*) | 11,400,000.00 | Deferred income | 3,420,000.00 |
| 2019 district technical improvement subsidy - Winner Medical (Jingmen) | 410,000.00 | Deferred income | 14,909.10 |
| 2019 special fund project of the transformation and upgrading of traditional industries - Winner Medical (Jiayu) | 750,000.00 | Deferred income | 13,392.85 |
| Surgical gown production line project subsidy - Winner Medical (Chongyang) (3*) | 4,000,000.00 | Deferred income | 216,216.22 |
| Funds subsidy for purchasing epidemic prevention equipment in key enterprises of "Three Batches" - Winner Medical (Chongyang) (4*) | 5,590,000.00 | Deferred income | 281,848.74 |
| Project on implementing the technical reformation policy of “Zero Land” in Wuhan and the municipal industrial investment and technical transformation special fund project of Bureau for Science, Technology and Economic Information Technology of Xinzhou District - Hubei Winner (5*) | 8,000,000.00 | Deferred income | 291,144.36 |
| Subsidy of COVID-19 epidemic prevention and control materials production enterprise for capacity expansion & technical | 3,645,000.00 | Deferred income | 295,860.18 |
| upgrading project - Hubei Winner (6*) | |||
| Special funds for the high-quality development of manufacturing granted by Municipal Economic and Information Bureau - Winner Medical (Huanggang) | 3,000,000.00 | Deferred income | 140,186.92 |
| Equipment purchase subsidy funds for key enterprise "Three Batches” at provincial levels granted by Municipal Economic and Information Bureau - Winner Medical (Huanggang) | 9,370,000.00 | Deferred income | 5,726,111.11 |
| Equipment subsidies during the COVID-19 pandemic - Winner Medical (Jingmen) | 6,800,000.00 | Deferred income | 1,700,000.00 |
| Equipment investment subsidies - Winner Medical (Tianmen) | 15,000,000.00 | Deferred income | |
| 2020 Provincial special funds for the high-quality development of manufacturing - Winner Medical (Jiayu) | 1,000,000.00 | Deferred income | 43,859.65 |
| 2020 Provincial special funds for the high-quality development of manufacturing granted by Economic and Information Bureau - Winner Medical (Wuhan) | 1,000,000.00 | Deferred income | 41,356.33 |
| Others | 21,317.91 | Deferred income | |
| 2. Government subsidies related to income | |||
| Incentives for capacity expansion | 28,524,000.00 | Other incomes | 28,524,000.00 |
| 2020 special funds for stable industrial growth granted by Finance Bureau to ICBC | 20,000,000.00 | Other incomes | 20,000,000.00 |
| Subsidies for shipping cotton out of Xinjiang | 5,254,900.00 | Other incomes | 5,254,900.00 |
| Domestic listing and listing subsidies for enterprises | 3,500,000.00 | Other incomes | 3,500,000.00 |
| Special funds for economic development of remittance headquarters of the finance bureau | 1,400,300.00 | Other incomes | 1,400,300.00 |
| Post-recognition subsidy for financial high-tech enterprises, post-innovation platform subsidy | 1,050,000.00 | Other incomes | 1,050,000.00 |
| International market access certification project | 1,032,300.00 | Other incomes | 1,032,300.00 |
| Special subsidy for structural adjustment of enterprises in Xinzhou District | 1,027,029.92 | Other incomes | 1,027,029.92 |
| Foreign trade premium growth fund of Coomerce Bureau of Shenzhen Municipality | 1,001,618.00 | Other incomes | 1,001,618.00 |
| Mayor Quality Award 2020 of Longhua District | 1,000,000.00 | Other incomes | 1,000,000.00 |
| Enterprise-university innovation platform subsidy | 1,000,000.00 | Other incomes | 1,000,000.00 |
| Electricity subsidies for COVID-19 pandemic prevention and control | 955,649.75 | Other incomes | 955,649.75 |
| Incentives for corporate R&D investment in 2020 | 816,000.00 | Other incomes | 816,000.00 |
| 2020 research and development grants for enterprises provided by Hi-tech Office of Shenzhen Science and Technology Innovation Committee | 776,000.00 | Other incomes | 776,000.00 |
| Export credit insurance premium grants from June to December 2019 | 572,169.00 | Other incomes | 572,169.00 |
| Consumption promotion support funds in 2021 | 500,000.00 | Other incomes | 500,000.00 |
| Electricity subsidy | 426,008.80 | Other incomes | 426,008.80 |
| Post stabilization subsidy | 408,945.37 | Other incomes | 408,945.37 |
| Central foreign trade and economic development funds in Fiscal 2020 | 121,000.00 | Other incomes | 121,000.00 |
| Others | 1,941,754.05 | Other incomes | 1,941,754.05 |
| Others | 36,262.29 | Non-revenue | 36,262.29 |
| Total | 228,504,305.09 | 86,791,122.28 |
(2) Return of government subsidies
□ Applicable √ Not applicable
Other description:
85. Others
VIII. Consolidation scope changes
1. Business combination not under common control
(1) Business combination not under common control occurred in current period
Unit: yuan
| Name of the acquiree | Time of equity acquisition | Cost of equity acquisition | Equity acquisition ratio | Method of equity acquisition | Acquisition date | Basis for determination of acquisition date | Income of the acquiree from the acquisition date to the end of the period | Net profit of the acquiree from the acquisition date to the end of the period |
Other description:
(2) Combination cost and goodwill
Unit: yuan
| Combination cost |
Determination method of fair value of combination cost, contingent consideration and explanation of its changes:
Main reasons for the formation of large amount of goodwill:
Other description:
(3) Identifiable assets and liabilities of the acquiree on the acquisition date
Unit: yuan
| Fair value on the acquisition date | Book value on the acquisition date | |
Determination method of fair value of identifiable assets and liabilities:
Contingent liabilities of the acquiree incurred in business combinationOther description:
(4) Gains or losses arising from remeasurement of equity held prior to the acquisition date at fair valueWhether there are transactions that realize the business combination step by step through multiple transactions and obtain controlright during the reporting period
□Yes √No
(5) Relevant description of the combination consideration or the fair value of the identifiable assets andliabilities of the acquiree that cannot be reasonably determined on the acquisition date or at the end ofcurrent period of the combination
(6) Other description
2. Business combination under common control
(1) Business combination under common control occurred in current period
Unit: yuan
| Name of merged party | Proportion of equity obtained in business combination | Basis of business combination under common control | Merger date | Basis for determination of merger date | Income of the combined party from the beginning of current period to the date of combination | Net profit of the combined party from the beginning of current period to the date of combination | Income of the combined party during the comparison period | Net profit of the combined party during the comparison period |
Other description:
(2) Combination cost
Unit: yuan
| Combination cost |
Contingent consideration and explanation of its changes:
Other description:
(3) Book value of assets and liabilities of the combined party on the date of combination
Unit: yuan
| Merger date | End of previous period | |
Contingent liabilities of the combined party incurred in business combinationOther description:
3. Reverse purchase
Basic information of transaction, basis of transaction forming reverse purchase, whether the assets and liabilities retained by thelisted company constitute business and their basis, determination of combination cost, amount and calculation of adjusted equity inaccordance with equity transaction:
4. Disposal of subsidiary
Whether there is a single disposal of investment in subsidiaries, i.e. loss of control right
□Yes √No
Whether there is a situation that the investment in subsidiaries is disposed step by step through multiple transactions and the controlright is lost in current period
□Yes √No
5. Change of merger scope for other reasons
Explain the changes in the scope of combination caused by other reasons (such as the establishment of new subsidiaries, liquidationof subsidiaries, etc.) and relevant information:
6. Others
IX. Interests in other entities
1. Interests in a subsidiary
(1) Composition of enterprise group
| Subsidiary name | Main operation site | Registration place | Business nature | Shareholding ratio | Way of obtaining | |
| Direct | Indirect | |||||
| Shenzhen Purcotton | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sale of Purcotton products | 100.00% | Establishment | |
| Beijing Purcotton | Beijing | Beijing | Sale of Purcotton products | 100.00% | Establishment | |
| Guangzhou Purcotton | Guangzhou City, Guangdong Province | Guangzhou City, Guangdong Province | Sale of Purcotton products | 100.00% | Establishment | |
| Shanghai Purcotton | Shanghai | Shanghai | Sale of Purcotton products | 100.00% | Establishment | |
| Qianhai Purcotton | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sale of Purcotton products | 100.00% | Establishment | |
| Winner Medical (Huanggang) | Huanggang City, Hubei Province | Huanggang City, Hubei Province | Production and sales of pure cotton spunlace non-woven fabrics, medical consumables, and Purcotton’s products | 100.00% | Business combination under common control | |
| Winner Medical (Jingmen) | Jingmen City, Hubei Province | Jingmen City, Hubei Province | Production and sales of medical consumables and Purcotton’s products | 100.00% | Business combination under common control | |
| Winner Medical (Chongyang) | Chongyang County, Hubei Province | Chongyang County, Hubei Province | Production and sales of medical consumables | 100.00% | Business combination under common control | |
| Winner Medical (Jiayu) | Jiayu County, Hubei Province | Jiayu County, Hubei Province | Production and sales of medical consumables and Purcotton’s products | 100.00% | Business combination under common control | |
| Winner Medical (Yichang) | Zhijiang City, Hubei Province | Zhijiang City, Hubei Province | Production and sales of medical gray cloth | 100.00% | Business combination under common control | |
| Winner Medical (Tianmen) | Tianmen City, Hubei Province | Tianmen City, Hubei Province | Production and sales of cotton spun laced non-woven fabric and Purcotton products | 100.00% | Business combination under common control | |
| Winner Medical (Hong Kong) | Hong Kong | Hong Kong | Sales of medical consumables and consumer products | 60.00% | Business combination under common control | |
| Winner (Huanggang) Cotton | Huanggang City, Hubei Province | Huanggang City, Hubei Province | Cotton trade | 100.00% | Business combination under common |
| control | ||||||
| Winner Medical Malaysia | Malaysia | Malaysia | There is no actual business operation | 100.00% | Business combination not under common control | |
| Winner Medical (Heyuan) | Heyuan City, Guangdong Province | Heyuan City, Guangdong Province | There is no actual business operation at present | 100.00% | Establishment | |
| Winner Medical (Wuhan) | Wuhan City, Hubei Province | Wuhan City, Hubei Province | Production and sterilization of cotton spun laced non-woven fabric and Purcotton products | 100.00% | Establishment | |
| PureH2B | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sales of personal care and other products | 100.00% | Establishment | |
| Pure HB (Shanghai) | Shanghai | Shanghai | Import and domestic sales of cosmetics | 100.00% | Establishment | |
| Purunderwear | Shenzhen City, Guangdong Province | Shenzhen City, Guangdong Province | Sales of Cotton Lining products | 100.00% | Establishment | |
| Huanggang Purcotton | Huanggang City, Hubei Province | Huanggang City, Hubei Province | Sale of Purcotton products | 100.00% | Establishment |
Difference between the shareholding ratio and the voting right ratio in the subsidiary:
Basis for holding half or less of the voting rights but still controlling the invested entity, and holding more than half of the votingrights but not controlling the invested entity:
For the important structured entity included in the combination scope, the control basis is as follows:
Basis for determining whether the company is an agent or a principal:
Other description:
(2) Important non-wholly owned subsidiary
Unit: yuan
| Subsidiary name | Minority shareholding ratio | Current profits and losses attributable to minority shareholders | Current dividends declared to minority shareholders | Ending balance of minority equity |
Difference between the shareholding ratio and the voting right ratio of the minority shareholders of the subsidiary:
Other description:
(3) Main financial information of important non-wholly owned subsidiaries
Unit: yuan
| Subsidiary name | Closing Balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
Unit: yuan
| Subsidiary name | Amount incurred in current period | Amount incurred in previous period | ||||||
| Revenue | Net profit | Total comprehensive income | Cash flow from financing activities | Revenue | Net profit | Total comprehensive income | Cash flow from financing activities | |
Other description:
(4) Major restrictions on the use of enterprise group assets and the settlement of enterprise group debts
(5) Financial or other support provided to structured entity included in the consolidated financial
statementsOther description:
2. Transactions in which the share of ownership interest in a subsidiary changes and the subsidiary is
still controlled
(1) Description of changes in the owner's equity share in the subsidiary
(2) Impact of transactions on minority shareholders' equity and owners' equities attributable to the
owners of parent company
Unit: yuan
Other description
3. Equity in joint venture arrangement or joint venture
(1) Important cooperative enterprises or joint ventures
| Name of cooperative enterprise or joint venture | Main operation site | Registration place | Business nature | Shareholding ratio | Accounting treatment method of investment in cooperative | |
| Direct | Indirect | |||||
Difference between the shareholding ratio and the voting right ratio in the cooperative enterprise or joint venture:
Basis for holding less than 20% of the voting rights but having a significant impact, or holding 20% or more of the voting rights butnot having a significant impact:
(2) Major Financial Information about Important Cooperative Enterprises
Unit: yuan
enterprises orjoint ventures
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
Other description
(3) Major Financial Information About Important Jointly Operated Enterprises
Unit: yuan
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
Other description
(4) Summary of financial information of unimportant cooperative enterprises and joint ventures
Unit: yuan
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
| Cooperative enterprise: | -- | -- |
| Total number of following items by shareholding ratio | -- | -- |
| - Joint venture: | -- | -- |
| Total book value of investment | 15,079,827.94 | 13,424,230.41 |
| Total number of following items by shareholding ratio | -- | -- |
| - Net profit | 1,655,597.53 | 4,565,754.26 |
| - Total comprehensive income | 1,655,597.53 | 4,565,754.26 |
Other description
(5) Significant restrictions on the ability of cooperative enterprises and joint ventures to transfer funds to
the Company
(6) Excess losses of cooperative enterprise or joint venture
Unit: yuan
| Name of cooperative enterprise or joint venture | Accumulated unrecognized losses in the previous period | Unrecognized loss in current period (or net profit shared in current period) | Accumulated unrecognized losses at the end of current period |
Other description
(7) Unconfirmed commitments related to investment in cooperative enterprise
(8) Contingent liabilities related to investment in cooperative enterprise or joint venture
4. Important pooling of interests
| Name of joint operation | Main operation site | Registration place | Business nature | Shareholding ratio / share enjoyed | |
| Direct | Indirect | ||||
Difference between the shareholding ratio or share enjoyed and the voting right ratio in joint operation:
If the joint operation is a separate entity, it shall be classified as the basis of joint operation:
Other description
5. Equity in the structured entity that is not included in the consolidated financial statementsDescription of structured entity not included in the consolidated financial statements
6. Others
X. Risks associated with financial instruments
The Company faces various financial risks in the process of operation: credit risk, market risk and liquidity risk.The Board of Directors of the Company is fully responsible for the determination of risk management objectivesand policies and ultimately responsible for the risk management objectives and policies, provided that the Boardof Directors has authorized the Company’s internal audit department to design and implement procedures toensure the effective implementation of risk management objectives and policies. The board reviews theeffectiveness of the procedures implemented and the reasonableness of risk management objectives and policiesthrough monthly reports submitted by the internal audit supervisor.The overall objective of the Company’s risk management is to develop risk management policies to minimize riskwithout overly affecting the Company' s competitiveness and strain capacity.
1. Credit risk
Credit risk refers to the risk of financial loss to the Company due to the failure of the counterparty to fulfill itscontractual obligations.
The Company is mainly faced with the customer credit risk caused by credit sales. Prior to signing a new contract,the Company will assess the credit risk of a new customer, including external credit ratings and, in some cases,bank reference letter (when such information is available). The Company sets a credit sales limit for eachcustomer, which is the maximum amount that does not require additional approval.The Company ensures that the overall credit risk of the Company is under control by quarterly monitoring of thecredit rating of existing customers and monthly review of the aging analysis of accounts receivable. Whenmonitoring the credit risk of customers, they are grouped according to their credit characteristics. Customers ratedas “high risk” are placed on the Restricted Customer List and can only be sold on credit for a future period withadditional approval, or they must be required to pay in advance.
2. Liquidity risk
Liquidity risk refers to the risk of capital shortage when the Company performs the obligation of settlement bycash payment or other financial assets. The Company’s policy is to ensure that there is sufficient cash to pay thedebt due. Liquidity risk is centrally controlled by the Financial Department of the Company. By monitoring cashbalances, securities that can be turned into cash at any time, and rolling forecasting of cash flows over the next 12months, the Finance Department ensures that the Company has sufficient funds to repay its debts under allreasonable projections.The Company’s various financial liabilities are shown as follows in terms of undiscounted contract cash flows onmaturity dates:
| Item | Closing Balance | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2-5 years | More than 5 years | Total | |
| Notes payable | 69,765,505.06 | 69,765,505.06 | ||||
| Accounts payable | 568,615,255.29 | 568,615,255.29 |
| Other payables | 615,888,545.12 | 615,888,545.12 | ||||
| Total | 1,254,269,305.47 | 1,254,269,305.47 |
| Item | Beginning balance | |||||
| Immediate repayment | Within 1 year | 1-2 years | 2-5 years | More than 5 years | Total | |
| Short-term loans | 150,071,416.66 | 150,071,416.66 | ||||
| Notes payable | 29,418,100.00 | 29,418,100.00 | ||||
| Accounts payable | 726,577,306.94 | 726,577,306.94 | ||||
| Other payables | 352,543,008.89 | 352,543,008.89 |
| Total | 1,258,609,832.49 | 1,258,609,832.49 |
3. Market risk
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financialinstruments fluctuates due to the change of market price, including exchange rate risk, interest rate risk and otherprice risk.
(1) Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due tothe change of market interest rate.The interest rate risk that the Company faces mainly comes from the bank's long-term borrowing. The Companyhas no long-term borrowings for the current period.
(2) Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates dueto the change of foreign exchange rate.The Company matches foreign currency income with foreign currency expenditure as far as possible to reduceexchange rate risk. In addition, the Company may enter into forward foreign exchange contracts or currencyexchange contracts to achieve the purpose of avoiding the exchange rate risk. The exchange rate risk faced by theCompany mainly come from financial assets and financial liabilities denominated in USD / EUR / HKD / Yen /Ringgit, etc. The amounts of foreign currency financial assets and foreign currency financial liabilities convertedinto RMB are listed as follows:
| Item | 2021.6.30 | |||||
| US dollar | EUR | HKD | Yen | Ringgit | Total | |
| Foreign currency financial assets | ||||||
| Cash and cash equivalents | 114,337,746.93 | 3,701,093.84 | 18,190,439.45 | 224,780.35 | 126,046.66 | 136,580,107.23 |
| Accounts receivable | 164,426,320.52 | 2,283,087.56 | 7,062,972.33 | - | 1,534,090.62 | 175,306,471.03 |
| Other receivables | - | - | 385,113.25 | - | 1,773.05 | 386,886.30 |
| Subtotal | 278,764,067.45 | 5,984,181.40 | 25,638,525.03 | 224,780.35 | 1,661,910.33 | 312,273,464.56 |
| Foreign currency financial liabilities |
| Accounts payable | 350,613.70 | 4,576.44 | 195,406.60 | - | 550,596.74 |
| Other payables | 94,437,629.42 | 88,199.15 | 8,647,194.78 | 1,354.30 | 1,244.80 | 103,175,622.45 |
| Subtotal | 94,437,629.42 | 438,812.85 | 8,651,771.22 | 196,760.90 | 1,244.80 | 103,726,219.19 |
| Net amount | 184,326,438.03 | 5,545,368.55 | 16,986,753.81 | 28,019.45 | 1,660,665.53 | 208,547,245.37 |
If the RMB appreciates or depreciates by 5% against USD / EUR / HKD / Yen / Ringgit, all other variables beingheld constant, the total comprehensive income of the Company will be reduced or increased by 8,775,340.15 yuan.Management considers that 5% is a reasonable reflection of the reasonable range of possible changes in RMBagainst foreign currencies.
4. Other price risks
The Company does not hold equity investments in other listed companies.
XI. Fair value disclosure
1. Ending fair value of assets and liabilities measured with fair value
Unit: yuan
| Item | Closing fair value | |||
| Measurement of fair value at first level | Measurement of fair value at second level | Measurement of fair value at third level | Total | |
| I. Continuous fair value measurement | -- | -- | -- | -- |
| 1. Financial assets measured with fair value and with the changes included in current profit and loss | 2,207,384,233.24 | 500,000,000.00 | 2,707,384,233.24 | |
| (1) Debt instruments investment | 2,207,384,233.24 | 500,000,000.00 | 2,707,384,233.24 | |
| (VI) Others | ||||
| 1. Amounts receivable financing | 9,263,087.17 | 9,263,087.17 | ||
| Total assets continuously measured at fair value | 2,216,647,320.41 | 500,000,000.00 | 2,716,647,320.41 | |
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Continuous and non-continuous measurement items of fair value at first level and recognition basis formarket price
3. Continuous and non-continuous measurement items of fair value at second level, qualitative andquantitative information on valuation techniques adopted and important parameters
4. Continuous and non-continuous measurement items of fair value at third level, qualitative andquantitative information on valuation techniques adopted and important parameters
5. Continuous measurement items of fair value at third level, adjustment information between openingand closing book value and sensitivity analysis of unobservable parameters
6. For continuous measurement items of fair value, if there is a conversion between different levels incurrent period, the reasons for the conversion and the policies for determining the conversion timepoint
7. Valuation technology change and reason of change in current period
8. Fair value of financial assets and financial liabilities not measured at fair value
9. Others
XII. Related parties and connected transactions
1. Parent company of the Company
| Parent company name | Registration place | Business nature | Registered capital | Shareholding ratio of the parent company in the Company | Voting right ratio of the parent company in the Company |
| Winner Group Limited | Cayman Islands | Equity investment and management business | HKD 1,143,000.00 | 68.10% | 68.10% |
Parent company of the CompanyWinner Group Limited was incorporated in the Cayman Islands on April 8, 2003 with registration number 124887 and an authorizedshare capital of 360,000,000.00 shares with a nominal value of HKD 1 per share. 1,143,000 shares have been issued. The registeredaddress is Vistra (Cayman) Limited, P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman KY1-1205,Cayman Islands.
The ultimate controlling party of the Company is Li Jianquan.Other description:
NA
2. Subsidiaries of the Company
See Note “IX. Interests in other entities” for information on the subsidiaries of the Company
3. Cooperative enterprises and joint ventures
See the note “IX. Interests in other entities” for important cooperative enterprises or joint ventures of the Company.Other cooperative enterprises or joint ventures that made related party transactions with the Company in the current period, or formedthe balance of related party transactions with the Company in the previous periods are as follows:
| Name of cooperative enterprise or joint venture | Relationship with the Company |
| Chengdu Winner | Joint venture |
Other descriptionSummary of financial information of unimportant cooperative enterprises and joint ventures:
| Ending balance/amount incurred in current period | Beginning balance/amount incurred in previous period | |
| - Joint venture: | -- | -- |
| Chengdu Winner | ||
| Total book value of investment | 15,079,827.94 | 13,424,230.41 |
| Total number of following items by shareholding ratio | -- | -- |
| - Net profit | 1,655,597.53 | 4,565,754.26 |
| - Other comprehensive income | ||
| - Total comprehensive income | 1,655,597.53 | 4,565,754.26 |
4. Situation of other related parties
| Name of other related parties | Relationship of other related parties with the Company |
| Sequoia Xinyuan | Shareholder of the Company, holding 9.16% of the Company’s shares |
| Kangsheng Investment | Shareholder of the Company, holding 5.68% of the Company’s shares |
| Kangxin Investment | Shareholder of the Company, holding 2.66% of the Company’s shares |
| SCGC | Shareholder of the Company, holding 1.99% of the Company’s shares |
| Kanglong Investment | Shareholder of the Company, holding 1.60% of the Company’s shares |
| Kangli Investment | Shareholder of the Company, holding 0.82% of the Company’s shares |
| Wuhan Zhuoling Packaging Co., Ltd. ((hereinafter referred to as “Wuhan Zhuoling”) | A company controlled by close family members of the Company’s key managers |
| Glory Ray Holdings Limited | A company controlled by the actual controller |
| Shenzhen Breo Technology Co., Ltd. (hereinafter referred to as “Breo”) | A company with the Company’s independent director Liang Wenzhao as an independent director |
| Shenzhen Ellassay Fashion Co., Ltd. (hereinafter referred to as “Ellassay”) | A company with the Company’s independent director Zhou Xiaoxiong as an independent director |
| Li Jianquan | Actual controller of the company |
| Xie Ping | Shareholder of the Company, holding 13.94% of the Company’s shares |
| Li Xiaoyuan | Shareholder of the Company, holding 6.32% of the Company’s shares |
| Fang Xiuyuan | Director, deputy general manager, chief financial officer |
| Xu Xiaodan | Director |
| Guo Zhenwei | Director |
| Liang Wenzhao | Independent director |
| Zhou Xiaoxiong | Independent director |
| Bi Qun | Independent director |
| Liu Weiwei | Chairman of the Board of Supervisors |
| Ye Yangjing | Supervisor |
| Wang Ying | Supervisor |
| Yin Wenling | Deputy general manager |
| Chen Huixuan | Deputy general manager, secretary to the Board of Directors |
| Song Haibo | Key technical personnel |
| Wang Huan | Key technical personnel |
Other description
5. Connected transaction
(1) Connected transaction of purchases and sales of goods, provision and acceptance of services
Purchase of goods/acceptance of services
Unit: yuan
| Related party | Connected transaction content | Amount incurred in current period | Approved transaction quota | Whether the transaction quota is exceeded | Amount incurred in previous period |
| Wuhan Zhuoling Packaging Co., Ltd. | Purchasing goods or services | 10,406,270.74 | No | 2,721,060.41 | |
| Chengdu Winner | Purchasing goods or services | 88,633.66 | No | 166,451.37 | |
| Breo | Purchasing goods or services | 124,234.00 | No | 31,424.78 |
Selling commodities/offering labor
Unit: yuan
| Related party | Connected transaction content | Amount incurred in current period | Amount incurred in previous period |
| Chengdu Winner | Selling goods or services | 2,362,509.36 | 1,940,885.50 |
| SCGC | Selling goods or services | 28,238.94 |
Connected transaction of purchases and sales of goods, provision and acceptance of services
(2) Associated fiduciary management/contracting and entrusted management/subcontractingEntrusted management / contracting of the Company:
Unit: yuan
| Name of entrusting party / subcontractor | Name of entrusting party / contractor | Entrusted / contracting asset type | Fiduciary / contracting start date | Fiduciary / contracting termination date | Pricing basis of fiduciary income / contracting income | Fiduciary income / contracting income recognized in current period |
Associated fiduciary / contractingEntrustment management / subcontracting of the Company:
Unit: yuan
| Name of entrusting party / subcontractor | Name of entrusting party / contractor | Entrusted / subcontracting asset type | Entrusted / subcontracting start date | Entrusted / subcontracting termination date | Pricing basis of fiduciary fee / subcontracting fee | Fiduciary fee / subcontracting fee recognized in current period |
Associated management / subcontracting
(3) Related-party lease
The Company as the lessor:
Unit: yuan
| Name of lessee | Type of leased assets | Lease income recognized in the current period | Lease income recognized in the previous period |
The Company as the lessee:
Unit: yuan
| Name of lessor | Type of leased assets | Lease fee recognized in the current period | Lease fee recognized in the previous period |
Related-party lease description
(4) Related-party guarantee
The Company as the guarantor
Unit: yuan
| Secured party | Amount guaranteed | Guarantee start date | Guarantee maturity date | Whether the guarantee has been fulfilled |
The Company as the secured party
Unit: yuan
| Guarantor | Amount guaranteed | Guarantee start date | Guarantee maturity date | Whether the guarantee has been fulfilled |
| Qianhai Purcotton, Shenzhen Purcotton, Li Jianquan | 50,000,000.00 | February 5, 2020 | February 5, 2021 | Yes |
| Shenzhen Purcotton | 200,000,000.00 | February 14, 2020 | February 14, 2021 | Yes |
| Li Jianquan | 20,000,000.00 | February 17, 2020 | February 17, 2021 | Yes |
Related-party guarantee
(5) Related party loan at call
Unit: yuan
| Related party | Borrowing amount | Start date | Maturity date | Description |
| Borrowing | ||||
| Lending | ||||
(6) Asset transfer and debt restructuring of related party
Unit: yuan
| Related party | Connected transaction content | Amount incurred in current period | Amount incurred in previous period |
(7) Key management personnel remuneration
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Key management personnel remuneration | 4,653,199.81 | 5,627,380.27 |
Note: The key management personnel include directors, supervisors, senior managers and core personnel.
(8) Other connected transactions
6. Accounts receivable and payable by related parties
(1) Receivables
Unit: yuan
| Project name | Related party | Closing Balance | Beginning balance | ||
| Book balance | Provision for bad debt | Book balance | Provision for bad debt | ||
| Accounts receivable | Chengdu Winner | 61,942.50 | 3,097.13 | 39,800.00 | 1,990.00 |
| Accounts receivable | Ellassay | 746,070.00 | 37,303.50 | ||
| Advance to supplier | Breo | 59,198.00 | |||
(2) Payables
Unit: yuan
| Project name | Related party | Ending book balance | Beginning book balance |
| Accounts payable | Chengdu Winner | 55,322.00 | 67,630.00 |
| Accounts payable | Wuhan Zhuoling | 1,313,480.16 | 4,705,258.45 |
| Accounts payable | Breo | 51,511.50 | |
| Contract liabilities | Chengdu Winner | 1,193,017.20 | |
| Contract liabilities | SCGC | 13,500.00 | 29,486.73 |
7. Related party commitment
8. Others
XIII. Share-based payment
1. Overall status of share-based payment
√Applicable □ Not applicable
Unit: yuan
| Total amount of equity instruments granted by the company during the current period | 508,824,220.00 |
| Total amount of equity instruments exercised by the company during the current period | 0.00 |
| Total amount of equity instruments invalidated by the company during the current period | 0.00 |
| Range of the exercise price of the Company’s stock options outstanding at the end of the period and the remaining term of the contract | In case of the audited revenue in 2021 ≥ 12 billion yuan, the ownership proportion at the Company level is 100%; in case of 10 billion yuan ≤ the audited revenue in 2021 < 12 billion yuan, the ownership proportion at the Company level is 80%; in case of the audited business income in 2021 < 10 billion yuan, the restricted stock planned to be vested by the incentive object shall not be vested and become invalid. In case of the audited revenue in 2022 ≥ the audited revenue in 2021 * (1+30%), the ownership proportion at the Company level is 100%; in case of the audited revenue in 2021 * (1+20%) ≤ the audited revenue in 2022 < the audited revenue in 2021 * (1+30%), the ownership proportion at the Company level is 80%; in case of the audited business income in 2022 < the audited revenue in 2021 * (1+20%), the restricted stock planned to be vested by the incentive object shall not be vested and become invalid. |
| Range of the exercise price of the Company’s other equity instruments outstanding at the end of the period and the remaining term of the contract | None |
Other description2020 Restricted Stock Incentive Plan
1. Number of restricted stock granted
On November 27, 2020, the Company held the 15th meeting of the second Board of Directors and the 9th meeting of the secondBoard of Supervisors, deliberated and passed the Proposal on the Company’s 2020 Restricted Stock Incentive Plan (Draft) and ItsAbstract. On December 15, 2020, the Company held the sixth extraordinary general meeting of shareholders in 2020 to deliberateand pass the Proposal on the Company’s 2020 Restricted Stock Incentive Plan (Draft) and Its Abstract. According to the aboveproposal, the number of restricted stock (Class II restricted stock) to be granted in this incentive plan is 6.5 million, and theunderlying stock involved is A -share common stock, accounting for about 1.52% of the total capital stock of the Company at thetime of announcement of the draft incentive plan. Among them, 5.9 million shares were granted for the first time, accounting forabout 1.38% of the total capital stock o f the Company at the time of announcement of the draft incentive plan, and 90.77% of thetotal equity to be granted. 0.6 million shares were reserved to be granted, accounting for about 0.14% of the total capital stock of theCompany at the time of announcement of the draft incentive plan, and 9.23% of the total equity to be granted. No more than 1,053incentive objects will be granted at the first time, including directors, senior managers, and other persons deemed to need incentivesby the Board of Directors.On December 18, 2020, the Company’s 17th meeting of the second Board of Directors and the 11th meeting of the second Board ofSupervisors deliberated and adopted the Proposal on First Granting Restricted Stocks to Incentive Objects. In view of the fact that 17incentive objects gave up the restricted stock to be granted by the Company due to resignation or personal reasons, they no longerqualified for the incentive conditions. According to the 2020 Restricted Stock Incentive Plan (Draft), the Company adjusted theincentive objects and the number of grants. The number of incentive objects granted for the first time was adjusted from 1,053 to1,036, and the total number of restricted stock granted for the first time was adjusted from 5.90 million to 5.833 million.
2. Validity, grant date, vesting arrangement and lock-up period of this incentive plan
① The incentive plan shall be valid for no more than 48 months from the date of the first grant of restricted stock to the date when allthe restricted stock granted to the incentive object is vested or invalidated.
② After the incentive plan is approved by the general meeting of shareholders of the Company, the Board of Directors shalldetermine the grant date, and the grant date must be the trading day. The Company shall grant the restricted stock and complete theannouncement within 60 days after the approval of the general meeting of shareholders. If the Company fails to complete the abovework within 60 days, the implementation of this incentive plan will be terminated, and the restricted stock not granted will becomeinvalid.The Company shall, within 12 months after the deliberation and approval of the incentive plan by the general meeting of shareholders, specify the incentive objects reserved for award. If the incentive objects are not specified for more than 12 months, therestricted stock corresponding to the reserved part shall become invalid.
③ The vesting arrangement for the first grant of restricted stock in this incentive plan is shown in the following table:
| Vesting arrangement | Vesting period | Vesting ratio |
| First vesting period | From the first trading day of 17 months from the date of the first grant to the last trading day within 29 months from the date of the first grant | 50% |
| Second vesting period | From the first trading day of 29 months from the date of the first grant to the last trading day within 41 months from the date of the first grant | 50% |
If the restricted stock corresponding to the reserved part is granted within 2020, the vesting arrangement for granting restricted stocksreserved in this incentive plan is consistent with the vesting arrangement for the first grant of restricted stock.If the restricted stock corresponding to the reserved part is granted within 2021, the vesting arrangement for granting restricted stocksreserved in this incentive plan is shown in the following table:
| Vesting arrangement | Vesting period | Vesting ratio |
| First vesting period | From the first trading day of 12 months from the date of reserved granting to the last trading day within 24 months from the date of reserved granting | 50% |
| Second vesting period | From the first trading day of 24 months from the date of reserved granting to the last trading day within 36 months from the date of reserved granting | 50% |
If the incentive objects are directors and senior management of the Company, the shares transferred each year during their term ofoffice shall not exceed 25% of the total number of the Company’s shares they hold; they shall not transfer the shares they hold withinhalf a year after leaving the Company
2. Equity-settled share-based payments
√Applicable □ Not applicable
Unit: yuan
| Method for determining the fair value of equity instruments on the grant date | The fair value of the restricted stocks of directors and senior management is calculated using the Black-Scholes model option pricing formula; the fair value of other employee restricted stocks is determined by reference to the stock closing price on the grant date without taking into account the liquidity discount. |
| Basis for the determination of the number of viable equity instruments | None |
| Reasons for significant differences between the current and previous estimates | None |
| Accumulated amount of equity-settled share-based payments | 166,167,747.30 |
| recorded in capital reserves | |
| Total amount of expenses recognized by equity-settled share-based payments in current period | 142,429,497.69 |
Other descriptionNA
3. Cash-settled share-based payments
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
NA
5. Others
NA
XIV. Commitment and contingencies
1. Important commitment issues
Important commitments on balance sheet dateAs of June 30, 2021, the outstanding contracts among the large-value contracts signed by the Company and its subsidiaries that arebeing or are about to be performed are as follows:
| Project name | Amount |
| Winner Medical (Tianmen) - Intelligent 3D e-commerce warehouse for pure cotton business | 43,200,000.00 |
| Winner Medical (Tianmen) - Spunlace Line 7 - De-dusting and carding machines | 11,200,000.00 |
| Winner Medical (Tianmen) - Non-woven carding machine and spunlace machine | 26,440,528.00 |
| Winner Medical (Tianmen) - Automated storage equipment project | 16,065,000.00 |
| Winner Medical (Tianmen) - Winner Medical (Tianmen) Spunlace Phase III Finishing Plant Project | 5,320,000.00 |
| Purcotton - Software development | 20,780,000.00 |
| Winner Medical (Jiayu) - The supporting de-dusting and carding machines for raw cotton spunlace production lines | 3,144,000.00 |
| Winner Medical (Chongyang) - Full-servo special (crinkle) non-woven machines | 2,800,000.00 |
| Winner Medical (Wuhan) - Engineering project | 4,772,448.19 |
| Winner Medical (Wuhan) - Equipment procurement | 5,863,358.52 |
| Winner Medical (Huanggang) - Full-servo straight pack sanitary pads production equipment | 31,500,000.00 |
| Winner Medical (Jingmen) - North warehouse | 4,400,000.00 |
| Total | 175,485,334.71 |
2. Contingencies
(1) Important contingencies on balance sheet date
NA
(2) Explanation is also required if the Company has no important contingencies to be disclosedThe Company has no important contingencies to be disclosed.
3. Others
NA
XV. Post-balance sheet events
1. Important non-adjustment items
Unit: yuan
| Item | Description | Influence number of financial position and operating results | Reasons for influence number cannot be estimated |
2. Profit distribution
Unit: yuan
3. Sales return
4. Other post-balance sheet events
XVI. Other important issues
1. Correction of previous accounting errors
(1) Retrospective restatement
Unit: yuan
| Content of accounting error correction | Processing procedures | Report item name of each affected comparison period | Cumulative influence number |
(2) Prospective application
| Content of accounting error correction | Approval procedures | Reason for adopting prospective application |
2. Debt restructuring
3. Assets replacement
(1) Exchange of non-monetary assets
(2) Other asset replacement
4. Pension plan
5. Discontinued operation
Unit: yuan
| Item | Income | Cost | Total profit | Income tax expenses | Net profit | Profit from discontinued operations attributable to the owners of parent company |
Other description
6. Segment information
(1) Determination basis and accounting policy of reporting segment
According to the Company's internal organizational structure, management requirements and internal reporting system, threereporting segments have been determined, respectively: medical consumables, health consumer goods, pure cotton spunlacenon-woven fabrics. Reporting segments of the Company offers different products or services or operates in different regions. Sinceeach segment requires different technologies or marketing strategies, the management of the Company manages the operatingactivities of each reporting segment separately and regularly evaluates the operating results of these reporting segments to determinethe allocation of resources to them and evaluate their performance.The inter-segment transfer price is determined on the basis of the actual transaction price, and the expenses indirectly attributable tothe segments are distributed among the segments in proportion to the income (as determined by the Company). Assets are allocatedaccording to the operations of a segment and the location of the assets. Liabilities of a segment include liabilities attributable to thatsegment arising from the operations of a segment. If expenses related to liabilities shared by multiple operating segments areallocated to those operating segments, such shared liabilities are also allocated to those operating segments.
(2) Financial information of the reporting segment
Unit: yuan
| Item | Medical consumables (segment 1) | Healthy consumer goods (segment 2) | Cotton non-woven coil (segment 3) | Unallocated | Offset between segments | Total |
| Revenue | 2,171,174,605.39 | 1,790,338,558.90 | 98,352,490.63 | 4,059,865,654.92 | ||
| Costs | 1,037,003,764.37 | 820,820,906.36 | 63,965,031.74 | 1,921,789,702.47 | ||
| Assets impairment losses | 27,617,878.12 | 20,941,502.91 | 229,744.86 | 48,789,125.89 | ||
| Depreciation expense and amortization expense | 25,221,906.19 | 111,264,949.28 | 2,457,131.11 | 138,943,986.58 | ||
| Operating profit / loss | 556,176,964.77 | 227,140,101.71 | 9,127,160.04 | 118,125,459.04 | 910,569,685.56 | |
| Non-revenue and expense | (6,163,340.48) | (6,163,340.48) | ||||
| Assets and liabilities | ||||||
| Total assets | 2,437,871,731.14 | 2,842,022,338.63 | 275,572,902.50 | 7,557,509,275.64 | 13,112,976,247.91 | |
| Total liabilities | 792,002,649.35 | 1,221,566,227.25 | 21,636,806.96 | 544,709,231.24 | 2,579,914,914.80 |
(3) If the Company has no reporting segments, or cannot disclose the total assets and total liabilities ofeach reporting segment, the reasons shall be explained
(4) Other description
7. Other important transactions and matters affecting the decision-making of investors
(1) Urban Renewal Project of Winner Industrial Park
① Project Overview
On April 6, 2017, the Company and Shenzhen Galaxy Real Estate Development Co., Ltd. (hereinafter referred to as “Galaxy RealEstate”) signed the Cooperation Agreement on Urban Renewal Project of Winner Industrial Park to apply for and implement thedemolition and reconstruction of urban renewal and reconstruction of Winner Industrial Park in Longhua District, Shenzhen City(hereinafter referred to as “the Project”). The scope of land to be demolished for the Project is a state-owned land that has beentransferred. The land parcel number is A819-0123. The land area is 29,064.49 m2, and the current use is industrial land. According tothe statutory plan of [Pinus tabulaeformis area] of No.402-19&20&21, Bao’an District, Shenzhen City, the planned use of this landparcel is a second-class residential land. The land has been registered for title with a construction area of 36,625.89 m2, used foroffice, plant and dormitory. The Company shall be the sole subject of rights to the said parcel and all the buildings (structures) andappendages thereon. At present, the above target land and part of the building are not mortgaged.
② Cooperation mode
The Company agrees to entrust the target land and building to Galaxy Real Estate for application for approval of the urban renewalunit plan, and accepts the relocation compensation of Galaxy Real Estate according to the conditions agreed in this agreement.Galaxy Real Estate is responsible for all the work related to the declaration of renewal unit plan of the target land and building andimplementation of urban renewal, responsible for the relocation compensation and demolition and reconstruction funds, and enjoysthe interest in the renewal project as the single market implementer.After the renewal and reconstruction of the target land and buildings is approved by the urban renewal unit plan, the specifictransformation and development intensity, planned purpose and indicators, etc. shall be discussed by Galaxy Real Estate with theCompany in advance before the formal application for construction, but the final approval shall be subject to the relevant governmentdepartments.Galaxy Real Estate shall pay the cooperation consideration to the Company by paying the relocation compensation consideration tothe Company. The Company voluntarily chooses the relocation compensation method that combines monetary compensation andproperty right exchange (relocation), including: 1) monetary compensation: 400 million yuan; 2) Property right exchange (relocation):
the area of property right exchange (relocation) obtained by Party B shall be determined at 40% of the gross floor area for sale basedon the gross floor area for sale determined in the final approval of the special planning of the renewal unit of this Project.
③ Current progress
Up to now, Galaxy Real Estate has paid the first margin of 50 million yuan and the second advance compensation of 100 millionyuan for demolition to the Company according to the agreement. The project was announced in September 2019 and approved inDecember 2019. Subsequent progress will be made in accordance with the procedures stipulated by the government, and the specificprogress will be subject to the government's approval.According to the agreement, if the project fails to obtain the approval of the renewal unit plan due to government policy or forcemajeure, either party has the right to terminate the contract, and the amount collected by the Company will be returned to GalaxyReal Estate without interest within 30 days after the termination of the contract.
(2) Heyuan investment and construction project
① Problem background
In 2016, under the guidance and promotion of Shenzhen Longhua District Committee and District Government, the Company plansto transfer part of the production and logistics functions to Heyuan Zijin Linjiang Industrial Park in response to the policy ofsupporting Heyuan City as a counterpart of Shenzhen City. In May 2016, the Company and the People’s Government of Zijin Countyof Heyuan City signed the Agreement on Investment and Construction of Medical Package and Cotton Household Goods ProductionProject (hereinafter referred to as the “Investment Agreement”), with the construction land of the project covering 200,000 m2After the agreement was signed and the Land Use Notice was obtained, the Company submitted the planning plan, projectapplication and approval form as required, and started the construction. In August 2016, Winner Medical (Heyuan) obtained theRecord Certificate of Enterprise Investment Projects in Guangdong Province issued by the Development and Reform Bureau of ZijinCounty. In June 2017, Environmental Protection Bureau of Zijin County issued the Approval on the Environmental Impact ReportForm of the Construction Project of Winner Medical (Heyuan) Co., Ltd. In accordance with the agreement, the Zijin CountyGovernment assisted in obtaining a series of licenses such as state-owned land use right certificate and construction land planningpermit.After the project was signed and started construction, the government required all construction projects under construction in ZijinLinjiang Industrial Park to stop due to land conflicts between the project site and the planned Heyuan East Station ofJiangxi-Shenzhen High-speed Railway and the High-speed Railway New Town. Meanwhile, the relevant land use procedures weresuspended.
② Current progress
In June 2019, the Regulatory Detailed Planning and Constructional Detailed Urban Design of the Core Area of Heyuan High-speed
Railway New Town was published to the public from June 22, 2019 to July 22, 2019. According to the final publicity content, it isdetermined that the square in front of Heyuan East Station of High-speed Railway, National Highway 205 and the High-speedRailway New Town overlap with the project land of Winner Medical (Heyuan).In October 2019, the Company signed a tripartite agreement with the People's Government of Zijin County and the ManagementCommittee of Heyuan Jiangdong New District to clarify the overall disposal plan. The land used for Winner Medical (Heyuan)’sproject and its above-ground buildings will be recovered by the People’s Government of Zijin County, and the three parties agree todetermine the amount of compensation through arbitration. The People’s Government of Zijin County paid 30 million yuan to theCompany as the performance bond.In November 2019, International Arbitration Court of Ganjiang New District issued the award ((2019) G.G.Z.Zi No.095), whichconfirmed the termination of the original Investment Agreement, and the People's Government of Zijin County shall bear the attorneyfees, legal costs and other expenses totaling 2,655,320.00 yuan. The land transfer deposit of 3 million yuan shall be returned to t heCompany and compensate for the economic loss of 550 million yuan. The People's Government of Zijin County shall pay 50% of theamount before December 31, 2019 and 50% before February 29, 2020. As of June 30, 2021, the Company has received the landtransfer deposit of 3 million yuan returned by the People's Government of Zijin County and paid the compensation of 314 millionyuan. The Company has also handed over the project land, above-ground buildings, equipment and facilities and relevant supportingmaterials to the People's Government of Zijin County.
③ Impact of this matter on the Company's operation
Winner Medical (Heyuan)'s business positioning is mainly the production, logistics and warehousing functions of medical packageand cotton daily necessities. At present, the Company has transferred the production, logistics and warehousing functions ofPurcotton daily necessities to the Company's subsidiary Hubei Winner, and the production of medical package has been transferred tothe Company's subsidiary Winner Medical (Chongyang).Hubei Winner and Winner Medical (Chongyang) have sufficient capacity to undertake the aforementioned production, logistics andwarehousing business originally intended to be undertaken by Winner Medical (Heyuan). The above matters of Winner Medical(Heyuan) have not caused significant adverse impact on the normal production and operation of the Company.
8. Others
XVII. Notes on main items of parent company's financial statement
1. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
| Class | Closing Balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book value | Book balance | Provision for bad debt | Book value | |||||
| Amount | Proportion | Amount | Accruing proportion | Amount | Proportion | Amount | Accruing proportion | |||
| Including: | ||||||||||
| Accounts receivable of provision for bad | 596,374,175.88 | 100.00% | 29,808,864.73 | 5.00% | 566,565,311.15 | 711,959,379.83 | 100.00% | 32,314,540.44 | 4.54% | 679,644,839.39 |
| debt by combination | ||||||||||
| Including: | ||||||||||
| Including: Aging analysis | 589,169,364.38 | 98.79% | 29,808,864.73 | 5.06% | 559,360,499.65 | 644,741,680.92 | 90.56% | 32,314,540.44 | 5.01% | 612,427,140.48 |
| Other combination | 7,204,811.50 | 1.21% | 7,204,811.50 | 67,217,698.91 | 9.44% | 67,217,698.91 | ||||
| Total | 596,374,175.88 | 100.00% | 29,808,864.73 | 566,565,311.15 | 711,959,379.83 | 100.00% | 32,314,540.44 | 4.54% | 679,644,839.39 |
Provision for bad debt by single item:
Unit: yuan
| Name | Closing Balance | |||
| Book balance | Provision for bad debt | Accruing proportion | Reasons for provision | |
Provision for bad debt by combination: aging analysis combination
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Within 1 year (including 1 year) | 584,331,467.44 | 29,216,573.38 | 5.00% |
| 1~2 years (including 2 years) | 4,540,980.86 | 454,098.09 | 10.00% |
| 2~3 years (including 3 years) | 226,746.88 | 68,024.06 | 30.00% |
| More than 5 years | 70,169.20 | 70,169.20 | 100.00% |
| Total | 589,169,364.38 | 29,808,864.73 | -- |
Description of the basis for determining the combination:
On June 30, 2021, the Company reviewed the appropriateness of the provision for bad debts of receivables in the previous yearaccording to the historical bad debt loss, and believed that the default probability has a strong correlation with the aging of accounts,and the account age is still a sign of whether the credit risk of the company's receivables has significantly increased. Therefore, theCompany's credit risk loss on June 30, 2021 is estimated based on the aging of accounts and estimated at the original loss ratio.Provision for bad debt by combination: other combination - related parties within the group
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
| Other combination - related parties within the group | 7,204,811.50 | 0.00% | |
| Total | 7,204,811.50 | -- | |
Description of the basis for determining the combination:
According to the Company's accounting policy, the related parties within the group do not make provision for bad debts.
Provision for bad debt by combination:
Unit: yuan
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Accruing proportion | |
Description of the basis for determining the combination:
If the bad debt provision of accounts receivable is withdrawn according to the general model of expected credit loss, please refer tothe disclosure method of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Closing Balance |
| Within 1 year (including 1 year) | 591,536,278.94 |
| 1~2 years | 4,540,980.86 |
| 2~3 years | 226,746.88 |
| More than 3 years | 70,169.20 |
| More than 5 years | 70,169.20 |
| Total | 596,374,175.88 |
(2) Provision, recovery or reversal of bad debt reserves in the current periodProvision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Others | |||
| Provision for bad debt of accounts receivable | 32,314,540.44 | 5,861,926.64 | 8,367,602.35 | 29,808,864.73 | ||
| Total | 32,314,540.44 | 5,861,926.64 | 8,367,602.35 | 29,808,864.73 | ||
Where the amount of bad debt provision recovered or reversed is important:
Unit: yuan
| Unit name | Amount recovered or reversed | Recovery way |
(3) Accounts receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important accounts receivable:
Unit: yuan
| Unit name | Nature of accounts receivable | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from connected transactions |
Description of write-off accounts receivable:
(4) Accounts receivable with Top 5 ending balances by debtor
Unit: yuan
| Unit name | Ending balance of accounts receivable | Proportion in total other ending balance of accounts receivable | Ending balance of bad debt provision |
| First | 192,013,204.61 | 32.20% | 9,600,660.23 |
| Second | 31,273,460.19 | 5.24% | 1,563,673.01 |
| Third | 29,435,075.96 | 4.94% | 1,471,753.80 |
| Fourth | 21,579,058.19 | 3.62% | 1,078,952.91 |
| Fifth | 17,402,885.15 | 2.92% | 870,144.26 |
| Total | 291,703,684.10 | 48.92% |
(5) Accounts receivable derecognized due to transfer of financial assets
(6) Amount of assets and liabilities formed by transferring accounts receivables and continuing
involvement
Other description:
2. Other receivables
Unit: yuan
| Item | Closing Balance | Beginning balance |
| Other receivables | 224,254,705.29 | 361,160,139.37 |
| Total | 224,254,705.29 | 361,160,139.37 |
(1) Interest receivable
1) Classification of interest receivable
Unit: yuan
| Item | Closing Balance | Beginning balance |
2) Important overdue interest
| Borrower | Closing Balance | Overdue time | Overdue reason | Whether there is impairment and its judgment basis |
Other description:
3) Provision for bad debt
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable
Unit: yuan
| Project (or invested unit) | Closing Balance | Beginning balance |
2) Important dividends receivable with the aging more than 1 year
Unit: yuan
| Project (or invested unit) | Closing Balance | Aging | Reason for non-recovery | Whether there is impairment and its judgment basis |
3) Provision for bad debt
□ Applicable √ Not applicable
Other description:
(3) Other receivables
1) Other receivables classified by nature
Unit: yuan
| Nature of payment | Ending book balance | Beginning book balance |
| Compensation for investment and construction project of Winner Medical (Heyuan) | 238,655,320.00 | 387,655,320.00 |
| Export drawback | 7,190,798.48 | |
| Margin and deposit | 7,023,624.55 | 3,650,806.01 |
| Employee pretty cash | 506,583.24 | 175,183.18 |
| Others | 2,551,682.43 | 1,528,756.45 |
| Total | 248,737,210.22 | 400,200,864.12 |
2) Provision for bad debt
Unit: yuan
| Provision for bad debt | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses over the entire duration (no credit impairment occurred) | Expected credit losses over the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2021 | 39,040,724.75 | 39,040,724.75 | ||
| Balance on January 1, 2021 in the current period | —— | —— | —— | —— |
| Accrual in current period | 167,011.59 | 167,011.59 | ||
| Reversal in current period | 14,725,231.41 | 14,725,231.41 | ||
| Balance on June 30, 2021 | 24,482,504.93 | 24,482,504.93 |
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
| Aging | Closing Balance |
| Within 1 year (including 1 year) | 9,696,700.82 |
| 1~2 years | 238,743,793.11 |
| 2~3 years | 125,337.86 |
| More than 3 years | 171,378.43 |
| 3~4 years | 171,378.43 |
| Total | 248,737,210.22 |
3) Provision, recovery or reversal of bad debt reserves in the current periodProvision for bad debts in current period:
Unit: yuan
| Class | Beginning balance | Amount of change in current period | Closing Balance | |||
| Accrual | Recovered or reversed | Write-off | Others | |||
| Provision for bad debts of other receivables | 39,040,724.75 | 167,011.59 | 14,725,231.41 | 24,482,504.93 | ||
| Total | 39,040,724.75 | 167,011.59 | 14,725,231.41 | 24,482,504.93 |
Where the amount of bad debt provision reversed or recovered is important:
Unit: yuan
| Unit name | Amount reversed or recovered | Recovery way |
4) Other receivable actually written off at the current period
Unit: yuan
| Item | Amount written off |
Write-off of important other receivables:
Unit: yuan
| Unit name | Nature of other receivables | Amount written off | Reasons for write-off | Write-off procedures performed | Whether the payments arise from connected transactions |
Description of write-off of other receivables
5) Other receivables with Top 5 ending balances by debtor
Unit: yuan
| Unit name | Nature of payment | Closing Balance | Aging | Proportion in total other ending balance receivable | Ending balance of bad debt provision |
| First | Receivables related to Heyuan project | 238,655,320.00 | 1~2 years | 95.95% | 23,865,532.00 |
| Second | Margin and deposit | 5,125,432.01 | Within 1 year | 2.06% | 256,271.60 |
| Third | Margin and deposit | 506,269.75 | Within 1 year | 0.20% | 25,313.49 |
| Fourth | Others | 489,228.01 | Within 1 year | 0.20% | 24,461.40 |
| Fifth | Margin and deposit | 190,000.00 | Within 1 year | 0.08% | 9,500.00 |
| Total | -- | 244,966,249.77 | -- | 98.49% | 24,181,078.49 |
6) Accounts receivable involving government subsidies
Unit: yuan
| Unit name | Name of government | Closing Balance | Ending aging | Estimated collection time, |
| subsidy project | amount and basis |
7) Other receivables derecognized due to transfer of financial assets
8) Amount of assets and liabilities formed by transferring other receivables and continuing involvement
Other description:
3. Long-term equity investment
Unit: yuan
| Item | Closing Balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiaries | 908,737,678.63 | 4,086,994.48 | 904,650,684.15 | 728,737,678.63 | 4,086,994.48 | 724,650,684.15 |
| Investment in associated enterprises and joint enterprises | 15,079,827.94 | 15,079,827.94 | 13,424,230.41 | 13,424,230.41 | ||
| Total | 923,817,506.57 | 4,086,994.48 | 919,730,512.09 | 742,161,909.04 | 4,086,994.48 | 738,074,914.56 |
(1) Investment in subsidiaries
Unit: yuan
| Invested unit | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end of period | |||
| Further investment | Capital reduction | Provision for impairment | Others | ||||
| Winner Medical (Huanggang) Co., Ltd. | 267,491,627.79 | 267,491,627.79 | |||||
| Winner Medical (Jingmen) Co., Ltd. | 27,242,761.31 | 27,242,761.31 | |||||
| Winner Medical (Tianmen) Co., Ltd. | 39,697,276.28 | 39,697,276.28 | |||||
| Winner Medical (Chongyang) Co., Ltd. | 33,629,806.08 | 33,629,806.08 | |||||
| Winner Medical (Jiayu) Co., Ltd. | 36,436,595.28 | 36,436,595.28 | |||||
| Yichang Winner Medical Textile Co., Ltd. | 18,595,897.41 | 18,595,897.41 | |||||
| Winner Medical (Heyuan) Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Winner Medical (Wuhan) Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Winner Medical (Hong Kong) Ltd. (HK) | 1,456,720.00 | 1,456,720.00 | |||||
| Winner Medical Malaysia Sdn. Bhd. (MY) | 0.00 | 4,086,994.48 | |||||
| Shenzhen Purcotton Technology Co., Ltd. | 50,000,000.00 | 80,000,000.00 | 130,000,000.00 | ||||
| Pure HB (Shanghai) Co., Ltd. | 100,000.00 | 100,000.00 | |||||
| Shenzhen PureH2B Technology Co., Ltd. | 50,000,000.00 | 100,000,000.00 | 150,000,000.00 | ||||
| Total | 724,650,684.15 | 180,000,000.00 | 904,650,684.15 | 4,086,994.48 |
(2) Investment in associated enterprises and joint enterprises
Unit: yuan
| Invested entity | Beginning balance (book value) | Increase or decrease in current period | Ending balance (book value) | Balance of impairment provision at the end of period | |||||||
| Further investment | Capital reduction | Investment gains and losses recognized by the equity | Adjustment of other comprehensive income | Changes in other equity | Declared payment of cash dividends or profits | Provision for impairment | Others | ||||
| method | |||||||||||
| I. Cooperative enterprise | |||||||||||
| II. Joint venture | |||||||||||
| Chengdu Winner | 13,424,230.41 | 1,655,597.53 | 15,079,827.94 | ||||||||
| Subtotal | 13,424,230.41 | 1,655,597.53 | 15,079,827.94 | ||||||||
| Total | 13,424,230.41 | 1,655,597.53 | 15,079,827.94 | ||||||||
(3) Other description
4. Revenue and cost
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 2,129,805,774.91 | 1,233,799,517.75 | 2,639,684,107.75 | 1,503,030,276.12 |
| Other businesses | 22,965,185.06 | 3,550,383.03 | 24,539,475.08 | 3,344,800.49 |
| Total | 2,152,770,959.97 | 1,237,349,900.78 | 2,664,223,582.83 | 1,506,375,076.61 |
Income related information:
Unit: yuan
| Contract classification | Segment 1 | Segment 2 | Total | |
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: |
Information related to performance obligations:
NoneInformation related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations signed but not yet performed or completed at the end of thisreporting period is 0.00 yuan.Other description:
5. Investment income
Unit: yuan
| Item | Amount incurred in current period | Amount incurred in previous period |
| Long-term equity investment gains measured by employing the equity method | 1,655,597.53 | 2,288,557.50 |
| Investment income from purchasing financial products | 43,948,199.51 | 4,349,191.29 |
| Total | 45,603,797.04 | 6,637,748.79 |
6. Others
XVIII. Further information
1. Current non-recurring gain and loss statement
√Applicable □ Not applicable
Unit: yuan
| Item | Amount | Description |
| Profit and loss on disposal of non-current assets | (7,991,363.76) | |
| Government subsidies included into the current profits and losses, except those government subsidies, which are closely related to the business of a company and enjoyed in accordance with a certain standard quota or quantity of the state | 86,791,122.28 | |
| In addition to the effective hedging business related to the company's normal business operations, the profit and loss from fair value changes arising from holding tradable financial assets, derivative financial assets, tradable financial liabilities, and derivative financial liabilities, as well as the investment income from disposal of tradable financial assets and derivative financial assets, tradable financial liabilities, derivative financial liabilities, and other debt investments | 79,825,882.59 | |
| Income and expenditure other than those mentioned above | 1,756,948.93 |
| Less: Amount affected by income tax | 26,599,643.40 | |
| Amount of minority shareholders' equity affected | (174.41) | |
| Total | 133,783,121.05 | -- |
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 onInformation Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from thenon-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of PublicSecurities Issuing Companies - Non-recurrent Profits and Losses.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Reporting profit | Weighted average return on net assets | Earnings Per Share | |
| Basic EPS (yuan/share) | Diluted EPS (yuan/share) | ||
| Net profit attributable to common shareholders of the Company | 7.06% | 1.7844 | 1.7715 |
| Net profit attributable to common shareholders of the Company after deduction of non-recurring profits and losses | 5.82% | 1.4707 | 1.4601 |
3. Differences in Accounting Data under Domestic and Foreign Accounting Standards
(1) The difference between net profits and net assets in financial statements disclosed according to the
International Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
(2) The difference between net profits and net assets in financial statements disclosed according to theOverseas Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
(3) Causes for differences in accounting data under domestic and foreign accounting standards. If thedifference adjustment has been made to the data audited by the overseas audit institution, the name ofthe overseas audit institution shall be indicated
4. Others
In case of a divergence of the interpretation the Chinese version of the annual report shall prevail.
Winner Medical Co., Ltd.September 29, 2021