C&S Paper Co., Ltd.
Annual Report 2020
April 2021
Section I Important Notice, Contents and DefinitionsThe Board of Directors and the Board of Supervisors of the Company and its directors,supervisors and senior management warrant that the information contained in this annualreport is true, accurate and complete without any false and misleading statements or materialomissions, and severally and jointly accept legal liability thereof.Deng Yinzhong, the legal representative of the Company, Dong Ye, the person in charge ofaccounting of the Company, and Xu Xianjing, the person in charge of the accountingdepartment of the Company, have declared that they warrant the truthfulness, accuracy andcompleteness of the financial statements set out in this annual report.All directors of the Company attended the Board meeting on which this report was reviewed.In the annual report, the decimal sum error is caused by roundingThe forward-looking statements in this annual report, including future plans, do notconstitute substantive commitments of the Company to investors. Investors should be awareof the investment risks.I. Risk of great fluctuations in pulp pricesPulp is an international bulk raw material and its price is obviously affected by the worldeconomic cycle. Since 2019, pulp prices have tumbled sharply owing to weaker Chinesemarket demand, trade disputes across the world, exchange rate movement, and increasedpulp inventories. In 2020, pulp prices were generally maintained at a relatively low level andstarted to rise in the fourth quarter. Pulp is the primary raw material of the Company’sproduction, accounting for 40%-60% of the total production costs. Therefore, substantialfluctuations in pulp prices pose a risk to the Company.II. Risk of exchange rateThe import of machinery equipment and pulp and the export of products to overseas marketof the Company are mainly settled in USD, HKD, and EUR. Since exchange rates fluctuateunder the impact of the international economic situation, the Company faces exchange raterisks.III. Risk of regional market competitionHousehold paper is a vast market in China in terms of both geography and market space.
Given the low unit value, transportation expenses taking up a large part of the sales price, andlimitations of the transportation radius, the main competition in the household paper industrylies in regional markets. High-end, mid-end, and low-end products compete in regionalmarkets, with the influence of spending power and consumption habit. Judging from thedevelopment trend of the industry, mid- and high-end household paper of national brands hasmore competitive edge. However, at present, some regional brands have an advantage in someregional markets. Compared with overseas counterparts, China's household paper industryrequires continued integration. The Company embraces production bases and a sales networkacross the country and offers mid- and high-end products under national brands.Nevertheless, it is inescapable from the risk of regional market competition.IV. Risk of industrial policiesStricter requirements have been raised for the papermaking industry in the aspects of scale,technology, equipment, and environmental protection, as multiple industry plans andsupporting policies have been successively issued by relevant departments, including thePapermaking Industry Development Policy, the Notice on the Management of Elevated SourcePollution Discharge Permits in Thermal Power and Papermaking Industries and Pilot Cities ofBeijing-Tianjin-Hebei Region, and the Opinions of China Paper Association on "ThirteenthFive-year" Development Plan of the Papermaking Industry. Particularly, a number of measureshave been introduced through environmental protection policies to drive the all-round,coordinated, and sustainable development of the household paper industry, including 1)optimizing the industrial distribution to reasonably allocate resources and promoting cleanproduction to preserve the ecological environment; 2) pushing energy conservation andemission reduction to shut down outdated production facilities, and adjusting productstructure and improving product quality; 3) developing resource-saving models to advocategreen consumption; and 4) optimizing enterprise structure and driving M&A andrestructuring. These policies are designated to strengthen household paper industryconcentration, close backward production facilities, and optimize resource allocation. TheCompany, as an enterprise in the first echelon of the domestic household paper industry, isunderpinned by national policies related to the sustainable development of the householdpaper industry. Precisely because of this, industrial policy adjustment, if any, will impact theproduction and operations of the Company to some extent.V. Risk of safe productionMost of the materials involved in the household paper industry are flammable, including the
main raw material of pulp, the main packing materials of plastic-film packing bags andcartons, the semi-finished product of body paper, and finished products. Due to thecharacteristics of low unit value and large market consumption, household papermanufacturers have to keep a mass of pulp, packing materials, and semi-finished and finishedproducts from the entry of raw materials into the plant to the delivery of products to themarket. Thus, fire can cause enormous losses to such manufacturers. In view of this, theCompany has formulated strict fire management regulations for raw materials andsemi-finished and finished products, established a full-time safety management department,equipped adequate fire protection equipment in production areas, and bought full insurancefor risky properties. As such, the Company’s fire safety risk is low. In addition, a largenumber of production lines have been put into use, which may pose certain occupationalhealth hazard and cause harm to the occupational health of employees. In response to possibleoccupational health hazards, the Company, at the equipment design and procurement stages,requires suppliers to carry out intrinsic safety design and fulfill the protection measuresduring the installation process. At the same time, the Company has passed the ISO45001occupational health and safety (OHS) management system and continues to maintain itseffective operations to reduce the occupational health and safety risks of employees. Eventhough the execution of all these measures has enabled the overall safe production risk to becontrollable, the Company still faces certain safe production risks.VI. Risk of logistics transportationThe spread of the COVID-19 pandemic since the beginning of 2020 has hindered domesticand foreign logistics transportation by sea and land to varying degrees, affecting both theCompany's procurement and sales and upstream suppliers and downstream dealers. In otherwords, the Company has suffered from multiple dimensions. Though impacts of the pandemicare phased and temporary, risks are unavoidable for the Company as being at the mid- anddownstream of the household paper industry chain.
The Board meeting has deliberated and approved the following profit distribution preplan:
distribute cash dividend of RMB 1.0 (tax included) for every 10 shares to all shareholders andissue 0 bonus shares (tax included) based on the Company’s total share capital minus thenumber of repurchased shares as of the registration date of the Company’s implementation ofthe profit distribution plan; meanwhile, the Company will not transfer capital reserve intoshare capital.
Contents
Section I Important Notice, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 9
Section III Summary of the Company’s Business ...... 15
Section IV Discussion and Analysis of the Operations ...... 20
Section V Significant Events ...... 47
Section VI Changes in Shareholding and Information of Shareholders ...... 90
Section VII Particulars of Preference Shares ...... 103
Section VIII Particulars of Convertible Corporate Bonds ...... 104
Section IX Particulars of Directors, Supervisors, Senior Management and Employees ...... 105
Section X Corporate Governance ...... 118
Section XI Corporate Bonds ...... 131
Section XII Financial Report ...... 132
Section XIII Documents Available for Inspection ...... 320
Definitions
| Term | Definition | |
| The Company, Company, C&S | C&S Paper Co., Ltd. | |
| Zhongshun Group | Guangdong Zhongshun Paper Group Co., Ltd. | |
| Hong Kong C&S | Chung Shun Co., a Hong Kong-based company | |
| Zhongshan Trading | Zhongshan Zhongshun Trading Co., Ltd. | |
| Zhong Shun International | Zhong Shun International Co., Ltd., a Hong Kong-based company | |
| C&S Hong Kong | C&S Hong Kong Co., Ltd., a Hong Kong-based company | |
| Beijing Trading | Beijing C&S Paper Co., Ltd. | |
| Xiaogan Trading | Xiaogan C&S Trading Co., Ltd. | |
| Chengdu Trading | Chengdu Zhongshun Paper Co., Ltd. | |
| Hangzhou Trading | Hangzhou Jie Rou Trading Co., Ltd. | |
| Shanghai Trading | Shanghai Huicong Paper Co., Ltd. | |
| Sichuan C&S | C&S (Sichuan) Paper Co., Ltd., formerly known as Chengdu Tiantian Paper Co., Ltd. | |
| Jiangmen C&S | Jiangmen Zhongshun Paper Co., Ltd. | |
| Zhejiang C&S | Zhejiang Zhongshun Paper Co., Ltd. | |
| Hubei C&S | C&S (Hubei) Paper Co., Ltd., formerly known as Hubei Zhongshun Hongchang Paper Co., Ltd. | |
| Yunfu C&S | C&S (Yunfu) Paper Co., Ltd. | |
| Yunfu Trading | Yunfu Hengtai Trading Co., Ltd., formerly known as C&S (Yunfu) Trading Co., Ltd. | |
| Tangshan C&S, Tangshan branch. | C&S Paper Co., Ltd. Tangshan Branch | |
| Zhongshan Paper | C&S (Zhongshan) Paper Co., Ltd., formerly known as Zhongshan Tongfu Trade Co., Ltd. | |
| Macao C&S | C&S (Macao) Co., Ltd. |
| Dazhou C&S | C&S (Dazhou) Paper Co., Ltd. | |
| Sun C&S | Sun Daily Necessities Co., Ltd. | |
| Dolemi | Dolemi Sanitary Products Co., Ltd. | |
| Jiangsu C&S | C&S (Jiangsu) Paper Co., Ltd. | |
| Mazars | Mazars Certified Public Accountants (LLP) |
Section II Company Profile and Key Financial Indicators
I. Company Information
| Stock name | C&S | Stock code | 002511 |
| Stock exchange on which the shares are listed | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 中顺洁柔纸业股份有限公司 | ||
| Abbreviation of Chinese name of the Company | 中顺洁柔 | ||
| English name of the Company | C&S Paper Co., Ltd. | ||
| Abbreviation of English name of the company | C&S | ||
| Legal representative of the Company | Deng Yingzhong | ||
| Registered address | Shenglong Village, Tanbei, Dongsheng Town, Zhongshan City | ||
| Postal code of registered address | 528414 | ||
| Office address | No. 136 Caihong Avenue, West District, Zhongshan City | ||
| Postal code of office address | 528401 | ||
| Company website | http://www.zhongshungroup.com | ||
| dsh@zsjr.com | |||
II. Contact Persons and Contact Methods
| Sectary to the Board | Representative of securities affairs | |
| Name | Zhou Qichao | Cao Hui and Liang Yao |
| Address | No. 136 Caihong Avenue, West District, Zhongshan City | No. 136 Caihong Avenue, West District, Zhongshan City |
| Tel | 0760-87883333 | 0760-87883333 |
| Fax | 0760-23886886 | 0760-23886886 |
| seven.zhou@cs-paper.com | huicao@cs-paper.com. yaoliang@cs-paper.com |
III. Information Disclosure and Location for Inspection of Documents
| Newspapers designated for disclosure of the Company’s information | China Securities Journal, Securities Times, Securities Daily |
| Website designated by CSRC for publication of the annual report | www.cninfo.com.cn |
| Location for inspection of annual report | Office of the Board of Directors |
IV. Changes of Registration Information
| Unified social credit code | 914420007123239244 |
| Changes of principal businesses since listing (if any) | The Company’s business scope was changed from “production and sales of high-end household paper series products (excluding printing processes); products are sold domestically and internationally” at the listing of the Company in 2010 to the current “General items: paper product manufacturing; paper product sales; Internet sales (excluding the sales of commodities requiring a permit); sales of daily necessities; sales of personal hygiene products; sales of household products; sales of sanitary products and disposable medical products; retail of cosmetics; wholesale of cosmetics; sales of knitwear; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-sue ceramic products; wholesale of kitchen utensils and daily groceries; sales of Class I medical devices; manufacture of Class I medical devices; sales of Class II medical devices; sales of disinfectants (excluding hazardous chemicals). (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law). Licensed items: import and export of goods or technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval); manufacture of Class II medical devices; operation of Class III medical devices; manufacture of Class III medical devices. (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments, and the specific business items are subject to the approval document or the permit issued by relevant department.) (The above |
| business scope involves import and export of goods and technologies, business operation of Class II and Class III medical devices, and manufacture of medical devices.) (The above items do not involve special management measures for the access of foreign investment).” | |
| Previous changes of controlling shareholders (if any) | No change |
V. Other Relevant InformationAccounting firm engaged by the Company
| Name of accounting firm | Mazars Certified Public Accountants (LLP) |
| Office address | Zhongshen Zhonghuan Building, No. 169 Donghu Road, Wuchang District, Wuhan |
| Name of signing accountants | Wang Bing, Pan Guiquan |
Sponsor engaged by the Company to fulfill continuous supervision obligation during the reporting period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to fulfill continuous supervision obligation during the reporting period
□ Applicable √ Not applicable
VI. Main Accounting Data and Financial Indicators
Whether the Company needs to perform retrospective adjustment or restatement of accounting data for previousyears
□ Yes √ No
| 2020 | 2019 | Changes over last year | 2018 | |
| Operating income (RMB) | 7,823,528,416.32 | 6,634,914,352.68 | 17.91% | 5,678,517,623.29 |
| Net profit attributable to shareholders of the listed company (RMB) | 905,889,081.41 | 603,832,650.83 | 50.02% | 406,993,183.92 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss (RMB) | 891,552,986.81 | 588,728,468.59 | 51.44% | 392,524,980.16 |
| Net cash flow from operating activities (RMB) | 828,200,862.25 | 1,360,374,901.86 | -39.12% | 437,254,844.25 |
| Basic earnings per share (RMB/share) | 0.70 | 0.47 | 48.94% | 0.32 |
| Diluted earnings per share (RMB/share) | 0.69 | 0.46 | 50.00% | 0.32 |
| Weighted average return on net assets | 19.86% | 16.42% | 3.44% | 12.67% |
| End of 2020 | End of 2019 | Changes over end of last year | End of 2018 | |
| Total assets (RMB) | 7,478,439,747.77 | 6,026,271,823.64 | 24.10% | 5,145,910,974.02 |
| Net assets attributable to shareholders of the listed company (RMB) | 5,042,146,076.42 | 4,077,004,459.23 | 23.67% | 3,311,242,723.53 |
The lower of the net profits before and after deducting the non-recurring profit and loss in the most recent threeaccounting years is all negative, and the audit report of the most recent year shows that the Company’s ability tocontinue operations is uncertain.
□ Yes √ No
The lower of the net profits before and after deducting the non-recurring profit and loss is negative.
□ Yes √ No
VII. Difference in Accounting Data under Domestic and International Accounting Standards
1. Net profit and net asset differences under International Financial Reporting Standards (IFRS) andChinese Accounting Standards (CAS)
□ Applicable √ Not applicable
No such differences for the reporting period
2. Net profit and net asset differences under foreign accounting standards and Chinese AccountingStandards (CAS)
□ Applicable √ Not applicable
No such differences for the reporting periodVIII. Major Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 |
| Operating income | 1,670,909,073.75 | 1,945,292,326.05 | 1,939,114,329.20 | 2,268,212,687.32 |
| Net profit attributable to shareholders of the listed company | 183,429,517.35 | 269,269,967.26 | 218,993,617.46 | 234,195,979.34 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss | 186,893,864.62 | 259,641,873.34 | 215,156,319.23 | 229,860,929.62 |
| Net cash flow from operating activities | 330,547,734.57 | 174,010,853.76 | -93,239,029.05 | 416,881,302.97 |
Whether there are significant differences between the above-mentioned financial indicators or its total number andthe relevant financial indicators disclosed in the Company’s quarterly reports and semi-annual report
□ Yes √ No
IX. Non-recurring Items and Amounts
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount in 2020 | Amount in 2019 | Amount in 2018 | Description |
| Profits/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -2,980,604.57 | -2,002,045.02 | -5,113,177.55 | |
| Governmental grants reckoned into current profits/losses (not including grants enjoyed in quota or ration according to national standards, which are closely relevant to the company’s business) | 28,533,162.96 | 18,422,795.06 | 14,259,920.14 | |
| Profits/losses from assets entrusted to others for investment or management | 3,868,134.28 | 333,745.61 | 10,637,420.00 | Returns on principal-protected wealth management products at maturity and reverse repo of treasury |
| bonds | ||||
| Other non-operating income and expenses except for the aforementioned items | -13,442,144.41 | 1,320,617.95 | 362,480.53 | |
| Less: Influence of income tax | 1,642,453.66 | 2,970,931.36 | 5,678,439.36 | |
| Total | 14,336,094.60 | 15,104,182.24 | 14,468,203.76 | -- |
Reason shall be provided if the company defines non-recurring profit and loss items as defined or listed in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering their Securities to thePublic—Non-recurring Profit and Loss as recurring profit and loss items.
□ Applicable √ Not applicable
The Company did not define any non-recurring profit and loss items defined or listed in the No. 1 ExplanatoryAnnouncement on Information Disclosure of Companies Offering Securities to the Public—Non-recurring Profitand Loss as recurring profit and loss items during the reporting period.
Section III Summary of the Company’s BusinessI. Principal Businesses of the Company during the Reporting Period
Mr. Deng Yinzhong, founder of the Company, initiated his entrepreneurial process in 1978. Starting fromintensive paper processing, the Company has developed into a leading household paper enterprise integratingR&D, production and sales after forty-two years of striving. With an adherence to its corporate values of“products need brands, enterprises need brands, and people need brands”, the Company has extended its productsfrom household paper to cross-category household daily necessities including cotton series products, sanitarywipes, baby diapers, etc.Currently, the Company features three major brands, namely, Jie Rou, Sun, and Dolemi. Main products includepaper rolls, coreless rolls, facial tissues, tissue handkerchiefs, wipes, personal care products, baby diapers, cottontissues, etc. Product series involve Face series, Lotion series, Natural Wood series, Antibacterial Paper series, JinZun series, wipes, Sun series, Dolemi series, OKBEBE series, and Cotton Tissue series. Specifics are given in thefollowing:
1. Household paper (Jie Rou brand + Sun brand)
Face Series: Face wettable facial tissue is a feature product of the Company. Through constant quality upgrading,the newly developed four-layer thick facial tissues remain pliable and thick even when they are wet. One piece ofthis facial tissue is as thick as two pieces of average tissues, which optimizes the products’ user experience andfashion sense. In 2020, in order to better reflect the brand’s image and high-end style, the Company incorporatedoil painting elements into its packaging and launched Face oil painting series products, which is called the“artwork of paper tissues”.Lotion Series: Lotion water retention facial tissues are characterized by the skin-friendly lotion and moisturizingfactor. They feel soft and smooth, thanks to the water retention factors. This product is especially suitable fordelicate skin and applicable to mothers and infants, people with nasal allergy, and people wearing makeup.Natural Wood Series: The Company launched the first noble yellow tissues (with low whiteness), "Jie RouNatural Wood Series" in 2018, based on the consumption concepts of health and safety. Its soft and pliable textureis attributable to 100% imported raw wood pulp. Quality of the whole series is superb.Antibacterial Series: With the advent of the post-pandemic era in China, the Company introduced the antibacterialseries products to keep abreast with changes in the consumption habits of consumers in early 2021. The productscontain antibacterial factors and have been proved with experiments to effectively reduce the growth of more than99% of bacteria on paper tissues. They can effectively inhibit bacteria such as E. coli and staphylococcus aureus,thereby protecting the health of consumers.
Jin Zun Series: Made from 100% imported raw wood pulp, Jin Zun products are thick, pliable, and cost-effective.Wipes: Wipe products of the Company are diversified, including mother and baby wipes, disinfection wipes,personal care wipes, kitchen wipes, and pure water wipes, which can meet the needs of consumers in differentscenarios.Sun Series: The Company launched the new brand Sun in 2019 in conjunction with the 300,000-tonbamboo-pulp-paper integration project in order to accelerate the coverage of high-, mid- and low-end householdpaper markets in China and satisfy consumption needs at different levels. This initiated the Company’s “dualbrand” business strategy. Sun is positioned to be a highly cost-effective product that has good quality yet lowerprices. It is the key to raise the market share of the Company in the future.
2. Personal care products (Dolemi brand)
Dolemi Series: In 2019, the Company launched a new personal care brand, Dolemi, to cater for upgradingconsumption. The surface of Dolemi pads is made from natural cotton. The products feature two-way aircirculation and are elastic, soft, and fit. Thanks to the good air circulation, consumers will feel at ease. Theyenable women pursuing better quality of life to experience "thin pads and get rid of side leakage".OKBEBE Series: This care brand for newborn babies was rolled out in 2021. Products include baby diapers andpull-up pants. With medical level high standards, the products are skin-friendly, breathable, dry and easy to absorb.They are dedicated to providing babies with safer and more comfortable growth experience, having passed thesurveillance on six product performance indicators including allergenic microbial inspection and productionenvironment bacteria.
3. Quality health products
Cotton Tissue Series: In 2018, the Company stepped out of the household paper field and introduced the "CottonTissue" products, which feature 100% fresh cotton, complete physical processes, and unbleached. As beingnatural, healthy, soft, skin-friendly, and dry-wet dual use, they can be used for personal cleaning and care ascotton pads and face towels, especially by infants and women.Medical surgical masks: In response to the government’s call, the Company quickly initiated medical maskproduction and rolled out medical surgical mask products. The products are characterized by “high efficiencyfiltration, low breathing resistance, and comfortable wearing”, and have passed the EU CE and US FDAcertifications. Third-party laboratory testing from US, EU and Japan proves the products to have reached thehighest quality standards of their kind.Other quality health products: In line with the Company’s strategic planning and market needs, the Companysuccessively launched personalized products that are fit with consumer needs since 2020, including makeupremoval wipes, feminine care wipes, alcohol disinfectant wipes, mouthwashes, disinfectant hand sanitizers, facewash towels, disposable sweat-absorbent wipes, insoles, etc. This enables the Company to form a diversifieddevelopment pattern on the basis of pursuing high quality and individualization.
The competition in China’s household paper industry is still fierce and industry concentration is increasing. Withstrengthened awareness on the concept of healthy living, consumers pay increasing attention to brands. Productquality is still a prominent concern in the industry. Amid all these, the Company has become one of therepresentative brands of high-end household paper in the market through continuous brand building and qualityassurance, and robust production capacity layout and channel expansion. It is ranked among the first echelon inthe household paper industry and is well recognized by consumers and capital markets. In addition, with anadherence to the value concept of “Only Care About You”, the Company continues to tap consumer needs andconstantly upgrades and optimizes products with leverage on its strong R&D and innovation capabilities. TheCompany is committed to providing consumers with products of better quality, more comfort, and more tailoredto their individual needs. The Company aims to achieve national product coverage which is underpinned bycontinuously improved product reputation among consumes and strengthened and consolidated brand awareness.
II. Significant Changes in Main Assets
1. Significant changes in main assets
| Main assets | Description of Significant changes |
| Equity assets | No significant changes during the reporting period |
| Fixed assets | No significant changes during the reporting period |
| Intangible assets | No significant changes during the reporting period |
| Construction work in progress | No significant changes during the reporting period |
2. Main overseas assets
□ Applicable √ Not applicable
III. Analysis of Core Competitiveness
1. Belong to the first echelon of the domestic household paper industry
The Company is a top-performing enterprise in the first echelon of the domestic household paper industry. Itsproducts are sold at home and abroad including Southeast Asia, the Middle East, and Europe.
2. Constantly optimized product structure
The Company boasts three major brands, namely, Jie Rou, Sun, and Dolemi. Main products include paper rolls,coreless rolls, facial tissues, tissue handkerchiefs, wipes, personal care products, baby diapers, cotton tissues, etc.
The Company continuously optimizes its product structure and raises the sales proportion of high-end products,high-gross profit products and non-roll categories. In addition, it has strengthened the sales of major series likeFace, Lotion, and Natural Wood, formulated distribution standards for each major channel, raised the marketshare in each channel, and continuously improved the gross profit and profitability of products.
3. Stable and effective management team
The R&D, production, procurement, sales, quality control, and operation teams have successively introducedexcellent professionals since 2014. At present, the Company boasts the most outstanding R&D, production, andsales teams in the industry. Its product R&D, quality and marketing management has been effectively reinforced.The management team of the Company has formulated long-term and strategic plans in line with actual situationof the Company, industry development level, and market demands. Moreover, the management team is capable ofmaking reasonable decisions on operation management issues with relation to R&D, production, marketing,investment, and financing, and effectively implementing such decisions. The excellent management teamfundamentally guarantees the Company’s competitiveness and sustainable development in the future.
4. Nationwide marketing network
The Company has been building and improving its marketing networks based on its keen and strategic insights andreasonable layout. The Company has enhanced its profitability by expanding its channels from a single dealerchannel in 2015 to six channels at present, namely, GT (general trade channels), KA (key account channels), AFH(away from home channels), EC (e-commerce channels), RC (new retail channels), and SC (maternal and infantchannels). Its current marketing network covers most of the prefecture-level (and county-level) cities. Products aredirectly sold to counties and then distributed to towns. This helps achieve segmented and flat market operation andexpand the dealer network.Furthermore, while ensuring the smooth operation of other channels, the Company has established a professionale-commerce operation team, devoted more resources to e-commerce platforms, built and improved thecorresponding supply chain system, and intensified its routine operation management. It has reached cooperationwith renowned platforms such as Tmall, JD, Pinduoduo, Taobao, Vipshop, Suning, Kuaishou, TikTok, Yunji andNetEase. In addition, it has developed an AFH service team for AFH channels and customer bases to match thegrowing AFH market. Attributable to a robust sales network plus quality and diversified products, the Company isable to constantly consolidate its market basis, improve consumer experience, and enhance brand reputation,which can help achieve sustainable and stable growth in the future.
5. Nationwide layout of production bases
The Company has developed a production layout covering East China, South China, West China, North China,and Central China, through its subsidiaries including Jiangmen C&S, Yunfu C&S, Sichuan C&S, Zhejiang C&S,Hubei C&S, and Tangshan Branch. Thanks to the nationwide layout of production bases, the Company hasnarrowed the distance to customers, reduced transportation costs, and enhanced transportation efficiency.
6. Product quality at an international level
The Company has always regarded product quality as its lifeline of survival and development ever since itsincorporation. First-class quality derives from first-class raw materials. Raw materials of the Company havepassed the ISO quality management system certification. Besides strict feed inspection procedures, it hasintroduced HACCP food hygiene and safety management system to control the hygiene and quality of productsfrom the source. Moreover, its products have passed ISO9001 quality management system certification which isthe strictest detecting system for product quality. The Company has observed internationally-advanced qualitymanagement system standards and utilized advanced processes, formulas, and control procedures in production toensure each technical performance indicator.
7. Good R&D capabilities
The Company is equipped with a complete product development system and the subordinate R&D departmentboasts strong independent R&D capabilities and excellent product formula technologies. In recent years, theCompany has continuously upgraded and optimized its products, in a bid to provide consumers with products ofbetter quality, more comfort, and more aligned with their individual needs. Products of the Company haveextended from household paper to cross-category household daily necessities including cotton series products,sanitary wipes, baby diapers, etc. The Company’s speed of bringing forth new products is at the forefront of theindustry.
8. First-class production equipment
The Company drives development via technology and has introduced cutting-edge papermaking and processingequipment. Advanced technology and highly automatic equipment have strengthened the Company's efficiency,further satisfied the ever-growing market demands, and served as an unstoppable driving force to development.
9. Outstanding environmental protection awareness and technology
Along with the deepening of industrialization, the concept of environmental protection has been deeply rootedamong the people. The Company has adhered to the concept of "seeking green benefits and fulfilling corporatesocial responsibilities", and utilized advanced environmental protection technologies to pursue its objective ofenvironmental protection. Its waste water and gas emissions are superior to the national standards andindustry-leading.
Section IV Discussion and Analysis of the OperationsI. OverviewIn 2020, the COVID-19 pandemic swept across the world, exerting a short-term influence on the procurement,production, and sales of the household paper industry. Nevertheless, management of the Company rapidlyresponded at the beginning of the outbreak and demonstrated strong comprehensive operational capabilities andanti-risk capabilities. Having gone through the journey of fighting the pandemic, resuming work and production,and orderly arranging pandemic prevention and control work, the Company has converted challenges toopportunities. Meanwhile, the Company has upheld its core strategies and operation objectives. Through unitedefforts and effective measures including expanding categories, deepening channels and accelerating marketingand promotion, the Company was able to boost results and profits steadily.In 2020, the Company recorded an operating income of RMB7.824 billion with a YoY increase of 17.91% and anet profit attributable to shareholders of the listed company of RMB906 million, up by 50.02% YoY. This notonly successfully fulfills the preset goals for the year, but also lays a solid foundation for the Company to marchonto the road of high quality and efficiency development.
1. Expansion of product categories to drive sales
During the reporting period, the Company quickly initiated the production of medical masks in response to thegovernment’s call. In addition, with the arrival of the post-epidemic era, consumption habits of consumers arechanged. Amid this, the Company quickly adapted to market demands, seized opportunities, and successivelylaunched products like antibacterial paper, alcohol disinfectant wipes, disinfectant hand sanitizers, and mouthwash.This effectively helped raise its brand effect and form a diversified product strategy. Favorable sales results wereachieved for the new products during the reporting period, which promoted the continuous improvement of theoperating results and became another profit growth point of the Company.
2. Constant optimization of product structure and improvement of channels to push steady growth in salesDuring the reporting period, the Company constantly optimized its product structure and raised the salesproportion of key products and high-gross margin products. In addition, in view of consumers’ preference ofonline consumption during the pandemic, the Company quickly adapted to market consumption changes, devotedmore resources to online channels while ensuring the smooth operation of other channels, and intensified thelayout and development of EC channels. As a result, favorable results were achieved in EC channels. In 2020, theCompany's gross margin in household paper reached 46.19%, making it the top enterprise in the domestichousehold paper industry.
3. Increase in gross margin thanks to decrease in international pulp prices
The price of pulp, the main raw material of the Company, was generally maintained at a relatively low levelduring the reporting period. Thanks to the decrease in production costs and the Company’s scale effects, its grossprofit margin and profitability were boosted. At the end of 2020, pulp prices began to rebound. Nevertheless,procurement team of the Company has stored raw materials in advance with a reliance on its professionalpredictive ability of the pulp market and sufficient financial strengthen. Thus, this could effectively smooth thecost pressure caused by rise of raw material prices in the future and lay the foundation for the Company to grabmarket shares and expand sales scale.
4. Employee enthusiasm boosted as the first unlocking/exercise period of the equity incentive plan wassuccessfully completedDuring the reporting period, the Company successfully completed the first unlocking period for first-grantrestricted stocks or reserved restricted stocks and the initiation of the first exercise period for stock options underthe 2018 Restricted Stock and Stock Option Incentive Plan. The incentive recipients reaped gratifying results. Thiscould enable employees to enjoy the development dividends of the Company and continuously stimulate theirenthusiasm, which is conducive to giving full play to the values of all employees and laying a solid foundation forthe long-term stable development of the Company.
5. Fulfillment of corporate social responsibilities and demonstrating the corporate culture as atop-performing enterpriseAs a nation enterprise with important social influence and a leading enterprise in the household paper industry, theCompany has always been concerned about the medical staff and people at the frontline of the fight against theepidemic and actively fulfilled its corporate social responsibilities. To fight against the pandemic and respond tothe government’s call, the Company quickly initiated the production of medical masks and donated RMB10.80million in cash and disinfectant wipes and other household paper products worth RMB500,000 to supportpandemic prevention and control. Viewing the shortage of pandemic prevention materials, the Company alsodonated over one million pieces of surgical masks and over 5,000 pads for women to front-line epidemicprevention areas and other support units. In February 2021, the Company contributed materials worth more thanRMB1 million to front-line epidemic control personnel in Shijiazhuang. In March 2021, the Company helpedinternational fight against the pandemic by giving 4 million pieces of medical masks to Russia, Pakistan,Myanmar and other “Belt and Road” countries. All of these efforts of helping pandemic prevention and controland providing the strongest support for the front-line pandemic fight personnel have embodied the Company’shumanistic spirit of taking responsibility.
II. Analysis of Principal Businesses
1. Overview
Products of the Company has been extended from household paper to cross-category household daily necessitiesincluding cotton series products, sanitary wipes, baby diapers, etc.Currently, the Company features three major brands, namely, Jie Rou, Sun, and Dolemi. Main products includepaper rolls, coreless rolls, facial tissues, tissue handkerchiefs, wipes, personal care products, baby diapers, cottontissues, etc. Product series involve Face series, Lotion series, Natural Wood series, Antibacterial Paper series, JinZun series, wipes, Sun series, Dolemi series, OKBEBE series, and Cotton Tissue series.
| Item | 2020 (RMB) | 2019 (RMB) | YoY changes (%) | 2018 (RMB) |
| Operating income | 7,823,528,416.32 | 6,634,914,352.68 | 17.91% | 5,678,517,623.29 |
| Operating cost | 4,590,904,040.35 | 4,005,421,052.70 | 14.62% | 3,744,105,124.57 |
| Selling expenses | 1,544,562,244.71 | 1,369,553,843.95 | 12.78% | 1,013,014,207.75 |
| Administrative expenses | 364,914,344.30 | 294,516,937.35 | 23.90% | 202,132,450.43 |
| Finance expenses | -18,001,546.24 | 21,476,411.75 | -183.82% | 55,843,921.52 |
| Net cash flows from operating activities | 828,200,862.25 | 1,360,374,901.86 | -39.12% | 437,254,844.25 |
2. Revenue and cost
(1) Composition of operating income
Unit: RMB
| 2020 | 2019 | YoY changes | |||
| Amount | Proportion in operating income | Amount | Proportion in operating income | ||
| Total operating income | 7,823,528,416.32 | 100% | 6,634,914,352.68 | 100% | 17.91% |
| By industry | |||||
| Household paper | 7,499,908,172.64 | 95.86% | 6,562,535,665.60 | 98.91% | 14.28% |
| Personal care | 100,000,774.38 | 1.28% | 3,218,698.97 | 0.05% | 3,006.87% |
| Others | 223,619,469.30 | 2.86% | 69,159,988.11 | 1.04% | 223.34% |
| By product | |||||
| Finished products | 7,585,449,858.45 | 96.96% | 6,531,531,717.68 | 98.44% | 16.14% |
| Semi-finished products | 14,459,088.57 | 0.18% | 34,222,646.89 | 0.52% | -57.75% |
| Others | 223,619,469.30 | 2.86% | 69,159,988.11 | 1.04% | 223.34% |
| By region | |||||
| Domestic | 7,652,670,691.06 | 97.82% | 6,501,041,000.07 | 97.98% | 17.71% |
| Overseas | 170,857,725.26 | 2.18% | 133,873,352.61 | 2.02% | 27.63% |
(2) Industries, products, or regions that accounted for over 10% of the Company's operating income oroperating profit
√ Applicable □ Not applicable
Unit: RMB
| Operating income | Operating cost | Gross profit margin | YoY changes of operating income | YoY changes of operating cost | YoY changes of operating gross profit margin | |
| By industry | ||||||
| Household paper | 7,499,908,172.64 | 4,342,663,520.12 | 42.10% | 14.28% | 10.21% | 2.15% |
| By product | ||||||
| Finished products | 7,585,449,858.45 | 4,367,115,588.55 | 42.43% | 16.14% | 11.71% | 2.28% |
| By region | ||||||
| Domestic | 7,652,670,691.06 | 4,499,766,586.64 | 41.20% | 17.71% | 14.97% | 1.40% |
Where the statistical standards for the Company’s principal business data were adjusted in the reporting period,principal business data of the Company in the recent year adjusted as per statistical standards at the end of thereporting period
□ Applicable √ Not applicable
(3) Whether the Company’s goods selling income higher than the service income
√ Yes □ No
| Industry | Item | Unit | 2020 | 2019 | YoY changes |
| Household paper | Sales volume | 10,000 boxes | 11,691.68 | 8,724.84 | 34.00% |
| Production volume | 10,000 boxes | 11,691.94 | 8,866.53 | 31.87% | |
| Inventory | 10,000 boxes | 882.65 | 768.51 | 14.85% |
Reasons for YoY changes of relevant data over 30%
√ Applicable □ Not applicable
Sales volume: Compared with 2019, the sales volume in 2020 increased by 29.6684 million boxes or 34%, mainlyowing to sales boosting measures adopted by the Company in the reporting period like product structureadjustment, accelerated promotion of key products and new products, continuously improved channeldevelopment, etc.Production volume: Compared with 2019, production volume in 2020 increased by 28.2541 million boxes or
31.87%, mainly owing to the release of production capacity and the increase in sales during the reporting period.
(4) Fulfillment of significant sales contracts signed by the Company as of the end of the reporting period
□ Applicable √ Not applicable
(5) Composition of operating cost
By industry and product
Unit: RMB
| By industry | Item | 2020 | 2019 | YoY changes | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Household paper | Principal business cost | 4,342,663,520.12 | 94.59% | 3,940,489,471.54 | 98.38% | 10.21% |
| Personal care | Principal business cost | 36,713,107.52 | 0.80% | 1,258,487.46 | 0.03% | 2,817.24% |
| Others | Other business | 211,527,412.71 | 4.61% | 63,673,093.70 | 1.59% | 232.21% |
Unit: RMB
costBy product
| By product | Item | 2020 | 2019 | YoY changes | ||
| Amount | Proportion in operating cost | Amount | Proportion in operating cost | |||
| Finished products | Principal business cost | 4,367,115,588.55 | 95.13% | 3,909,345,003.17 | 97.60% | 11.71% |
| Semi-finished products | Principal business cost | 12,261,039.09 | 0.27% | 32,402,955.83 | 0.81% | -62.16% |
| Others | Other business cost | 211,527,412.71 | 4.61% | 63,673,093.70 | 1.59% | 232.21% |
Description: None
(6) Whether the consolidated scope changed during the reporting period
√ Yes □ No
As of December 31, 2020, the Company has 19 subsidiaries which are included in the consolidated scope, asdetailed in “Note IX. Equities in other Entities”. Compared with last year, one subsidiary has been newly addedinto the consolidated scope this year. For details, see “Note VIII. Changes in Consolidated Scope”.
(7) Description on significant changes or adjustments of the Company’s businesses, products or services inthe reporting period
□ Applicable √ Not applicable
(8) Major customers and suppliers
Major customers of the Company
| Total sales to the top five customers (RMB) | 2,445,154,280.92 |
| Proportion of sales to top five customers in total annual sales | 31.25% |
| Proportion of sales to related party among the top five customers in total annual sales | 0.00% |
Information of the top five customers of the Company
| No. | Name of customer | Sales (RMB) | Proportion in total annual sales |
| 1 | 1st | 876,396,661.34 | 11.20% |
| 2 | 2nd | 650,635,800.84 | 8.32% |
| 3 | 3rd | 418,807,020.50 | 5.35% |
| 4 | 4th | 288,547,374.69 | 3.69% |
| 5 | 5th | 210,767,423.55 | 2.69% |
| Total | -- | 2,445,154,280.92 | 31.25% |
Other descriptions of major customers
√ Applicable □ Not applicable
There is no related party relationship between the top five customers and the Company.Major suppliers of the Company
| Total purchase amount from the top five suppliers (RMB) | 2,393,268,000.87 |
| Proportion of the total purchase amount from the top five suppliers in total annual purchase amount | 50.40% |
| Proportion of purchase amount from related parties among the top five suppliers in total annual purchase amount | 0.00% |
Information of the top five suppliers of the Company
| No. | Name of supplier | Purchase amount (RMB) | Proportion in total annual purchase amount |
| 1 | 1st | 1,256,589,068.94 | 26.46% |
| 2 | 2nd | 509,980,063.97 | 10.74% |
| 3 | 3rd | 256,897,941.48 | 5.41% |
| 4 | 4th | 234,163,222.56 | 4.93% |
| 5 | 5th | 135,637,703.92 | 2.86% |
| Total | -- | 2,393,268,000.87 | 50.40% |
Other descriptions of major suppliers
√ Applicable □ Not applicable
There is no related party relationship between the top five suppliers and the Company.
3. Expenses
Unit: RMB
| 2020 | 2019 | YoY changes | Description of significant changes | |
| Selling expenses | 1,544,562,244.71 | 1,369,553,843.95 | 12.78% | |
| Administrative expenses | 364,914,344.30 | 294,516,937.35 | 23.90% | |
| Finance expenses | -18,001,546.24 | 21,476,411.75 | -183.82% | Finance expenses: A reduction of RMB39,477,957.99 or 183.82% was witnessed in the reporting period compared with 2019, mainly due to the decrease in bank interest expenses and in exchange gains and losses during the reporting period. |
| R&D expenses | 190,298,633.61 | 176,374,287.34 | 7.89% |
4. R&D investment
√ Applicable □ Not applicable
Main R&D projects of the Company in 2020 included the following:
1. Debut of Jie Rou oil painting series products: Being thick, pliable, and soft with exquisite high-definitionembossing, the products are “artwork” of paper towels.
2. Antibacterial tissue and roller series products: The products can remain initial cleanliness despite that their useenvironment is contaminated by bacteria or after they wipe the bacteria daily. They have no irritation to the skinand mucous membranes.
3. High-quality medical surgical masks: The products are characterized by “high efficiency filtration, lowbreathing resistance, and comfortable wearing”, and have passed the EU CE and US FDA certifications.Third-party laboratory testing from US, EU and Japan proves the products to have reached the highest qualitystandards of their kind. The Company’s R&D, production and sales of medical masks was a response to thegovernment’s call at the outbreak of the epidemic, which both fulfilled the Company’s social responsibilities andsolved employees’ use of masks.
4. Antibacterial hand sanitizers: The products can effectively inhibit intestinal pathogenic bacteria and pyogenicbacilli. With plant extracts and water rendition ingredients, they can keep the skin soft and moisturizing.
5. Small-package sanitary pads: The Company developed easy-to-carry pads by catering to the demands of girls
aging 15 to 25 who prefer small and cute packaging. Launched in June 2020, the products can attract youngconsumers for the Dolemi brand.
R&D investment of the Company
| 2020 | 2019 | Change | |
| Number of R&D personnel (person) | 397 | 438 | -9.36% |
| Proportion of R&D personnel headcount | 6.00% | 7.25% | -1.25% |
| Amount of R&D investment (RMB) | 190,298,633.61 | 176,374,287.34 | 7.89% |
| Proportion of R&D investment in total operating income | 2.43% | 2.66% | -0.23% |
| Amount of capitalized R&D investment (RMB) | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D investment in total R&D investment | 0.00% | 0.00% | 0.00% |
Reason for marked changes over the last year of the proportion of R&D investment in operating income
□ Applicable √ Not applicable
Reason for marked changes of the proportion of R&D investment capitalization and its reasonable explanation
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
| Item | 2020 | 2019 | YoY changes |
| Subtotal of cash in-flow from operating activities | 7,802,290,765.25 | 7,225,605,514.97 | 7.98% |
| Subtotal of cash out-flow from operating activities | 6,974,089,903.00 | 5,865,230,613.11 | 18.91% |
| Net cash flow from operating | 828,200,862.25 | 1,360,374,901.86 | -39.12% |
| activities | |||
| Subtotal of cash in-flow from investing activities | 179,801,840.88 | 1,489,516.51 | 11,971.15% |
| Subtotal of cash out-flow from investing activities | 561,677,417.02 | 730,059,032.35 | -23.06% |
| Net cash flow from investing activities | -381,875,576.14 | -728,569,515.84 | 47.59% |
| Subtotal of cash in-flow from financing activities | 411,994,677.00 | 515,060,991.14 | -20.01% |
| Subtotal of cash out-flow from financing activities | 481,103,146.23 | 842,676,049.62 | -42.91% |
| Net cash flow from financing activities | -69,108,469.23 | -327,615,058.48 | 78.91% |
| Net increase in cash and cash equivalents | 374,037,282.75 | 304,867,380.91 | 22.69% |
Main influencing factors of significant YoY changes in relevant data
√ Applicable □ Not applicable
1. Net cash flow from operating activities: This item recorded a decrease of RMB532,174,039.61 or 39.12% in thereporting period compared with 2019, mainly due to the increase in payment for materials and various taxes andfees during the reporting period.
2. Net cash flow from investing activities: This item recorded an increase of RMB346,693,939.70 or 47.59% inthe reporting period compared with 2019, mainly due to the increase in received financial principals and thedecrease in payment for engineering equipment during the reporting period.
3. Net cash flow from financing activities: This item recorded an increase of RMB258,506,589.25 or 78.91% inthe reporting period compared with 2019, mainly due to the increase in cash received from borrowings and thedecrease in cash paid for debt repayment during the reporting period.
Reason for significant differences between the net cash flow from operating activities and the net profit of the yearduring the reporting period
□ Applicable √ Not applicable
III. Analysis of Non-principal Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | Proportion in total profit | Explanation of reason | Is it consistently applied? | |
| Investment income | 3,868,134.28 | 0.36% | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds | No |
| Profit and loss from changes in fair value | 0.00% | |||
| Asset impairment | -15,863,724.17 | -1.46% | Provision for impairment of inventories and provision for impairment of fixed assets | No |
| Non-operating income | 5,429,670.00 | 0.50% | Government grants, income from fine and compensation, and others | No |
| Non-operating expense | 20,912,859.12 | 1.92% | External donations and others | No |
IV. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
The Company implemented the new revenue standard or the new lease standard for the first time from 2020 andadjusted the relevant items of the financial statements as at the beginning of the year of adoptionApplicable
Unit: RMB
| End of 2020 | Beginning of 2020 | Proportion changes | Explanation of significant changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary funds | 1,125,196,199.56 | 15.05% | 703,746,624.42 | 11.68% | 3.37% | Monetary funds: This item recorded an increase of RMB421,449,575.14 or |
| 59.89% in the reporting period compared with the end of 2019, mainly owing to the increase in the net cash flow from investing activities and financing activities during the reporting period. | ||||||
| Accounts receivable | 1,051,423,939.59 | 14.06% | 807,772,897.68 | 13.40% | 0.66% | Accounts receivable: This item recorded an increase of RMB243,651,041.91 or 30.16% in the reporting period compared with the end of 2019, mainly owing to the increase in accounts receivable during the reporting period. |
| Inventory | 1,661,274,495.32 | 22.21% | 986,405,689.17 | 16.37% | 5.84% | Inventory: This item recorded an increase of RMB674,868,806.15 or 68.42% in the reporting period compared with the end of 2019, mainly owing to the increase in raw material inventories during the reporting period. |
| Investment property | 34,575,365.94 | 0.46% | 36,039,381.30 | 0.60% | -0.14% | |
| Long-term equity investment | 0.00% | 0.00% | 0.00% | |||
| Fixed assets | 2,792,587,302.21 | 37.34% | 2,921,392,106.87 | 48.48% | -11.14% | |
| Construction work in progress | 275,904,617.95 | 3.69% | 55,734,236.91 | 0.92% | 2.77% | Construction work in progress: This item recorded an increase of RMB220,170,381.04 or 395.049% in the reporting period compared with the end of 2019, mainly owing to the increase in construction projects during the reporting period. |
| Short-term | 142,942,941.34 | 1.91% | 14,721,492.38 | 0.24% | 1.67% | This item recorded an increase of |
| borrowings | RMB128,221,448.96 or 870.98% in the reporting period compared with the end of 2019, mainly owing to the increase in short-term borrowings from banks during the reporting period. | |||||
| Long-term borrowings | 0.00% | 22,500,000.00 | 0.37% | -0.37% | This item recorded a decrease of RMB22,500,000.00 or 100.00% in the reporting period compared with the end of 2019, mainly owing to the early repayment of long-term borrowings during the reporting period. |
2. Assets and liabilities measured at fair value
□ Applicable √ Not applicable
3. Restriction of asset rights as at the end of the reporting period
| Item | 2020.12.31 | Reason for restriction |
| Monetary funds (RMB) | 75,162,063.84 | Security deposits for issuing letter of credit and notes |
| Total (RMB) | 75,162,063.84 |
V. Analysis of Investment
1. Overview
√ Applicable □ Not applicable
| Investment amount during the reporting period (RMB) | Investment amount of previous year (RMB) | Changes |
| 561,677,417.02 | 730,059,032.35 | -23.06% |
2. Major equity investment during the reporting period
□ Applicable √ Not applicable
3. Major non-equity investment during the reporting period
□ Applicable √ Not applicable
4. Financial asset investment
(1) Security investment
□ Applicable √ Not applicable
The Company did not invest in securities during the reporting period.
(2) Derivative investment
□ Applicable √ Not applicable
The Company did not invest in derivatives during the reporting period.
5. Use of raised funds
□ Applicable √ Not applicable
No raised funds were used by the Company during the reporting period.VI. Major Asset and Equity Sales
1. Sales of major assets
□ Applicable √ Not applicable
The Company did not sell major assets during the reporting period.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of Main Holding and Joint-stock Companies
√ Applicable □ Not applicable
Description of main subsidiaries and of joint-stock companies which have influence on the Company’s net profit by over 10%
Unit: RMB
| Company name | Company type | Principal businesses | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Jiangmen C&S | Subsidiary | R&D, production, and sales (including online sales): household paper, maternal and infant products, cosmetics, wipes, non-woven products, daily necessities, and cleaning supplies; sales (including online sales) of Class I and II medical devices. (The above items do not involve special management measures for the access of foreign investment.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | RMB345,985,031 | 1,762,755,225.91 | 1,503,245,893.46 | 1,481,156,722.41 | 238,073,124.23 | 204,403,346.14 |
| Yunfu C&S | Subsidiary | R&D, production, wholesale, retail and online sales: household paper, sanitary products, maternal and infant products, daily necessities, cosmetics, medical devices, sanitary materials, non-woven fabrics and products, polymer materials and products, daily sundries, and | RMB650 million | 2,159,000,142.58 | 1,359,647,571.56 | 2,842,001,060.24 | 396,387,504.77 | 348,421,782.34 |
| disinfection supplies (excluding hazardous chemicals); wholesale, retail and online sales: food; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval); warehousing services (limited to warehouses qualified in fire protection without hazardous chemicals). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | ||||||||
| Sichuan C&S | Subsidiary | Licensed items: production of sanitary products and disposable medical supplies; import and export of goods (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments, and the specific business items are subject to the approval document or the permit issued by relevant department). General items: sales of sanitary products and disposable medical supplies; sales of personal hygiene products; sales of daily necessities; manufacture of paper products; sales of paper products; manufacture of paper; manufacture of daily chemical products; sales of daily chemical products; sales of Class II medical devices; sales of Class | RMB100 million | 1,190,428,729.88 | 853,862,145.19 | 1,783,389,934.49 | 218,982,290.16 | 185,928,308.11 |
| I medical devices; manufacture of industrial textile products; sales of industrial textile products; manufacture of maternal and infant products; sales of maternal and infant products. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) | ||||||||
| Hubei C&S | Subsidiary | Licensed items: production of sanitary products and disposable medical supplies; production of cosmetics (for items that must be approved in accordance with the law, companies may carry out business operations upon approval by relevant departments, and the specific business items are subject to the approval document or the permit issued by competent department). General items: sales of sanitary products and disposable medical supplies; retail of cosmetics; wholesale of cosmetics; manufacture of paper; sales of personal hygiene products; sales of knitwear; manufacture of maternal and infant products; sales of maternal and infant products; sales of paper products; manufacture of paper products; sales of daily necessities; sales of daily chemical products; sales of disinfectants (excluding hazardous chemicals); Internet sales (excluding the sales of commodities | RMB200 million | 1,361,067,365.05 | 373,922,157.82 | 1,075,896,640.52 | 144,907,802.92 | 106,898,341.64 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Not applicable
Description of main holding and joint-stock companies
VIII. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook of the Company’s Future Development
1. Future development trend of the industry in which the Company lies
(1) Analysis of industry status quo
China’s household paper market is growing steadily, while market competition is extremely fierce. New projectinvestments are led by the capacity expansion of leading companies and the equipment upgrading of existingcentral companies, which facilitates further concentration of the industry and improvement of overall equipmentlevel. The relative overcapacity and demanding environmental protection requirements put more pressure onsmall- and medium-sized enterprises. Leveraging the sharp drop in pulp prices and economies of scale, leadingcompanies have adopted a series of effective measures to better their gross profit margin, including energy savingand consumption reduction, increasing inputs on the development of EC channels and other new channels,optimizing product structure, and launching new products with high value addition.The household paper market, especially the high-end household paper market, will be substantially boosted alongwith the continuous growth of China’s economy, improvement of people’s living standards, and the advancementof consumption concepts. However, owing to China-US trade frictions and uncertainties brought by exchange ratefluctuations and future pulp prices, operating pressure is still great for the household paper industry.
(2) Industry development trend
1) Outdated capacity will be phased out and companies of the first echelon will gain greater market opportunities.Competent government departments at all levels have strengthened supervision, administration and enforcementof the household paper industry and released a series of regulations and policies, including the DevelopmentPolicy of the Paper Industry, Notice of the State Council on Printing the Comprehensive Work Plan for EnergyConservation and Emission Reduction, Water Pollutant Discharge Standards for the Pulp and Water Industry,Norm of Water Intake for Paper Products, Twelfth Five-Year Plan for Paper Industry Development, and Catalogsfor the Management of Imported Wastes. Companies with reasonable economic scale, high energy and waterconsumption or not up to discharge standards were shut down or ordered for rectification within a time frame.Thus, a large number of backward production capacities have been eliminated. With increasingly stringentenvironmental protection polices, small- and medium-sized enterprises in the industry are further phased out,thereby releasing certain market shares. Meanwhile, first echelon enterprises in the industry are rapidly expandingproduction scale to meet market demands and seize market shares.
2) Operating models are continually innovated and product structures are constantly optimized. At present,
marketing of the household paper industry is still dominated by traditional distributors and modern supermarkets.However, with the continuous improvement of e-commerce channels in recent years, the percentage ofe-commerce shares is rapidly growing. Some leading companies have been promoting social media marketingsuch as WeChat official accounts, Weibo, and live webcasting, and have increased inputs in the development ofe-commerce channels. At the same time, in order to cater to the rapidly growing demands of consumers,companies continue to carry out product innovations, upgrade product specifications and packaging designs,optimize product structures, and develop new products by capturing in time changes in the consumption conceptsof consumers. Diversified operating models emerge in the industry and product structures are further optimized.
3) Equipment upgrading and product R&D are intensified. People’s demand for household paper is bound to risealong with the improvement of living standards, requiring constant product capacity expansion in the householdpaper industry. As such, it is inevitable for companies of the industry to choose large-scale and automatedproduction equipment, which can also meet the demands for low energy consumption, low water consumption,and low pulp consumption specified in the overall requirements of the State’s industrial policies for energyconservation, consumption reduction and pollution reduction. In recent years, imports of household paperequipment have been trending up in China, with a focus on the imports of body paper machines. Meanwhile, somelarge-scale domestic equipment is also constantly optimized and improved. It is foreseeable that large scale andautomation of production equipment will be the development direction of the household paper industry in thefuture.
4) Competitiveness of China’s household paper production companies in the international market will be furtherintensified. With the rapid development of the household paper industry in China, local enterprises occupy mostof the domestic market shares. On the basis of meeting domestic demands, household paper manufactured inChina has been exported to a range of countries and regions around the world with certain competitive advantages.In the future, the competitiveness of Chinese household paper production enterprises in the international marketwill be steadily enhanced.
2. Development strategy and planning of the Company
(1) The Company’s development strategy
As a member of the first echelon in the domestic household paper industry, the Company will continue to betterits independent R&D capabilities and tap product formulas and production processes to meet multi-layered anddifferentiated product needs of the market. Adhering to the development vision of “building a century-oldenterprise with hundred billion market value”, the Company uses cutting-edge equipment and first-class rawmaterials to produce quality products. Corporate values are “putting consumers first, partners at the focus andemployees at the core; pursuing win in doing things and virtue in daily life”, which is the basis for improvingreturn to shareholders. The Company will continue horizontal integration and establish strategic alliances with keycustomers. It will further enhance its core competitiveness and product R&D capabilities with a focus on core
businesses. When it comes to marketing, the Company will further expand marketing networks, fulfill themanagement requirements of building first-class brands, systems and talents, and grab channel networks andterminal resources.
(2) The Company’s development planning
With the continuous expansion of sales scale, the Company steadily puts in production capacity in alignment withthe market environment and sales expansion tempo, to reach a dynamic balance of production and sales.Meanwhile, it has strengthened the construction of each base. In the future, the Company will expand productcategories based on the development trends of the industry. Beyond making household paper of highest quality,the Company will also explore new product categories with product quality always coming first. In addition, theCompany will tap deeper into channel development, further increase product coverage, and promote its steadydevelopment in an all-round manner.
X. Reception of Researches, Communications, Interviews and Other Activities
1.Registraiton form for the reception of researches, communications, interviews and other activities during the reporting period
√ Applicable □ Not applicable
| Reception time | Reception location | Reception method | Type of reception object | Reception object | Main content discussed and information provided | Index of the basic situation of the survey |
| January 7, 2020 | Beijing | Field research | Institution | Taikang Asset Management, Torq Capital Management, Norges Bank Investment Management, Teng Yue Partners, Snow Lake Capital, Snow Lake Capital, Green Court Capital, Kaizen, Golden Nest Capital, Lygh Capital, Yiheng Capital, Kora Management, Toona Tree Capital Partners, Wt Capital, Keywise Capital, Pinpoint, Keywise Capital, Safe & Sic, 3w Fund Management, Goldstream Capital Management, Oxbow Capital Management, Invesco, China Orient Asset Management, Janchor Partners | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| January 8, 2020 | Hong Kong | Field research | Institution | CITI Millennium Capital Management, Fidelity Management&Research, Amundi Pioneer (Asia), BlackRock Inv Mgmt LLC (NJ), Bosera Asset Management Co Ltd, Bosvalen Asset Management, China Southem Fund Management, Eastspring Investments Singapore Ltd, Eurzon Capital SGR SPA, Fuh Hwa Asset Management, Green Court Management Holding, JK Capital Mgmt Ltd, Macquane Investment Mgmt(Asia), Morgan Stanley AM Singapore, Optimas Capital Limited, Pinebridge investments Asia Ltd, PingAn Ins Group Co of china, SPARX Asia Investment | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| Advisors, Sumitomo Mitsui DS AM CO, T Rowe Price, Point72 Asset Management, Allianz Asia, BEA Union investment Management Ltd, JK Capital Mgmt Ltd, Pinpoint Asset management Ltd, RBC IM (AsIa) LTD, SPARX ASia Investment Advisors, Sumitomo Mitsui DS AM CO, Trivest Advisors, Value Partners | ||||||
| January 16, 2020 | Shenzhen | Field research | Institution | Perseverance Asset Management | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| January 17, 2020 | Zhongshan | Field research | Institution | Causeway Capital Management LLC., Golden Nest Capital Management | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| February 17, 2020 | / | Telephone research | Institution | GOLDMAN SACHS, NOMURA ASSET MANAGEMENT, MACQUARIE SECURITIES, ALLIANZ GLOBAL INVESTORS HONG KONG LTD, ASPEX MANAGEMENT (HK) LIMITED, BEA UNION INVESTMENT MANAGEMENT LTD, PAG CAPITAL, PICTET ASSET MANAGEMENT (HONG KONG) LTD, SAMSUNG ASSET MANAGEMENT HK LTD, TORG CAPITAL MANAGEMENT(HK) LIMITED, BLACKROCK FINANCIAL MANAGEMENT(HONG KONGLFIDELITY INVESTMENT MANAGEMENT (HK), APS, BANK OF COMMUNICATIOAND SCHRODERS, BARINGS, BNP PARIBAS, BOSERA, BOSHENG CAPITAL, CENTERLINE, CHINA EVERBRIGHT, CIS ASSET MANAGEMENT, COMGEST, CSFG | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
| INTERNATIONAL ASSET MANAGEMENT, HARVEST GLOBAL INVESTMENTS LTDINVESCO HONG KONG LIMITED, EAST CAPITAL, EASTSPRING, FIDELITY MANAGEMENT RESEARCH (HONG KONG), FIDELITY INVESTMENT MANAGEMENT (HK), FIL, FORCHN, FOSUN GROUP, LAZARD ASSET MANAGEMENT, MANULIFE ASSET MANAGEMENT(HONG KONG)CO LTD, FULLGOAL FUND, GAVEKAL, GIC, GREENWOOD ASSET MANAGEMENT, MILLENNIUM CAPITAL MANAGEMENT (HONGKONG), GUOTAI JUNAN ASSETS (ASIA) LIMITED, HORIZON ASSET, HT INTERNATIONAL, HUATAI BAIRUI JIJING, INVENTIO, INVESCO, KADENSA, LMR, LYGH CAPITAL, MIGHTY DIVINE, MLP, MOON CAPITAL, MORGAN STANLEY, NORGES BANK, OBERWEIS, OLD PEAK, OP CAPITAL, OPTIMAS, ORIENT, OXBOW, PARANTOUX, PAT, PINPOINT, POINT 72, POWER PACIFIC, PACIFIC ALLIANCE, PRUDENCE, SAFE, SCHONFELD, SEVARA CAPITAL, SUMMER CAPITAL, SUMOTOMO MITSUI, TBP, TORQ, TRIKON, TX CAPITAL, UBS, VALUE PARTNERS, WELLINGTON, TYBOURNE CAPITAL MANAGEMENT, WELLS CAPITAL MANAGEMENT, POINT 72 ASSET MGT, GREENWOODS ASSET MGT , BNP PARIBAS INVESTMENT, FOSUN ASSET MGT, FUH HWA ASSET MGT, NEW SILK ROAD INVESTMENT, JK CAPITAL MGT, WININGTON, CMBI SINGAPORE, AVEREST CAPITAL, CGS-CIMB | ||||||
| March 23, 2020 | / | Telephone research | Institution | Bank of China Investment Management, China Asset Management, Huatai Asset Management, Huatai Baoxing Fund Management, Huatai PineBridge Investments, HuaAn Funds proprietary trading, Hongde Fund, HFT Fund, Guotai Asset | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for |
| Management, GF Fund Management, Changsheng Fund, CITIC AMC, CICC Asset Management, CITIC self-owned equity investment, Bank of Beijing Scotiabank Asset Management, Zhonghai Fund, CMB Wealth Management, Maxwealth Fund, Yingda Securities self-owned equity investment, Aegon-Industrial Fund, StarRock Investment, First State Cinda Fund, Xinyuan Asset Management, New China Fund, Xiangcai Fund, Tianfeng Asset Management, Taikang Asset, Taiping Asset, Schroders, SWS MU Fund Management, Shenjiu Asset, National Council for Social Security Fund, AXA SPDB Investment Managers, Penghua Fund, Panhou Dongliang Capital Management, Nuode Asset Management, Lion Fund Management, Southern Asset Management, Morgan Stanley Huaxin Fund Management, HSBC Jintrust Fund Management, ICBC Credit Suisse, Fullgoal Fund, Donghai Funds, Dacheng Fund, Caitong Asset, Caitong Fund Management | details. | |||||
| May 8, 2020 | / | Telephone research, Internet communication | Institution | FOUNTAIN CAP, ALLIANZ, SUMITOMO, CIFM, PING AN ASSET, FUHHWA, AGI, MIGHTY DEVINE, BNP, ESG, ORCHID ASIA, CENTERLINE, VALUE PARTNERS, JK CAPITAL, CLOUGH CAPITAL, HK, MACQ, ATLANTIS, MLP, XING TAI, AR CAPITAL SG, MANULE LIFE, WELLINGTON, MANULIFE, LYGH CPT, CITI, FIL, BARINGS, 3W FUND MGMT LTD, ALLIANCEBERNSTEIN LP, ALLIANZ GLOBAL INVESTORS ASIA PACIFIC LTD, ARISAIG PARTNERS (ASIA) PTE LTD, ARTISAN PARTNERS ASSET MANAGEMENT INC, CHAMPLAIN INV PARTNERS LLC, CHINA ASSET MGMT (HONG KONG) LTD, CHINA EVERBRIGHT ASSETS MGMT LTD, CHINA ORIENT INTL ASSET MGMT LTD, CLIENT 8888 - BEIJING, CLOUGH CAPITAL PARTNERS, CREDIT SUISSE - COMMERCIAL BANK, CSFG ASSET | Status quo and future development plan of the Company | Please refer to the record sheet of IR activities disclosed on CNINFO for details. |
Section V Significant EventsI. Profit Distribution of the Ordinary Shares and Conversion of Capital Reserve to ShareCapital of the CompanyFormulation, implementation or adjustment of profit distribution policies of ordinary shares especially the cashdividend plan in the reporting period
√ Applicable □ Not applicable
The Company convened the 19th meeting of the fourth session of the Board of Directors on December 5, 2019and the 2019 Fourth Extraordinary General Meeting of Shareholders on December 23, 2019. These meetingsreviewed and approved the Proposal on the Formulation of the Shareholder Return Plan for the Next Three Years(2020-2022). During the reporting period, the Company strictly implemented the Articles of Association, theDividend Management Regulations, and the Shareholder Return Plan for the Next Three Years (2020-2022),which specified the Company’s dividend distribution standards, ratio and decision-making procedures. This couldguarantee the continuity and stability of dividend distribution policies from an institutional perspective and fullyprotect the legitimate rights and interests of minority investors.
| Special explanation on cash dividend policy | |
| Whether the policy complies with provisions of the Articles of Association or requirements of the resolutions made on the shareholders’ general meeting: | Yes |
| Whether dividend standards and ratio are definite and clear: | Yes |
| Whether relevant decision-making procedure and mechanism are well-established: | Yes |
| Whether independent directors have performed duties and played their roles properly: | Yes |
| Whether minority shareholders have sufficient opportunities to express opinions and requests, and whether their legitimate rights and interests were sufficiently protected: | Yes |
| Where the cash dividend policy undergoes any adjustment or change, whether the conditions and procedures are compliant and transparent: | Yes |
Dividend distribution plan (preplan) of ordinary shares and conversion plan (preplan) of capital reserve into sharecapital of the Company in the latest three years (including the reporting period)
1. Profit distribution plan in 2018: Based on the number of shares of the Company’s total share capital minus11,709,583 repurchased shares as at the equity registration date of the implementation of this profit distributionplan, distribute a cash dividend of RMB0.23 (tax included) for every 10 shares to all shareholders; no bonusshares will be issued and no capital reserve will be converted into share capital. In addition, the Company startedthe share repurchase plan in 2018 and completed the plan on December 4, 2018. A total of 11,709,583 shares wererepurchased, with a total amount of RMB94,581,547.35. Article 7 of the Implementation Rules of Shenzhen StockExchange on the Share Repurchase of Listed Companies stipulates that “Where a listed company uses cash as theconsideration and repurchases shares through offer or centralized bidding, the amount paid for share repurchaseshall be deemed as cash dividend, which shall be included in the calculation of relevant cash dividend ratios of theyear”. Therefore, the amount paid by the Company for share repurchase, i.e. RMB94,581,547.35, is considered ascash dividend.
2. Profit distribution plan in 2019: Based on the number of shares of the Company’s total share capital minus thenumber of repurchased shares as at the equity registration date of the implementation of this profit distributionplan, distribute a cash dividend of RMB0.75 (tax included) for every 10 shares to all shareholders; no bonusshares will be issued and no capital reserve will be converted into share capital.
3. Profit distribution preplan in 2020: Based on the number of shares of the Company’s total share capital minusthe number of repurchased shares as at the equity registration date of the implementation of this profit distributionplan, distribute a cash dividend of RMB1.00 (tax included) for every 10 shares to all shareholders; no bonusshares will be issued and no capital reserve will be converted into share capital. In addition, the Companyconducted share repurchase in 2020 and ended the share repurchase plan on May 21, 2020. A total of 1,895,900shares were repurchased, with a total amount of RMB27,680,721.76. Article 7 of the Implementation Rules ofShenzhen Stock Exchange on the Share Repurchase of Listed Companies stipulates that “Where a listed companyuses cash as the consideration and repurchases shares through offer or centralized bidding, the amount paid forshare repurchase shall be deemed as cash dividend, which shall be included in the calculation of relevant cashdividend ratios of the year”. Therefore, the amount paid by the Company for share repurchase, i.e.RMB27,680,721.76, is considered as cash dividend.Cash dividend of ordinary shares in latest three years (including the reporting period)
Unit: RMB
| Year | Amount of cash dividend (tax included) | Net profit attributable to holders of | Percentage of cash dividend in net profit | Cash dividend by other ways (such as share | Percentage of cash dividend by other ways | Total amount of cash dividend | Percentage of total amount of cash dividend |
| ordinary shares of the Company based on the consolidated statements for the corresponding year | attributable to holders of ordinary shares of the Company based on the consolidated statements | repurchase) | in net profit attributable to holders of ordinary shares of the Company based on the consolidated statements | (including other ways) | (including other ways) in net profit attributable to holders of ordinary shares of the Company based on the consolidated statements | ||
| 2020 | 130,106,877.80 | 905,889,081.41 | 14.36% | 27,680,721.76 | 3.06% | 157,787,599.56 | 17.42% |
| 2019 | 98,024,652.98 | 603,832,650.83 | 16.23% | 0.00 | 0.00% | 98,024,652.98 | 16.23% |
| 2018 | 29,777,149.13 | 406,993,183.92 | 7.32% | 94,581,547.35 | 23.24% | 124,358,696.48 | 30.56% |
The Company gained profits in the reporting period and the retained profit of the Parent Company for holders ofordinary shares is positive, but no plan of cash dividend is proposed
□ Applicable √ Not applicable
II. Profit Distribution and Conversion of Capital Reserve to Share Capital during theReporting Period
√ Applicable □ Not applicable
| Number of bonus shares for every 10 shares (share) | 0 |
| Amount of dividend for every 10 shares (tax included) (RMB) | 1 |
| Basis of the shares for distribution preplan (share) | 1,301,068,778 |
| Amount of cash dividends (RMB) (tax included) | 130,106,877.80 |
| Cash dividend amount in other ways (such as share repurchase) (RMB) | 27,680,721.76 |
| Total amount of cash dividends (including other ways) (RMB) | 157,787,599.56 |
| Distributable profit (RMB) | 157,409,974.07 |
| Proportion of total cash dividends (including other ways) in distributable profit | 100.24% |
| Cash dividend in the reporting period | |
| If the Company is in the growth period and there are major capital expenditure arrangements, when the profit is distributed, the proportion of cash dividends in this profit distribution should be at least 20%. | |
| Details of the profit distribution preplan or share conversion preplan from capital reserve | |
| Note: The total amount of cash dividends is estimated based on 1,301,068,778 shares, which is the Company’s existing total share capital of 1,311,948,555 shares minus 10,879,777 shares repurchased by the Company as of March 25, 2021. The number of share basis for actual cash dividends will be subject to the figure of the Company’s total share capital minus actual repurchased shares as of the equity registration date for the Company’s implementation of this profit distribution plan. Where the Company’s share capital changes due to repurchase and cancellation of restricted shares, option exercise, and other reasons on the future equity registration date for the implementation of this distribution plan, the Company will maintain the same distribution amount for every 10 shares and change the total distributed amount accordingly. | |
III. Implementation of Commitments
1. Commitments completed by actual controllers, shareholders, related parties, purchasers, or theCompany within the reporting period and commitments not fulfilled by the end of the reporting period
√ Applicable □ Not applicable
| Cause of Commitment | Undertaking Party | Type of commitment | Content of commitment | Time of commitment | Term of commitment | Fulfillment of commitment |
| Share reform commitment | ||||||
| Commitments in the acquisition report or the equity change report | ||||||
| Commitments made during asset restructuring | ||||||
| Commitments made during the initial public offering or refinancing | Directors, supervisors, and senior management | Directors, supervisors, and senior management promise that they will not transfer more than 25% of the total shares of the Company they hold each year during the term of office. If they leave office before the expiry of the term of office, they promise not to transfer more than 25% of the total shares of the Company they hold each year within the term of office and within six months after the term of office expires (which is agreed when they took | November 25, 2010 | Long-term | Strictly observed |
| office). Moreover, they will not transfer their shares of the Company within half a year after they leave office. | ||||||
| Equity incentive commitments | Dai Zhenji, Dong Ye, Ye Longfang and Liu Jinfeng | They promise not to sell all their shares (including shares obtained from exercise and other shares) within six months after the end of the exercise of the last stock options. Besides, they promise to strictly conform to stock trading-related laws and regulations. | June 5, 2020 November 12, 2020 | During the implementation of the equity incentive plan | Strictly observed | |
| Other commitments to minority shareholders | Deng Guanbiao, Deng Guanjie, Deng Yingzhong, and Guangdong Zhongshun Paper Group Co., Ltd. | They promise not to compete with the Company in the same business. | January 1, 2009 | Long-term | Strictly observed | |
| C&S Paper Co., Ltd. | Cash dividends shall be distributed when dividend conditions are met. The Board of Directors of the Company shall comprehensively consider industry characteristics, development stage, business model, profitability, and major capital spending (if any), distinguish the following circumstances, and propose differentiated cash dividend policies in compliance with the procedures stipulated in the Articles of | August 28, 2014 | Long-term | Strictly observed |
| Association,. | ||||||
| C&S Paper Co., Ltd. | The 2019 repurchase plan was terminated due to objective reasons. The Company will perform the necessary procedures and immediately restart the repurchase work upon the end of the exercise period. | May 21, 2020 | Between the end of the repurchase plan and the start of the next repurchase plan (the Company reviewed and passed the share repurchase plan on January 5, 2020, and will continue the share repurchase plan) | Strictly observed | ||
| Deng Yinzhong | He promises not to reduce any shares of the Company he holds within six months upon the completion of the share increase plan, not to engage in insider trading and short-term trading, and not to trade shares of the Company during sensitive periods. | November 04, 2020 | Within six months from the completion of the share increase plan | Strictly observed | ||
| Whether commitments are fulfilled on time | Yes | |||||
2. If there are assets or projects of the Company which have profit forecast while the reporting period is still in the forecast period, the Company shouldstate whether the assets or projects have attained the profit forecast and explain reasons
□ Applicable √ Not applicable
IV. Appropriation of Funds for Non-operating Purposes by Controlling Shareholder and ItsRelated Parties
□ Applicable √ Not applicable
During the reporting period, the Company did not have any funds appropriated for non-operating purposes by thecontrolling shareholder and its related parties.V. Explanation by the Board of Directors, the Board of Supervisors, and IndependentDirectors (if any) of the "Non-standard Audit Report" for the Reporting Period Issued by theAccounting Firm
□ Applicable √ Not applicable
VI. Explanation of Changes in Accounting Policies, Estimates and Calculation MethodsCompared with the Financial Report of Last Year
√ Applicable □ Not applicable
(1) Accounting policy changes
1) Accounting policy changes resulted from the execution of the New Revenue StandardsThe Ministry of Finance promulgated the Accounting Standards for Business Enterprises No. 14 –Revenue (C.K.[2017] No. 22) (hereinafter referred to as the “New Revenue Standards”) on July 5, 2017. Upon deliberation, the21st meeting of the fourth session of the Board of Directors passed a resolution on February 25, 2020 that theCompany would implement the New Revenue Standards from January 1, 2020.The New Revenue Standards set up a new revenue recognition model to regulate revenues generated fromcontracts with customers. In order to implement the New Revenue Standards, the Company reassessed therecognition, measurement, accounting and presentation of revenues from major contracts. Pursuant to the NewRevenue Standards, the Company chose to only adjust the accumulative impact amount for contracts that have notbeen completed on January 1, 2020. The amounts of retained earnings and other relevant items in the financialstatements at the beginning of the period for the first time adoption of the new standards (i.e. January 1, 2020) areadjusted based on the accumulative impact amount at the first time adoption, while comparative financialinformation for the previous accounting periods is not adjusted.
2) Major changes and impacts upon implementation of the New Revenue Standards are as follows:
The Company changes the contractual consideration received from customers in advance for the transfer of goodsfrom the “payments received in advance” item to the “contract liabilities” item.
The Company’s implementation of the New Revenue Standards did not have an impact on the retained earnings atthe beginning of 2020. Impacts on other relevant items in the financial statements dated January 1, 2020 are listedin the following:
Unit: RMB
| Statement item | Amount on December 31, 2019 (prior to changes) | Amount on January 1, 2020 (after changes) | ||
| Consolidated statement | Parent Company’s statement | Consolidated statement | Parent Company’s statement | |
| Payments received in advance | 142,476,562.31 | 28,227,454.47 | ||
| Contract liabilities | 142,476,562.31 | 28,227,454.47 | ||
(2) Changes of accounting estimates
There were no changes of accounting estimates within the reporting period.VII. Description of Major Accounting Errors within the Reporting Period That NeedRetrospective Restatement
□ Applicable √ Not applicable
There were no major accounting errors within the reporting period that need retrospective restatement.VIII. Description of Changes in the Scope of Consolidated Statements Compared with theFinancial Report of Last Year
√ Applicable □ Not applicable
December 29, 2020, The Company and its wholly-owned subsidiary Zhongshan Zhongshun Trading Co., Ltd.jointly invested and established Dolemi Sanitary Products Co., Ltd. with a registered capital of RMB50 million.The Company holds 60% of the shares while Zhongshan Zhongshun Trading holds 40% of the shares. SinceDecember 2020, the Company has incorporated Dolemi Sanitary Products Co., Ltd into the scope of itsconsolidated statements. Currently, Dolemi Sanitary Products has no operating activities.IX. Engagement and Dismissal of Accounting Firm
Accounting firm engaged
| Name of the domestic accounting firm | Mazars CPA Limited (LLP) |
| Remuneration for the domestic accounting firm (RMB 10,000) | 156 |
| Term of auditing service provided by the domestic accounting firm | 2 |
| Name of domestic certified public accountants | Wang Bing, Pan Guiquan |
| Term of auditing services provided by domestic certified public accountants | 2 |
Whether the accounting firm was changed in the reporting period
□ Yes √ No
Appointment of accounting firm, financial advisor or sponsor for internal control audit
□ Applicable √ Not applicable
X. The Company Facing Delisting after the Disclosure of the Annual Report
□ Applicable √ Not applicable
XI. Matters relating to Bankruptcy and Restructuring
□ Applicable √ Not applicable
No bankruptcy and restructuring-related matters of the Company happened during the reporting period.
XII. Material Litigations and Arbitrations
□ Applicable √Not applicable
The Company had no material litigations or arbitrations during the reporting period. Other litigations are listed asfollows:
| No. | Basic information of the litigation (arbitration) | Amount involved (RMB 10,000) | Whether projected liabilities were incurred | Litigation (arbitration) progress | Hearing results and influences of the litigation (arbitration) | Execution of judgment of the litigation (arbitration) |
| 1 | Zhongshan Trading sued Shenzhen Yongxinghua Trading Co., Ltd., Feng, & Liang for a sales contract dispute | 660.374109 | No | Both the first instance and the second instance ruled that Zhongshan | The verdict of second instance came into force. Zhongshan Trading has | Ongoing |
| Trading won the case. | applied for execution. | |||||
| 2 | Zhongshan Trading sued Guangzhou Yingjing Trade Co., Ltd. for a sales contract dispute | 31.3604 | No | The first instance supported all the claims by Zhongshan Trading. | The verdict of first instance came into force. Zhongshan Trading has applied for execution. | The first round of execution ended. No properties have been recovered. |
| 3 | Zhongshan Trading sued Shaoyang Jiahe Trading Co., Ltd. for a sales contract dispute | 33.638552 | No | The first instance supported all the claims by Zhongshan Trading. | The verdict of first instance came into force. Zhongshan Trading has applied for execution. | Ongoing |
| 4 | Zhongshan Trading sued Shanghai Tongli Trading Co., Ltd. and eight natural person defendants including Liu for a sales contract dispute | 2932.009863 | No | Both the first instance and the second instance ruled that Zhongshan Trading won the case. | The verdict of second instance came into force. Zhongshan Trading has applied for execution. | Ongoing |
| 5 | Yin sued C&S Paper for a dispute over the right to health | 30.247331 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance ruled that C&S won the case. The second instance sent the case back to the first instance court for a retrial. The first instance retrial has been opened. C&S is waiting for the verdict. | Wait for the verdict and judgment of the first instance retrial. | Not applicable |
| 6 | Sichuan Hua Xi Da Cheng Construction Co., Ltd. Zhuhai Branch sued Sichuan Luxian No. 9 Construction | The original claim was RMB7,516,032.39, which | Yes | The case was mediated and closed in the first instance. | All parties of the lawsuit fulfilled their respective settlement | The paper of civil mediation has been fulfilled. |
| Engineering Co., Ltd. and Yunfu C&S for a contract dispute over the Yunfu C&S construction project | was changed to RMB9,124,489.89 during the first instance. | obligation for relevant project costs agreed in the contract. | ||||
| 7 | Guangdong Weihong Plastics Technology Co., Ltd. sued Hubei C&S for a contractor contract dispute | 225.9055 | No | Both the first instance and the second instance ruled that Hubei C&S won the case. | The verdict of second instance came into force. | The verdict has been fulfilled. |
| 8 | Sichuan C&S sued Xi'an Minsheng Department Store Management Co., Ltd. for a contract dispute | 5.651847 | No | The case was mediated and closed in the first instance. | Xi'an Minsheng has not fulfilled the repayment obligation in line with the paper of civil mediation. Sichuan C&S has applied for legal enforcement. | The first round of enforcement ended; RMB5,000 were recovered. |
| 9 | Zhongshan Trading sued Guangzhou Jv Se Mai Ke Internet Service Co., Ltd. for a sales contract dispute | 28.554681 | No (Note: Whether projected liabilities will be incurred cannot be determined prior to the verdict.) | The first instance is being heard. Zhongshan Trading is waiting for the verdict to come into force. | Zhongshan Trading will apply for legal enforcement after the verdict comes into effect. | Not applicable |
| 10 | Xiaogan C&S sued Wuhan Xincheng Tongda Trading Co., Ltd. for a sales contract dispute | 525.162529 | No | The case was mediated and closed in the first instance (with a mediation amount of RMB4,496,05235). | Fulfill repayment obligation by installments according to the civil mediation paper. | Performing according to the civil mediation paper |
| 11 | Ouyang sued C&S Paper for a labor dispute | 2 | No | Arbitration ruled in favor of the Company. | Arbitration ruled in favor of the Company. Case closed. | Not applicable |
| 12 | Sichuan Zhongshun sued Yunan Yiya Tongmei Shikang Deep Supply Chain Management Co., Ltd., Yang & Li for a sales contract dispute | 109.09999 | No | The case was settled and closed in the first instance. | The settlement paper has been fulfilled (RMB1,001,739,94 were recovered) | Not applicable |
| 13 | Huang sued Xiaogan Trading for a labor provider liability dispute | 24.189454 | No | The plaintiff withdrew at the first instance. | The plaintiff withdrew at the first instance. Case closed. | Not applicable |
XIII. Penalty and Rectification
□ Applicable √ Not applicable
No penalties and rectifications of the Company occurred during the reporting period.XIV. Integrity Records of the Company and its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XV. Implementation of the Stock Incentive Plan, Employee Stock Ownership Plan, and OtherEmployee Incentives of the Company
√ Applicable □ Not applicable
1. Implementation of the Phase II stock incentive plan
On May 21, 2020, the Company convened the 23rd meeting of the fourth session of the Board of Directors and the19th meeting of the fourth session of the Board of Supervisors, which considered and approved the Proposal onAchieving the Unlock Conditions of the First Unlock Period for Restricted Stocks Awarded in the First Grantunder the Company's 2018 Stock Option and Restricted Stock Incentive Plan. There were 533 holders of restrictedstocks meeting the unlock conditions, and the number of stocks that could be unlocked was 5,593,428. The unlockdate of these restricted stocks was June 8, 2020. The above meetings also reviewed and approved the Proposal on
the Repurchase and Deregistration of Partial Restricted Stocks Awarded in the First Grant under the Company's2018 Stock Option and Restricted Stock Incentive Plan. The Board of Directors of the Company approved torepurchase and deregister a total of 802,722 restricted shares that had been granted but not unlocked. In addition,the aforesaid meetings also deliberated and approved the Proposal on Achieving the Exercise Conditions of theFirst Exercise Period for Stock Options Awarded in the First Grant under the Company's 2018 Stock Option andRestricted Stock Incentive Plan. There were 2,522 holders of stock options meeting the exercise conditions, andthe number of options that could be exercised was 3,431,505. The Proposal on the Repurchase and Deregistrationof Partial Stock Options Awarded in the First Grant under the Company's 2018 Stock Option and Restricted StockIncentive Plan was also considered and approved. The Board agreed to deregister 2,110,545 options that had beengranted but not exercised.On May 28, the Company held the 24th meeting of the fourth session of the Board of Directors and the 20thmeeting of the fourth session of the Board of Supervisors, which reviewed and approved the Proposal onAdjusting the Exercise Price of Stock Options. Pursuant to the Company’s profit distribution plan in 2019 andrelevant provisions of the 2018 Stock Option and Restricted Stock Incentive Plan (Draft), the Company adjustedthe exercise price of first-granted stock options from RMB8.67/share to RMB8.572/share, and adjusted theexercise price of reserved stock options from RMB14.04/share to RMB13.965/share.On June 15, 2020, the cancellation procedures for 2,110,54 first-granted stock options that had been granted butnot exercised were completed at the Shenzhen Branch of China Securities Depository and Clearing CorporationLimited.On September 7, 2020, the cancellation procedures for 802,722 first-granted restricted shares that had beengranted but not unlocked were completed at the Shenzhen Branch of China Securities Depository and ClearingCorporation Limited.On October 29, 2020, the Company convened the 28th meeting of the fourth session of the Board of Directors andthe 22nd meeting of the fourth session of the Board of Supervisors, which considered and approved the Proposalon Achieving the Unlock Conditions of the First Unlock Period for Reserved Restricted Stocks under theCompany's 2018 Stock Option and Restricted Stock Incentive Plan. A total of 43 incentive recipients of thereserved restricted stocks met the unlock conditions of the first unlock period, and the number of stocks that couldbe applied for unlock was 765,270. The unlock date was November 10, 2020. The above meetings also reviewedand approved the Proposal on Achieving the Exercise Conditions of the First Exercise Period for Reserved StockOptions under the Company's 2018 Stock Option and Restricted Stock Incentive Plan. A total of 88 incentiverecipients of the reserved stock options met the exercise conditions of the first exercise period, and the number ofoptions that could be exercised was 640,389. In addition, the Proposal on the Repurchase and Deregistration ofPartial Reserved Restricted Stocks under the Company's 2018 Stock Option and Restricted Stock Incentive Planwas also reviewed and approved. The Company agreed to repurchase and deregister 211,890 restricted shares that
had been granted but not unlocked. In addition, the Proposal on the Repurchase and Deregistration of PartialReserved Stock Options under the Company's 2018 Stock Option and Restricted Stock Incentive Plan was alsoconsidered and approved. The Company agreed to deregister 151,111 stock options that had been granted but notexercised.On November 20, 2020, the cancellation procedures for 151,111 reserved stock options that had been granted butnot exercised were completed at the Shenzhen Branch of China Securities Depository and Clearing CorporationLimited.Please continue to pay attention to the Company's information disclosure for subsequent implementation progressor changes.
2. Implementation of the Phase II employee stock ownership plan
In conformity with Accounting Standards for Enterprises No.11–Share-based Payments and relevant applicationguidelines and other documents, the Company's Phase II Employee Stock Ownership Plan meets the definition ofshare-based payment, and the total share-based payment expenses incurred were RMB56.44 million, of whichRMB4.7 million were allocated in 2019 and RMB51.74 million in 2020.The lockup period for the Phase II Employee Stock Ownership Plan expired on November 30, 2020.As of January 5, 2021, all stocks held under the Company’s Phase II Employee Stock Ownership Plan, i.e.11,709,583 shares, had been sold out. As per relevant provisions of the Phase II Employee Stock Ownership Plan,the implementation of the Plan is completed and thus the Plan is terminated.
XVI. Material Related Party Transaction
1. Related party transactions relating to daily operations
√ Applicable □ Not applicable
| Party of related party transaction | Related relationship | Type of related party transaction | Content of related party transaction | Pricing rules of related party transaction | Price of related party transactions | Amount of related party transaction (RMB10,000) | Proportion in the amount of similar transactions | Approved transaction limit (RMB10,000) | Whether to outstrip the approved limit | Settlement of related party transaction | Available market prices for similar transactions | Date of disclosure | Index of disclosure |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Lease | Rental | Market fair price | Market fair price | 294.81 | 28.97% | 294.81 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Lease | Rental | Market fair price | Market fair price | 5.56 | 0.55% | 5.56 | No | Transfer settlement | Market fair price | October 30, 2020 | 2020-82 |
| Deng Yingzhong, Deng Guanbiao, Deng Guanjie | Actual controller of the Company | Lease | Rental | Market fair price | Market fair price | 0.11 | 0.01% | Yes | Transfer settlement | Market fair price | |||
| Pengzhou Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor | Daily operation transaction | Sale of goods | Market fair price | Market fair price | 137.8 | 0.02% | 300 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Sichuan West Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor | Daily operation transaction | Sale of goods | Market fair price | Market fair price | 64.12 | 0.01% | 100 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Chongqing Qinyue | A company where the senior | Daily operation | Sale of goods | Market fair price | Market fair price | 33.05 | 0.00% | 240 | No | Transfer settlement | Market fair price | December 6, 2019 | 2019-93 |
| Trading Co., Ltd. | manager Yue Yong's brother holds shares and serves as a supervisor | transaction | ||||||||||||
| Guangdong Zhongshun Paper Group Co., Ltd. | Controlling shareholder of the Company | Daily operation transaction | Sale of goods | Market fair price | Market fair price | 5.66 | 0.00% | Yes | Transfer settlement | Market fair price | ||||
| Total | -- | -- | 541.11 | -- | 940.37 | -- | -- | -- | -- | -- | ||||
| Details of returns of large sales | Not applicable | |||||||||||||
| Where the total amount of daily related-party transactions occurred in the current period is estimated by category, actual performance during the reporting period (if any) | The excessive amounts of related party transactions of RMB1,100 and RMB56,600 in the reporting period are the Company's business of renting properties from and selling mask products to related parties, respectively. They are temporary new related transactions during the reporting period, fall within the authority of the Chairman of the Company and can be implemented without the approval of the Board of Directors. | |||||||||||||
| Reason(s) for a large difference between the transaction price and the market reference price (if applicable) | Exercise at fair price | |||||||||||||
2. Related party transactions relating to acquisition and sale of assets or equity
□ Applicable √ Not applicable
During the reporting period, there was no related party transaction relating to acquisition and sale of assets orequity.
3. Related party transactions relating to joint outbound investment
□ Applicable √ Not applicable
During the reporting period, there was no related party transaction relating to joint outbound investment.
4. Related party transactions relating to creditor's rights and debts
√ Applicable □ Not applicable
Whether there was non-operating related party transaction relating to creditor's rights and debts
□ Yes √ No
During the reporting period, there was no non-operating related party transaction relating to creditor's rights anddebts.
5. Other significant related party transactions
□ Applicable √ Not applicable
During the reporting period, there were no other significant related party transactions.XVII. Significant Contracts and Their Performance
1. Custody, contracting and leasing matters
(1) Custody
□ Applicable √ Not applicable
During the reporting period, there was no custody.
(2) Contracting
□ Applicable √ Not applicable
During the reporting period, there was no contracting.
(3) Leasing
√ Applicable □ Not applicable
Description of leasing mattersOn December 5, 2019, the Company convened the 19th meeting of the fourth session of the Board of Directorsand the 16th meeting of the fourth session of the Board of Supervisors, on which the Proposal on Daily RelatedParty Transactions in 2021 was reviewed and approved. Due to the needs of operation and business, the Board ofDirectors of the Company agreed that the Company and its wholly-owned subsidiary, Zhongshan ZhongshunTrading Co., Ltd., leased the real estate jointly owned by Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. DengGuanjie, the actual controllers of the Company. The lease term is from January 1, 2020 to December 31, 2021, andthe total rent involved is RMB5,896,200. During the deliberation of this proposal, the Company's three relateddirectors, Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie, withdrew from voting, while theremaining six attending directors unanimously approved this related party transaction. The three independentdirectors of the Company respectively issued Prior Approval Opinions and Opinions of Independent Directors onthe proposal, agreeing to submit the proposal to the Board of Directors for deliberation and agreeing to the relatedparty transaction.On October 29, 2020, the Company convened the 20th meeting of the fourth session of the Board of Directors andthe 22nd meeting of the fourth session of the Board of Supervisors, on which the Proposal on Adding toRelated-Party Leasing Transactions was reviewed and approved. The Board of Directors of the Company agreedthat the Company’s wholly-owned subsidiary, C&S (Yunfu) Paper Co., Ltd., leased the real estate jointly ownedby the actual controllers of the Company Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie to beused as its R&D center. The lease term is from November 1, 2020 to December 31, 2021, and the total rentinvolved is RMB389,300. During the deliberation of this proposal, the Company's three related directors, Mr.Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie, withdrew from voting, while the remaining sixattending directors unanimously approved this related party transaction. The three independent directors of theCompany respectively issued Prior Approval Opinions and Opinions of Independent Directors on the proposal,agreeing to submit the proposal to the Board of Directors for deliberation and agreeing to the related partytransaction.The Company’s holding subsidiary, Dolemi Sanitary Products Co., Ltd., leased the real estate jointly owned byactual controllers of the Company Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie to be used asresidence. The lease term is from December 1, 2020 to December 31, 2021, and the total rent involved isRMB14,100. The amount of this related party transaction falls within the approval authority of the Company’s
Chairman and has been approved by the Chairman.Projects whose profits or losses brought to the Company reached more than 10% of the total profits of theCompany during the reporting period
□ Applicable √ Not applicable
During the reporting period, there were no leasing projects whose profits or losses brought to the Companyreached more than 10% of the total profits of the Company during the reporting period.
2. Material guarantee
√ Applicable □ Not applicable
(1) Guarantee
Unit: RMB10,000
| External guarantee of the Company and subsidiaries (excluding guarantee for subsidiaries) | ||||||||
| Name of guarantee object | Disclosure date of relevant announcement on guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Guarantee of the Company for subsidiaries | ||||||||
| Name of guarantee object | Disclosure date of relevant announcement on guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Zhongshan Trading | December 5, 2019 | 15,000 | September 15, 2020 | 11,582.11 | Joint and several liability | 2020.9.15-2023.8.31 | No | Yes |
| guarantee | ||||||||
| Zhongshan Trading | December 5, 2019 | 3,000 | December 30, 2020 | 0 | Joint and several liability guarantee | 2020.12.30-2024.12.31 | No | Yes |
| Zhongshan Trading | December 5, 2019 | 25,000 | December 15, 2020 | 0 | Joint and several liability guarantee | 2020.12.15-2024.12.9 | No | Yes |
| Zhongshan Trading | December 19, 2018 | 9,000 | July 12, 2019 | 0 | Joint and several liability guarantee | 2019.7.12-2024.12.31 | No | Yes |
| Jiangmen C&S | December 5, 2019 | 12,000 | October 15, 2020 | 0 | Joint and several liability guarantee | 2020.10.15-2023.8.31 | No | Yes |
| Jiangmen C&S | December 15, 2017 | 10,000 | March 27, 2018 | 0 | Joint and several liability guarantee | 2018.3.27-2023.12.31 | No | Yes |
| Jiangmen C&S | December 5, 2019 | 7,000 | July 9, 2020 | 2,809.88 | Joint and several liability guarantee | 2020.7.9-2022.9.23 | No | Yes |
| Jiangmen C&S | December 5, 2019 | 10,000 | November 16, 2020 | 1,206.54 | Joint and several liability guarantee | 2020.11.26-2023.11.25 | No | Yes |
| Jiangmen C&S | December 5, 2019 | 5,000 | December 23, 2020 | 0 | Joint and several liability | 2020.12.23-2025.12.23 | No | Yes |
| guarantee | ||||||||
| Jiangmen C&S | December 15, 2017 | 16,000 | May 30, 2018 | 0 | Joint and several liability guarantee | 2018.5.30-2023.5.30 | No | Yes |
| Yunfu C&S | December 5, 2019 | 8,000 | April 14, 2020 | 125.31 | Joint and several liability guarantee | 2020.4.14-2028.4.14 | No | Yes |
| Yunfu C&S | December 5, 2019 | 5,000 | November 20, 2020 | 0 | Joint and several liability guarantee | 2020.11.20-2023.12.31 | No | Yes |
| Yunfu C&S | December 5, 2019 | 10,000 | October 15, 2020 | 1,372.31 | Joint and several liability guarantee | 2020.10.15-2023.8.31 | No | Yes |
| Yunfu C&S | December 5, 2019 | 10,000 | October 15, 2020 | 0 | Joint and several liability guarantee | 2020.11.16-2023.11.15 | No | Yes |
| Yunfu C&S | December 5, 2019 | 4,000 | July 9, 2020 | 1,511.95 | Joint and several liability guarantee | 2020.7.9-2022.9.23 | No | Yes |
| Hubei C&S | December 5, 2019 | 10,000 | February 25, 2020 | 0 | Joint and several liability guarantee | 2020.2.25-2025.12.4 | No | Yes |
| Hubei C&S | December 5, 2019 | 9,822.45 | September 16, 2020 | 571.51 | Joint and several liability | 2020.9.16-2023.9.11 | No | Yes |
| guarantee | ||||||||
| Hubei C&S | December 5, 2019 | 10,000 | June 3, 2020 | 9,000 | Joint and several liability guarantee | 2020.6.3-2023.5.29 | No | Yes |
| Jiangmen C&S, Yunfu C&S, Hubei C&S | December 19, 2018 | 25,000 | January 8, 2019 | 4,047.24 | Joint and several liability guarantee | 2019.1.8-2021.1.8 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 5, 2019 | 32,741.5 | July 8, 2020 | 13,272.59 | Joint and several liability guarantee | 2020.7.8-2024.7.31 | No | Yes |
| C&S Hong Kong, Zhong Shun International | December 5, 2019 | 17,145.38 | March 20, 2020 | 0 | Joint and several liability guarantee | 2020.3.20-2022.9.19 | No | Yes |
| C&S Hong Kong,, Macao C&S | December 5, 2019 | 33,784 | September 7, 2020 | 4,493.79 | Joint and several liability guarantee | 2020.9.7-2022.12.23 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 5, 2019 | 41,581.71 | February 12, 2020 | 23,283.94 | Joint and several liability guarantee | 2020.2.12-2022.2.12 | No | Yes |
| C&S Hong Kong,, Macao C&S | December 5, 2019 | 13,096.6 | February 25, 2020 | 0 | Joint and several liability guarantee | 2020.2.25-2022.2.25 | No | Yes |
| C&S Hong Kong,, Macao C&S | December 5, 2019 | 6,548.3 | November 12, 2020 | 0 | Joint and several liability | 2020.11.12-2024.3.1 | No | Yes |
| guarantee | ||||||||
| C&S Hong Kong,, Macao C&S | December 5, 2019 | 15,715.92 | March 27, 2020 | 5,202.81 | Joint and several liability guarantee | 2020.3.27-2022.2.19 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 15, 2017 | 18,243.36 | September 28, 2018 | 0 | Joint and several liability guarantee | 2018.9.28-2022.8.31 | No | Yes |
| C&S Hong Kong, Zhong Shun International, Macao C&S | December 5, 2019 | 19,644.9 | January 30, 2020 | 7,630.17 | Joint and several liability guarantee | 2020.1.30-2022.1.30 | No | Yes |
| Macao C&S | December 15, 2017 | 7,203.13 | March 23, 2018 | 1,506.11 | Joint and several liability guarantee | 2018.3.23-2021.9.23 | No | Yes |
| Macao C&S | December 15, 2017 | 7,000 | August 15, 2018 | 1,212.3 | Joint and several liability guarantee | 2018.8.15-2025.8.15 | No | Yes |
| C&S Hong Kong | December 5, 2019 | 22,919.05 | September 1, 2020 | 1,851.98 | Joint and several liability guarantee | 2020.9.1-2022.7.9 | No | Yes |
| C&S Hong Kong | December 5, 2019 | 14,275.29 | July 1, 2020 | 7,341.22 | Joint and several liability guarantee | 2020.7.1-2021.6.30 | No | Yes |
| Macao C&S | December 5, 2019 | 27,371.89 | July 1, 2020 | 13,818.35 | Joint and several liability | 2020.7.1-2021.6.30 | No | Yes |
| guarantee | ||||||||
| Total approved amount of guarantee for subsidiaries during the reporting period (B1) | 388,646.99 | Total actual amount of guarantee for subsidiaries during the reporting period (B2) | 105,074.46 | |||||
| Total approved amount of guarantee for subsidiaries at the end of the reporting period (B3) | 481,093.48 | Total actual guarantee balance to subsidiaries at the end of the reporting period (B4) | 111,840.11 | |||||
| Guarantee of subsidiaries to subsidiaries | ||||||||
| Name of guarantee object | Disclosure date of relevant announcement on guarantee limit | Guarantee limit | Actual date of occurrence | Actual guarantee amount | Guarantee type | Guarantee period | Whether it has been completed | Whether it is related party guarantee |
| Total amount of the Company's guarantee (the sum of the first three items) | ||||||||
| Total approved amount of guarantee during the reporting period (A1 + B1 + C1) | 388,646.99 | Total actual amount of guarantee during the reporting period (A2 + B2 + C2) | 105,074.46 | |||||
| Total approved amount of guarantee at the end of the reporting period (A3 + B3 + C3) | 481,093.48 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 111,840.11 | |||||
| Proportion of the total actual amount of guarantee (A4 + B4 + C4) in the net assets of the Company | 22.18% | |||||||
| Wherein: | ||||||||
| Balance of guarantee for shareholders, actual controllers and their related parties (D) | 0 | |||||||
| Balance of debt guarantee provided directly or indirectly for objects whose asset-liability ratio exceeds 70% (E) | 0 |
| Amount of guarantees in excess of 50% of net assets (F) | 25,200.86 |
| Total amount of the above three guarantees (D + E + F) | 25,200.86 |
| Description of situations that the guarantee liability has occurred or the Company may be jointly and severally liable for undue guarantees during the reporting period (if any) | No |
| Description of providing external guarantee in violation of prescribed procedures (if any) | No |
Detailed description on the guarantees with different types: None
(2) External guarantee in violation of prescribed procedures
□ Applicable √ Not applicable
During the reporting period, there was no external guarantee in violation of prescribed procedures.
3. Entrusting others to manage cash assets
(1) Entrusted wealth management
√ Applicable □ Not applicable
Overview of entrusted wealth management during the reporting period
Unit: RMB10,000
| Specific type | Source of entrusted wealth management funds | Incurred amount of entrusted wealth management | Undue balance | Amount overdue but not recovered |
| Wealth management product of bank | Self-owned fund | 21,320 | 0 | 0 |
| Wealth management product of securities company | Self-owned fund | 8,710.5 | 5,000 | 0 |
| Total | 30,030.5 | 5,000 | 0 | |
Explanation of high-risk entrusted wealth management with large individual amount or low safety, poor liquidity
and no principal guarantee
□ Applicable √ Not applicable
Entrusted wealth management is expected to fail to recover the principal or there are other circumstances that maylead to impairment
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
There were no entrusted loans during the reporting period.
4. Significant contracts for daily operation
□ Applicable √ Not applicable
5. Other significant contracts
□ Applicable √ Not applicable
There were no other significant contracts during the reporting period.
XVIII. Social Responsibilities
1. Performance of social responsibilities
The Company actively fulfills its social responsibilities and initiatively discloses its performance of the socialresponsibilities. While safeguarding the legitimate rights and interests of shareholders, employees, consumers,partners, the society and other stakeholders, the Company upholds the tenet of integrity and commitment, andmakes positive contributions to the sustainable development of the society and environment. For details on theCompany’s performance of social responsibilities in 2020, please refer to the 2020 Environmental, Social andGovernance (ESG) Report published on the designated information disclosure media CNINFO(http://www.cninfo.com.cn)
2. Performance of social responsibilities for targeted poverty alleviation
(1) Targeted poverty relief planning
The Company carried out targeted poverty alleviation in 2020, and the follow-up work plan will be conducted in
accordance with the Company’s situation and work arrangement.
(2) Summary of annual targeted poverty alleviation
In order to implement General Secretary Xi Jinping’s important guidance that poverty alleviation anddevelopment should be precise and non-public enterprises are encouraged to participate in poverty alleviation bytaking a turnkey approach in terms of resources, the Company has actively responded to the government’s appealof targeted poverty alleviation, deepened poverty alleviation and rural revitalization. In 2002, we visitedpoverty-stricken areas many times and carried out targeted poverty relief work from three aspects of providingfunds, providing materials and helping poor people to work. Specifics are as follows:
1. Based on the framework agreement of achieving well-off with joint efforts signed with Jinzhai Village,Huanghua Town, Yongshan County, Zhaotong City, the Company donated RMB40,000 to Jinzhai Village forimproving local infrastructure and environment for residents. This could consolidate the achievements of povertyalleviation work.
2. The Company carried out targeted poverty alleviation actions in Heishui County of Aba Tibetan and QiangAutonomous Prefecture (Sichuan Province), with a total assistance amount of RMB5,000.
3. The Company visited Wupu Middle School in Wupu Town, Yunmeng County, Xiaogan City, Hubei Province,and donated epidemic prevention materials worth RMB30,000.
4. The Company absorbed five local poverty alleviation targets from Xiaogan City of Hubei Province and signedlabor contracts with them. In addition, the Company also, in response to local government’s call to participate inpoverty alleviation and agricultural assistance, purchased agricultural aid products worth RMB50,000.
5. The Company donated a poverty relief fund of RMB100,000 to Luoding City of Guangdong Province; to helppoverty-stricken households with registration cards to achieve employment, the Company absorbed 12 targets oftargeted poverty alleviation and signed labor contracts with them.
(3) Targeted poverty relief achievements
| Indicator | Unit of measurement | Amount and description |
| I. Overall situation | —— | —— |
| Including: 1. Capital | RMB10,000 | 19.5 |
| 2. Money equivalent of supplies | RMB10,000 | 3 |
| 3. Number of registered | Person | 17 |
| poverty-stricken people helped to lift out of poverty | ||
| II. Investments by items | —— | —— |
| 1. Poverty alleviation initiatives to promote industry development | —— | —— |
| 2. Poverty alleviation initiatives to transfer employment | —— | —— |
| 2.3 Number of registered poverty-stricken people helped to get employed | Person | 17 |
| 3. Poverty alleviation initiatives to relocate impoverished residents | —— | —— |
| 4. Poverty alleviation initiatives to promote education | —— | —— |
| 5. Poverty alleviation initiatives to promote healthcare | —— | —— |
| 6. Poverty alleviation initiatives to promote ecological protection | —— | —— |
| 7. Poverty alleviation initiatives to strengthen security guarantee | —— | —— |
| 8. Poverty alleviation initiatives to promote social causes | —— | —— |
| 8.3 Investment in poverty alleviation charity funds | RMB10,000 | 22.5 |
| 9. Other projects | —— | —— |
| III. Awards (including content and level) | —— | —— |
(4) Subsequent targeted poverty alleviation plan
The Company will decide whether to carry out follow-up targeted property alleviation plans based on results ofvisits and inspections.
3. Situations relating to environmental protection
Whether the listed company and its subsidiaries are the key pollution discharge units published by theenvironmental protection department
√ Yes □ No
| Name of company | Main pollutants and particular pollutants | Ways of discharge | Number of discharge outlets | Distribution of discharge outlets | Concentration of discharge | Implemented pollutant discharge standards | Total discharge | Total approved discharge | Excessive discharge | |
| Jiangmen Zhongshun Paper Co., Ltd. | Waste water | COD | After treatment, it is discharged to the sewage treatment plant | 1 | Centralized processing facilities in the factory | 148mg/L | 200mg/L | 294.058t | 335.600 t/a | None |
| Ammonia nitrogen | 5.8mg/L | 8mg/L | 11.52t | 13.4 t/a | None | |||||
| C&S (Sichuan) Paper Co., Ltd. | Waste water | COD | After treatment, it enters the water purification station through urban sewage pipeline | 1 | Production waste water discharge (DW001) flows through the channel into the main outlet DW002 (confluent with domestic waste water) | 33 mg/L | 80mg/L | 27.4413 t | 96 t/a | None |
| Ammonia nitrogen | 0.496 mg/L | 8mg/L | 0.4125 t | 9.6 t/a | None | |||||
| Waste gas | PM (particulate matter) | Discharge directly through the flue | 3 | Three chimneys (reconstruction of low nitrogen boilers was completed in June 2020; two boilers are commonly used and one boiler serves as the standby) | 1#furnace 5.2mg/m? 2# furnace 3.6 mg/m? 3# furnace 4.6 mg/m? | 20mg/Nm? | 0.6781t | / | None | |
| Nitrogen oxide | 1# furnace 26 mg/m? 2# furnace 81mg/m? 3# furnace 27 mg/m? | 150mg/Nm? | 9.5484t | 31.35t/a | None | |||||
| Sulfur dioxide | 0 | 50mg/Nm? | 0 | / | None | |||||
| Zhejiang Zhongshun Paper Co., Ltd. | Waste water | COD | After treatment, it is discharged to Jiaxing Union Sewage Treatment Co., Ltd. | 1 | Centralized processing facilities in the factory | 40.1mg/L | 500mg/L | 8.55t | 13.97 t/a | None |
| Ammonia nitrogen | 0.965mg/L | 35mg/L | 0.2t | 9.78 t/a | None | |||||
| through municipal pipe | ||||||||||
| C&S (Hubei) Paper Co., Ltd. | Waste water | COD | After treatment, it is discharged to Biquan Sewage Treatment Plant through municipal pipe | 1 | After pre-processing of centralized processing facilities in the factory, it is discharged to Biquan Sewage Treatment Plant | 70.579 mg/L | 400mg/L | 77.974t | 152.25t/a | None |
| Ammonia nitrogen | 3.880 mg/L | 30mg/L | 4.286t | 15.25t/a | None | |||||
| Waste gas | PM (particulate matter) | Dedusting by bag filter, desulfurization by limestone-gypsum and denitration by SNCR | 1 | One chimney | 9.0 mg/Nm? | 30mg/Nm? | 9.998t | 28.63 t/a | None | |
| Sulfur dioxide | 18.5 mg/Nm? | 200mg/Nm? | 29.171t | 203.87t/a | None | |||||
| Nitrogen oxide | 58.0 mg/Nm? | 200mg/Nm? | 81.501t | 239.85t/a | None | |||||
| C&S (Yunfu) Paper Co., Ltd. | Waste water | COD | Continuous discharge | 1 | Sewage treatment station in the factory | 23.99 mg/L | 80mg/L | 44.81t | 197.1 t/a | None |
| Ammonia nitrogen | Continuous discharge | 1 | Sewage treatment station in the factory | 1.66 mg/L | 8mg/L | 3.18t | 19.76 t/a | None | ||
| C&S Paper Co., Ltd. Tangshan Branch | Waste water | COD | After being treated by the plant sewage treatment station, it is discharged to the Lvyuan Sewage Treatment Plant in the zone | 1 | The main outlet of the zone (Lvyuan Sewage Treatment Plant) | 24.96 mg/L | 50mg/L | 5.74t | 16.5 t/a | None |
| Ammonia nitrogen | 0.464 mg/L | 5mg/L | 0.103t | 1.65t/a | None | |||||
| Waste gas | PM | Discharge directly | 1 | One chimney | 2.12mg/m? | 5mg/Nm? | 0.22t | 2.46 t/a | None |
| (particulate matter) | through the flue | ||||||
| Nitrogen oxide | 17.50mg/m? | 30mg/Nm? | 1.837t | 18.46t/a | None | ||
| Sulfur dioxide | 3mg/m? | 10mg/Nm? | 0.3128t | 6.15 t/a | None |
Construction and operation of pollution prevention and control facilities
(1) Compliance obligation fulfillment: The Company and its subsidiaries strictly abide by national and local environmental laws and regulations; all new projectsstrictly implement the environmental impact assessment system and "three simultaneous" system; all production activities strictly comply with the EnvironmentalProtection Law of the People's Republic of China, the Law of the People's Republic of China on the Prevention and Control of Water Pollution, the Law of thePeople's Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the People's Republic of China on the Prevention and Control ofEnvironmental Pollution by Solid Waste and the Action Plan for Prevention and Control of Water Pollution, and ensure that all pollutant treatment and discharge arein line with the requirements of laws and regulations.
(2) Configuration and operation of water treatment equipment and facilities: Each subsidiary has a complete set of environmental protection treatment equipment andfacilities. The main sewage treatment processes are anaerobic, aerobic and subsequent deep treatment processes, which can achieve the discharge standards of varioussewage indicators. In addition, each subsidiary is equipped with a recycling water system, in which the reclaimed water that meets the usage standard is used forre-production to reduce the discharge of sewage as far as possible. The sewage of Jiangmen, Zhejiang, Hubei and Tangshan companies is discharged after centralizedtreatment in the company and treated by the local sewage treatment plants. After centralized treatment in the company, the sewage of Sichuan Company enters waterpurification station through urban sewage pipeline; the sewage of Yunfu Company, after treated by the company's sewage treatment station and reaching the standard,is discharged in an organized manner.
(3) Online monitoring and operation of water treatment facilities: Four subsidiaries in Yunfu, Sichuan, Zhejiangand Hubei have all installed on-line sewage monitoring facilities, which are directly supervised by localenvironmental protection bureau. The sewage of Tangshan Company, after centralized treatment in the Company,is discharged to the sewage plant of the local paper industry base without any other sewage outlet. Monitoringfacilities are installed in the company for internal control reference. After the centralized treatment within theCompany, the sewage of Jiangmen Company is discharged to the sewage plant of the local paper industry base;there is no other sewage outlet and no online monitoring facilities. The environmental protection bureau goes tothe company regularly every quarter to compare the on-line monitoring data, which all meet the requirements.
(4) Boiler waste gas emission: Sichuan Branch and Tangshan Branch are equipped with natural gas boilers. HubeiBranch is equipped with a coal-fired boiler, and waste gas is emitted uniformly after desulfurization anddenitrification. Boiler waste gas emission conforms to GB13271-2014 Emission Standard of Air Pollutants forBoiler.Environmental impact assessment of construction projects and other administrative permits for environmentalprotection
(1) Administrative permits: According to the Measures for the Administration of Pollutant Discharge Permit of theMinistry of Environmental Protection of the People's Republic of China, the applications were submitted to theEnvironmental Protection Bureau. All the subsidiaries attained the new pollutant discharge permit in 2017, andcompleted its renewal and change in May 2020.
(2) Construction projects: the Company has always been strictly in accordance with environmental laws andregulations to implement the control of construction projects. Environmental impact assessment was carried outfor all construction projects and environmental protection project construction was arranged according toconstruction plan, to ensure that the environmental protection facilities and the main project are designed,constructed and put into use at the same time. At present, all construction projects put into production havecompleted environmental impact assessment and acceptance and approval.Emergency plan for sudden environmental events
(1) Preparation and reporting of emergency plan for sudden environmental events: The Company strictlyimplements emergency response rules for sudden environmental events, and, in accordance with the technicalrequirements in the Technical Guidelines for Preparation of Emergency Plans for Environmental PollutionAccidents, employs a professional advisory and guidance organization to formulate the Emergency Plan forSudden Environmental Events, which has been reviewed by and filed with the Environmental Protection Bureau.
(2) Emergency response supplies, training and drill: The Company has matched the corresponding emergencyresponse supplies according to the requirements of the Emergency Plan for Sudden Environmental Events.Emergency response measures for hazardous chemicals have been prepared according to environmental protection
requirements, and necessary labor protection supplies and emergency response supplies have been provided inaccordance with safety technical instructions, and checked and updated regularly. The Company regularly carriesout emergency training and drill and suitability assessment of the emergency plan to ensure the effectiveness andenforceability of the emergency plan.Environmental self-monitoring program
(1) Self-monitoring ledger: The Company strictly abides by laws and regulations, carries out self-monitoring workin accordance with environmental protection requirements, establishes environmental management ledger anddata, and constantly improves it.
(2) Waste water monitoring: At present, self-monitoring is a combination of manual monitoring and automaticmonitoring, and qualified units are entrusted to carry out monitoring regularly. Automatic monitoring projects:
main discharge outlet of waste water (COD, ammonia nitrogen, flow rate, PH, total nitrogen); Manual monitoringprojects: COD, BOD, ammonia nitrogen, SS, chroma, PH, total phosphorus and total nitrogen indicators aremonitored daily; for other sewage monitoring items, uncontrolled emissions, solid waste and factory boundarynoise, each subsidiary entrusts qualified units to carry out monitoring work monthly or quarterly according to thelocal environmental protection requirements.
(3) Waste gas monitoring: The main testing items are nitrogen oxide, ringelman emittance, sulfur dioxide and soot.The testing frequency is in compliance with the requirements of regulations.
(4) The self-monitoring data of pollutant discharge and environmental monitoring plans of each subsidiary aredisclosed on the national key pollution source information disclosure website and the provincial key pollutionsource information disclosure website.Other environmental information that should be disclosed
(1) The information regarding pollution discharge permit and relevant environmental information required bypollution permits is published on the National Pollution Discharge Permit Management Information Platform. Ifthe competent government department in the location of the subsidiary has specific requirements, the informationwill be published on its required environmental information platform in local area.
(2) Other information related to environmental protection is published in the “News” section of our website.Other relevant information on environmental protection: None
XIX. Other Significant Events
√ Applicable □ Not applicable
| No. | Announcement time | Announcement name | Announcement number | Disclosure media |
| 1 | January 9, 2020 | Announcement on Pre-disclosure of the Share Reduction Plan by Directors and Senior Management of the Company | 2020-01 | |
| 2 | February 3, 2020 | Announcement on Resolutions of the 20th Meeting of the Fourth Session of the Board of Directors | 2020-02 | |
| 3 | February 3, 2020 | Announcement on External Donations | 2020-03 | |
| 4 | February 10, 2020 | Announcement on the Production and Sales of Medical Masks by Wholly-owned Subsidiaries | 2020-04 | |
| 5 | February 12, 2020 | Announcement on Completion of the Share Reduction Plan by Directors and Senior Management | 2020-05 | |
| 6 | February 13, 2020 | Announcement on the Acquisition of Emergency Medical Device Production and Emergency Medical Device Record Certificate by Wholly-owned Subsidiaries | 2020-06 | |
| 7 | February 15, 2020 | Announcement on Progress of the Share Reduction Plan by Senior Management of the Company | 2020-07 | |
| 8 | February 26, 2020 | Announcement on Resolutions of the 21st Meeting of the Fourth Session of the Board of Directors | 2020-08 | |
| 9 | February 26, 2020 | Announcement on Resolutions of the 17th Meeting of the Fourth Session of the Board of Supervisors | 2020-09 | |
| 10 | February 26, 2020 | Announcement on Changes to Accounting Policies | 2020-10 | |
| 11 | February 26, 2020 | Notice on Convening 2020 First Extraordinary General Meeting | 2020-11 | |
| 12 | February 29, 2020 | Annual Performance Bulletin 2019 | 2020-12 | |
| 13 | March 6, 2020 | Announcement on Completion of the Share Reduction Plan by Senior Management of the Company | 2020-13 | |
| 14 | March 11, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of Subsidiaries | 2020-14 | |
| 15 | March 14, 2020 | Announcement on Resolutions of 2020 First Extraordinary General Meeting of Shareholders | 2020-15 | |
| 16 | March 18, 2020 | Announcement on the Resignation of the Representative of Securities Affairs | 2020-16 | |
| 17 | March 20, 2020 | Announcement on the First Repurchase of Company Shares | 2020-17 | |
| 18 | March 21, 2020 | Announcement on the Progress of Repurchase of Company Shares | 2020-18 | |
| 19 | March 31, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of the Company and Holding Subsidiaries | 2020-19 |
| 20 | April 3, 2020 | Announcement on the Progress of Repurchase of Company Shares | 2020-20 | Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News and CNINF |
| 21 | April 8, 2020 | Announcement on Pre-disclosure of the Share Reduction Plan by Directors and Senior Management of the Company | 2020-21 | |
| 22 | April 30, 2020 | Announcement on Resolutions of the 22nd Meeting of the Fourth Session of the Board of Directors | 2020-22 | |
| 23 | April 30, 2020 | Announcement on Resolutions of the 18th Meeting of the Fourth Session of the Board of Supervisors | 2020-23 | |
| 24 | April 30, 2020 | Summary of Annual Report 2019 | 2020-24 | |
| 25 | April 30, 2020 | Announcement on the Proposal on 2019 Profit Distribution Plan | 2020-25 | |
| 26 | April 30, 2020 | Notice on Convening 2019 Annual General Meeting | 2020-26 | |
| 27 | April 30, 2020 | Notice on Convening the Online Performance Presentation for Annual Report 2019 | 2020-27 | |
| 28 | April 30, 2020 | Text of the First Quarter Report 2020 | 2020-28 | |
| 29 | May 8, 2020 | Announcement on Progress of Repurchase of Company Shares | 2020-29 | |
| 30 | May 8, 2020 | Announcement on Progress of the Share Reduction Plan by Senior Management of the Company | 2020-30 | |
| 31 | May 15, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of Subsidiaries | 2020-31 | |
| 32 | May 15, 2020 | Announcement on Completion of the Share Reduction Plan by Directors and Senior Management the Company | 2020-32 | |
| 33 | May 16, 2020 | Announcement on Expiry of the Share Reduction Plan by Senior Management of the Company and Pre-disclosure on the Next Share Reduction Plan | 2020-33 | |
| 34 | May 22, 2020 | Announcement on Resolutions of 2019 Annual General Meeting of Shareholders | 2020-34 | |
| 35 | May 22, 2020 | Announcement on Resolutions of 23rd Meeting of the Fourth Session of the Board of Directors | 2020-35 | |
| 36 | May 22, 2020 | Announcement on Resolutions of the 19th Meeting of the Fourth Session of the Board of Supervisors | 2020-36 | |
| 37 | May 22, 2020 | Announcement on Termination of Repurchase of Company Shares | 2020-37 | |
| 38 | May 22, 2020 | Announcement on Achieving the Unlock Conditions of the First Unlock Period for Restricted Stocks Awarded in the First Grant under | 2020-38 |
| the Company's 2018 Stock Option and Restricted Stock Incentive Plan | ||
| 39 | May 22, 2020 | Announcement on Achieving the Exercise Conditions of the First Exercise Period for Stock Options Awarded in the First Grant under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-39 |
| 40 | May 22, 2020 | Announcement on the Repurchase and Deregistration of Partial Restricted Stocks Awarded in the First Grant under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-40 |
| 41 | May 22, 2020 | Announcement on the Deregistration of Partial Stock Options Awarded in the First Grant under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-41 |
| 42 | May 23, 2020 | Announcement on Implementation of 2019 Annual Equity Allocation | 2020-42 |
| 43 | May 27, 2020 | Announcement on Resignation of the Company’s Director | 2020-43 |
| 44 | May 29, 2020 | Announcement on Resolutions of the 24th Meeting of the Fourth Session of the Board of Directors | 2020-44 |
| 45 | May 29, 2020 | Announcement on Resolutions of the 20th Meeting of the Fourth Session of the Board of Supervisors | 2020-45 |
| 46 | May 29, 2020 | Announcement on Adjusting the Exercise Price of Stock Options under 2018 Stock Option and Restricted Stock Incentive Plan | 2020-46 |
| 47 | May 29, 2020 | Announcement on By-election of non-Independent Directors of the Fourth Session of the Board of Directors | 2020-47 |
| 48 | May 29, 2020 | Notice on Convening 2020 Second Extraordinary General Meeting | 2020-48 |
| 49 | June 4, 2020 | Indicative Announcement on Lifting the Sales Restrictions in the First Unlock Period for Restricted Stocks Awarded in the First Grant under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-49 |
| 50 | June 8, 2020 | Indicative Announcement on Adopting the Autonomous Exercise Mode in the First Exercise Period for Stock Options Awarded in the First Grant under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-50 |
| 51 | June 16, 2020 | Announcement on Progress of the Share Reduction Plan by Senior Management of the Company | 2020-51 |
| 52 | June 16, 2020 | Announcement on the Deregistration Completion of Partial Stock Options Awarded in the First Grant under the 2018 Stock Option and Restricted Stock Incentive Plan | 2020-52 |
| 53 | June 16, 2020 | Announcement on Resolutions of 2020 Second Extraordinary General Meeting of Shareholders | 2020-53 |
| 54 | June 16, 2020 | Announcement on Capital Decrease | 2020-54 |
| 55 | June 23, 2020 | Announcement on Resolutions of the 25th Meeting of the Fourth Session of the Board of Directors | 2020-55 |
| 56 | June 23, 2020 | Announcement on Election of the Vice Chairman of the Fourth Session of the Board of Directors | 2020-56 |
| 57 | June 23, 2020 | Announcement on Appointment of the Joint General Manager of the Company | 2020-57 |
| 58 | July 2, 2020 | Announcement on Completion of the Share Reduction Plan by Directors and Senior Management of the Company | 2020-58 |
| 59 | July 13, 2020 | Semi-annual Performance Forecast 2020 | 2020-59 |
| 60 | August 7, 2020 | Announcement on Resolutions of the 26th Meeting of the Fourth Session of the Board of Directors | 2020-60 |
| 61 | August 7, 2020 | Announcement on Resolutions of the 21st Meeting of the Fourth Session of the Board of Supervisors | 2020-61 |
| 62 | August 7, 2020 | Summary of Semi-annual Report 2020 | 2020-62 |
| 63 | August 7, 2020 | Announcement on Continued Engagement of the Accounting Firm | 2020-63 |
| 64 | August 7, 2020 | Notice on Convening the 2020 Third Extraordinary General Meeting | 2020-64 |
| 65 | August 26, 2020 | Announcement on Resolutions of the 2020 Third Extraordinary General Meeting | 2020-65 |
| 66 | August 26, 2020 | Announcement on Resolutions of the 27th Meeting of the Fourth Session of the Board of Directors | 2020-66 |
| 67 | August 26, 2020 | Announcement on Adjusting the Annual Remuneration of the Joint General Manager | 2020-67 |
| 68 | August 26, 2020 | Notice on Convening the 2020 Fourth Extraordinary General Meeting | 2020-68 |
| 69 | September 8, 2020 | Announcement on the Repurchase and Deregistration Completion of Partial Restricted Awarded in the First Grant under the 2018 Stock Option and Restricted Stock Incentive Plan | 2020-69 |
| 70 | September 11, 2020 | Announcement on Over Half Time of the Share Reduction Plan by Senior Management of the Company | 2020-70 |
| 71 | September 16, 2020 | Announcement on the Completion of Industrial and Commercial | 2020-71 |
| Registration Amendment of Subsidiaries | |||
| 72 | September 16, 2020 | Announcement on Resolutions of the 2020 Fourth Extraordinary General Meeting | 2020-72 |
| 73 | October 12, 2020 | Performance Forecast of the First Three Quarters 2020 | 2020-73 |
| 74 | October 17, 2020 | Announcement on Completion of the Industrial and Commercial Registration Amendment of the Company | 2020-74 |
| 75 | October 30, 2020 | Announcement on Resolutions of the 28th Meeting of the Fourth Session of the Board of Directors | 2020-75 |
| 76 | October 30, 2020 | Announcement on Resolutions of the 22nd Meeting of the Fourth Session of the Board of Supervisors | 2020-76 |
| 77 | October 30, 2020 | Text of the Third Quarter Report 2020 | 2020-77 |
| 78 | October 30, 2020 | Announcement on Achieving the Unlock Conditions of the First Unlock Period for Reserved Restricted Stocks under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-78 |
| 79 | October 30, 2020 | Announcement on Achieving the Exercise Conditions of the First Exercise Period for Reserved Stock Options under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-79 |
| 80 | October 30, 2020 | Announcement on the Repurchase and Deregistration of Partial Reserved Restricted Stocks under the 2018 Stock Option and Restricted Stock Incentive Plan | 2020-80 |
| 81 | October 30, 2020 | Announcement on the Deregistration of Partial Reserved Stock Options under the 2018 Stock Option and Restricted Stock Incentive Plan | 2020-81 |
| 82 | October 30, 2020 | Announcement on Increase of Related Lease | 2020-82 |
| 83 | October 30, 2020 | Notice on Convening the 2020 Fifth Extraordinary General Meeting | 2020-83 |
| 84 | November 5, 2020 | Announcement on Share Increase by Actual Controllers and Chairman of the Company | 2020-84 |
| 85 | November 9, 2020 | Indicative Announcement on Lifting the Sales Restrictions in the First Unlock Period for Reserved Restricted Stocks under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-85 |
| 86 | November 13, 2020 | Indicative Announcement on Adopting the Autonomous Exercise Mode in the First Exercise Period for Reserved Stock Options under the Company's 2018 Stock Option and Restricted Stock Incentive Plan | 2020-86 |
| 87 | November 17, 2020 | Announcement on Resolutions of the 2020 Fifth Extraordinary General Meeting | 2020-87 |
| 88 | November 17, 2020 | Announcement on Capital Reduction | 2020-88 |
| 89 | November 21, 2020 | Announcement on the Deregistration Completion of Partial Reserved Stock Options under the 2018 Stock Option and Restricted Stock Incentive Plan | 2020-89 |
| 90 | December 1, 2020 | Indicative Announcement on Expiry of the Lockup Period of Phase II Employee Stock Ownership Plan | 2020-90 |
| 91 | December 12, 2020 | Announcement on Expiry of the Share Reduction Plan by Senior Management of the Company | 2020-91 |
| 92 | December 16, 2020 | Announcement on Resolutions of the 29th Meeting of the Fourth Session of the Board of Directors | 2020-92 |
| 93 | December 16, 2020 | Announcement on Resolutions of the 23rd Meeting of the Fourth Session of the Board of Supervisors | 2020-93 |
| 94 | December 16, 2020 | Announcement on the Company’s Application for Credit Line from Banks in 2021 | 2020-94 |
| 95 | December 16, 2020 | Announcement on the Company’s Provision of Guarantee for Subsidiaries in 2021 | 2020-95 |
| 96 | December 16, 2020 | Announcement on Use of Self-owned Idle Funds to Purchase Wealth Management Products in 2021 | 2020-96 |
| 97 | December 16, 2020 | Announcement on Engaging in Financial Derivatives Trading in 2021 | 2020-97 |
| 98 | December 16, 2020 | Announcement on Provision of Guarantee for Credit Line Offered by Bank to Dealers | 2020-98 |
| 99 | December 16, 2020 | Announcement on Daily Related Party Transactions in 2021 | 2020-99 |
| 100 | December 16, 2020 | Notice on Convening the 2020 Third Extraordinary General Meeting | 2020-100 |
| 101 | December 19, 2020 | Announcement on Reduction of Company Shares by Senior Management Through Block Transactions | 2020-101 |
| 102 | December 30, 2020 | Announcement on Investment and Establishment of a Holding Subsidiary and Completion of Industrial and Commercial Registration | 2020-102 |
XX. Significant Events of Subsidiaries of the Company
√ Applicable □ Not applicable
| No. | Announcement time | Announcement name | Announcement number | Disclosure media |
| 1 | February 10, 2020 | Announcement on the Production and Sales of Medical Masks by Wholly-owned Subsidiaries | 2020-04 | Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News and CNINF |
| 2 | February 13, 2020 | Announcement on the Acquisition of Emergency Medical Device Production and Emergency Medical Device Record Certificate by Wholly-owned Subsidiaries | 2020-06 | |
| 3 | March 11, 2020 | Announcement on Completion of Industrial and Commercial Registration Amendment of Subsidiaries | 2020-14 | |
| 4 | March 31, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of the Company and Holding Subsidiaries | 2020-19 | |
| 5 | May 15, 2020 | Announcement on the Completion of Industrial and Commercial Registration Amendment of Subsidiaries | 2020-31 | |
| 6 | December 30, 2020 | Announcement on Investment and Establishment of a Holding Subsidiary and Completion of Industrial and Commercial Registration | 2020-102 |
Section VI Changes in Shareholding and Information of ShareholdersI. Changes in Share Capital
1. Changes in shares
Unit: share
| Before change | Increase/decrease (+, -) of this change | After change | |||||||
| Number | Percentage | New shares issued | Bonus shares | Reserves capitalized | Others | Subtotal | Number | Percentage | |
| I. Shares subject to selling restrictions | 43,764,852 | 3.34% | 116,250 | -7,022,779 | -6,906,529 | 36,858,323 | 2.81% | ||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic shareholders | 41,134,807 | 3.14% | 116,250 | -6,344,768 | -6,228,518 | 34,906,289 | 2.66% | ||
| Including: Shares held by domestic legal persons | |||||||||
| Shares held by domestic natural persons | 41,134,807 | 3.14% | 116,250 | -6,344,768 | -6,228,518 | 34,906,289 | 2.66% | ||
| 4. Shares held by foreign shareholders | 2,630,045 | 0.20% | -678,011 | -678,011 | 1,952,034 | 0.15% | |||
| Including: Shares held by foreign legal | |||||||||
| persons | |||||||||
| Shares held by foreign natural persons | 2,630,045 | 0.20% | -678,011 | -678,011 | 1,952,034 | 0.15% | |||
| II. Shares without selling restrictions | 1,265,126,421 | 96.66% | 3,494,166 | 6,220,057 | 9,714,223 | 1,274,840,644 | 97.19% | ||
| 1. RMB-denominated ordinary shares | 1,265,126,421 | 96.66% | 3,494,166 | 6,220,057 | 9,714,223 | 1,274,840,644 | 97.19% | ||
| 2. Domestic listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 1,308,891,273 | 100.00% | 3,610,416 | -802,722 | 2,807,694 | 1,311,698,967 | 100.00% |
Explanation on changes in shares
√ Applicable □ Not applicable
1. During the first unlock period for restricted shares awarded in the first grant under the 2018 Stock Option andRestricted Stock Incentive Plan, 241 incentive recipients were unable to unlock the shares since they left theCompany or failed to pass performance appraisal or unable to unlock all the shares since they passed theperformance appraisal but failed to get a full mark and therefore could only lock shares proportioned to their mark.As a result, the Company had to repurchase and cancel a total of 802,722 restricted shares that had been grantedbut not unlocked. The deregistration procedures for the aforementioned restricted shares had been completed atthe Shenzhen Branch of China Securities Depository and Clearing Corporation Limited as at September 9, 2020.As a result, the Company’s total share capital decreased by 802,722 shares.
2. During June 10, 2020 and December 31, 2020, vesting incentive recipients of stock options awarded in the firstgrant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan exercised theright of 3,610,416 shares. As a result, the Company’s total share capital increased by 3,610,416 shares.Approval of changes in shares
√ Applicable □ Not applicable
1. The Board of Directors’ disposition of the repurchase and deregistration matters for the first unlocking ofpartial restricted shares awarded in the first grant under the 2018 Stock Option and Restricted Stock Incentive Planhad been authorized by the first extraordinary general meeting of shareholders and reviewed and approved by the
23rd meeting of the fourth session of the Board of Directors and 19th meeting of the fourth session of the Boardof Supervisors.
2. The Board of Directors’ disposition of the exercise matters for the first exercise period of restricted stockoptions awarded in the first grant and reserved stock options under the 2018 Stock Option and Restricted StockIncentive Plan had been authorized by the first extraordinary general meeting of shareholders and reviewed andapproved by the 23rd meeting of the fourth session of the Board of Directors and 19th meeting of the fourthsession of the Board of Supervisors.Transfer of title of changed shares
□ Applicable √ Not applicable
Implementation of share repurchase
√ Applicable □ Not applicable
On April 18, 2019, the 12th meeting of the fourth session of the Board of Directors passed the Proposal on ShareRepurchase of the Company. The Company aims to repurchase part of the Company's shares by centralizedbidding transaction, with a total amount of RMB200 million (inclusive) to RMB400 million (inclusive). Thebuyback price shall not outstrip RMB13.69/share (inclusive). All shares to be repurchased will be used foremployee stock ownership plans.On August 5, 2019, the Company held the 15th meeting of the fourth session of the Board of Directors and passedthe Proposal on Adjusting the Upper Limit of Share Repurchase Price. In line with the positive changes in thecapital market and the Company's stock price, the Company adjusted the upper limit of share repurchase price toRMB18.81/share (inclusive), to ensure the smooth implementation of share repurchase based on the confidence inthe Company's future business development and market value.From March 19 to March 20, 2020, the Company conducted share repurchase by centralized bidding. The numberof shares repurchased was 1,895,900 accumulatively, accounting for 0.1448% of the Company's total share capital.The highest transaction price was RMB15/share, the lowest one was RMB14.34/share, and the total transactionamount was RMB27,680,721.76 (with no transaction costs included).On May 21, 2020, after holding the 23rd meeting of the fourth session of the Board of Directors, the Companypassed the Proposal on Termination of Share Repurchase of the Company. The Company decided to terminate theshare repurchase.
Implementation of share repurchase by centralized bidding
□ Applicable √ Not applicable
Impact of share changes on basic earnings per share and diluted earnings per share, net assets per share
attributable to ordinary shareholders of the Company, and other financial indicators in last year and the latestperiod
□ Applicable √ Not applicable
Other contents considered necessary by the Company or required to be disclosed by the securities regulatoryauthority
□ Applicable √ Not applicable
2. Changes in shares subject to selling restrictions
√ Applicable □ Not applicable
Unit: share
| Shareholder’s name | Number of shares subject to selling restrictions at the beginning of the period | Increase in shares subject to selling restrictions during the period | Number of shares released from selling restrictions during the period | Number of shares subject to selling restrictions at the end of the year | Reason for Selling restrictions | Date of release from selling restrictions |
| Deng Yingzhong | 4,679,558 | 385,050 | 5,064,608 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of shareholding increase proportional to the position of the director. | Long-term | |
| Deng Guanbiao | 3,718,105 | 3,718,105 | Lock-up shares of senior management | Long-term | ||
| Deng Guanjie | 900,730 | 900,730 | Lock-up shares of | Long-term |
| senior management | ||||||
| Dai Zhenji | 220,045 | 600,000 | 555,011 | 265,034 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of unlocked restricted shares proportional to the position of the senior management. | Long-term |
| Liu Jinfeng | 1,733,967 | 549,000 | 703,492 | 1,579,475 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of unlocked restricted shares or exercised stock options proportional to the position of the senior management. | Long-term |
| Yue Yong | 9,206,243 | 55,000 | 9,261,243 | Lock-up shares of senior management; the | Long-term |
| increase in restricted shares is due to the locking of unlocked restricted shares proportional to the position of the senior management. | ||||||
| Zhou QichaoZhou Qichao | 663,579 | 165,825 | 497,754 | Lock-up shares of senior management | Long-term | |
| Ye LongfangYe Longfang | 112,500 | 37,500 | 112,500 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of exercised stock options proportional to the position of the senior management. | Long-term | |
| Dong Ye | 134,625 | 56,250 | 71,081 | 119,794 | Lock-up shares of senior management; the increase in restricted shares is due to the locking of | Long-term |
| unlocked restricted shares or exercised stock options proportional to the position of the senior management. | ||||||
| Li Youquan | 40,800 | 7,500 | 33,300 | Lock-up shares of senior management | Long-term | |
| Equity incentive recipients | 22,467,200 | 7,161,420 | 15,305,780 | In accordance with 2018 Stock Option and Restricted Stock Incentive Plan (Draft), the first unlocking was conducted for partial restricted stocks awarded in the first grant and partial reserved stocks; 30% of the shares were unlocked and 70% were still locked. | Pursuant to 2018 Stock Option and Restricted Stock Incentive Plan (Draft) | |
| Total | 43,764,852 | 1,757,800 | 8,701,829 | 36,858,323 | -- | -- |
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preference shares) during the reporting period
□ Applicable √ Not applicable
2. Changes in total shares and shareholder structure as well as changes in asset and liability structure of theCompany
√ Applicable □ Not applicable
1. During the first unlock period for restricted shares awarded in the first grant under the 2018 Stock Option andRestricted Stock Incentive Plan, 241 incentive recipients were unable to unlock the shares since they left theCompany or failed to pass performance appraisal or unable to unlock all the shares since they passed theperformance appraisal but failed to get a full mark and therefore could only lock shares proportioned to their mark.As a result, the Company had to repurchase and cancel a total of 802,722 restricted shares that had been grantedbut not unlocked. The deregistration procedures for the aforementioned restricted shares had been completed atthe Shenzhen Branch of China Securities Depository and Clearing Corporation Limited as at September 9, 2020.As a result, the Company’s total share capital decreased by 802,722 shares.
2. During June 10, 2020 and December 31, 2020, vesting incentive recipients of stock options awarded in the firstgrant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan exercised theright of 3,610,416 shares. As a result, the Company’s total share capital increased by 3,610,416 shares.
3. Internal employee shares
□ Applicable √ Not applicable
III. Information of Shareholders and Actual Controllers
1. Total number of shareholders
Unit: share
| Total number of ordinary shareholders as at the end of the reporting period | 108,366 | Total number of ordinary shareholders at the end of the month preceding the disclosure | 63,824 | Total number of preferred shareholders whose voting rights were resumed at the end of the reporting period (if any) (see Note VIII) | 0 | Total number of preferred shareholders whose voting rights were resumed at the end of the month preceding the disclosure date of the | 0 |
| date of the annual report | annual report (if any) (see Note VIII) | |||||||||||
| Shareholdings of shareholders with more than 5% or the top 10 shareholders | ||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage (%) | Shares held at the end of the reporting period | Increase/decrease during the reporting period | Number of shares subject to selling restrictions | Number of shares without selling restrictions | Pledged or frozen | |||||
| Share status | Number of shares | |||||||||||
| Guangdong Zhongshun Paper Group Co., Ltd. | Domestic non-state-owned legal person | 28.64% | 375,655,958 | 375,655,958 | ||||||||
| Chung Shun Co. | Foreign legal person | 20.32% | 266,504,789 | 266,504,789 | ||||||||
| Hong Kong Securities Clearing Co., Ltd. | Foreign legal person | 6.29% | 82,484,484 | Underweight | 82,484,484 | |||||||
| National Social Security Fund Portfolio 406 | Others | 1.00% | 13,112,327 | New | 13,112,327 | |||||||
| Investec Asset Management Co., Ltd. -- Investec Global Fund Strategy -- China Stock Fund (Exchange) | Foreign legal person | 0.84% | 11,033,861 | New | 11,033,861 | |||||||
| Yue Yong | Domestic natural person | 0.80% | 10,537,741 | Underweight | 10,031,243 | 506,498 | ||||||
| National Social Security Fund Portfolio 101 | Others | 0.74% | 9,700,878 | New | 9,700,878 | |||||||
| Deng Yinzhong | Domestic natural person | 0.51% | 6,752,811 | New | 5,064,608 | 1,688,203 | ||||||
| Cascade Investment LLC—self-run capital | Foreign legal person | 0.48% | 6,326,197 | New | 6,326,197 | |||
| Zhongshan Xinda Investment Management Co., Ltd. | Domestic non-state-owned legal person | 0.46% | 6,083,636 | New | 6,083,636 | |||
| Description on the related relationship or parties acting-in-concert arrangements among the above shareholders | 1. Among the top ten shareholders mentioned above, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are the enterprises controlled by actual controllers of the Company, i.e. Deng Yingzhong, Deng Guanbiao and Deng Guanjie. That is, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are related parties. 2. It is unknown to the Company whether there is related party relationship among other shareholders, or whether there is acting-in-concert among other shareholders as stipulated in the Administrative Measures for the Disclosure of Information on Changes in Shareholders' Shareholding of Listed Companies. | |||||||
| Shareholdings of top 10 shareholders not subject to selling restrictions | |||
| Name of shareholder | Number of shares held not subject to selling restrictions | Type of shares | |
| Type of shares | Number of shares | ||
| Guangdong Zhongshun Paper Group Co., Ltd. | 375,655,958 | RMB-denominated ordinary shares | 375,655,958 |
| Chung Shun Co. | 266,504,789 | RMB-denominated ordinary shares | 266,504,789 |
| Hong Kong Securities Clearing Co., Ltd. | 82,484,484 | RMB-denominated ordinary shares | 82,484,484 |
| National Social Security Fund Portfolio 406 | 13,112,327 | RMB-denominated ordinary shares | 13,112,327 |
| Investec Asset Management Co., Ltd. -- Investec Global Fund Strategy -- China Stock Fund (Exchange) | 11,033,861 | RMB-denominated ordinary shares | 11,033,861 |
| National Social Security Fund Portfolio 101 | 9,700,878 | RMB-denominated ordinary shares | 9,700,878 |
| Cascade Investment LLC—self-run capital | 6,326,197 | RMB-denominated ordinary shares | 6,326,197 |
| Zhongshan Xinda Investment Management Co., Ltd. | 6,083,636 | RMB-denominated ordinary shares | 6,083,636 |
| Li Hong | 5,075,400 | RMB-denominated ordinary shares | 5,075,400 |
| National Social Security Fund Portfolio 105 | 4,995,800 | RMB-denominated ordinary shares | 4,995,800 |
| Description on the related relationship or parties acting-in-concert among the top ten ordinary shareholders without selling restrictions and between the top ten ordinary shareholders without selling restrictions and the top ten ordinary shareholders | 1. Among the top ten shareholders mentioned above, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are the enterprises controlled by actual controllers of the Company, i.e. Deng Yingzhong, Deng Guanbiao and Deng Guanjie. That is, Guangdong Zhongshun Paper Group Co., Ltd. and Chung Shun Co. are related parties. 2. It is unknown to the Company whether there is related party relationship among other shareholders, or whether there is acting-in-concert among other shareholders as stipulated in the Administrative Measures for the Disclosure of Information on Changes in Shareholders' Shareholding of Listed Companies. | ||
Whether the top ten ordinary shareholders and the top ten shareholders without selling restrictions conducted theagreed repurchase transaction during the reporting period
□ Yes √ No
The Company's top ten ordinary shareholders and top ten ordinary shareholders without selling restrictions did notconduct agreed repurchase transactions during the reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholder: Natural person holdingType of controlling shareholder: Legal person
| Name of controlling shareholder | Legal representative or person in charge of the institution | Date of establishment | Organization code of the entity | Principal businesses |
| Guangdong Zhongshun Paper Group Co., Ltd. | Deng Yingzhong | November 21, 1997 | 91442000617775375D | Investment management |
| Equity interests in other controlled and invested companies whose shares were listed in the PRC or overseas during the reporting period | None | |||
Changes of controlling shareholders during the reporting period
□ Applicable √ Not applicable
There was no change of the Company’s controlling shareholder during the reporting period.
3. Actual controller and person acting in concert
Nature of actual controller: Domestic natural personType of actual controller: Natural person
| Name | Relationship with actual controller | Nationality | Whether obtain the right of abode in other countries or regions |
| Deng Yingzhong | Self | Chinese | No |
| Deng Guanbiao | Self | Chinese | Yes |
| Deng Guanjie | Self | Chinese | No |
| Main occupation and position | Refer to Section IX “Particulars of Directors, Supervisors, Senior Management and Employees” for details. | ||
| Holding of domestic and overseas listed companies over the past ten years | None | ||
Changes of actual controllers during the reporting period
□ Applicable √ Not applicable
There was no change of the Company’s actual controllers during the reporting period.Diagram on equity and control relationship between the Company and actual controllers
| 0.09% | 0.51% | |||
Actual controller controls the Company by entrust or other asset management methods
□ Applicable √ Not applicable
4. Other legal person shareholders holding 10% or more of shares
√ Applicable □ Not applicable
| Name of legal person shareholder | Legal representative or person in charge of the institution | Date of establishment | Registered capital | Principal activities or management activities |
| Chung Shun Co. | Deng Yingzhong | June 1, 1996 | HKD10,000 | No engagement in any specific business except for holding the Company’s equities |
5. Restrictions on share reductions of controlling shareholders, actual controllers, restructuring parties andother commitment subjects
□ Applicable √ Not applicable
Section VII Particulars of Preference Shares
□ Applicable √ Not applicable
The Company had no preference shares during the reporting period.
Section VIII Particulars of Convertible Corporate Bonds
□ Applicable √ Not applicable
The Company had no convertible corporate bonds during the reporting period.
Section IX Particulars of Directors, Supervisors, Senior Management and
EmployeesI. Changes in Shareholding of Directors, Supervisors and Senior Management
| Name | Position | Position status | Gender | Age | Start date of term of office | Expiry date of term of office | Number of shares held at the beginning of the year | Increase of shares during the year | Decrease of shares during the year | Other increase/decrease | Number of shares held at the end of the year |
| Deng Yingzhong | Director | Incumbent | Male | 70 | December 12, 2008 | January 20, 2024 | 6,239,411 | 513,400 | 6,752,811 | ||
| Liu Peng | Chairman | Incumbent | Male | 41 | April 12, 2021 | January 20, 2024 | |||||
| Liu Peng | President | Incumbent | Male | 41 | March 22, 2021 | January 20, 2024 | |||||
| Deng Guanbiao | Vice Chairman | Incumbent | Male | 43 | December 21, 2011 | January 20, 2024 | 4,957,473 | 4,957,473 | |||
| Deng Guanjie | Vice Chairman | Incumbent | Male | 37 | June 22, 2020 | January 20, 2024 | 1,200,974 | 1,200,974 | |||
| Dai Zhenji | Director | Incumbent | Male | 55 | June 15, 2020 | January 20, 2024 | 2,220,045 | 550,045 | 1,670,000 | ||
| Dai Zhenji | Joint President | Incumbent | Male | 55 | June 22, 2020 | January 20, 2024 | |||||
| Liu Jinfeng | Director | Incumbent | Male | 45 | September 11, 2015 | January 20, 2024 | 2,813,967 | 703,417 | 300,000 | 2,410,550 | |
| Liu Jinfeng | Vice President | Incumbent | Male | 45 | January 31, 2018 | January 20, 2024 | |||||
| Yue Yong | Vice President | Incumbent | Male | 55 | July 09, 2019 | January 20, 2024 | 13,374,991 | 2,837,250 | 10,537,741 |
| He Haidi | Independent Director | Incumbent | Male | 53 | March 10, 2017 | January 20, 2024 | |||||
| He Guoquan | Independent Director | Incumbent | Male | 47 | January 21, 2021 | January 20, 2024 | |||||
| Liu Die | Independent Director | Incumbent | Male | 43 | January 21, 2021 | January 20, 2024 | |||||
| Zhou Qichao | Vice President | Incumbent | Male | 41 | June 30, 2017 | January 20, 2024 | 663,672 | 165,000 | 498,672 | ||
| Zhou Qichao | Board Secretary | Incumbent | Male | 41 | August 16, 2017 | January 20, 2024 | |||||
| Ye Longfang | Vice President | Incumbent | Male | 45 | July 09, 2019 | January 20, 2024 | 150,000 | 150,000 | |||
| Li Zhaojin | Vice President | Incumbent | Male | 58 | April 12, 2021 | January 20, 2024 | |||||
| Dong Ye | Chief Financial Officer | Incumbent | Male | 57 | December 12, 2011 | January 20, 2024 | 284,725 | 71,000 | 15,000 | 228,725 | |
| Chen Haiyuan | Chairman of the Board of Supervisors | Incumbent | Male | 67 | September 22, 2015 | January 20, 2024 | |||||
| Liang Yongliang | Supervisor | Incumbent | Male | 42 | December 12, 2011 | January 20, 2024 | |||||
| Li Youquan | Supervisor | Incumbent | Male | 42 | January 31, 2018 | January 20, 2024 | 62,280 | 62,280 | |||
| Deng Yingzhong | Chairman | Resigned | Male | 70 | December 12, 2008 | April 09, 2021 | |||||
| Deng Guanbiao | President | Resigned | Male | 43 | January 06, 2015 | March 19, 2021 | |||||
| Yue Yong | Director | Resign | Male | 55 | January 21, | March 18, |
| ed | 2021 | 2021 | |||||||||
| Deng Guanjie | Vice President | Resigned | Male | 37 | January 06, 2015 | June 22, 2020 | |||||
| Zhou Qichao | Director | Resigned | Male | 41 | November 07, 2017 | May 26, 2020 | |||||
| Zeng Yi | Director | Resigned | Female | 45 | January 31, 2018 | January 21, 2021 | |||||
| Huang Hongyan | Independent Director | Resigned | Male | 51 | January 06, 2015 | January 21, 2021 | |||||
| Ge Guangrui | Independent Director | Resigned | Female | 54 | January 06, 2015 | January 21, 2021 | |||||
| Total | -- | -- | -- | -- | -- | -- | 31,817,538 | 513,400 | 4,326,712 | 465,000 | 28,469,226 |
II. Changes in Directors, Supervisors and Senior Management of the Company
√ Applicable □ Not applicable
| Name | Position | Type | Date | Reason |
| Deng Yingzhong | Chairman | Resigned | April 09, 2021 | Voluntary resign |
| Deng Guanbiao | President | Resigned | March 19, 2021 | Voluntary resign |
| Yue Yong | Director | Resigned | March 18, 2021 | Voluntary resign |
| Deng Guanjie | Vice President | Resigned | June 22, 2020 | Voluntary resign |
| Zhou Qichao | Director | Resigned | May 26, 2020 | Voluntary resign |
| Zeng Yi | Director | Resigned upon expiry of term of office | January 21, 2021 | Expiry of term of office |
| Huang Hongyan | Independent Director | Resigned upon expiry of term of office | January 21, 2021 | Expiry of term of office |
| Ge Guangrui | Independent Director | Resigned upon expiry of term of office | January 21, 2021 | Expiry of term of office |
III. Main Working Experience
Professional background, main working experience and main current responsibilities of the Company’s in-servicedirectors, supervisors and senior managementMr. Deng Yingzhong, male and born in 1951, is the founder of the Company. Mr. Deng started to engage in thepaper industry in 1979 and thereby has more than 40 years of industry experience. He served as the Chairman ofZhongshan Zhongshun Paper Manufacturing Co., Ltd. from 1992 to 1999, the Chairman and Legal Representativeof that company from 1999 to 2005, and a director of that company from 2005 and 2008. He was the Chairman ofthe Company from 2008 to April 2021 and is currently a director and chairman of the Strategic Committee of theCompany. He has been rewarded titles like “National Township Entrepreneur”, “China Excellent PrivateEntrepreneurs of Technology Firms”, “Excellent Private Entrepreneur of Guangdong Province”, “ExcellentManager of Quality Work of Guangdong Province”, “Excellent Entrepreneur of Zhongshan City”, etc.Liu Peng, male, has a bachelor’s degree and is a CPC member and of Chinese nationality. He successively servedas the president of Industrial Bank Jiangmen Branch and Zhongshan Branch. Currently, he acts as the Chairmanand President of the Company.Mr. Deng Guanbiao, male and born in 1978, is of Chinese nationality and has the permanent residency inRepublic of Gambia and the permanent resident status in Macao Special Administrative Region. He holds abachelor’s degree. Starting to work in Zhongshan Zhongshun Paper Manufacturing Co., Ltd. in 1999, he was oncea director and deputy general manager of that company and a director and General Manager of the Company. Heserved as the General Manager of the Company from 2015 to March 2021 and has been the Vice Chairman of theCompany since 2011. Currently, he is also a member of the Household Paper and Paperboard Subcommittee ofthe National Paper Industry Standardization Technical Committee.Mr. Deng Guanjie, male and born in 1984, studied at Oxford Brookes University in England from 2004 to 2007and obtained a bachelor’s degree. He acted as the Assistant to the Chairman of Zhongshan Zhongshun PaperManufacturing Co., Ltd. from 2005 to 2007 and the Assistant to the Chairman of the Company from 2008 toFebruary 2011. Afterwards, he was the Assistant to the Chairman and the Director of the HR Department fromMarch 2011 to January 2012 and the Assistant to the Chairman of the Company from February 2012 to March2013. He has been a director of the Company ever since December 2011 and served as the Deputy GeneralManager of the Company from April 2013 to June 2006 and as the Vice Chairman of the Company from June2020.Dai Zhenji, male and born in 1966, is from Taiwan China with an MBA degree. He served as the MarketingGeneral Manager, General Manager of the Eastern District BU, Special Assistant to CEO and General Manager ofthe Commercial Consumer BU in Gold Hongye Paper Co., Ltd. from January 2013 to March 2015. He joined theCompany as the Marketing President in October 2015 and became the Operating President in October 2018.
Afterwards, he started to act as the Deputy General Manager of the Company from July 2019 and a director andJoint General Manager of the Company since June 2020.Liu Jinfeng, male and born in 1976, is of Chinese nationality and has no permanent residency abroad. He holds abachelor’s degree and an EMBA degree. Mr. Liu served as the manager of Hunan Province, Central China Region,Household Paper BU of APP from August 2005 to May 2008 and as the BU’s General Manager of the CentralChina Region and Northwest Region from June 2008 and September 2009. Afterwards, he was promoted to theOperations General Manager of the Central China and Northwest Regions from February 2009 to April 2013, andthen the Central Region VP of the BU from May 2013 to December 2014, during which he part-timed as theNational Strategic Brand Marketing General Manager and the General Manger of Shanghai Yuanzesheng TradeCo., Ltd. from September 2014 to March 2015. He joined the Company in April 2015 as the Marketing VP andstarted to act as a director of the Company since September 2015 and the Deputy General Manager of theCompany since January 2018.He Haidi, male and born in September 1968, is of Chinese nationality and has no permanent residency abroad. Hegraduated from the Library Science of Wuhan University and was awarded a bachelor’s degree in arts, and thenreceived a master’s degree in management from Wuhan University in 2006. Mr. He is a CPC member. Currently,with technical title of associate researcher, he works in the University of Electronic Science and Technology ofChina, Zhongshan Institute, engaging in the teaching and research of information consulting, services, analysis,retrieval, etc. He has presided over and been involved in a dozen of scientific research projects at the provinciallevel of Guangdong Province and the municipal level of Zhongshan City, and has published more than twentyacademic papers in major core journals of the professional field. He has been hired as an expert for the ReviewCommittee of Medium-Grade Professional Title for Book Information of Zhongshan City and a review expert forgovernment procurements of Zhongshan City. He also part-times in Zhongshan Information Research Instituteand provides information consulting, information analysis, technology novelty search, development and supportfor IPR and technological innovation projects, and other services to enterprises. He has been an independentdirector of the Company since March 2017.He Guoquan, male and born in 1976, is of Chinese nationality and has no permanent residency abroad. He has abachelor’s degree and is a senior certified public accountant in China and Australia, an international certifiedinternal auditor, and national accounting leading talent as ascertained by the Ministry of Finance. He once servedas a non-independent director of Singapore-listed Debao Property Group and resigned in 2018. From 1997, heworks as a partner in GP Certified Public Accountants (Limited Liability Partnership). He acts as an independentdirector of the Company since January 2021.Liu Die, male and born in 1978, is of Chinese nationality and has no permanent residency abroad. He graduatedfrom South-Central University for Nationalities in 2005 with a master’s degree in law theory. He passed thenational judicial examination and obtained the lawyer’s qualification certificate in 2004. From 2007 to 2018, he
successively served as a lawyer in Guangdong Yashang Law Firm, Guangdong Hengyun Law Firm, andGuangdong Xiangshan Law Firm. Currently, he is the lead lawyer in Guangdong Liu Zhi Jun Law Firm. Mr. Liuhas been an independent director of the Company since January 2021.Zhou Qichao, male and born in 1980, is of Chinese nationality and has a master’s degree. He has successivelyserved as the public affairs director, media director, vice president and secretary of the board of directors in HubGate International Group, Hubei Daily Media Group, and Surfilter Network Technology Co., Ltd. He joined theCompany in July 2017 and has successively worked as a director, Deputy General Manager, and secretary of theBoard of Directors. He started to serve as an independent director of Shenzhen KSTAR Technology Co., Ltd.from November 2019 and a director of Shenzhen Senior Technology Material Co., Ltd. from November 2020.Yue Yong, male and born in 1966, is of Chinese nationality. He joined Zhongshan Zhongshun PaperManufacturing Co., Ltd. in 1993 and successively served as the production manager of Zhongshan Zhongshun andthe General Manager of C&S (Sichuan) Paper Co., Ltd. He was a director and deputy general manager ofZhongshan Zhongshun between 2005 and 2008. Afterwards, he became a director and Deputy General Managerof the Company from 2009 to 2015, and has been the Procurement President since 2015 and the Deputy GeneralManager since July 2019. Currently he part-times the deputy director of the China National Household PaperIndustry Association.Ye Longfang, male and born in 1976, is of Chinese nationality. From July 1997 to November 2015, hesuccessively acted as the production deputy manager, production manager and factory manager of Vinda (Hubei)and Vinda (Sichuan). Currently he is the Production President of the Company and has been the Deputy GeneralManager since July 2019.Li Zhaojin, male and born in April 1962, is from Taiwan China and has an MBA degree. He joined the GoldHongye Paper Group in 2005 and successively served as the production manager, papermaking (pre-production)general manager, manufacturing general manager, etc. Mr. Li started to work for the Company since November2019.Dong Ye, male and born in 1964, is of Chinese nationality and has no permanent residency abroad. He has acollege degree and is an assistant accountant. He joined Zhongshan Zhongshun Paper Manufacturing Co., Ltd. in2006 and successively served as its finance supervisor, finance manager, and finance deputy director. He is theperson responsible for the accounting department of the Company, and acted as a director of the Companybetween 2011 and 2014 and became the Chief Financial Officer of the Company since 2011.Chen Haiyuan, male, was born in 1954. He served as the party branch secretary and director of the villagecommittee of Shenglong Village, Tanbei Town, Zhongshan City between 1991 and 1999 and the village’s partybranch secretary between 1999 and 2005. He was the Deputy Director and Assistant to Director of the DongshenTownship Water Authority from 2005 to 2014, and retired in July 2014. Afterwards, he worked as the Company’ssupervision specialist since March 2015, a supervisor since April 2015 and the Chairman of the Board of
Supervisors since September 2015.Liang Yongliang, male and born in 1979, is of Chinese nationality and has no permanent residency abroad. Mr.Liang has a college degree. He joined Zhongshan Zhongshun Paper Manufacturing Co., Ltd. in 2002 andsuccessively served as the Assistant to Finance President of Zhongshan Zhongshun and the General Manager ofthe Investment Management Department and head of the Audit Department of C&S Paper. Currently, he works asthe Deputy General Manager of the Company’s Finance Department and started to serve as a supervisor of theCompany since 2011.Li Youqua, male and born in 1979, has a college degree. He worked in Sichuan Tongda Electric Co., Ltd. andengaged in sales and accounting between 2001 and 2003, and handled accounting affairs in Zhongshan HuhengCraft Products Co., Ltd. between 2004 and 2006. From October 2006 to 2008, he served as the finance supervisorin Zhongshan Zhongshun Paper Manufacturing Co., Ltd. and then became the finance manager of the Companyand the finance director of the South China region from 2009 to December 2011. He became person in charge ofthe Company’s auditing work in December 2011 and has held that position ever since.
Positions in shareholder entities
√ Applicable □ Not applicable
| Name | Name of shareholder entity | Position held in shareholder entities | Starting date of term of office | Expiry date of term of office | Whether receiving remuneration and allowance from shareholder entities |
| Deng Yingzhong | Guangdong Zhongshun Paper Group Co., Ltd. | Legal reprehensive and executive director | May 28, 1999 | No | |
| Deng Yingzhong | Chung Shun Co. | Legal representative | June 01, 1996 | No | |
| Deng Guanbiao | Guangdong Zhongshun Paper Group Co., Ltd. | Supervisor | May 28, 1999 | No | |
| Description on position held in shareholder entity | Mr. Deng Yingzhong is a director and Mr. Deng Guanbiao is the Vice Chairman of the Company. | ||||
Positions in other entities
√ Applicable □ Not applicable
| Name | Name of other entity | Position held in other entity | Starting date of term of office | Expiry date of term of office | Whether receiving remuneration from other entity |
| Deng Guanbiao | Household Paper and Paperboard Subcommittee of the National Paper Industry Standardization Technical Committee | Member | No | ||
| Yue Yong | China National Household Paper Industry Association | Deputy director | No | ||
| He Haidi | University of Electronic Science and Technology of China, Zhongshan Institute | Researcher | Yes | ||
| He Guoquan | GP Certified Public Accountants (Limited Liability Partnership) | Partner | Yes | ||
| Liu Die | Guangdong Liu Zhi Jun Law Firm | Lead lawyer | Yes | ||
| Zhou Qichao | Shenzhen KSTAR Technology Co., Ltd. | Independent director | Yes | ||
| Zhou Qichao | Shenzhen Senior Technology Material Co., Ltd. | Director | Yes | ||
| Description on position held in other entity | Mr. Deng Guanbiao is the Vice Chairman, Mr. Yue Yong is the Vice President, Mr. He Haidi, Mr. He Guoquan and Mr. Liu Die are independent directors, and Mr. Zhou Qichao is the secretary of the Board of Directors and Vice President of the Company. | ||||
Penalties by securities regulatory authorities in the last three years
□ Applicable √ Not applicable
IV. Remuneration of Directors, Supervisors and Senior Management
Procedures and basis for determining the remuneration of directors, supervisors and senior management and
actual payment
1. Procedure for determining the remuneration of directors, supervisors and senior management:
The Remuneration and Review Committee under the Company’s Board of Directors proposes remuneration plansfor directors, supervisors and senior management, which should be approved by the Board of Directors. Wherein,the plan for directors and supervisors should be submitted to the shareholder general meetings for approval.
2. Basis for determining the remuneration of directors, supervisors and senior management:
Remunerations of directors, supervisors and senior management are determined based on the Company’sRemuneration Management System for Directors, Supervisors and Senior Management (April 2019) and theirperformance appraisal results conducted by the Remuneration and Review Committee, with reference to theremuneration level in the sector.
3. Actual payment of remuneration to directors, supervisors and senior managementRemuneration of the Company’s incumbent directors, supervisors and senior management comprises two parts offixed salary and annual performance salary. Wherein, the fixed salary has been distributed monthly based onperformance appraisal results; annual performance salary will be distributed after the Remuneration and ReviewCommittee establishes an appraisal team which evaluates the annual performance of the aforementioned personnelupon the end of the business year.
Remuneration of directors, supervisors and senior management of the Company during the reporting period
Unit: RMB10,000
| Name | Position | Gender | Age | Position status | Total remuneration before tax received from the Company | Whether receiving remuneration from related parties of the Company |
| Deng Yingzhong | Director | Male | 70 | Incumbent | 480.78 | No |
| Deng Guanbiao | Vice Chairman | Male | 43 | Incumbent | 297.16 | No |
| Deng Guanjie | Vice Chairman | Male | 37 | Incumbent | 257.07 | No |
| Dai Zhenji | Director, Joint President | Male | 55 | Incumbent | 1,001.26 | No |
| Liu Jinfeng | Director, Vice President | Male | 45 | Incumbent | 402.48 | No |
| He Haidi | Independent Director | Male | 53 | Incumbent | 10 | No |
| Zhou Qichao | Vice President, Secretary of the Board of Directors | Male | 41 | Incumbent | 260.02 | No |
| Yue Yong | Vice President | Male | 55 | Incumbent | 301.53 | No |
| Ye Longfang | Vice President | Male | 45 | Incumbent | 191.83 | No |
| Dong Ye | Chief Financial Officer | Male | 57 | Incumbent | 101.53 | No |
| Chen Haiyuan | Chairman of the Board of Supervisors | Male | 67 | Incumbent | 5.39 | No |
| Liang Yongliang | Supervisor | Male | 42 | Incumbent | 35.74 | No |
| Li Youquan | Supervisor | Male | 42 | Incumbent | 34.61 | No |
| Zeng Yi | Director | Female | 45 | Resigned | 18 | No |
| Huang Hongyan | Independent Director | Male | 51 | Resigned | 10 | No |
| Ge Guangrui | Independent Director | Female | 54 | Resigned | 10 | No |
| Total | -- | -- | -- | -- | 3,417.4 | -- |
Note: Chairman and President of the Company Mr. Liu Peng, Vice President Mr. Li Zhaojin and independentdirectors Mr. He Guoquan and Mr. Liu Die are all elected/appointed in 2021. Therefore, their remuneration is notincluded in the reporting period (i.e. the year 2020).Equity incentives granted to directors and senior management during the reporting period
√ Applicable □ Not applicable
Unit: share
| Name | Position | Number of shares exercisable during the reporting period | Number of shares exercised during the reporting period | Exercise price of exercised shares during the reporting period | Market price at the end of the reporting period | Number of shares subject to selling restrictions at the beginning of the period | Number of shares unlocked during the period | Number of shares subject to selling restrictions newly granted in the period | Grant price of shares subject to selling restrictions | Number of shares subject to selling restrictions at the end of the period |
| Dai Zhenji | Director. Joint | 300,000 | 2,000,000 | 600,000 | 0 | 1,400,000 |
| President | ||||||||||
| Liu Jinfeng | Director. Vice President | 300,000 | 300,000 | 13.965 | 1,080,000 | 324,000 | 0 | 756,000 | ||
| Yue Yong | Vice President | 1,100,000 | 330,000 | 0 | 770,000 | |||||
| Ye Longfang | Vice President | 150,000 | 150,000 | 8.572 | 0 | |||||
| Dong Ye | Chief Financial Officer | 15,000 | 15,000 | 8.572 | 150,000 | 45,000 | 0 | 105,000 | ||
| Total | -- | 765,000 | 465,000 | -- | -- | 4,330,000 | 1,299,000 | 0 | -- | 3,031,000 |
| Notes (if any) | 1. During the first unlocking period for restricted stocks awarded in the first grant and reserved restricted stocks under the 2018 Stock Option and Restricted Stock Incentive Plan, the unlocking ratio was 30% and the date of releasing from sales restrictions was June 8, 2020 and November 10, 2020, respectively. The restricted shares held by the above staff at the beginning of the period have been unlocked as per 30%. 2. During the first exercise period for stock options awarded in the first grant and reserved stock options under the 2018 Stock Option and Restricted Stock Incentive Plan, the exercise ratio was 30% and the start date for exercise was June 10, 2020 and November 17, 2020, respectively. Mr. Liu Jinfeng, Mr. Ye Longfang and Mr. Dong Ye have exercised the rights during the reporting period and Mr. Dai Zhenji has not exercised the rights during the reporting period. | |||||||||
V. Employees of the Company
1. Number, profession composition and education level of employees
| Number of in-service employees of the Parent Company | 906 |
| Number of in-service employees of major subsidiaries | 5,712 |
| Total number of in-service employees | 6,618 |
| Total number of employees receiving remuneration | 6,765 |
| Number of retired employees whose expenses are borne by the Parent Company and its major subsidiaries | 5 |
| Composition of professions | |
| Type of profession | Number of staff in the profession |
| Production staff | 2,502 |
| Sales staff | 2,852 |
| Technical staff | 511 |
| Finance staff | 118 |
| Administrative staff | 635 |
| Total | 6,618 |
| Education level | |
| Type of education level | Number of persons |
| University graduates or above | 572 |
| College graduates | 1,471 |
| High school graduates or below | 4,575 |
| Total | 6,618 |
2. Remuneration policy
The Company has established the following reward and incentive policies:
1. Bonus Package Program for Marketing Teams 2020
2. Reward Program for Team Breakthroughs of the Marketing Department 2020—Business Team
3. Indicator Competition Program of the Marketing Department 2020—Business Team
4. Reward Program for Production Teams 2020
5. Indicator Competition Program of the Production Department 2020
6. Reward Program for Accounting Teams 2020
7. Reward Program for Finance Teams 2020
8. Reward Program for Supply Chain Teams 2020
9. Management System of C&S Paper for Marketing Staff Promotion 2020
10. Procurement Reward Program 2020
3. Training program
Training programs carried out by the Company in 2020 are as follows:
1) Class 2 of the Start-up Program (a program to cultivate production managers; mainly courses include managerrole recognition and growth, Everything DiSC to improve workplace interpersonal relations, structured thinking
and expression, QC seven tools, plan organization and execution, objective management, leadership, etc.);
2) Class 1 of the Direction Program (a program to cultivate manufacturing managers/production deputy mangers;the learning chain in 2020 was: management practices ? leadership second study ? guideline management ?quarterly review of objective/guideline-based management ? analysis and risk management/control of projectinvestment decisions);
3) Class 1 of the Lighthouse Program (a program to cultivate internal lecturers; studies include 13 micro-classesof three modules, i.e. class management, curriculum design and teaching methods);
4) Subsidiaries across the country have carried out annual training programs involving knowledge, skills, attitudes,safety, quality and orientation training courses.
4. Labor outsourcing
□ Applicable √ Not applicable
Section X Corporate Governance
I. Basic Situation of Corporate Governance
1. Basic situation of corporate governance
During the reporting period, the Company has been operating in strict compliance with requirements of theCompany Law, the Securities Law, the Standards on Corporate Governance of Listed Companies, the RulesGoverning the Listing of Shares on Shenzhen Stock Exchange, and relevant laws and regulations promulgated byChina Securities Regulatory Commission (CSRC) and Shenzhen Stock Exchange. To standardize actions, theCompany has developed the Articles of Association, constantly improved its corporate governance structure, andoptimized its internal management systems. Its corporate governance structure meets requirements set out inrelevant normative documents of CSRC on the governance of listed companies.
(1) In respect of shareholders and general meetings
During the reporting period, the convening, holding, and voting procedures of shareholder meetings werestandardized and in strict compliance with provisions and requirements of the Rules of Procedure of the GeneralMeetings and the Articles of Association. All shareholders were treated equally and were able to fully exercisetheir rights. The general meetings during the reporting period were convened by the Board of Directors andlawyers were invited to the site for witnessing.
(2) In respect of the controlling shareholder and the Company
The Company’s controlling shareholder strictly regulated its behaviors in accordance with the Standards onCorporate Governance of Listed Companies, the Rules Governing the Listing of Shares on Shenzhen StockExchange, and the Articles of Association. The controlling shareholder exercised its shareholder rights through thegeneral meeting of shareholders, and there were no actions of the controlling shareholder of bypassing the generalmeeting and directly or indirectly interfering with the Company’s operations and decision making.
(3) In respect of the directors and the Board of Directors
The Board of Directors of the Company currently comprises 9 directors, among which 3 are independent directors.The number and composition of the Board of Directors meet requirements of laws and regulations. The Companyconducts the selection of directors in strict accordance with provisions of the Company Law and the Articles ofAssociation, to ensure open, fair, just and independent engagement of directors. All directors are able to carry outwork as per requirements set out in the Rules of Procedure of the Board of Directors, the Guidelines on Conductof Corporate Directors of SME Board Listed Companies, etc. They attend Board meetings and shareholdermeetings, actively participate in relevant knowledge training to familiarize with and acquire relevant laws andregulations, and earnestly perform their duties as directors of being honest and trustworthy, diligent and
conscientious.
(4) In respect of supervisors and the Board of Supervisors
The Board of Supervisors of the Company currently comprises 3 directors, among which one is employeesupervisor. The Company conducts the selection of supervisors in strict accordance with provisions of theCompany Law and the Articles of Association, and the number and composition of the Board of Supervisors meetrequirements of laws and regulations. All supervisors earnestly perform their duties as per requirements of theRules of Procedure of the Board of Supervisors and other relevant regulations, to supervise the decision-makingprocedures and resolutions of the Board of Directors and the Company’s legal operations and to effectivelyoversee the legality and compliance of directors, managers and other senior executives of the Company in theirduty performance.
(5) In respect of performance appraisal and incentive restriction mechanism
The Company’s appointment of senior management is open and transparent and in compliance with relevant lawsand regulations. The Company has established a sound performance appraisal mechanism under which theremuneration of the senior management is linked to the Company’s business performance indicators.
(6) In respect of investor relations (IR) management
The Sectary of the Board of Directors of the Company is responsible for IR management while the Office of theBoard of Directors carries out daily affairs of IR management. In order to further strengthen and improve IRmanagement, the Company has formulated the Investor Relations Management System, Investor CompliantManagement System, and Measures for the Management of Reception of Institutional Investors. IR activities mustbe conducted in strict accordance with relevant provisions and it is strictly forbidden to disclose any undisclosedinformation of the Company. Personnel from the Office of the Board of Directors are dedicated to answering callsof investors, replying their emails, and responding to questions raised by investors on relevant interactionplatforms, to maintain smooth and sound communication with investors. Response of investors has been positive.The Office of the Board of Directors is responsible for the reception of investors and archival of relevantdocuments. Dedicated personnel are arranged to well receive investor visits. The Company properly arrangesindividual investors, analysts and fund managers who come to the Company for onsite research to visit the sites ofthe Company, discuss with them and sign the Letter of Commitment with them for information confidentiality.Records are well documented for each visit and the IR activity form is submitted to Shenzhen Stock Exchangewithin two working days. On the basis of not violating relevant provisions of CSRC, Shenzhen Stock Exchangeand the Company’s Information Disclosure Management System, situations of the Company are presented in anobjective, true, accurate and complete manner. The Company attaches great importance to IR management in itsdaily work by actively communicating with investors, understanding relevant situations, and listing to relevantsuggestions. Attention is also paid to the cultivation of healthy long-term investors.The Company will continue the good work in information disclosure and IR management, and ensure true,
accurate, timely and complete information disclosure and smooth, convenient, fair and effective communicationchannels with investors.
(7) In respect of information disclosure and transparency
The Company has set up the Office of Board of Directors which is equipped with professionals, and disclosesinformation of the Company in a true, accurate, timely and complete manner in strict compliance with relevantlaws and regulations as well as systems of the Company including the Information Disclosure ManagementSystem, Management System for External Information Users, Accountability System for Significant Errors inInformation Disclosure of Annual Reports, and Internal Reporting System for Significant Events. This ensures thatall shareholders of the Company could obtain information with equal opportunities.
(8) In respect of stakeholders
The Company fully respects and safeguards the legitimate rights and interests of relevant stakeholders andactively cooperates with them. In order to coordinate and balance the interests of shareholders, employees, societyand other parties, the Company strengthens communication and exchange with all parties, to jointly promote itssustainable and healthy development.
2. Corporate governance regulations established or revised by the Company during the reporting periodDuring the reporting period, the Company revised the External Donation Management System and the Articles ofAssociation based on its operating conditions and relevant provisions and timely improved its internal controlmanagement system.Whether there are significant differences between the Company’s actual status of corporate governance andnormative documents on the governance of listed companies issued by CSRC
□ Yes √ No
There were no significant differences between the Company’s actual conditions and normative documents onlisted company governance issued by CSRC.
II. The Company’s Independence from Its Controlling Shareholders in terms of Business,Personnel, Assets, Organization and FinanceThere were no situations where the Company couldn’t guarantee its independence or maintain its self-operatingcapabilities from its controlling shareholders in terms of business, personnel, assets, organization and finance.
III. Horizontal Competition
□ Applicable √ Not applicable
IV. Annual General Meeting and Extraordinary General Meetings Held during the ReportingPeriod
1. Shareholder meetings during the reporting period
| Session of meeting | Type | Ratio of investor participation | Date of convening | Date of disclosure | Index of disclosure |
| 2020 First Extraordinary General Meeting | Extraordinary general meeting of shareholders | 59.84% | March 13, 2020 | March 14, 2020 | Announcement on Resolutions of 2020 First Extraordinary General Meeting of Shareholders (Announcement No.: 2020-15). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. |
| 2019 Annual General Meeting of Shareholders | Annual general meeting | 55.09% | May 21, 2020 | May 22, 2020 | Announcement on Resolutions of 2019 Annual General Meeting of Shareholders (Announcement No.: 2020-34). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. |
| 2020 Second Extraordinary General Meeting | Extraordinary general meeting of shareholders | 53.75% | June 15, 2020 | June 16, 2020 | Announcement on Resolutions of 2020 Second Extraordinary General Meeting of Shareholders |
| (Announcement No.: 2020-53). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. | |||||
| 2020 Third Extraordinary General Meeting | Extraordinary general meeting of shareholders | 54.42% | August 25, 2020 | August 26, 2020 | Announcement on Resolutions of 2020 Third Extraordinary General Meeting of Shareholders (Announcement No.: 2020-65). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. |
| 2020 Fourth Extraordinary General Meeting | Extraordinary general meeting of shareholders | 51.91% | September 15, 2020 | September 16, 2020 | Announcement on Resolutions of 2020 Fourth Extraordinary General Meeting of Shareholders (Announcement No.: 2020-72). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. |
| 2020 Fifth | Extraordinary | 53.57% | November 16, 2020 | November 17, 2020 | Announcement on |
| Extraordinary General Meeting | general meeting of shareholders | Resolutions of 2020 Fifth Extraordinary General Meeting of Shareholders (Announcement No.: 2020-87). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. | |||
| 2020 Sixth Extraordinary General Meeting | Extraordinary general meeting of shareholders | 54.80% | December 31, 2020 | January 04, 2021 | Announcement on Resolutions of 2020 Sixth Extraordinary General Meeting of Shareholders (Announcement No.: 2020-103). See Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and CNINFO (www.cninfo.com.cn) for details. |
2. Extraordinary general meetings of shareholders proposed to be convened by preferred shareholderswhose voting rights were resumed
□ Applicable √ Not applicable
V. Performance of Duties by Independent Directors during the Reporting Period
1. Attendance of independent directors to Board meetings and general meetings of shareholders
| Name of independent director | Required attendance of Board meetings for the year | Attendance of Board meetings in person | Attendance of Board meetings by way of communication | Attendance of Board meetings by proxy | Number of absence | Any failure in attending in person for two consecutive meetings | Attendance of general meetings (times) |
| Huang Hongyan | 10 | 3 | 7 | No | 6 | ||
| Ge Guangrui | 10 | 2 | 8 | No | 7 | ||
| He Haidi | 10 | 4 | 6 | No | 6 |
Description of failure in attending in person for two consecutive meetingsThere were no situations where the Company’s independent directors did not attend Board meetings in person fortwo consecutive times during the reporting period.
2. Objections by independent directors to the Company’s relevant matters
Whether independent directors raised objections to relevant matters of the Company
□ Yes √ No
Independent directors did not raise objections to relevant matters of the Company during the reporting period.
3. Other descriptions on independent directors’ performance of duty
Whether opinions from independent directors were adopted
√ Yes □ No
Description on whether opinions from independent directors were adoptedIndependent directors of the Company gave full play to the role of independent director in their work in 2020 andperformed their duties of independent directors faithfully and diligently in compliance with provisions andrequirements of relevant laws and regulations such as the Company Law, Guiding Opinions on the Establishmentof Independent Director System in Listed Companies, Guidelines of Shenzhen Stock Exchange on Conduct ofCorporate Directors of SME Board Listed Companies as well as the Company’s Articles of Association andIndependent Director System. The independent directors actively attended relevant meetings, regularly checkedreports of the Company, carefully deliberated proposals of the Board of Directors and expressed independentoptions, in an effort to safeguard the overall interests of the Company and legitimate rights and interests of
minority shareholders.VI. Performance of Duties by Special Committees under the Board of Directors
1. Performance of the Audit Committee under the Board of Directors
The Audit Committee convened 4 meetings during the reporting period.On February 21, 2020, the Audit Committee convened a meeting and reviewed and approved the InternalAudit Work Report 2019, the Audit Report on External Guarantees in 2019, the Audit Report on the Purchase andSales of Assets in 2019, the Audit Report on Related Party Transactions in 2019, and the Audit Report on theAppropriation of Funds by Controlling Shareholder and Its Related Parties in 2019. The Committee alsocommunicated with Mazars Certified Public Accountants with regard to the audit of the Annual Report 2019.
On April 30, 2020, the Audit Committee convened a meeting and reviewed and approved the Internal AuditWork Report for Q1 2020, the Audit Report on External Guarantees in Q1 2020, the Audit Report on ExternalInvestments in Q1 2020, the Audit Report on the Purchase and Sales of Assets in Q1 2020, the Audit Report onRelated Party Transactions in Q1 2020, and the Audit Report on the Appropriation of Funds by ControllingShareholder and Its Related Parties in Q1 2020.On August 6, 2020, the Audit Committee held a meeting and reviewed and agreed to recommend to theBoard of Directors for continued engagement of Mazars Certified Public Accountants (LLP) as the audit serviceprovision agency of the Company in 2020. The Committee also deliberated and approved the Internal Audit WorkReport for H1 2020, the Audit Report on External Guarantees in H1 2020, the Audit Report on ExternalInvestments in H1 2020, the Audit Report on the Purchase and Sales of Assets in H1 2020, the Audit Report onRelated Party Transactions in H1 2020, and the Audit Report on the Appropriation of Funds by ControllingShareholder and Its Related Parties in H1 2020.On December 7, 2020, the Audit Committee convened a meeting and reviewed and approved the InternalAudit Work Plan for 2021, Internal Audit Work Report for Q3 2020, the Audit Report on External Guarantees inQ3 2020, the Audit Report on External Investments in Q3 2020, the Audit Report on the Purchase and Sales ofAssets in Q3 2020, the Audit Report on Related Party Transactions in Q3 2020, and the Audit Report on theAppropriation of Funds by Controlling Shareholder and Its Related Parties in Q3 2020.
2. Performance of the Remuneration and Review Committee under the Board of DirectorsThe Remuneration and Review Committee convened 4 meetings during the reporting period.On April 17, 2020, the Remuneration and Review Committee convened a meeting on which the Proposal on theRemuneration of Senior Management of the Company in 2019 and the Proposal on the Remuneration of Directorsof the Company in 2019 were reviewed and approved. The assessment of the salaries of the Company’s directorsand senior management in 2019 was in line with the Company’s actual assessment indicators, and theremunerations they received from the Company also matched the Company’s actual development and the industry
level, which was conducive to tap the creativity and enthusiasm of directors and senior management. There wereno situations that harmed interests of the Company and shareholders.On a meeting held on May 15, 2020, the Committee reviewed and approved the Proposal on Achieving the UnlockConditions of the First Unlock Period for Restricted Stocks Awarded in the First Grant under the Company's 2018Stock Option and Restricted Stock Incentive Plan and the Proposal on Achieving the Exercise Conditions of theFirst Exercise Period for Stock Options Awarded in the First Grant under the Company's 2018 Stock Option andRestricted Stock Incentive Plan. The Committee believed that the conditions of the first unlock/exercise period forrestricted stocks/stock options awarded in the first grant were met, and the qualifications of the incentiverecipients for unlocking/exercising were valid and effective. Therefore, it agreed for the Company to handlematters relevant to the first unlocking/exercise period of the concerned stocks/stock options.On August 18, 2020, the Committee convened a meeting and reviewed and approved the Proposal on Adjustingthe Annual Remuneration of the Joint General Manager, according to which the pre-tax annual remuneration ofthe Joint General Manager Mr. Dai Zhenji was raised to no more than RMB10 million.On a meeting held on May 15, 2020, the Committee reviewed and approved the Proposal on Achieving the UnlockConditions of the First Unlock Period for Reserved Restricted Stocks under the Company's 2018 Stock Option andRestricted Stock Incentive Plan and the Proposal on Achieving the Exercise Conditions of the First ExercisePeriod for Reserved Stock Options under the Company's 2018 Stock Option and Restricted Stock Incentive Plan.The Committee believed that the conditions of the first unlock/exercise period for reserved restricted stocks/stockoptions were met, and the qualifications of the incentive recipients for unlocking/exercising were valid andeffective. Therefore, it agreed for the Company to handle matters relevant to the first unlocking/exercise period ofthe concerned stocks/stock options.
3. Performance of the Nomination Committee under the Board of Directors
The Nomination Committee convened 3 meetings during the reporting period.On May 27, 2020, the Committee convened a meeting and reviewed and approved the Proposal on By-election ofNon-Independent Directors of the Fourth Session of the Board of Directors, agreeing to by-elect Mr. Dai Zhenjias a non-independent director of the fourth session of the Board of Directors.On June 15, 2020, the Committee convened a meeting and reviewed and approved the Proposal on Election of theVice Chairman of the Fourth Session of the Board of Directors, agreeing to elect Mr. Deng Guanjie as the ViceChairman of the fourth session of the Board of Directors; the Proposal on Appointment of the Joint GeneralManager of the Company was also reviewed and approved, and Mr. Dai Zhenji was appointed the Joint GeneralManager of the Company.On December 28, 2020, the Committee convened a meeting and reviewed and approved the Proposal on Electionof Non-Independent Directors of the Fifth Session of the Board of Directors, agreeing to nominate Mr. DengYingzhong, Mr. Deng Guanbiao, Mr. Deng Guanjie, Mr. Dai Zhenji, Mr. Liu Jinfeng, and Mr. Yue Yong as
candidates for non-independent directors of the fifth session of the Board of Directors; the Committee alsoreviewed and passed the Proposal on Election of Independent Directors of the Fifth Session of the Board ofDirectors, and agreed to nominate Mr. He Haidi, Mr. He Guoquan and Mr. Liu Die as candidates for independentdirectors of the fifth session of the Board of Directors.
VII. Work of the Board of SupervisorsRisks discovered by the Board of Supervisors in supervisory activities during the reporting period
□ Yes √ No
The Board of Supervisors had no objections to supervised events during the reporting period.VIII. Performance Appraisal and Incentives of Senior ManagementThe Company comprehensively appraises the performance of senior executives in compliance with provisions ofthe Remuneration Management System for Directors, Supervisors and Senior Management and in combinationwith annual financial budgets, production and operation indicators and the attainment of management objectives.Their individual incomes are linked with the business performance of the Company. During the reporting period,incentives to the Company’s senior management mainly included remuneration incentive, restricted stockincentive plan, and employee stock ownership plan, with a purpose of effectively stimulating the work enthusiasmof the senior management, promoting the steady improvement of the Company’s performance, achieving itsdevelopment strategies and business objectives, and maintaining a steady and sound development.The Company rolled out the second phase equity incentive plan under which employees were motived in the formof options + restricted stocks. The unlocking/exercise for the first phase was completed in 2020.The Company introduced the second phase employee stock ownership plan in 2019 to incentivize directors, seniorexecutives and backbone employees. The lockup period of the plan had expired as at November 30, 2020, and theliquidation and distribution of the plan were completed in January 2021.
IX. Self-assessment Report on Internal Control
1. Details of the significant defects in internal control detected during the reporting period
□ Yes √ No
2. Self-assessment report on internal control
| Date of disclosure of the full text of the internal control assessment report | April 29, 2021 |
| Disclosure index of full text of the internal control assessment report | Please refer to the Self-assessment Report on Internal Control 2020 of C&S Paper Co., Ltd. published on CNINFO (http://www.cninfo.com.cn) for details. |
| 100.00% | |||
| Percentage of total operating income of units included in the assessment scope to the operating income in the Company’s consolidated financial statements | 100.00% | ||
| Defect identification criteria | |||
| Category | Financial report | Non-financial report | |
| Qualitative criteria | Material defect: refers to one or a combination of control defects that may cause the Company to materially deviate from the objectives of internal control. When there are one or several material defects in internal control, it should be concluded that the internal control is invalid in the internal control assessment report. (1) Directors, supervisors and senior management have committed fraud and caused serious losses and severe adverse impacts to the company. (2) Corrections were made to published financial reports due to significant accounting errors. (3) Significant errors in the current financial reports were identified by the certified public accountants but not by internal | Non-financial report defects are identified mainly based on their degree of impact on business processes and their probability of occurrence. A defect is termed as a general defect if its probability of occurrence is low or the defect reduces work efficiency or effectiveness, or increases the uncertainty of effects or causes deviations from expected objectives. A defect is termed as a major defect if its probability of occurrence is relatively high or the defect significantly reduces work efficiency or effectiveness, or significantly increases the uncertainty of effects or causes obvious | |
| control. (4) The internal control and supervision by the company’s audit committee and internal audit were invalid, or significant problems were found but not corrected. Major defect: refers to one or a combination of defects in internal control that is with less severity than a material defect, but may still cause the Company to deviate from the objectives of internal control. A major defect is less severe than a material defect and would not seriously endanger the overall effectiveness of internal control, but should arouse the sufficient attention of the board of directors and mangers. (1) Failure to select and apply accounting policies based on generally accepted accounting standards; (2) There were one or multiple defects in the financial reports of the current period that did not meet the criteria for material defect. (3) There were one or multiple defects in the control of the financial reporting process at the end of the period such that the authenticity and completeness of the prepared financial reports could not be reasonably guaranteed. General defect: refers to defects other than material defect or major defect. | deviations from expected objectives. A defect is termed as a material defect if its probability of occurrence is high or the defect severely reduces work efficiency or effectiveness, or severely increases the uncertainty of effects or causes severe deviations from expected objectives. | |
| Quantitative criteria | General defect: The misstated amount is less than 0.5% of operating income. Major defect: The misstated amount is between 0.5% (inclusive) and 1.5% of the operating income. Material defect: The misstated amount is more than 1.5% (inclusive) of operating income. | General defect: The direct property losses are less than 0.5% of operating income. Major defect: The direct property losses are between 0.5% (inclusive) and 1.5% of operating income. Material defect: The direct property losses are |
| more than 1.5% (inclusive) of operating income. . | |||
| Number of material defects in financial reports | 0 | ||
| Number of material defects in non-financial reports | 0 | ||
| Number of major defects in financial reports | 0 | ||
| Number of major defects in non-financial reports | 0 | ||
X. Internal Control Audit Report or Assurance ReportNot applicable
Section XI Corporate Bonds
Whether there are any bonds of the Company that are publicly issued and listed on the stock exchange and are notdue at the date of issuance of the annual report or are due but unable to be redeemed for full face value at maturityNo
Section XII Financial Report
I. Audit Report
| Type of auditor’s opinion | Standard and unqualified |
| Signing date of the Audit Report | April 27, 2021 |
| Name of auditing organization | Mazars Certified Public Accountants (LLP) |
| Reference number of the Audit Report | Zhong-Huan-Shen-Zi (2021) No. 0500115 |
| Name of certified public accountants | Wang Bing, Pan Guiquan |
Audit ReportTo all shareholders of C&S Paper Co., Ltd.,I. OpinionWe have audited the accompanying financial statements of C&S Paper Co., Ltd. (hereinafter “the Company”),which comprise the consolidated and the Parent Company’s balance sheet as at 31 December 2020, theconsolidated and the Parent Company’s income statement, the consolidated and the Parent Company’s cash flowstatement, and the consolidated and the Parent Company’s statement of the changes in equity for 2020, and notesto the financial statements.In our opinion, the accompanying financial statements have been prepared in accordance with the AccountingStandards for Business Enterprises in all material aspects, and they fairly present the consolidated and the ParentCompany’s financial position as of 31 December 2020, and the consolidated and the Parent Company’s operatingresults and cash flows for 2020.
II. Basis of OpinionWe conducted our audit in accordance with the Auditing Standards for PRC Certified Public Accountants. Ourresponsibilities under those standards are further described in the “Certified Public Accountants’ Responsibilitiesfor the Audit of the Financial Statements” section of our report. We are independent of the Company inaccordance with the Code of Ethics for Chinese Certified Public Accountants (the “Code”), and we have fulfilledour other ethical responsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements of the current period. These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters. We determine the followings are key audit matters in need of communication in our report.
(I) Recognition of operating income
| Key audit matter | How the matter was addressed in our audit |
| As stated in Note V (34) in the Company’s financial statements, the Company recorded an operating income of RMB7,823,528,416.32 in 2020. Since the amount of operating income is significant and a key performance indicator, there is a relatively high inherent risk, so we identify the recognition of operating income as a key audit matter. | Our audit procedures included: (1) We obtained an understanding of and evaluated the internal control design over the recognition of operating income and its operating effectiveness; (2) We obtained an understanding and evaluated whether policies for recognizing operating income were in compliance with requirements of accounting standards for business enterprises via interviewing the management, consulting the Company’s accounting policies, etc.; (3) We checked whether there were any abnormalities in the operations of the Company’s major customers and whether there was related relationship between such customers and the Company or its related parties by checking the business registration information of the customers and contracts with them; (4) We adopted the sampling method to select some customers and send them the confirmation letter to verify the balance of accounts receivable, the balance of prepayment, and the amount of sales income; (5) In respect of domestic sales, we adopted the sampling method to check the large-value contracts and sales orders as well as their corresponding invoices, outbound orders, delivery orders, customer receipts, etc.; for export sales, we used the sampling method to check large-value contracts and sales orders as well as their corresponding invoices, customs declarations, freight bills of lading, customer receipts, etc.; (6) We conducted cutoff test for operating income to assess whether operating income was recognized in an appropriate period. |
(II) Recognition of selling expenses
| Key audit matter | How the matter was addressed in our audit |
| As stated in Note V (36) in the Company’s financial statements, the Company recorded a selling expense of RMB1,544,562,244.71 in | Our audit procedures included: (1) We obtained an understanding of and evaluated the internal control design over the recognition of selling expense and its operating effectiveness; |
| 2020. accounting for 19.74% of operating income. Since selling expense has a great impact on the Company’s financial results, which may cause a major misstatement risk, we identify the recognition of selling expense as a key audit matter. | (2) We obtained the detailed list of selling expenses, and analyzed the reasonableness of each expense item based on features of the Company’s businesses; we also analyzed the proportion of main expense items in the main business income and whether the change trend of selling expense consistent with that of income; (3) We conducted a spot check of main items under selling expense and selected and checked some selling expense vouchers against corresponding contracts, invoices, bank receipts and other original documents, as well as the Company’s sales promotion policies, remuneration policies, etc.; (4) We conducted cutoff test for selling expense to assess whether selling expense was recognized across periods. |
IV. Other informationThe Company’s management is responsible for other information. Other information includes the informationincluded in the Company’s 2020 annual report, but excludes the financial statements and our audit report.Our audit opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit process or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that if there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Governance Layer for Financial StatementsThe management of C&S Paper Co., Ltd. (hereinafter the “Management”) is responsible for preparing financialstatements in accordance with the Accounting Standards for Business Enterprises, and fairly presenting them; theManagement also needs to design, implement and maintain necessary internal control to enable that the financialstatements are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the Management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing matters in relation to going concern (if applicable) and applying thegoing-concern assumption unless the Management intends to liquidate the Company, cease operations, or have norealistic alternative but to do so.The governance layer is responsible for overseeing the financial reporting process of the Company.VI. Certified Public Accountants’ Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether these financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withCSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.As part of an audit work in accordance with CSAs, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraudis higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.(IV) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertaintyexists, we are required to drawing attention in our audit report to the related disclosures in these financial statementsor, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor’s report. However, future events or conditions may cause the Company tocease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or businessactivities within the Company to express an opinion on the financial statements. We are responsible for the direction,supervision and performance of the group audit, and remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we comply with relevant ethical requirementsregarding independence, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and related safeguards (if applicable).From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the financial statements of the period and are therefore the key audit matters. We
describe these matters in our audit report unless law or regulation precludes public disclosure about the matter orwhen, in tiny minority circumstances, we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Mazars Certified Public Accountants (LLP) Chinese Certified Public Accountant: Wang Bing
Chinese Certified Public Accountant: Pan Guiquan
Wuhan, PRC
April 27, 2021
II. Financial StatementsUnit of financial statements: RMB
1.Consolidated balance sheet
Prepared by: C&S Paper Co., Ltd.
December 31, 2020
Unit: RMB
| Item | December 31, 2020 | December 31, 2029 |
| Current assets: | ||
| Monetary funds | 1,125,196,199.56 | 703,746,624.42 |
| Settlement reserve | ||
| Lending to banks and other financial institutions | ||
| Tradable financial assets | ||
| Derivative financial assets |
| Notes receivable | 724,419.74 | 301,904.32 |
| Accounts receivable | 1,051,423,939.59 | 807,772,897.68 |
| Accounts receivable financing | ||
| Prepayments | 26,819,108.57 | 14,877,757.16 |
| Premium receivable | ||
| Reinsurance payables | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 15,824,945.56 | 8,240,417.99 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets held under resale agreements | ||
| Inventory | 1,661,274,495.32 | 986,405,689.17 |
| Contract assets | ||
| Assets held for sale | 57,073,059.69 | 57,073,059.69 |
| Non-current assets due within one year | ||
| Other current assets | 101,584,569.30 | 165,567,805.78 |
| Total current assets | 4,039,920,737.33 | 2,743,986,156.21 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in creditor’s rights | ||
| Investments in other creditor’s rights | ||
| Long-term receivable | ||
| Long-term equity investment | ||
| Investment in other equity instruments |
| Other non-current financial assets | ||
| Investment property | 34,575,365.94 | 36,039,381.30 |
| Fixed assets | 2,792,587,302.21 | 2,921,392,106.87 |
| Construction work in progress | 275,904,617.95 | 55,734,236.91 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 169,355,772.24 | 168,731,781.83 |
| Development expenses | ||
| Goodwill | 64,654.15 | 64,654.15 |
| Long-term deferred expenses | 26,635,983.14 | 13,686,397.24 |
| Deferred income tax assets | 111,367,362.66 | 80,331,080.17 |
| Other non-current assets | 28,027,952.15 | 6,306,028.96 |
| Total non-current assets | 3,438,519,010.44 | 3,282,285,667.43 |
| Total assets | 7,478,439,747.77 | 6,026,271,823.64 |
| Current liabilities: | ||
| Short-term borrowings | 142,942,941.34 | 14,721,492.38 |
| Borrowings from PBC | ||
| Placements from banks and other financial institutions | ||
| Tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 234,887,563.22 | 202,653,860.31 |
| Accounts payable | 761,519,389.26 | 578,212,781.22 |
| Payments received in advance | 142,476,562.31 | |
| Contract liabilities | 137,333,617.40 | |
| Proceeds from financial assets sold under repo |
| Customer bank deposits and due to banks and other financial institutions | ||
| Funds from securities trading agency | ||
| Funds from securities underwriting agency | ||
| Employee remuneration payable | 123,524,627.11 | 106,413,600.27 |
| Tax and fees payable | 112,608,054.87 | 101,670,618.11 |
| Other payables | 754,844,580.09 | 635,834,511.05 |
| Including: Interests payable | 173,259.89 | |
| Dividends payable | 1,437,466.77 | 452,536.50 |
| Transaction fee and commission receivable | ||
| Reinsurance payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 32,400,000.00 | |
| Other current liabilities | 17,628,086.63 | |
| Total current liabilities | 2,285,288,859.92 | 1,814,383,425.65 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term borrowings | 22,500,000.00 | |
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term employee remuneration payable |
| Provision | ||
| Deferred income | 115,101,158.13 | 82,367,831.33 |
| Deferred income tax liabilities | 35,903,653.30 | 30,016,107.43 |
| Other non-current liabilities | ||
| Total non-current liabilities | 151,004,811.43 | 134,883,938.76 |
| Total liabilities | 2,436,293,671.35 | 1,949,267,364.41 |
| Owner's equity: | ||
| Share capital | 1,311,487,077.00 | 1,308,891,273.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 907,006,505.05 | 760,731,416.57 |
| Less: Treasury shares | 96,480,911.29 | 104,792,649.00 |
| Other comprehensive income | ||
| Special reserves | ||
| Surplus reserves | 61,469,258.27 | 53,205,582.86 |
| General reserves | ||
| Retained earnings | 2,858,664,147.39 | 2,058,968,835.80 |
| Total equity attributable to owners of the parent company | 5,042,146,076.42 | 4,077,004,459.23 |
| Equities of minority shareholders | ||
| Total owner's equity | 5,042,146,076.42 | 4,077,004,459.23 |
| Total liabilities and owners' equities | 7,478,439,747.77 | 6,026,271,823.64 |
Legal representative: Deng Yingzhong Person in charge of accounting: Dong Ye Person in charge of accountingdepartment: Xu Xianjing
2. Balance sheet of the Parent Company
Unit: RMB
| Item | December 31, 2020 | December 31, 2029 |
| Current assets: | ||
| Monetary funds | 170,229,178.13 | 156,202,659.45 |
| Tradable financial assets | ||
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 92,647,372.33 | 127,203,426.87 |
| Accounts receivable financing | ||
| Prepayments | 7,940,396.34 | 2,565,716.66 |
| Other receivables | 136,987,584.64 | 637,511,752.54 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventory | 156,605,546.36 | 84,567,041.98 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 52,517,725.87 | 129,377,576.74 |
| Total current assets | 616,927,803.67 | 1,137,428,174.24 |
| Non-current assets: | ||
| Investments in creditor’s rights | ||
| Investments in other creditor’s rights | ||
| Long-term receivable | ||
| Long-term equity investment | 1,928,113,219.50 | 1,231,245,128.96 |
| Investment in other equity instruments |
| Other non-current financial assets | ||
| Investment property | 17,939,329.51 | 18,745,192.09 |
| Fixed assets | 257,354,688.59 | 222,724,273.70 |
| Construction work in progress | 35,260,100.44 | |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 25,205,232.21 | 21,259,498.66 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred income tax assets | 46,811,106.77 | 18,366,334.29 |
| Other non-current assets | 2,619,959.27 | 4,521,074.21 |
| Total non-current assets | 2,278,043,535.85 | 1,552,121,602.35 |
| Total assets | 2,894,971,339.52 | 2,689,549,776.59 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Tradable financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 420,061,168.44 | 325,506,510.90 |
| Payments received in advance | 28,227,454.47 | |
| Contract liabilities | 17,388,431.01 | |
| Employee remuneration payable | 44,678,713.21 | 24,280,403.99 |
| Tax and fees payable | 5,995,417.05 | 3,225,793.88 |
| Other payables | 126,072,040.24 | 167,279,884.09 |
| Including: Interests payable | ||
| Dividends payable | 1,437,466.77 | 452,536.50 |
| Liabilities held for sale | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | 2,260,496.03 | |
| Total current liabilities | 616,456,265.98 | 548,520,047.33 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term employee remuneration payable | ||
| Provision | ||
| Deferred income | 5,855,467.25 | 7,062,818.69 |
| Deferred income tax liabilities | 7,202,336.33 | 5,575,323.82 |
| Other non-current liabilities | ||
| Total non-current liabilities | 13,057,803.58 | 12,638,142.51 |
| Total liabilities | 629,514,069.56 | 561,158,189.84 |
| Owner's equity: | ||
| Share capital | 1,311,487,077.00 | 1,308,891,273.00 |
| Other equity instruments | ||
| Including: Preference shares | ||
| Perpetual bonds | ||
| Capital reserve | 831,693,206.19 | 690,241,724.38 |
| Less: Treasury shares | 96,480,911.29 | 104,792,649.00 |
| Other comprehensive income |
| Special reserves | ||
| Surplus reserves | 61,347,923.99 | 53,084,248.58 |
| Retained earnings | 157,409,974.07 | 180,966,989.79 |
| Total owner's equity | 2,265,457,269.96 | 2,128,391,586.75 |
| Total liabilities and owners' equities | 2,894,971,339.52 | 2,689,549,776.59 |
3. Consolidated income statement
Unit: RMB
| Item | 2020 | 2019 |
| I. Total Operating Income | 7,823,528,416.32 | 6,634,914,352.68 |
| Including: Operating income | 7,823,528,416.32 | 6,634,914,352.68 |
| Interest income | ||
| Gross earned premiums | ||
| Service charge and commission income | ||
| II. Total Operating Cost | 6,728,790,634.82 | 5,910,158,735.56 |
| Including: Operating costs | 4,590,904,040.35 | 4,005,421,052.70 |
| Interest expenses | ||
| Service charge and commission expenses | ||
| Surrender value | ||
| Net compensation expenses | ||
| Net appropriation of insurance reserve | ||
| Policy dividends expenses | ||
| Reinsurance costs | ||
| Tax and surcharges | 56,112,918.09 | 42,816,202.47 |
| Selling expenses | 1,544,562,244.71 | 1,369,553,843.95 |
| Administrative expenses | 364,914,344.30 | 294,516,937.35 |
| R&D expenses | 190,298,633.61 | 176,374,287.34 |
| Finance expenses | -18,001,546.24 | 21,476,411.75 |
| Including: Interest fees | 2,903,635.12 | 13,452,104.83 |
| Interest income | 8,202,097.37 | 3,504,368.80 |
| Plus: Other income | 29,224,284.70 | 16,012,562.77 |
| Return on investment ("-" indicates loss) | 3,868,134.28 | 333,745.61 |
| Including: Return on investment in associates and joint ventures | ||
| Income from the derecognition of financial assets measured at amortized cost | ||
| Exchange gains ("-" indicates loss) | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | ||
| Credit impairment losses ("-" indicates loss) | -6,462,152.71 | -2,778,561.87 |
| Asset impairment losses ("-" indicates loss) | -15,863,724.17 | -19,053,460.18 |
| Return on disposal of assets ("-" indicates loss) | -1,630,681.60 | 198,268.96 |
| III. Operating Profit ("-" indicates loss) | 1,103,873,642.00 | 719,468,172.41 |
| Plus: Non-operating income | 5,429,670.00 | 5,851,556.70 |
| Less: Non-operating expenditure | 20,912,859.12 | 4,321,020.44 |
| IV. Total Profit ("-" indicates total loss) | 1,088,390,452.88 | 720,998,708.67 |
| Less: Income tax expense | 182,501,371.47 | 117,166,057.84 |
| V. Net Profit ("-" indicates net loss) | 905,889,081.41 | 603,832,650.83 |
| i. Classified by operation continuity | ||
| 1. Net profit from continued operation ("-" indicates net loss) | 905,889,081.41 | 603,832,650.83 |
| 2. Net profit from discontinued operation ("-" indicates net loss) | ||
| ii. Classified by attribution of ownership | ||
| 1. Net profit attributable to owners of the parent | 905,889,081.41 | 603,832,650.83 |
| company | ||
| 2. Minority shareholders' profits and losses | ||
| VI. Net Amount of Other Comprehensive Income after Tax | ||
| Total other comprehensive after-tax net income attributable to owners of the parent company | ||
| i. Other comprehensive income not able to be reclassified into the profit or loss | ||
| 1. Changes of re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments | ||
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into the profit or loss | ||
| 1. Other comprehensive income to be transferred into the profit or loss under equity method | ||
| 2. Changes in fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Impairment provision for credit of investment in other creditor's rights | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others |
| Total other comprehensive after-tax net income attributable to minority shareholders | ||
| VII. Total Comprehensive Income | 905,889,081.41 | 603,832,650.83 |
| Total comprehensive income attributable to owners of the parent company | 905,889,081.41 | 603,832,650.83 |
| Total comprehensive income attributable to minority shareholders | ||
| VIII. Earnings per Share: | ||
| i. Basic earnings per share | 0.70 | 0.47 |
| ii. Diluted earnings per share | 0.69 | 0.46 |
For business combinations of the current period under common control, the net profit realized by the combined party before thecombination is: RMB0.00; the net profit realized by the combined party in last period is: RMB0.00.Legal representative: Deng Yingzhong Person in charge of accounting: Dong Ye Person in charge of accountingdepartment: Xu Xianjing
4. Income statement of the Parent Company
Unit: RMB
| Item | 2020 | 2019 |
| I. Operating Income | 1,632,515,354.88 | 1,287,647,693.35 |
| Less: Operating cost | 1,377,798,965.81 | 1,084,476,382.79 |
| Tax and surcharges | 5,201,738.09 | 4,116,684.80 |
| Selling expenses | 127,888,051.22 | 122,236,408.01 |
| Administrative expenses | 179,278,540.50 | 85,790,130.74 |
| R&D expenses | ||
| Finance expenses | -5,095,985.70 | -9,773,667.34 |
| Including: Interest fees | 9,422,954.52 | |
| Interest income | 2,906,543.07 | 20,679,432.95 |
| Plus: Other income | 1,988,938.21 | 1,948,033.25 |
| Return on investment ("-" indicates loss) | 143,256,231.99 | 60,333,745.61 |
| Including: Return on investment in associates and |
| joint ventures | ||
| Profits from derecognition of financial assets at amortized cost | ||
| Gains from net exposure hedging ("-" indicates loss) | ||
| Gains from changes in fair value ("-" indicates loss) | ||
| Credit impairment losses ("-" indicates loss) | -457,064.44 | -106,437.03 |
| Asset impairment losses ("-" indicates loss) | -572,411.86 | -944,304.47 |
| Return on disposal of assets ("-" indicates loss) | -613,479.84 | -21,577.69 |
| II. Operating Profit ("-" indicates loss) | 91,046,259.02 | 62,011,214.02 |
| Plus: Non-operating income | 393,442.74 | 470,286.60 |
| Less: Non-operating expenditure | 15,848,705.74 | 1,651,977.28 |
| III. Total Profit ("-" indicates total loss) | 75,590,996.02 | 60,829,523.34 |
| Less: Income tax expense | -7,045,758.08 | 1,820,524.82 |
| IV. Net Profit ("-" indicates net loss) | 82,636,754.10 | 59,008,998.52 |
| i. Net profit from continued operation ("-" indicates net loss) | 82,636,754.10 | 59,008,998.52 |
| ii. Net profit from discontinued operation ("-" indicates net loss) | ||
| V. Net Amount of Other Comprehensive Income after Tax | ||
| i. Other comprehensive income not able to be reclassified into the profit or loss | ||
| 1. Changes of re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred into the profit or loss under equity method | ||
| 3. Changes in fair value of investment in other equity instruments |
| 4. Changes in fair value of credit risk of the enterprise | ||
| 5. Others | ||
| ii. Other comprehensive income reclassified into the profit or loss | ||
| 1. Other comprehensive income to be transferred into the profit or loss under equity method | ||
| 2. Changes in fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Impairment provision for credit of investment in other creditor's rights | ||
| 5. Reserve of cash flow hedge | ||
| 6. Converted difference in foreign currency financial statements | ||
| 7. Others | ||
| VI. Total Comprehensive Income | 82,636,754.10 | 59,008,998.52 |
| VII. Earnings per Share: | ||
| i. Basic earnings per share | ||
| ii. Diluted earnings per share |
5. Consolidated cash flow statement
Unit: RMB
| Item | 2020 | 2019 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 7,641,541,541.60 | 6,946,974,117.36 |
| Net increase in deposits from customers, |
| banks and non-bank financial institutions | ||
| Net increase in due to central banks | ||
| Net increase in placements from other financial institutions | ||
| Cash received from the premium of direct insurance contracts | ||
| Net cash from reinsurance business | ||
| Net increase in deposits and investment of the insured | ||
| Cash obtained from interest, net fee and commission | ||
| Net increase in placements from banks and other financial institutions | ||
| Net increase in repo service fund | ||
| Net cash from agent securities trading | ||
| Tax rebates | 8,043,686.95 | 29,267,082.90 |
| Cash received related to other operating activities | 152,705,536.70 | 249,364,314.71 |
| Sub-total of cash inflow from operating activities | 7,802,290,765.25 | 7,225,605,514.97 |
| Cash paid for goods purchased and services rendered | 4,999,555,647.15 | 4,213,639,113.14 |
| Net loans and advances to customers | ||
| Net increase in deposits with the central bank, banks and non-bank financial institutions | ||
| Cash paid for claims of direct insurance contracts | ||
| Net increase in placements with banks and non-bank financial institutions | ||
| Cash paid for interest, fee and commission |
| Cash paid for dividends of the insured | ||
| Cash paid to and on behalf of employees | 665,109,162.40 | 543,660,724.86 |
| Tax payments | 534,941,400.79 | 320,611,778.10 |
| Cash payments related to other operating activities | 774,483,692.66 | 787,318,997.01 |
| Sub-total of cash outflow from operating activities | 6,974,089,903.00 | 5,865,230,613.11 |
| Net cash flows from operating activities | 828,200,862.25 | 1,360,374,901.86 |
| II. Cash Flows from Investing Activities: | ||
| Cash from realization of investment | ||
| Cash received from the return on investments | 3,868,134.28 | 333,745.61 |
| Net cash received from the disposal of fixed assets, intangible assets, and other long-term assets | 48,828,706.60 | 1,155,770.90 |
| Net amount of cash received from the disposal of subsidiaries and other operating organizations | ||
| Cash received related to other investing activities | 127,105,000.00 | |
| Sub-total of cash inflow from investing activities | 179,801,840.88 | 1,489,516.51 |
| Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets | 511,677,417.02 | 602,954,032.35 |
| Cash paid for investments | ||
| Net increase in pledged loans | ||
| Net amount of cash paid for acquisition of subsidiaries and other operating organizations | ||
| Cash payments related to other investing | 50,000,000.00 | 127,105,000.00 |
| activities | ||
| Sub-total of cash outflow from investing activities | 561,677,417.02 | 730,059,032.35 |
| Net cash flows from investing activities | -381,875,576.14 | -728,569,515.84 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | 28,101,700.23 | 104,792,649.00 |
| Including: Proceeds received by subsidiaries from minority shareholders' investment | ||
| Cash received from borrowings | 383,892,976.77 | 299,514,563.03 |
| Cash received related to other financing activities | 110,753,779.11 | |
| Sub-total of cash inflow from financing activities | 411,994,677.00 | 515,060,991.14 |
| Cash paid for repayments of borrowings | 301,057,260.06 | 796,290,846.44 |
| Cash payment for interest expenses and distribution of dividends or profits | 99,989,760.28 | 45,925,148.44 |
| Including: Dividend and profit paid by subsidiaries to minority shareholders | ||
| Cash payments related to other financing activities | 80,056,125.89 | 460,054.74 |
| Sub-total of cash outflow from financing activities | 481,103,146.23 | 842,676,049.62 |
| Net cash flows from financing activities | -69,108,469.23 | -327,615,058.48 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | -3,179,534.13 | 677,053.37 |
| V. Net Increase in Cash and Cash Equivalents | 374,037,282.75 | 304,867,380.91 |
| Plus: Opening balance of cash and cash equivalents | 675,996,852.97 | 371,129,472.06 |
| VI. Closing Balance of Cash and Cash Equivalents | 1,050,034,135.72 | 675,996,852.97 |
6. Cash flow statement of the Parent Company
Unit: RMB
| Item | 2020 | 2019 |
| I. Cash Flows from Operating Activities: | ||
| Cash received from sale of goods or rendering of services | 1,317,396,402.58 | 1,056,147,896.18 |
| Tax rebates | 120,214.00 | 73,675.36 |
| Cash received related to other operating activities | 1,834,396,504.14 | 1,539,185,832.09 |
| Sub-total of cash inflow from operating activities | 3,151,913,120.72 | 2,595,407,403.63 |
| Cash paid for goods purchased and services rendered | 985,895,534.46 | 686,517,835.07 |
| Cash paid to and on behalf of employees | 127,413,062.62 | 61,651,247.93 |
| Tax payments | 31,053,247.68 | 21,024,211.02 |
| Cash payments related to other operating activities | 1,414,912,983.81 | 1,482,289,208.78 |
| Sub-total of cash outflow from operating activities | 2,559,274,828.57 | 2,251,482,502.80 |
| Net cash flows from operating activities | 592,638,292.15 | 343,924,900.83 |
| II. Cash Flows from Investing Activities: | ||
| Cash from realization of investment | ||
| Cash received from the return on investments | 143,256,231.99 | 60,333,745.61 |
| Net cash received from the disposal of fixed assets, intangible assets, and other long-term assets | 48,336.80 | 430,375.00 |
| Net amount of cash received from the disposal of subsidiaries and other operating |
| organizations | ||
| Cash received related to other investing activities | 127,105,000.00 | |
| Sub-total of cash inflow from investing activities | 270,409,568.79 | 60,764,120.61 |
| Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets | 32,119,334.97 | 18,996,988.31 |
| Cash paid for investments | 665,600,000.00 | 6,200,000.00 |
| Net amount of cash paid for acquisition of subsidiaries and other operating organizations | ||
| Cash payments related to other investing activities | 50,000,000.00 | 127,105,000.00 |
| Sub-total of cash outflow from investing activities | 747,719,334.97 | 152,301,988.31 |
| Net cash flows from investing activities | -477,309,766.18 | -91,537,867.70 |
| III. Cash Flows from Financing Activities: | ||
| Cash received from capital contribution | 28,101,700.23 | 104,792,649.00 |
| Cash received from borrowings | ||
| Cash received related to other financing activities | 98,045,766.24 | |
| Sub-total of cash inflow from financing activities | 28,101,700.23 | 202,838,415.24 |
| Cash paid for repayments of borrowings | 352,600,000.00 | |
| Cash payment for interest expenses and distribution of dividends or profits | 97,014,306.99 | 41,327,992.18 |
| Cash payments related to other financing activities | 32,970,709.24 | 460,054.74 |
| Sub-total of cash outflow from financing activities | 129,985,016.23 | 394,388,046.92 |
| Net cash flows from financing activities | -101,883,316.00 | -191,549,631.68 |
| IV. Effect of Exchange Rate Changes on Cash and Cash Equivalents | 254,432.97 | 26,189.80 |
| V. Net Increase in Cash and Cash Equivalents | 13,699,642.94 | 60,863,591.25 |
| Plus: Opening balance of cash and cash equivalents | 156,151,560.82 | 95,287,969.57 |
| VI. Closing Balance of Cash and Cash Equivalents | 169,851,203.76 | 156,151,560.82 |
7. Consolidated statement of changes in owner’s equity
Amount of the current period
Unit: RMB
| Item | 2020 | ||||||||||||||
| Owner's equity attributable to the Parent Company | Equity of minority shareholders | Total owner’s equity | |||||||||||||
| Share capital | Other equity instrument | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General reserves | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 | ||||||||
| Plus: Alternation to accounting policies | |||||||||||||||
| Correction to previous errors | |||||||||||||||
| Business | |||||||||||||||
| combinations involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Beginning of the Year | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 | ||||||||
| III. Changes in the Period ("-" Indicates Decrease) | 2,595,804.00 | 146,275,088.48 | -8,311,737.71 | 8,263,675.41 | 799,695,311.59 | 965,141,617.19 | 965,141,617.19 | ||||||||
| i. Total comprehensive income | 905,889,081.41 | 905,889,081.41 | 905,889,081.41 | ||||||||||||
| ii. Capital contributed or decreased by owner | 2,595,804.00 | 146,275,088.48 | -8,311,737.71 | 157,182,630.19 | 157,182,630.19 | ||||||||||
| 1. Ordinary shares | 3,610,416.00 | 34,809,136.79 | 38,419,552.79 | 38,419,552.79 |
| contributed by owners | |||||||||||||||
| 2. Capital contributed by owners of other equity instruments | |||||||||||||||
| 3. Share based payments recognized as owner's equity | -1,014,612.00 | 111,465,951.69 | -35,992,459.47 | 146,443,799.16 | 146,443,799.16 | ||||||||||
| 4. Others | 27,680,721.76 | -27,680,721.76 | -27,680,721.76 | ||||||||||||
| iii. Profit distribution | 8,263,675.41 | -106,193,769.82 | -97,930,094.41 | -97,930,094.41 | |||||||||||
| 1. Appropriation of surplus reserves | 8,263,675.41 | -8,263,675.41 | |||||||||||||
| 2. Appropriation of general risk reserves | |||||||||||||||
| 3. Distribution | -97,930,094.41 | -97,930,094.41 | -97,930,094.41 |
| to owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| iv. Interior balance from owner's equity | |||||||||||||||
| 1. Added capital (or share capital) from capital reserves | |||||||||||||||
| 2. Added capital (or share capital) from surplus reserves | |||||||||||||||
| 3. Compensation of loss with surplus reserves | |||||||||||||||
| 4. Retained earnings of carry-over of the defined benefit plan |
| 5. Retained earnings of carry-over of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| v. Special reserves | |||||||||||||||
| 1. Appropriation for the period | |||||||||||||||
| 2. Use for the period | |||||||||||||||
| vi. Others | |||||||||||||||
| IV. Closing Balance of the Period | 1,311,487,077.00 | 907,006,505.05 | 96,480,911.29 | 61,469,258.27 | 2,858,664,147.39 | 5,042,146,076.42 | 5,042,146,076.42 |
Amount of last period
Unit: RMB
| Item | 2019 | ||||||||||||||
| Owner's equity attributable to the Parent Company | Equity of minority shareholders | Total owner’s equity | |||||||||||||
| Share capital | Other equity instrument | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | General reserves | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 1,286,692,741.00 | 609,403,941.54 | 122,916,831.04 | 47,304,683.01 | 1,490,758,189.02 | 3,311,242,723.53 | 3,311,242,723.53 | ||||||||
| Plus: Alternation to accounting policies | |||||||||||||||
| Correction to previous errors | |||||||||||||||
| Business combinations involving | |||||||||||||||
| enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Beginning of the Year | 1,286,692,741.00 | 609,403,941.54 | 122,916,831.04 | 47,304,683.01 | 1,490,758,189.02 | 3,311,242,723.53 | 3,311,242,723.53 | ||||||||
| III. Changes in the Period ("-" Indicates Decrease) | 22,198,532.00 | 151,327,475.03 | -18,124,182.04 | 5,900,899.85 | 568,210,646.78 | 765,761,735.70 | 765,761,735.70 | ||||||||
| i. Total comprehensive income | 603,832,650.83 | 603,832,650.83 | 603,832,650.83 | ||||||||||||
| ii. Capital contributed or decreased by owner | 22,198,532.00 | 151,327,475.03 | -18,124,182.04 | 191,650,189.07 | 191,650,189.07 | ||||||||||
| 1. Ordinary shares contributed by owners | 22,467,200.00 | 82,325,449.00 | 104,792,649.00 | 104,792,649.00 |
| 2. Capital contributed by owners of other equity instruments | |||||||||||||||
| 3. Share based payments recognized as owner's equity | -268,668.00 | 69,002,026.03 | 76,457,365.31 | -7,724,007.28 | -7,724,007.28 | ||||||||||
| 4. Others | -94,581,547.35 | 94,581,547.35 | 94,581,547.35 | ||||||||||||
| iii. Profit distribution | 5,900,899.85 | -35,622,004.05 | -29,721,104.20 | -29,721,104.20 | |||||||||||
| 1. Appropriation of surplus reserves | 5,900,899.85 | -5,900,899.85 | |||||||||||||
| 2. Appropriation of general risk reserves | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -29,721,104.20 | -29,721,104.20 | -29,721,104.20 | ||||||||||||
| 4. Others |
| iv. Interior balance from owner's equity | |||||||||||||||
| 1. Added capital (or share capital) from capital reserves | |||||||||||||||
| 2. Added capital (or share capital) from surplus reserves | |||||||||||||||
| 3. Compensation of loss with surplus reserves | |||||||||||||||
| 4. Retained earnings of carry-over of the defined benefit plan | |||||||||||||||
| 5. Retained earnings of |
| carry-over of other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| v. Special reserves | |||||||||||||||
| 1. Appropriation for the period | |||||||||||||||
| 2. Use for the period | |||||||||||||||
| vi. Others | |||||||||||||||
| IV. Closing Balance of the Period | 1,308,891,273.00 | 760,731,416.57 | 104,792,649.00 | 53,205,582.86 | 2,058,968,835.80 | 4,077,004,459.23 | 4,077,004,459.23 |
8.Statement of changes in owner’s equity of the Parent Company
Amount of the current period
Unit: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner's equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 | ||||||
| Plus: Alternation to accounting policies | ||||||||||||
| Correction to previous errors | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Beginning of the Year | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 2,595,804.00 | 141,451,481.81 | -8,311,737.71 | 8,263,675.41 | -23,557,015.72 | 137,065,683.21 | ||||||
| i. Total comprehensive income | 82,636,754.10 | 82,636,754.10 | ||||||||||
| ii. Capital contributed or decreased by owner | 2,595,804.00 | 141,451,481.81 | -8,311,737.71 | 152,359,023.52 | ||||||||
| 1. Ordinary shares contributed by owners | 3,610,416.00 | 34,809,136.79 | 38,419,552.79 | |||||||||
| 2. Capital contributed by owners of other equity instruments | ||||||||||||
| 3. Share based payments recognized as owner's equity | -1,014,612.00 | 106,642,345.02 | -35,992,459.47 | 141,620,192.49 | ||||||||
| 4. Others | 27,680,721.76 | -27,680,721.76 | ||||||||||
| iii. Profit distribution | 8,263,675.41 | -106,193,769.82 | -97,930,094.41 | |||||||||
| 1. Appropriation of surplus reserves | 8,263,675.41 | -8,263,675.41 | ||||||||||
| 2. Distribution to owners (or shareholders) | -97,930,094.41 | -97,930,094.41 | ||||||||||
| 3. Others | ||||||||||||
| iv. Interior balance from owner's equity | ||||||||||||
| 1. Added capital (or share capital) from capital reserves | ||||||||||||
| 2. Added capital (or share capital) from surplus reserves | ||||||||||||
| 3. Compensation of loss with surplus reserves | ||||||||||||
| 4. Retained earnings of carry-over of the defined benefit plan | ||||||||||||
| 5. Retained earnings of carry-over of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| v. Special reserves | ||||||||||||
| 1. Appropriation for the period | ||||||||||||
| 2. Use for the period | ||||||||||||
| vi. Others |
| IV. Closing Balance of the Period | 1,311,487,077.00 | 831,693,206.19 | 96,480,911.29 | 61,347,923.99 | 157,409,974.07 | 2,265,457,269.96 |
Amount of last period
Unit: RMB
| Item | 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Retained earnings | Others | Total owner's equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 1,286,692,741.00 | 545,219,407.25 | 122,916,831.04 | 47,183,348.73 | 157,579,995.32 | 1,913,758,661.26 | ||||||
| Plus: Alternation to accounting policies | ||||||||||||
| Correction to previous errors | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Beginning of the Year | 1,286,692,741.00 | 545,219,407.25 | 122,916,831.04 | 47,183,348.73 | 157,579,995.32 | 1,913,758,661.26 | ||||||
| III. Changes in the Period ("-" Indicates Decrease) | 22,198,532.00 | 145,022,317.13 | -18,124,182.04 | 5,900,899.85 | 23,386,994.47 | 214,632,925.49 | ||||||
| i. Total comprehensive income | 59,008,998.52 | 59,008,998.52 | ||||||||||
| ii. Capital contributed or decreased by owner | 22,198,532.00 | 145,022,317.13 | -18,124,182.04 | 185,345,031.17 | ||||||||
| 1. Ordinary shares contributed by owners | 22,467,200.00 | 82,325,449.00 | 104,792,649.00 | |||||||||
| 2. Capital contributed by owners of other equity instruments | ||||||||||||
| 3. Share based payments recognized as owner's equity | -268,668.00 | 62,696,868.13 | 76,457,365.31 | -14,029,165.18 | ||||||||
| 4. Others | -94,581,547.35 | 94,581,547.35 | ||||||||||
| iii. Profit distribution | 5,900,899.85 | -35,622,004.05 | -29,721,104.20 | |||||||||
| 1. Appropriation of surplus reserves | 5,900,899.85 | -5,900,899.85 | ||||||||||
| 2. Distribution to owners (or shareholders) | -29,721,104.20 | -29,721,104.20 | ||||||||||
| 3. Others | ||||||||||||
| iv. Interior balance from owner's equity | ||||||||||||
| 1. Added capital (or share capital) from capital reserves | ||||||||||||
| 2. Added capital (or share capital) from surplus reserves | ||||||||||||
| 3. Compensation of loss with surplus reserves | ||||||||||||
| 4. Retained earnings of carry-over of the defined benefit plan | ||||||||||||
| 5. Retained earnings of carry-over of other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| v. Special reserves | ||||||||||||
| 1. Appropriation for the period |
| 2. Use for the period | ||||||||||||
| vi. Others | ||||||||||||
| IV. Closing Balance of the Period | 1,308,891,273.00 | 690,241,724.38 | 104,792,649.00 | 53,084,248.58 | 180,966,989.79 | 2,128,391,586.75 |
III. Basic Information of the Company
1. Development history of the Company
C&S Paper Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited company restructured fromZhongshan Zhongshun Paper Manufacturing Co., Ltd., with all shareholders of the original company as its initiators.The Company has obtained a business license of enterprise legal person with the registration number of442000400013713 issued by Guangdong Province Administration for Industry and Commerce on December 31,2008.In November 2010, under the approval of the Notice on the Approval of the Initial Public Offering of Shares of C&SPaper Co., Ltd. (CSRC Xu Ke [2010] No. 1539) issued by China Securities Regulatory Commission, the Companyissued 40,000,000 RMB-denominated ordinary shares (A shares) to the public, each having a par value of RMB1.The share capital after the public offering was RMB160,000,000.00.On May 22, 2012, the Company held the 2011 Annual General Meeting of Shareholders and approved the Proposalon the 2011 Profit Distribution Plan, applying for an increase of registered capital by RMB48,000,000.00. With thebase number of 160,000,000.00 total shares as at the end of 2011, the Company planned to convert capital reserveinto new shares on the basis of three shares for every ten existing shares. The registered capital after the change wasRMB208,000,000.00.On June 3, 2013, the Company held the 2012 Annual General Meeting of Shareholders and approved the Proposalon the 2012 Profit Distribution Plan, applying for an increase of registered capital by RMB104,000,000.00. Withthe base number of 208,000,000.00 total shares as at the end of 2012, the Company planned to convert capitalreserve into new shares on the basis of five shares for every ten existing shares. The registered capital after thechange was RMB312,000,000.00.On May 8, 2014, the Company held the 2013 Annual General Meeting of Shareholders and approved the Proposalon the 2013 Profit Distribution Plan, applying for an increase of registered capital by RMB93,600,000.00. With thebase number of 312,000,000.00 total shares as at the end of 2013, the Company planned to convert capital reserveinto new shares on the basis of three shares for every ten existing shares. The registered capital after the change wasRMB405,600,000.00.On May 8, 2015, the Company held the 2014 Annual General Meeting of Shareholders and approved the Proposalon the 2014 Profit Distribution Plan, applying for an increase of registered capital by RMB81,120,000.00. With thebase number of 405,600,000.00 total shares as at the end of 2014, the Company planned to convert capital reserveinto new shares on the basis of two shares for every ten existing shares. The registered capital after the change wasRMB486,720,000.00.Pursuant to the resolutions of the 7th meeting of the third session of the Board of Directors, the 9th meeting of thethird session of the Board of Directors, the third extraordinary general meeting of 2015 and the 10th meeting of the
third session of the Board of Directors, the Company planned to grant 17,133,000.00 restricted RMB-denominatedordinary shares (A shares) to 242 incentive recipients including Liu Jinfeng through private placement, with a parvalue of RMB1 per share and a grant price of RMB4.25 per share. Upon completion, 16,957,000.00 restrictedRMB-denominated ordinary shares (A shares) were actually granted to a total of 199 incentive recipients with 43employees withdrawing from the plan. The registered capital after the change was RMB503,677,000.00.Pursuant to the resolutions of the third extraordinary general meeting of 2015, the 11th meeting of the third sessionof the Board of Directors and the 9th meeting of the third session of the Board of Supervisors, the Company plannedto grant 1,867,000.00 restricted RMB-denominated ordinary shares (A shares) to 68 incentive recipients includingDuan Xianglei through private placement, with a par value of RMB1 per share and a grant price of RMB4.80 pershare. Upon completion, 1,847,000.00 restricted RMB-denominated ordinary shares (A shares) were granted to atotal of 54 incentive recipients with 14 employees withdrawing from the plan. The registered capital after thechange was RMB505,524,000.00.On October 24, 2016, at the 15th meeting of the third session of the Board of Directors, Proposal on theRepurchase and Deregistration of Partial Restricted Stocks under the Company's Restricted Stock Incentive Planand Proposal on Changing the Registered Capital and Amending the Articles of Association of the Company werereviewed and approved. Pursuant to the resolution of the meeting of the Board of Directors, the Company appliedfor the repurchase and deregistration of 266,000.00 restricted stocks. Among them, the repurchase price ofrestricted stocks awarded in the first grant was RMB4.25 per share, the repurchase price of reserved restrictedstocks was RMB4.80 per share, and the registered capital after the change was RMB505,258,000.00.On May 10, 2017, the Company held the 2016 Annual General Meeting of Shareholders and approved theProposal on the 2016 Profit Distribution Plan, applying for an increase of registered capital byRMB252,629,000.00. With the base number of 505,258,000.00 total shares as at the end of 2016, the Companyplanned to convert capital reserve into new shares on the basis of five shares for every ten existing shares. Theregistered capital after the change was RMB757,887,000.00.Pursuant to the resolutions of the 22nd and 24th meeting of the third session of the Board of Directors in 2017, assome incentive recipients were disqualified to hold incentive stocks after leaving the Company or failing theappraisal, the Company planned to repurchase and deregister the restricted stocks of 35 incentive recipients. Amongthem, 25 incentive recipients were granted in the first period with 382,462.50 restricted stocks and ten incentiverecipients were granted with 39,997.50 reserved restricted stocks. A total of 422,460.00 shares were repurchasedand deregistered. The registered capital after the reduction was RMB757,464,540.00.On May 8, 2018, the Company held the 2017 Annual General Meeting of Shareholders and approved the Proposalon the 2017 Profit Distribution Plan, applying for an increase of registered capital by RMB530,225,178.00. Withthe base number of 757,464,540.00 total shares, the Company planned to convert capital reserve into new shares onthe basis of seven shares for every ten existing shares. The registered capital after the change was
RMB1,287,689,718.00.Pursuant to the resolution of the 5th meeting of the fourth session of the Board of Directors in 2018, as someincentive recipients were disqualified to hold incentive stocks after leaving the Company or failing the appraisal atthe second unlocking period under the Restricted Stock Incentive Plan, the Company planned to repurchase andderegister the restricted stocks of 46 incentive recipients. Among them, 38 incentive recipients were granted in thefirst grant with 985,426.00 restricted stocks and eight incentive recipients were granted with 11,551.00 reservedrestricted stocks. A total of 996,977.00 shares were repurchased and deregistered. The registered capital after thereduction was RMB1,286,692,741.00.Pursuant to the resolutions of the 9th meeting of the fourth session of the Board of Directors and the firstextraordinary general meeting in 2019, the Company planned to grant 21,717,500.00 restricted RMB-denominatedordinary shares (A shares) to 671 incentive recipients including Dong Ye through private placement, with a parvalue of RMB1 per share. Upon completion, 19,675,500.00 restricted RMB-denominated ordinary shares (A shares)were granted to a total of 569 incentive recipients at the price of RMB4.33, with 102 employees withdrawing fromthe plan. The registered capital after the change was RMB1,306,368,241.00.Pursuant to the resolutions of the 12th and 13th meeting of the fourth session of the Board of Directors, as someincentive recipients were disqualified to hold incentive stocks after leaving the Company or failing the appraisal, theCompany planned to repurchase and deregister the restricted stocks of 32 incentive recipients. Among them,211,803.00 restricted stocks were granted to 22 incentive recipients in the first grant and 56,865.00 reservedrestricted stocks were granted to ten incentive recipients. A total of 268,668.00 shares were repurchased andderegistered.Pursuant to the Proposal on Granting Reserved Stock Options and Restricted Stocks to Incentive Recipientsreviewed and approved at the 16th meeting of the fourth session of the Board of Directors in 2019, the Companyplanned to grant 64 incentive recipients with 3,500,000.00 restricted stocks with a grant price of RMB7.02 pershare. The incentive plan actually granted 46 incentive recipients with 2,791,700.00 restricted ordinary shares as18 incentive recipients did not subscribe for the restricted stocks due to resignation or voluntary abandonment and13 incentive recipients did not fully pay for the subscribed restricted stocks. The registered capital after the grantwas RMB1,308,891,273.00.The 23rd meeting of the fourth session of the Board of Directors and the second extraordinary general meeting of2020 reviewed and approved the Proposal on the Repurchase and Deregistration of Partial Restricted StocksAwarded in the First Grant under the Company's 2018 Stock Option and Restricted Stock Incentive Plan. Pursuantto the proposal, as some incentive recipients were disqualified to hold incentive stocks after leaving the Company orfailing the appraisal or some recipients passed the appraisal but did not attain a full score and hence could notunlock all the stocks, the Company decided to repurchase and deregister total 802,722 restricted shares of 241incentive recipients. The registered capital after the reduction was RMB1,308,088,551.00.
The 28th meeting of the fourth session of the Board of Directors and the fifth extraordinary general meeting of2020 reviewed and approved the Proposal on the Repurchase and Deregistration of Partial Reserved RestrictedStocks under the Company's 2018 Stock Option and Restricted Stock Incentive Plan. Pursuant to the proposal, assome incentive recipients were disqualified to hold incentive stocks after leaving the Company or failing theappraisal or some recipients passed the appraisal but did not attain a full score and hence could not unlock all thestocks, the Company decided to repurchase and deregister total 211,890 restricted shares of 24 incentive recipients.The registered capital after the reduction was RMB1,307,876,661.00.At the 23rd meeting of the fourth session of the Board of Directors, the Proposal on Achieving the ExerciseConditions of the First Exercise Period for Stock Options Awarded in the First Grant under the Company's 2018Stock Option and Restricted Stock Incentive Plan was reviewed and approved. The proposal agreed that theexercise conditions under the first exercise period for the stock options awarded in the first grant had been met asset out in the 2018 Stock Option and Restricted Stock Incentive Plan (Draft), and the exercise method wasindependent exercise. The number of incentive recipients in conformity with the exercise conditions reached 2,522and the number of stock options that had met exercise conditions was 3,431,505.00. The exercise period was fromJune 10, 2020 to February 26, 2021. At the 28th meeting of the fourth session of the Board of Directors, theProposal on Achieving the Exercise Conditions of the First Exercise Period for Reserved Stock Options under theCompany's 2018 Stock Option and Restricted Stock Incentive Plan was reviewed and approved. The proposalagreed that the exercise conditions under the first exercise period for the reserved stock options had been met asset out in the 2018 Stock Option and Restricted Stock Incentive Plan (Draft), and the exercise method wasindependent exercise. The number of incentive recipients in conformity with the exercise conditions reached 88 andthe number of stock options that have met exercise conditions was 640,389. The exercise period was fromNovember 17, 2020 to September 10, 2021. As of December 31, 2020, the incentive recipients who had met theabove exercise conditions have successively begun to exercise their rights, and a total of 3,610,416 shares havebeen subscribed.As at December 31, 2020, the Company has had a registered capital of RMB1,311,487,077.00 and a share capitalof RMB1,311,487,077.00.
2. Registered address, form of organization, and headquarters of the Company
Form of organization: Company limited by sharesRegistered address: Shenglong Village, Tanbei, Dongsheng Town, Zhongshan CityAddress of the headquarters the Company: 136 Caihong Avenue, West District, Zhongshan City
3. Business nature and main business activities of the Company
C&S Paper Co., Ltd. and its subsidiaries (hereafter generally referred to as “the Company”) are in the householdpaper industry. The Company mainly engages in the following: “General items: paper product manufacturing;paper product sales; Internet sales (excluding the sales of commodities requiring a permit); sales of daily
necessities; sales of personal hygiene products; sales of household products; sales of sanitary products anddisposable medical products; retail of cosmetics; wholesale of cosmetics; sales of knitwear; sales of plasticproducts; sales of metal products; sales of rubber products; manufacture of daily-sue ceramic products; wholesaleof kitchen utensils and daily groceries; sales of Class I medical devices; manufacture of Class I medical devices;sales of Class II medical devices; sales of disinfectants (excluding hazardous chemicals). (The company may carryout business operations independently according to the law based on the business license, except for items thatmust be licensed according to the law). Licensed items: import and export of goods or technologies (excluding theimport and export of goods and technologies prohibited by the State or involving administrative approval);manufacture of Class II medical devices; operation of Class III medical devices; manufacture of Class III medicaldevices. (For items that must be approved in accordance with the law, the company may carry out businessoperations upon approval by competent departments, and the specific business items are subject to the approvaldocument or the permit issued by relevant department.) (The above business scope involves import and export ofgoods and technologies, business operation of Class II and Class III medical devices, and manufacture of medicaldevices.) (The above items do not involve special management measures for the access of foreign investment).”
4. Actual controller of the Company
The actual controllers of the Company are Deng Yingzhong, Deng Guanbiao, and Deng Guanjie (DengYingzhong is the other two’s father).
5. Approver for the issue of the financial statements and date of approval
The financial statements were approved for issue by the Board of Directors of the Company on April 27, 2021.
6. Scope of the consolidation of financial statements
As of December 31, 2020, the Company has 19 subsidiaries which are included in the consolidated scope, asdetailed in “Note IX. Equities in Other Entities”. Compared with last year, one subsidiary has been newly addedinto the consolidated scope this year. For details, see “Note VIII. Changes in Consolidated Scope”.IV. Preparation Basis for Financial Statements
1. Basis of preparation
The financial statements of the Company have been prepared on a going concern basis based on actualtransactions and events and according to the Accounting Standards for Business Enterprises - Basic Standardspromulgated by the Ministry of Finance (MOF No. 33 Document and No. 76 Revision), the 42 accountingstandards, Guidelines for the Application of the Accounting Standards for Business Enterprises, interpretation tothe accounting standards for business enterprises and other relevant regulations that are successively promulgatedon or after February 15, 2006 (hereinafter collectively referred to as "Accounting Standards for BusinessEnterprises"), and rules set out in No. 15 Preparation and Reporting Rules of Information Disclosure of Public
Offering Companies - General Rules for Financial Statements (2014 Revision) issued by China SecuritiesRegulatory Commission based on actual transactions and events.In accordance with the relevant rules of Accounting Standards for Business Enterprises, the financial accountingof the Company is based on accrual basis. Apart from some financial tools, the accounting measurement of thefinancial statements is based on historical cost method. Provision for impairment of asset is set aside if it isrecognized.
2. Going concern
The Company shall be a going concern for at least 12 months following the end of the reporting period. There areno major events that will affect the Company’s operational ability; therefore the assumption on which thefinancial statements are based is reasonable.V. Significant Accounting Policies and Accounting EstimatesSpecific accounting policies and accounting estimates:
C&S Paper Co., Ltd. and all its subsidiaries have set out several specific accounting policies and accountingestimates for transactions and events with relation to the recognition of incomes and income taxes in accordancewith the Accounting Standards for Business Enterprises and their own operational characteristics. Please refer to“Note V (39) Revenue” for details. As for explanations of significant accounting judgments and estimates madeby the management, please refer to “Note V (44) significant changes of accounting policies and accountingestimates”.
1. Statement of compliance with the accounting standards for business enterprisesThe financial statements of the Company conform to the requirements set out in the Accounting Standards forBusiness Enterprises. The statements truthfully and completely reflect the financial status, operating results, cashflow, and other relevant information of the Company. In addition, the financial statements of the Company arealso in accordance with disclosure requirements for financial statements and notes in No. 15 Preparation andReporting Rules of Information Disclosure of Public Offering Companies - General Rules for FinancialStatements of the China Securities Regulatory Commission (2014 Revision) in all material aspects
2. Accounting period
The accounting year of the Company is from January 1 to December 31 of each calendar year.
3. Operating cycle
The operating cycle of the Company normally refers to the periods during which the Company purchases assetsfor processing and then gets cash or cash equivalents from the processed items. Normally, the operating cycle of acompany is shorter than a year. The Company sets 12 months as a full operating cycle and uses the 12-monthperiod as a standard for the liquidity of assets and liabilities.
4. Standard currency for accounting
RMB is the main currency in the main economic environments in which the Company and its domesticsubsidiaries operate. Therefore, the Company and its subsidiaries use RMB as the standard currency forbookkeeping. The currency for accounting used in the Company’s financial statements is RMB.
5. Accounting treatment measures of business combinations involving enterprises under common controland business combinations involving enterprises not under common controlBusiness combinations refer to the combination of two or more independent enterprises to form a reporting entityof transactions or events. Business combination can be classified as business combinations involving enterprisesunder common control and business combinations involving enterprises not under common control.
(1) Business combinations involving enterprises under common control
Business combinations under common control means enterprises involved in the business combination are underultimate control by one party or the same multi-parties before and after combination, and such control is nottemporary. For business combinations under common control, those who obtain control of enterprises involved inthe business combination on the combination date are the acquirer while other enterprises involved in the businesscombination are the acquiree. Combination date is the date that the combining party actually obtains control of thecombined party.Assets and liabilities that the acquirer gets from the acquiree are calculated and measured at the book values onthe combination date. If there are differences between the book values of the net assets the acquirer receives andthe book values of the combination consideration it pays (or the face values of the issued shares), the differenceswill be used to adjust capital reserves (share premium). Where capital reserves (share premium) are insufficient tooffset, retained earnings shall be adjusted.All direct expenses related to the business combinations paid by the acquirer shall be included in current profitsand losses upon occurrence.
(2) Business combinations involving enterprises not under common control
Business combinations not under common control means enterprises involved in the business combination are not
under ultimate control by one party or the same multi-parties before and after combination. For businesscombinations not under common control, those who obtain control of enterprises involved in the businesscombination on the acquisition date are the acquirer, while other enterprises involved in the business combinationare the acquiree. Acquisition date is the date that the acquirer actually obtains control of the acquiree.For business combinations not under common control, the costs of combination include the assets the acquirerpays, liabilities the acquirer bears, and the fair value of the equity securities issued on the date of combination forthe acquisition of control over the acquiree. The costs of auditing, legal services, evaluation consulting, otherintermediary expenses and other management fees incurred for business combination shall be included in currentprofits and losses. The transaction costs of the equity securities and debt securities issued by the acquirer shall beincluded in the initially confirmed amounts of equity securities and debt securities. The contingent considerationinvolved shall be included in the costs of business combination based on its fair value at the acquisition date. If,within 12 months after the acquisition, there is new or further evidence for conditions that have already existed onthe acquisition date and the contingent consideration shall be re-adjusted, the combination goodwill shall beadjusted accordingly. The acquirer’s costs of business combinations and its identifiable net assets obtained frombusiness combinations shall be assessed at the fair values on the acquisition date. If the costs of businesscombinations are higher than the identifiable net assets of the acquiree on the acquisition date, the gap betweenthem shall be confirmed as goodwill. If the costs of business combinations are lower than the fair values of theidentifiable net assets of the acquiree on the acquisition date, the fair values of identifiable assets, liabilities andcontinent liabilities as well as the measurement of combination costs shall be reassessed; if, upon reassessment,the business combination costs are still lower than the fair values of the identifiable net assets of the acquiree, thedifference shall be included in profits and losses of the current period.If the deductible temporary differences the acquirer gets from the acquiree are not eligible to be confirmed asdeferred tax asset on the acquisition date, and within 12 months of the acquisition, there are new or furtherevidence for the conditions that have already existed on the acquisition date that the economic profits brought bythe deductible temporary differences of the acquiree could be achieved, such differences shall be confirmed asdeferred tax asset. At the same time, the goodwill shall be reduced. Where the goodwill is insufficient to bededucted, the gap between them shall be included in current profits and losses. Apart from the aforementionedsituations, all deductible temporary differences confirmed to be relevant to the business combination shall berecorded in current profits and losses.For business combinations not under common control that are achieved through multiple steps, whether they canbe regarded as package deals shall be judged in accordance with Notice No.5 of the Interpretation of AccountingStandards for Business Enterprises of the Ministry of Finance (C.K. [2012] No.19), and the standards of “packagedeals” set out in Article 51 of the Accounting Standard for Business Enterprises No. 33 – Consolidated FinancialStatements (please refer to Note V (6) "Methods for preparation of consolidated financial statements" (2)). In the
event that the combination is regarded as "package deals", accounting treatment shall be done by referring to thedescriptions in previous paragraphs of this section and “Note V (22) Long-term equity investments" herein; if not,accounting treatment shall be done by distinguishing individual financial statements from consolidated financialstatements:
In individual financial statements, the initial investment costs shall be the sum of the book value of the equityinvestment of the acquiree held before the acquisition date and the new investment costs on the acquisition date; ifother comprehensive income is involved in the equities of the acquiree before the acquisition date, accountingprocessing shall be done for the comprehensive income related to this investment by adopting the same basis fordirectly disposing of relevant assets or liabilities of the acquiree during the disposal of this investment (that is,except for the corresponding shares of the changes caused by re-measurement of the net liabilities or net assets ofthe defined benefit plan by the acquiree, which are accounted by the equity method, others shall be transferred tothe return on investment of the current period).In consolidated financial statements, the equities of the acquiree held before the acquisition date shall bere-measured at the fair value of the equities on the acquisition date, and the difference between the fair value andthe book value shall be recognized as the return on investment of the current period; if other comprehensiveincome is involved in the equities of the acquiree before the acquisition date, accounting processing shall be donefor the comprehensive income related to this investment by adopting the same basis for directly disposing ofrelevant assets or liabilities of the acquiree (that is, except for the corresponding shares of the changes caused byre-measurement of the net liabilities or net assets of the defined benefit plan by the acquiree, which are accountedby the equity method, others shall be transferred to the return on investment of the current period).
6. Methods for preparation of consolidated financial statements
(1) Principles of determining the scope of consolidated financial statements
The scope of consolidation of consolidated financial statements shall be subject to the basis of control. Controlrefers to the power the investor owns against the investee, which allows the investor to enjoy the variable returnby attending relevant activities held by the investee, and to be capable of using such power to affect the amount ofreturn. The scope of consolidation is the Company and all of its subsidiaries. Subsidiaries refer to entitiescontrolled by the Company.The Company shall reassess whether it controls an investee if facts and circumstances indicate that there arechanges to the relevant elements of control as defined above.
(2) Methods for preparation of consolidated financial statements
The Company shall include the subsidiaries in the scope of consolidation from the date it acquires the actualcontrol over the net assets and the decision-making of production and operations of such subsidiaries; accordingly,the Company shall terminate including them in the scope of consolidation from the date it loses the actual control.
In terms of subsidiaries already disposed of, the operating results and cash flows before the disposal date havebeen included in the consolidated income statements and the consolidated cash flow statements appropriately; asfor subsidiaries disposed in the current period, the opening balance in the consolidated balance sheet shall not beadjusted. In case of subsidiaries added through business combinations not under the same control, the operatingresults and cash flows after the acquisition date have been included in the consolidated income statements and theconsolidated cash flow statements appropriately, and the opening and comparative balance in the consolidatedbalance sheet shall not be adjusted. In case of subsidiaries added through business combinations under the samecontrol among which the Company absorbs the combined party, the operating results and cash flows of thecombined party from the beginning of the period in which the combination happens to the combination date havebeen included in the consolidated income statements and the consolidated cash flow statements appropriately, andthe comparative balance in the consolidated balance sheet shall be adjusted simultaneously.In case of inconsistencies in the accounting policies or periods between subsidiaries and the Company duringpreparation of consolidated financial statements, financial statements of subsidiaries shall be adjusted according tothe accounting policies and periods adopted by the Company. For subsidiaries acquired by business combinationsnot under the same control, their financial statements shall be adjusted based on the fair value of the identifiablenet assets on the acquisition date.All major business transaction balance, transactions, and unrealized profit of the Company shall be offset duringpreparation of consolidated financial statements.Shareholders' equities of subsidiaries and the part of the net profit and loss of the current period not attributable tothe Company shall be presented separately under the shareholders' equities and the net profit in the consolidatedfinancial statements as equities of minority shareholders and minority shareholders' profits and losses. Shares ofequities of minority shareholders in the net profit and loss of the current period of subsidiaries shall be presentedunder the "minority shareholders' profits and losses" in the consolidated income statement. If the loss of asubsidiary which is shared by its minority shareholders exceeds the minority shareholders' share in the openingbalance of the subsidiary, the minority interest shall be reduced.If the Parent Company loses control of a subsidiary due to partial disposal of equity investment or other reasons, itshall re-measure the remaining equity at fair value on the date of loss of control. The sum of considerationobtained from equity disposal and fair value of the remaining equity, minus the difference between the ParentCompany's share of the subsidiary's net assets that is continuously calculated from the acquisition date, shall berecognized as investment income for the reporting period when the loss of control takes place. Accountingprocessing shall be done for the other comprehensive income related to this investment in the subsidiary's equitiesby adopting the same basis for directly disposing of relevant assets or liabilities of the acquiree during the loss ofcontrol (that is, except for the changes caused by re-measurement of the net liabilities or net assets of the definedbenefit plan by the previous subsidiary, others shall be transferred to the return on investment of the current
period). After that, subsequent measurement shall be done for the remaining equity of this part as per relevantprovisions in the Accounting Standards for Enterprises No. 2 - Long-term Equity Investment or the AccountingStandards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments. See "Note V
(22)" or "Note V (10)" for details.
If the Company disposes of investments in a subsidiary's equities by steps via transactions until it loses control, itshall check whether these transactions from disposal of the investments in the subsidiary's equities to the loss ofcontrol are package deals. If the terms, conditions, and economic effects of transactions on disposing of equityinvestment in the subsidiary conform to one or more of the following circumstances, that means these multipletransactions should be treated as package deals in accounting processing: 1) Those transactions are reached at thesame time or after taking into consideration the influence of each other; 2) those transactions together produce acomplete commercial outcome; 3) the occurrence of one transaction depends on the occurrence of at least oneother transaction; 4) one transaction alone does not seem to be economical, but all those transactions areeconomical when are considered as a whole. In terms of transactions that are not package deals, accountingprocessing shall be done for each transaction following the principles applicable to the "partial disposal oflong-term equity investment in a subsidiary without loss of control" (see 22 Long-term equity investments (2) 4)under Note V for details) or the "loss of control over a subsidiary due to partial disposal of equity investment orother reasons" (see the previous paragraph for details). If those transactions are package deals, each transactionshall be treated as a transaction that results in loss of control of the subsidiary in accounting processing. However,the difference between each disposal price before loss of control and the Parent Company's share of thesubsidiary's net assets corresponding to the disposal investment shall be recognized as other comprehensiveincome in the consolidated financial statements and, upon loss of control, transferred to the profit and loss of thecurrent reporting period.
7. Classification of joint operation arrangements and accounting treatment methods for joint operationsNone
8. Criteria for recognition of cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits that can be used for payment at any time, and short-term(due within three months from the acquisition date) investment held by the Company with high liquidity, easy toconvert to cash in a known amount, and small risk of value changes.
9. Translation of transactions and financial statements denominated in foreign currencies
(1) Methods for translation of transactions denominated in foreign currencies
At the initial recognition of foreign currency transactions of the Company, foreign currency will be translated intothe amount of standard currency for accounting at the spot exchange rate or its approximate exchange rate on thetransaction date. However, the business of exchange of foreign currencies or transactions related to the exchangeof foreign currencies, foreign currency will be translated into the amount of standard currency for accounting atthe exchange rate actually adopted.
(2) Methods for translation of monetary and non-monetary items in foreign currenciesOn the balance sheet date, the foreign currency monetary items are translated at the spot exchange rate on thatdate. Exchange difference resulting from the difference between the spot exchange rate on the balance sheet dateand that at the initial recognition or on the previous balance sheet date shall be recognized as the profit and loss ofthe current period.Non-monetary items that are measured at historical cost in foreign currencies shall still be converted at the spotexchange rate on the transaction date with the amount of standard currency for accounting unchanged.Non-monetary items that are measured at fair value in foreign currencies are translated using the foreign exchangerate at the date the fair value is recognized. The difference between the amount of standard currency foraccounting after translation and the original amount of the standard currency for accounting shall be treated as achange in fair value (including the change in the exchange rate) and recognized as the profit and loss of thecurrent period or other comprehensive income.
(3) Methods for translation of foreign-currency financial statements
Foreign-currency financial statements of overseas operations shall be translated into RMB financial statements bythe following methods: The assets and liabilities in the balance sheet shall be converted at the spot exchange rateon the balance sheet date; except "undistributed profits", all the other owner's equity items are converted at thespot exchange rate at the time of occurrence. Income and expense items in the income statement shall betranslated using the foreign exchange rates ruling at the dates of the transactions. Difference resulting fromtranslation of foreign-currency financial statements by the above methods shall be recognized as othercomprehensive income. Translation of comparative financial statements shall be subject to the above provisions.
10. Financial instruments
When the Company becomes a party to a financial instrument contract, the financial instrument is confirmed to beeither financial assets or financial liabilities.
(1) Classification, recognition, and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics offinancial assets, the Company classified financial assets into the following categories: financial assets measured atthe amortized cost, financial assets measured at fair value through other comprehensive income and financialassets measured at fair value through profit and loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair valuethrough profit and loss of the current period, transaction costs are directly included in profit and loss of the currentperiod. For other types of financial assets, related transaction costs are included in their initial recognized amounts.In terms of the accounts receivable or notes receivable arising from selling products or providing labor servicewithout or not considering major financing component, the Company shall regard the expected considerationamount that it has rights to charge as the initial recognition amount.
1) Financial assets measured at amortized cost
For the business model where the Company manages the financial assets carried at amortized cost, the Companyaims to charge the contract cash flows, and the characteristics of the contract cash flows of this kind of financialassets are consistent with the basic lending arrangements. That is, cash flows generated on specified dates aresolely payments of principal and interest on the principal amount outstanding. This kind of financial assets aresubsequently measured at amortized cost using the effective interest method. Gain or loss arising fromamortization or impairment is recognized in profit and loss of the current period.
2) Financial assets measured at fair value through other comprehensive income
The business model for the Company to manage this type of financial assets aims at both obtaining the contractcash flows and selling the financial assets, and the characteristics of the contract cash flows of this kind offinancial assets are consistent with the basic lending arrangements. The Company measures this kind of financialassets at fair value through other comprehensive income, but recognizes the impairment losses or gains, exchangeprofit and loss, and interest income calculated by the effective interest method as the profit and loss of the currentperiod.Additionally, the Company designates some non-tradable equity instruments as financial assets at fair valuethrough other comprehensive income. The Company recognizes relevant dividend income from such financialassets as the profit and loss of the current period, and changes in fair value as other comprehensive income. Whensuch financial assets are derecognized, the accumulated gains or losses previously recognized as othercomprehensive income shall be transferred from other comprehensive income to retained earnings and notrecognized as the profit and loss of the current period.
3) Financial assets measured at fair value through profit and loss of the current periodAll financial assets other than the other two preceding types are classified as financial assets measured at fairvalue through profit and loss of the current period. Moreover, at initial recognition, to eliminate or significantlyreduce accounting mismatches, the Company may designate some financial assets as financial assets measured atfair value through profit and loss of the current period. Such financial assets shall be measured at fair value, andchanges in fair value are recognized as the profit and loss of the current period.
(2) Classification, recognition, and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities measured at fair value through
profit or loss and other financial liabilities. For financial liabilities at fair value through profit and loss of thecurrent period, transaction costs are directly included in profit and loss of the current period. For other types offinancial liabilities, related transaction costs are included in their initial recognized amounts.
1) Financial liabilities measured at fair value through profit and loss of the current periodFinancial liabilities measured at fair value through profit and loss of the current period include tradable financialliabilities (including derivatives belonging to financial liabilities) and financial liabilities designated to bemeasured at fair value through profit and loss of the current period at initial recognition.Tradable financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fairvalue, and changes in fair value -- except for those related to hedging accounting -- are recognized as profit andloss of the current period.For those that are designated as financial liabilities measured at fair value through profit or loss, the changes infair value resulting from changes in the credit risk of the Company shall be recognized as other comprehensiveincome; besides, when such liabilities are derecognized, the amount of accumulative changes in fair valueresulting from credit risk changes that are recognized as other comprehensive income shall be transferred toretained earnings. Other changes in fair value shall be recognized as the profit and loss of the current period. If thetreatment of the credit risk changes in such financial liabilities by the above methods will result in expansion ofthe accounting mismatch in the profit and loss, the Company shall recognize all gains or losses in such financialliabilities (including the amount subject to the credit risk changes of the Company) as the profit and loss of thecurrent period.
2) Other financial liabilities
Except for financial liabilities resulting from financial asset transfers not meeting the conditions for derecognitionor the continuous involvement in the transferred financial asset, or financial guarantee contracts, other financialliabilities shall be classified into the financial liabilities measured at amortized cost, which shall be subsequentlymeasured at amortized cost, and the gains or losses resulting from derecognition or amortization shall berecognized as the profit and loss of the current period.
(3) Recognition basis and measurement method of financial asset transfer
Once one of the following conditions is met, the financial assets shall be derecognized: 1) The contract right tocharge the cash flows of the financial assets is terminated; 2) the financial assets have been transferred, and almostall the risks and rewards of the ownership of the financial assets are transferred to the transferee; 3) the financialassets have been transferred, and the Company has given up the control over the financial assets although it doesnot transfer or retain almost all the risks and rewards of the ownership of the financial assets.If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of thefinancial assets, and the Company does not waive its control of the financial assets, it shall recognize the relevantfinancial assets within the extent of its continuous involvement in the transferred financial assets and recognize
the relevant liabilities. The continuous involvement in the transferred financial assets refers to the level of riskwith which the Company is faced due to changes in the financial asset values.When overall transfer of financial assets meets the conditions for derecognization, the book value of thetransferred financial assets and the difference between the consideration received due to transfer and theaccumulative changes in fair value that is originally recognized as other comprehensive income shall berecognized as the profit and loss of the current period.When partial transfer of financial assets meets the conditions for derecognization, the book value of thetransferred financial assets shall be apportioned to the fair value between the derecognized part and the recognizedpart, and the consideration received due to transfer and the difference between the accumulative changes in fairvalue that is originally recognized as other comprehensive income, which shall be apportioned to the derecognizedpart, and the apportioned book value as mentioned above shall be recognized as the profit and loss of the currentperiod.When the Company sells financial assets with additional recourse or transfers the endorsed financial assets held, itshall check whether almost all the risks and rewards of the ownership of the financial assets are transferred. If theCompany has transferred almost all the risks and rewards of the ownership of the financial assets to the transferee,it shall derecognize the financial assets; if the Company retains almost all the risks and rewards of the ownershipof the financial assets, it shall not derecognize the financial assets; if the Company neither transfers nor retainsalmost all the risks and rewards of the ownership of the financial assets, it shall judge whether it has retainedcontrol over the assets and conduct accounting processing following the principles described in previousparagraphs.
(4) Derecognition of financial liabilities
If current obligations of the financial liabilities (or some of the liabilities) have been released, the Company shallderecognize the financial liabilities (or some of the liabilities). Where the Company (borrower) and a lender signan agreement to replace the existing financial liability by way of assumption of new financial liability with theterms of the new financial liability substantially different from those of the existing financial liability, itderecognizes the existing financial liability while recognizing the new financial liability. If the contract terms ofthe existing financial liability are materially changed in whole (or in part), the existing financial liability will bederecognized, and the financial liability after changes of terms will be recognized as a new financial liability.If a financial liability is derecognized in whole (or in part), the difference between the book value of thederecognized portion and the consideration paid (including the non-cash assets transferred out or the new financialliability assumed) is recognized as the profit and loss of the current period.
(5) Offsetting financial assets and financial liabilities
When the Company has the statutory right to offset the recognized amount of financial assets and financialliabilities, and this statutory right is currently enforceable, and the Company plans to net the financial assets or
simultaneously realize the financial assets and pay off the financial liabilities, the financial assets and financialliabilities are presented in the balance sheet at the net amount after offsetting each other. Otherwise, financialassets and financial liabilities are presented separately in the balance sheet and are not offset against each other.
(6) Methods for determining the fair value of financial assets and financial liabilitiesThe fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. If there are active markets for a financialinstrument, the Company establishes its fair value by using quotes in the active markets. Quotes in active marketsrefer to prices that are readily available on a regular basis from exchanges, brokers, trade associations, pricingservice institutions, etc., and represent the prices of market transactions that actually occur in a fair trade. If thereis no active market, the Company establishes fair value by using valuation techniques. Valuation techniquesinclude reference to price used in recent market transactions between knowledgeable, willing parties, reference tothe current fair value of other financial instruments that are substantially the same, discounted cash flow analysis,option pricing models, etc. During valuation, the Company adopts the valuation techniques that are applicableunder current circumstances and supported by sufficient available data and other information, selects the inputvalues that are consistent with the characteristics of the assets or liabilities considered by the market participantsin the transaction of the relevant assets or liabilities, and preferentially uses the relevant observable inputs.Unobservable input values are used where the relevant observable input values are not available or are notpracticable.
(7) Equity instruments
An equity instrument refers to a contract that can prove the Company owns the remaining equity in the assets afterdeducting all liabilities. The Company's issuance (including refinancing), repurchase, sales or cancellation ofequity instruments are treated as changes in equities, and transaction costs related to equity transactions arededucted from equities. The Company does not recognize changes in the fair value of equity instruments.Where equity instruments of the Company distribute dividends in its duration (including “interests” generated byinstruments classified as equity instruments), it shall be treated as profit distribution.
(8) Impairment of financial assets
The financial assets for which the Company needs to recognize impairment losses are financial assets measured atamortized cost, debt instrument investments measured at fair value through other comprehensive income, andlease receivables, mainly including notes receivable, accounts receivable, and other receivables. In addition, forsome financial guarantee contracts, impairment reserves are set aside and credit impairment losses are recognizedas per the accounting policies described in this section.
1) Methods for recognizing impairment reserves
Based on the expected credit loss, the Company sets aside provisions for impairment of the above items bymethods (general method or simplified method) for measuring expected credit loss applicable to them and
recognizes credit impairment loss.Credit loss refers to the difference between all contract cash flow receivables discounted at the original effectiveinterest rate under the contract and all expected cash flow receivables, i.e., the present value of all cash shortages.Specifically, for financial assets that have been credit-impaired at the time of purchase or origin, the Companydiscounts the financial assets at the credit-adjusted actual interest rate.The general method for measuring expected credit loss means that the Company assesses on each balance sheetdate whether the credit risk of financial assets has increased significantly since the initial recognition. If yes, theCompany measures loss reserves at an amount equivalent to the expected credit loss in the entire duration; if not,the Company measures loss reserves at an amount equivalent to the expected credit loss in the next 12 months.The Company considers all reasonable and evidence-based information, including forward-looking information,when assessing expected credit loss;As for financial instruments with low credit risk on the balance sheet date, the Company measures the lossreserves according to the expected credit loss in the future 12 months, assuming that its credit risk has had nosignificant increase since its initial recognition. The Company chooses to measure loss reserves according to theexpected credit loss in the next 12 months or in the entire duration based on whether the credit risk has increasedsignificantly since initial recognition.
2) Standards for judging whether credit risk has increased significantly since initial recognitionIf the probability of default (PD) of a financial asset in the expected duration recognized on the balance sheet dateis significantly higher than that in the expected duration recognized at the time of initial recognition, the creditrisk of the financial asset has increased significantly. Except for special circumstances, the Company determineswhether credit risk has increased significantly since initial recognition by reasonably assessing the changes in thePD in the entire duration with the changes in the coming 12 months.
3) Portfolio method for assessing expected credit risk based on portfolios
The Company assesses individual credit risk of financial assets with significantly different credit risks. Examplesinclude the following: receivables from related parties; receivables that have disputes with counterparties or thoseinvolved in litigation or arbitration; there are obvious signs that the debtor is very unlikely to fulfill the repaymentobligation.In addition to financial assets whose individual credit risk is assessed, the Company divides financial assets intodifferent groups based on common risk characteristics, and assesses credit risk on a portfolio basis.
4) Accounting treatment methods for impairment of financial assets
At the end of the reporting period, the Company calculates the expected credit loss of financial assets. If theexpected credit loss is greater than the book value of its current impairment provisions, the difference isrecognized as an impairment loss; if it is less than the current book value of the impairment provisions, thedifference is recognized as impairment gains.
5) Methods for recognizing credit losses of financial assets
a. Notes receivableThe Company measures loss reserves for notes receivable at an amount equivalent to expected credit loss in theentire duration. The Company divides notes receivable into different portfolios based on their credit riskcharacteristics:
| Item | Basis for determining the portfolio |
| Banker's acceptance | Acceptors are banks with low credit risks. |
| Trade acceptance | The aging of trade acceptance is used as credit risk characteristics. |
b. Accounts receivableThe Company measures loss reserves for accounts receivable without major financing component at an amountequivalent to expected credit loss in the entire duration.The Company measures loss reserves for accounts receivable and lease receivables with major financing componentat an amount equivalent to expected credit loss in the duration.Except for accounts receivable whose individual credit risk is assessed, the Company divides accounts receivableinto different portfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Aging portfolio | This portfolio uses aging of accounts receivable as credit risk characteristics. |
| Related party portfolio | This portfolio comprises amounts of related parties within the consolidated scope. |
c. Other receivablesThe Company adopts the amount equivalent to the expected credit loss in the coming 12 months or in the entireduration to measure impairment losses based on whether the credit risk of other receivables has increasedsignificantly since initial recognition. Except for other receivables whose individual credit risk is assessed, theCompany divides other receivables into different portfolios based on their credit risk characteristics:
| Item | Basis for determining the portfolio |
| Aging portfolio | This portfolio uses aging of other receivables as credit risk characteristics. |
| Related party portfolio | This portfolio comprises amounts of related parties within the consolidated scope. |
11. Notes receivable
For details, please refer to 10. Financial instruments in V. Significant Accounting Policies and AccountingEstimates of Section XII.
12. Accounts receivable
For details, please refer to 10. Financial instruments in V. Significant Accounting Policies and AccountingEstimates of Section XII.
13. Accounts receivable financing: None
14. Other receivables
Recognition methods and accounting treatment methods for expected credit loss in other receivablesFor details, please refer to 10. Financial instruments in V. Significant Accounting Policies and AccountingEstimates of Section XII.
15. Inventories
(1) Classification of inventories
Inventories mainly include raw materials, goods in process, materials for consigned processing, commodity stocks,packages, and low-value consumables.
(2) Pricing methods for inventory acquisition and delivery
Inventories are priced at actual cost when they are acquired. Inventory costs include procurement costs, processingcost, and other costs. Inventories are priced by the weighted average method during receipt and delivery.
(3) Methods for recognition of the net realizable value of inventories and the provisions for impairment ofinventoriesThe net realizable value refers to the amount of the estimated selling price of the inventory minus the estimated cost,estimated selling expenses, and related taxes and fees at the time of completion in daily activities. Whenrecognizing the net realizable value of inventories based on the substantial evidence obtained, the Company alsoconsiders the purpose of holding the inventories and the impact on matters after the balance sheet date.On the balance sheet date, inventories are measured at the lower of costs and the net realizable value. When thenet realizable value is lower than costs, the Company sets aside provisions for inventory impairment. Provisionsfor inventory impairment are set aside based on the difference between the cost of individual inventory item andits net realizable value.After provisions for the inventory impairment are set aside, if the influencing factors in previous write-down ofthe inventory value disappear, causing the net realizable value of the inventory to be higher than its book value, itshall be reversed within the amount of the provisions for inventory impairment that have been set aside andrecognized as the profit and loss of the current period.
(4) The perpetual inventory system is adopted for the inventories.
(5) Amortization method for low-value consumables and packages
The one-time amortization method is adopted for low-value consumables and packages upon receipt.
16. Contract assets: None
17. Contract costs: None
18. Assets held for sale
The Company classifies non-current assets or a disposal group as held for sale (including exchange ofnon-monetary assets with commercial substance, the same below) if their book values are recovered principallythrough disposal rather than through continuing use. Specifically, the following conditions shall be metsimultaneously: A certain non-current asset or disposal group can be sold immediately under the currentconditions according to the practice of selling such assets or disposal groups in similar transactions; the Companyhas made a resolution of an offer and obtained the purchase commitment; the sale is expected to be completedwithin one year. Among them, the disposal group refers to a group of assets that are disposed of as a wholethrough sale or other means in a transaction, and the liabilities directly related to these assets that are transferred inthe transaction. If the asset group or the combination of asset groups to which the goodwill (obtained frombusiness combination) has been allocated in accordance with the Accounting Standards for Business EnterprisesNo. 8 -- Impairment of Assets, the disposal group shall include the goodwill allocated to it.During initial measurement or re-measurement of the non-current assets and disposal groups classified intoheld-for-sale assets on the balance sheet date, if the book value of such assets is higher than the net valuededucting the cost of offer, the book value is written down to the recoverable amount by the Company, thewritten-down amount is recognized as profit and loss of the current period and impairment provisions are set asideat the same time. For the disposal group, the recognized asset impairment loss is first deducted from the bookvalue of the goodwill in the disposal group, and then deducted in proportion from the book value of non-currentassets specified in the applicable Accounting Standards for Business Enterprises No. 42 - Non-Current Assets andDisposal Groups Held for Sale and Discontinued Operations (hereinafter referred to as the "Standards for AssetsHeld for Sale"). If the fair value of the disposal group held for sale on the subsequent balance sheet date increasesafter deducting the selling expenses, the previously written down amount shall be restored, and reversed withinthe amount of the asset impairment losses recognized for non-current assets as per the Standards for Assets Heldfor Sale applicable after the assets are classified into those held for sale, and the reversed amount shall berecognized as the profit and loss of the current period. Besides, the book value of the reversed amount shall beincreased in proportion according to the proportion of the book value of the non-current assets specified in the
Standards for Assets Held for Sale applicable to those except for the goodwill in the disposal group. The bookvalue of the goodwill that has been deducted, and the asset impairment losses recognized before the non-currentassets are classified into assets held for sale as per the Standards for Assets Held for Sale shall not be reversed.Non-current assets held for sale and non-current assets in the disposal group are not subject to depreciation oramortization. Interest and other expenses on liabilities in the disposal group held for sale continue to berecognized.When the non-current assets or disposal group no longer meets the conditions for classification into the assets heldfor sale, the Company no longer classifies them into the category or removes the non-current assets from thedisposal group held for sale, and measures them at the lower of the following two: (1) in terms of the book valuebefore classification into assets held for sale, for which the measurement standard is the amount after adjustmentaccording to the depreciation, amortization, or impairment that should have been recognized under the assumptionthat they are not classified into assets held for sale; and (2) the recoverable amount.
19. Investments in creditor's rights: None
20. Other investments in creditor's rights: None
21. Long-term receivables: None
22. Long-term equity investments
The long-term equity investments herein refer to the long-term equity investments in which the Company hascontrol, joint control, or significant influence on the investee. Long-term equity investments where the Companyhas no control, joint control, or significant influence on the investee are accounted as financial assets measured atfair value through profit and loss of the current period. Among them, for those that are non-tradable, the Companymay choose to designate them as the financial assets measured at fair value through other comprehensive incomefor accounting during initial recognition. See "Note V (10)" for their detailed accounting policies.Joint control refers to the common control over a particular arrangement according to relevant agreement, and thatthe decisions on relevant activities under such arrangement are subject to the unanimous consent from the partiessharing the joint control. Significant influence means having the power to participate in the financial andoperating policy decision-making of the investee, but cannot control or, together with other parties, jointly controlthe formulation of these policies.
(1) Determination of investment cost
For long-term equity investments obtained from combination of enterprises under common control, the share ofthe combined party’s owner's equity in the book value of the consolidated financial statements of the final
controlling party which is acquired on the combination date shall be regarded as the initial investment cost forlong-term equity investments. The capital reserves shall be adjusted if there is difference between the initialinvestment cost of long-term equity investment and the cash paid, the transferred non-cash assets, and the bookvalue of the debts assumed; if the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Ifthe equity securities issued are used as the combination consideration, the share of the combined party's owner'sequity in the book value of the consolidated financial statements of the final controlling party which is acquired onthe combination date shall be regarded as the initial investment cost for long-term equity investments; the totalbook value of the shares issued shall be the share capital; the capital reserves shall be adjusted if there isdifference between the initial investment cost of long-term equity investments and the total book value of theshares issued; if the capital reserves are insufficient to balance the difference, retained earnings shall be adjusted.For long-term equity investments obtained from combination of enterprises under different control, thecombination costs on the acquisition date shall be used as the initial investment costs of the long-term equityinvestment; the combination costs include the sum of the assets paid by the acquirer, the liabilities incurred orassumed, and the fair value of the equity securities issued.Intermediary expenses such as auditing, legal services, assessment and consulting and other related managementexpenses incurred by the combining party or acquirer for the business combination shall be recognized as theprofit and loss of the current period.Other equity investments except for long-term equity investments formed via business combination are initiallymeasured at cost. Subject to the way the long-term equity investments are obtained, the costs shall be recognizedbased on the cash actually paid by the Company for acquisition, the fair value of the equity securities issued bythe Company, the value agreed in the investment contract or agreement, the fair value or original book value ofthe assets swapped out in a non-monetary asset exchange transaction, and the fair value of the long-term equityinvestment itself. Expenses, taxes, and other necessary expenditures directly related to acquisition of long-termequity investments are also recognized as investment costs.
(2) Subsequent measurement and recognition of profit and loss
If the Company has common control or significant influence over the investee (except for constitutingco-proprietors), the long-term equity investment shall be accounted for by using the equity method. Additionally,the Company’s financial statements apply the cost method for long-term equity investments that can make controlin the investee
1) Long-term equity investments accounted for using the cost method
When the cost method is used, the long-term equity investments are calculated according to the initial investmentcost. In the event that the investment is added or recovered, the cost of the long-term equity investments shall beadjusted. With the exception of the price actually paid at the acquisition of investment or cash dividends or profits
included in consideration, declared but not issued yet, the return on investment of the current period shall berecognized according to the cash dividends or profits declared to be issued by the investee.
2) Long-term equity investments accounted for using the equity method
When using equity method, if the initial investment cost of long-term equity investments is greater than the fairvalue share of the identifiable net assets entitled of the investee at the time of investment, the initial investment ofthe long-term equity investments shall not be adjusted. If the initial investment cost of long-term equityinvestments is lower than the fair value share of the identifiable net assets entitled of the investee at the time ofinvestment, the difference shall be recognized as profit and loss of the current period and the cost of the long-termequity investments shall be adjusted at the same time.When the equity method is used, return on investment and other comprehensive income shall be respectivelydetermined based on the share of net profit or loss and other comprehensive income realized by the investee thatshall be attributable or assumed, and the book value of long-term equity investments shall be adjusted at the sametime. Attributable share shall be calculated based on the profit or cash dividends declared by the investee and thebook value of long-term equity investments shall be accordingly decreased. In respect to other changes of owner'sequity of the investee in addition to net profit or loss, other comprehensive income and profit distribution, thebook value of long-term equity investments shall be adjusted and recognized as capital surplus. When confirmingthe share of the investee's net profit and loss, the Company shall confirm the investee's net profit after adjustmentbased on the fair value of the identifiable net assets of the investee at the acquisition of the investment. Where theaccounting policy and accounting period adopted by the investee differs from those of the Company, the investee'sfinancial statements shall be adjusted according to the Company's accounting policy and accounting period, andthe return on investment and other comprehensive income shall be recognized accordingly. Where the transactionsare between the Company and the associates and joint ventures, and the assets that are invested or sold do notconstitute business, unrealized internal transaction profits and losses incurred between the Company and theassociates and joint ventures shall be offset with the part attributable to the Company which is calculated on a duepro-rata basis, and the return on investment shall be recognized on this basis. However, unrealized internaltransaction losses incurred between the Company and the investees shall not be offset if they fall under theimpairment losses on assets transferred.When confirming the limit of net loss incurred by the investee, the limit is the extent that the book value of thelong-term equity investments and other long-term equity that substantially constitutes a net investment in theinvestment target is written down to zero. Additionally, if the Company has obligations to assume additionallosses of the investee, provisions are recognized according to the expected obligation, and recognized asinvestment losses for the period. Where the investee records net profit in the future, the Company resumes andrecognizes the profit-sharing amount after such amount makes up the unrecognized loss-sharing amount.
23. Investment property
Measurement model for investment propertyMeasurement by the cost methodDepreciation or amortization methodInvestment properties are real estate held to generate rental income or earn capital gains or both. Investmentproperties include land use rights leased out, land use rights held for transfer after appreciation, buildings leasedout, etc.Investment property is initially measured at cost. Subsequent costs are included in the investment property's costonly when it is probable that future economic benefits associated with the item will flow to the Company and thecost of the item can be measured reliably; other subsequent costs are recognized as profit and loss of the currentperiod when incurred.The Company adopts the cost model for subsequent measurement of investment property, and depreciates oramortizes it according to policies consistent with those for buildings or land use rights.Impairment test method and impairment provision method for investment property are detailed in "Note V (31)".Investment properties are derecognized when they are disposed of or permanently withdrawn from use and it isexpected that no economic benefit can be generated from its disposal. The income from selling, transferring,writing off or destroying investment property, less its book value and relevant taxes and fees, is recognized asprofit and loss of the current period.
24. Fixed assets
(1) Recognition conditions
Fixed assets are tangible assets with a useful life of more than one accounting year that are held for production orsupply of goods or labor services, for rental to third parties, or for use in the organizations.Fixed assets shall only be recognized when relevant economic interest may flow into the Company and coststhereof can be reliably measured. Fixed assets shall be initially measured at cost and by taking into account theimpact of estimated disposal expense.
(2) Depreciation method
| Type | Depreciation method | Depreciation life | Residual value rate | Annual depreciation rate |
| Properties and buildings | Straight-line depreciation | 10 to 30 years | 5%. 10% | 3.00%, 3.17% to 9.00%, |
| 9.50% | ||||
| Equipment | Straight-line depreciation | 2 to 20 years | 5%. 10% | 4.50%, 4.75% to 45.00%, 47.50% |
| Motor vehicles | Straight-line depreciation | 5 to 14 years | 5%. 10% | 6.43%, 6.79% to 18.00%, 19.00% |
| Office equipment | Straight-line depreciation | 3 to 8 years | 5%. 10% | 11.25%, 11.88% to 30.00%, 31.67% |
| Production equipment | Straight-line depreciation | 2 to 5 years | 5%. 10% | 18.00%, 19.00% to 45.00%, 47.50% |
Estimated residual value refers to the current amount where, supposed the service life of a fixed asset has expiredand it is in the expected status of such expiration, the Company obtains from the disposal of such asset after theestimated disposal expense is deducted.
(3) Determination basis, pricing method and depreciation method of fixed assets acquired under financeleasesLeases of assets where substantially all the risks and rewards of ownership have been transferred are classified asfinance leases. Title may or may not eventually be transferred. The fixed asset leased in through finance leasesadopts the same depreciation policy self-owned fixed assets. If it can be reasonably ascertained that the ownershipof the asset leased can be obtained by the expiration of the tenancy, the asset is depreciated over its service life; ifnot, the asset is depreciated over the shorter of the tenancy and the service life of the leased asset.
25. Construction work in process
Construction work in progress is measured at actual project expenditure, comprising project expenditure incurredduring construction and other necessary cost incurred.The Company's Construction work in progress is transferred to fixed assets when the assets are ready for theirintended use. If the fixed assets under construction have reached the expected usable status but have not yetcompleted the final account for completed project, they shall be recognized as fixed assets according to theestimated value, and accrue depreciation. After the completion of the final account for completed project, theoriginal estimated value is adjusted according to the actual cost, but the original accrued depreciation amount isnot adjusted.Impairment test method and impairment provision method for Construction work in progress are detailed in "NoteV (31)".
26. Borrowing costs
Borrowing costs include interest on borrowings, amortizations of discounts or premiums, incidental expenses,exchange difference resulting from foreign-currency borrowings, etc. The borrowing costs that can be directlyattributable to the acquisition, construction or production of an asset eligible for capitalization shall be capitalizedif the capital expenditures have been incurred, the borrowing costs have been incurred, or the necessary purchase,construction or production activities to make the asset reach the expected available or marketable state have begun.When the assets with the purchase, construction or production meeting the capitalization conditions reach theexpected available or marketable state, they cease to be capitalized. Any other borrowing costs are recognized asan expense in the period when they are incurred.The amount of interest that shall be capitalized is determined based on the interest expenses incurred in the periodwhen a specifically borrowed fund is obtained less any income earned on the unused borrowing fund as a depositin a bank or as a temporary investment. Where funds are borrowed for a general purpose, the amount of interestthat shall be capitalized is determined by multiplying the part of the accumulative asset disbursements in excess ofthe weighted average asset disbursement for the specifically borrowed fund by the capitalization rate of thegeneral borrowing used. The capitalization rate is the weighted average interest rates applicable to thegeneral-purpose borrowings.During the capitalization, all exchange differences arising from earmarked foreign-currency borrowings shall becapitalized; exchange differences arising from general-purpose foreign-currency borrowings shall be recognizedas profit and loss of the current period.Assets eligible for capitalization refer to assets such as fixed assets, investment real estates and inventories thatcan reach the expected available or marketable status after a long period of purchase, construction or productionactivities.If the acquisition, construction or production of an asset eligible for capitalization is continuously suspended forover three months for abnormal reasons, capitalization of the borrowing costs shall be suspended, until theacquisition, construction or production of the asset is resumed.
27. Biological assets: None
28. Oil & gas assets: None
29. Right-of-use assets: None
30. Intangible assets
(1) Pricing method, service life, and impairment test
Intangible assets refer to identifiable non-monetary assets without physical substance owned or controlled by theCompany.Intangible assets are initially measured at cost. Costs of intangible assets are included in intangible assets' bookvalue, only when it is probable that future economic benefits associated with the item will flow to the Companyand the cost of the item can be measured reliably. Other costs of intangible assets are recognized as profit and lossof the current period when incurred.Land use rights acquired are generally accounted for as intangible assets. With respect to self-built buildingsincluding plants, the relevant land use right expenses and buildings' construction costs are accounted for asintangible assets and fixed assets, respectively. For purchased houses and buildings, the price paid is distributedbetween the land use right and the building. If it is difficult to distribute, it shall all be included in fixed assets.From the beginning of use of intangible assets with finite service life, the accumulated amount of the originalvalue less estimated net residual value and the provisions for asset impairment set aside shall be amortized evenlyin stages by straight-line method over their service life. Intangible assets with uncertain service lives are notamortized.The Company reviews the service life and amortization method of intangible asset with finite service life at theend of the reporting period, and a change therein (if any) shall be accounted for as a change in accountingestimates. Additionally, the Company reviews the service life and amortization method of intangible asset withuncertain service life. If there is evidence that the period when it brings economic benefits to the enterprise isforeseeable, its service life shall be estimated and it is amortized according to the amortization policy forintangible assets with finite service life.Impairment test method and impairment provision method for intangible assets are detailed in "Note V (31)".
(2) Accounting policy for expenditure on internal research and developmentThe Company classifies the expenditure on an internal research and development project into expenditure on theresearch phase and expenditure on the development phase.
Expenditure on the research phase is recognized as profit and loss of the current period when incurred.Expenditure on the development phase is recognized as intangible asset when all the following criteria are met,while expenditure in the development phase that does not meet the following criteria is recognized as profit andloss of the current period when incurred:
1) technically feasible to complete the intangible asset so that it will be available for use or sale;
2) the intention to complete the intangible asset and use or sell it;
3) how the intangible asset will generate probable future economic benefits. Among other things, the Companycan demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if itis to be used internally, the usefulness of the intangible asset;
4) the availability of adequate technical, financial and other resources to complete the development and the abilityto use or sell the intangible asset;
5) the ability to measure reliably the expenditure attributable to the intangible asset during the development.Where the expenditure on research and development incurred cannot be classified into the expenditure on researchphase or the expenditure on development phase, it shall be recognized as profit and loss of the current periodwhen incurred.
31. Long-term asset impairment
The Company determines on the balance sheet date whether there is any indication that the non-current andnon-financial assets may have been impaired, including fixed assets, construction work in progress, intangibleassets with limited service life, and investment properties measured using the cost model, and long-term equityinvestments in subsidiaries, joint ventures and associates. If there is any indication that the asset is likely to beimpaired, the Company will estimate the recoverable amount and carry out the impairment test. Impairment testsshall be conducted each year for goodwill and intangible assets with uncertain service life and not yet in use,whether or not there is any indication of impairment.If an impairment test shows that the recoverable amount of an asset is lower than its book value, the difference isrecognized as a provision for impairment and recognized as the impairment loss. The recoverable amount isdetermined based on the higher of the net amount of the fair value of the asset minus the disposal expenses andthe present value of the expected future cash flow of the asset. The fair value of asset is determined according tothe price of the sales agreement in fair trade. If there is no sales agreement but an active market for the asset, thefair value is determined according to the price offered by the buyer for the asset. If there is neither sales agreementnor active market for the asset, the fair value of the asset shall be estimated based on the best informationavailable. The disposal costs include legal fees, relevant taxes and fees, as well as handling fees related to thedisposal of asset, and the direct costs incurred to ensure the asset reaches the marketable state. The present valueof the expected future cash flow of an asset shall be determined by the discounted cash at an appropriate discount
rate, on the basis of the expected future cash flow generated during the continuous use or final disposal of an asset.Provisions for asset impairment are calculated and recognized on an individual basis. If it is difficult to estimatethe recoverable amount of individual assets, the Company will determine the recoverable amount of the assetgroup on the basis of the asset group to which the asset belongs. Asset group refers to the smallest asset portfoliowhich can independently generate cash inflows.When an impairment test is performed on the goodwill separately listed in the financial statement, book value ofsuch goodwill is apportioned to the asset group or combination of asset groups that can benefit from the synergyeffect of business combination. If the test result shows that the recoverable amount of the asset group orcombination of asset groups is lower than their book value, corresponding impairment losses on goodwill will berecognized. The impairment loss shall first offset against the book value of goodwill that is apportioned to assetgroup or a combination of asset groups, and then offset against the book value of assets excluding goodwill in theasset group or the combination of asset groups on a pro-rata basis according to the proportion of their book value.Once the aforementioned asset impairment loss is recognized, it will not be reversed in subsequent accountingperiods even if the value can be recovered.
32. Long-term unamortized expenses
Long-term unamortized expenses are expenses which have been incurred but shall be amortized over a periodlonger than one year, including the reporting period and the future periods. Long-term unamortized expenses shallbe amortized based on the straight-line method over the expected benefit period.
33. Contract liabilities
A contract liability is the Group's obligation to transfer goods or services to a customer for which the Group hasreceived consideration from the customer.Contract assets and liabilities within a single contract should be presented on a net basis. If the net amount is debitbalance, it shall be presented in the item of "contract assets" or "other non-current assets" based on its liquidity. Ifthe net amount is credit balance, it shall be presented in the item of "contract liabilities" or "other non-currentliabilities" based on its liquidity.
34. Employee remuneration
(1) Accounting treatment method for short-term remuneration
Short-term remuneration includes salaries, bonuses, allowances and subsidies, employee welfare, medicalinsurance fees, maternity insurance fees, employment injury insurance fees, housing provident funds, labor union
fees, staff education funds, and non-monetary welfare. The Company shall, within the accounting period when itsemployees provide service, recognize actual short-term remuneration as liabilities which shall be recognized asprofit and loss of the current period or relevant asset costs. Wherein, non-monetary benefits are measured at fairvalue.
(2) Accounting treatment method for post-employment benefits
Post-employment benefit includes basic endowment insurance, unemployment insurance, etc. It also includesdefined contribution plans. Where defined contribution plans are adopted, the corresponding amount payable shallbe recognized as profit and loss of the current period or relevant asset costs in which it is incurred.
(3) Accounting treatment method for dismissal benefits
If the Company terminates the labor relationship with an employee before the employee's labor contract expires,or proposes to give the employee compensation for encouraging the employee to voluntarily accept dismissal, theliabilities arising from the compensation giving to the employee for the termination of the labor relationship withthe employee shall be recognized as profit and loss of the current period, when the Company cannot unilaterallywithdraw the termination of the labor relationship plan or the dismissal proposal, or when it recognizes the costsrelated to the restructuring of the payment of the dismissal benefits, whichever is earlier. However, if it isexpected that the dismissal benefits cannot be paid in full within twelve months after the end of the annualreporting period, they shall be accounted for according to other long-term employee remunerations.Internal retirement schemes for employees shall be accounted for following the same principles of the abovedismissal benefits. Where the salaries and social insurance fees of early retirees to be paid by the Company fromthe date when employees stop providing services to the normal retirement date meet the recognition conditions forprojected liabilities, they shall be recognized as profit and loss of the current period.
(4) Accounting treatment method for other long-term employee benefits
Other long-term benefits provided by the Company to employees that meet the conditions of the definedcontribution plan are accounted for in accordance with the defined contribution plan; other long-term benefits areaccounted for in accordance with the defined benefit plan.
35. Lease liabilities: None
36. Provision
An obligation related to contingent issues and meeting the following conditions shall be deemed a provision: (1)such an obligation is a current one assumed by the Company; (2) fulfilling such an obligation might causeeconomic benefits to flow out of the Company; and (3) the amount of such an obligation is measurable reliably.On the balance sheet date, a provision is measured at the best estimate of the expenditure required to settle therelated present obligation, with comprehensive consideration of factors such as the risks, uncertainty and timevalue of money relating to a contingency.A provision is separately recognized as an asset and the recognized compensation amount shall not exceed thebook value of the provision, when all or part of the expenses required to pay off the provision are expected to becompensated by a third party and the amount of compensation is basically determined to be receivable.
37. Share-based payment
Share-based payment is the transaction made through granting equity instruments or bearing the liabilitiesrecognized based on such instruments in exchange for services rendered by employees or other parties. TheCompany's share-based payment includes equity-settled share-based payment and cash-settled share-basedpayment.
(1) Equity-settled share-based payment
Where the share payment is settled through equity for acquisition of service from employees, it shall be measuredat the fair value of the equity instruments granted to the employees. If the right cannot be exercised until thevesting period ends or until the prescribed performance conditions are met, the amount of such fair value shall,based on the best estimate of the number of vested equity instruments, be recognized as the relevant costs orexpenses by straight-line method; if the right can be exercised immediately following the grant, the amount ofsuch fair value shall be recognized as the relevant costs or expenses on the grant date, and the capital reserve shallbe increased accordingly.On each balance sheet date within the vesting period, the Company carries out the best estimation based on suchfollow-up information such as the variation of the number of vested staff acquired recently, and revises thenumber of estimated vested equity instruments. The impact of the above estimates shall be recognized as therelevant costs or expenses of the current period, and the capital reserve shall be adjusted accordingly.For an equity-settled share-based payment in return for the service of any other party, if the fair value of theservice of any other party can be reliably measured, it shall be measured at the fair value of the service of anyother party on the acquisition date; if the fair value of the service of any other party cannot be reliably measured,
but the fair value of the equity instruments can be reliably measured, it shall be measured at the fair value of theequity instruments on the acquisition date and included in the relevant costs or expenses, and the shareholders'equity shall be increased correspondingly.
(2) Cash-settled share payment
The cash-settled share-based payment shall be measured at the fair value of the Company's liabilities determinedbased on shares or other equity instruments. If the right may be exercised immediately after the grant, relevantcosts or expenses shall be recognized the grant date, and the liabilities shall be increased accordingly. If the rightmay not be exercised until the vesting period ends or until the specified performance conditions are met, on eachbalance sheet date within the vesting period, the services obtained in the current period shall, based on the bestestimate of the information about the exercisable right, be recognized as the relevant costs or expenses at the fairvalue of the liability undertaken by the Company, and liabilities shall be increased accordingly.The fair value of liabilities is re-measured and any change thereto is recognized as profit and loss of the currentperiod on each balance sheet date and settlement date prior to settlement of the relevant liabilities.
38. Preference shares, perpetual bonds and other financial instruments: None
39. Revenue
Accounting policy for recognition and measurement of revenueThe revenue is recognized when the customers take control of the relevant goods or services if the contractbetween the Company and the customers meet all the following conditions: 1) the parties to the contract haveapproved such contract and undertake to perform their respective obligations; 2) the contract has specified therights and obligations of the parties thereto and in connection with the transfer of goods or provision of laborservices; 3) the contract sets out clear payment terms related to the transfer of goods; 4) the contract hascommercial substance, meaning that the performance thereof will change the risk, time distribution or amount ofthe Company's future cash flow; 5) the Company is very likely to recover the consideration obtained bytransferring goods to customers.On the enforcing date of the contract, the Company identifies all individual performance obligations in thecontract, and apportions the transaction price to each individual performance obligation according to the relativeproportion of the individual selling price of the goods. When determining the transaction price, the Company hasconsidered the impact of such factors including variable consideration, major financing component of the contract,non-cash consideration, and consideration payable to the customer.With respect to each individual performance obligation of the contract, the Company will recognize thetransaction price apportioned to such obligation as revenue based on the progress of performance during therelevant performance periods, if any of the following conditions is met: 1) the customer obtains and consumes the
economic benefits brought by the Company's performance during such performance; 2) the customer can controlthe goods in progress during the Company's performance; 3) the goods produced from the Company'sperformance has irreplaceable use, and in respect of the portion of revenue arising from the Company'sperformance completed to date, the Company is entitled to collect revenue during the entire validity period of thecontract. The progress of performance is determined according to the nature of the transferred goods using theinput or output method. When such progress cannot be reasonably determined, if the costs incurred are expectedto be compensated, the Company recognizes revenue based on the amount of costs incurred, until the progress ofperformance can be reasonably determined.If none of the aforesaid conditions is met, the Company will recognize the transaction price apportioned to suchindividual performance obligation when the customer obtains the control over relevant goods. To decide whetherthe customer has obtained the control over goods, the Company takes into account the following indications: 1)the enterprise has the present right to collection for the goods, meaning the customer bears the present obligationto payment for the goods; 2) the enterprise has passed the legal title to the goods to the customer, meaning thecustomer has had the legal title to the goods; 3) the enterprise has transferred the physical possession of the goodsto the customer, meaning the customer has had the physical possession of the goods; 4) the enterprise hastransferred the major risks and remunerations concerning the title to the goods to the customer, meaning thecustomer has obtained the major risks and remunerations concerning the title to the goods; 5) the customer hasaccepted the goods; 6) other indications to show that the customer has obtained the control over the goods.Generally, the Company’s business of goods selling only comprises the performance obligation of transferring thegoods. The control of the goods is transferred when they are sent out and the Company receives the signed receiptand other documents from the customer, so the Company confirms the realization of revenue at that point in time.The discounts, rewards and other arrangements in some contracts between the Company and customers constitutevariable consideration. The Company uses the expected value method or the most likely amount to determine thebest estimates for variable consideration, but the transaction price containing variable consideration shall notexceed the amount of cumulatively recognized revenue that is unlikely to have major reversals when the relevantuncertainties are eliminated.
40. Government grants
Government grants are monetary or non-monetary assets acquired by the Company from the government free ofcharge, excluding the capital invested by the government as an investor and granted corresponding owner's equity.Government grants are classified into government grants related to assets and government grants related toincome. The Company defines the government grants for purchasing or constructing or otherwise forminglong-term assets as asset-related government grants; other government grants are defined as the income-relatedgovernment grants. Government grants shall be measured at the amount received or receivable if they are
monetary assets. Non-monetary government grants shall be measured at fair value; if the fair value cannot bereliably obtained, they shall be measured at the nominal amount. The government grants measured at the nominalamount shall be directly recognized as the profit and loss of the current period.Asset-related government grants are recognized as deferred income, and included in the profit and loss of thecurrent period in stages according to a reasonable and systematic method over the service life of the relevantassets. The income-related government grants shall be recognized as deferred income if they are used tocompensate relevant expenses or losses in subsequent periods, and shall be recognized as profit and loss of thecurrent period during the recognition of related expenses; the grants used to compensate related expenses or lossesalready incurred shall be directly recognized as profit and loss of the current period.The government grants related to both assets and income shall be accounted for by distinguishing different parts;if it is difficult to distinguish, they shall be, as a whole, classified as income-related government grants.Government grants related to the Company's daily activities shall be recognized as other profit and loss or writedown relevant costs according to the essence of economic business; those unrelated to the Company's dailyactivities shall be recognized as non-operating income and expenditure.If the recognized government grants need to be returned and there is relevant deferred income balance, the bookbalance of relevant deferred income shall be written off, and the excess shall be recognized as profit and loss ofthe current period; otherwise, government grants shall be directly recognized as profit and loss of the currentperiod.
41. Deferred income tax assets/deferred income tax liabilities
(1) Current income tax
On the balance sheet date, the Company measures a current tax liability (or asset) arising from the current andprior periods based on the amount of income tax expected to be paid by the Company (or returned by tax authority)calculated by related tax laws. The taxable income which is the basis for calculation of the current income tax iscalculated after appropriate adjustments to the pretax accounting profits for the reporting period.
(2) Deferred income tax assets and deferred income tax liabilities
For the difference between the book value of certain assets and liabilities and their tax bases, and the temporarydifferences between the book values and the tax bases of items, of which the tax bases can be determined for taxpurposes according to the tax laws but which have not been recognized as assets and liabilities, the Companyrecognizes deferred income tax assets and deferred income tax liabilities using the balance sheet debt method.Where the taxable temporary differences arise from the initial recognition of goodwill and the initial recognitionof an asset or liability arising from the transaction that is not a business combination, nor, at the time of thetransaction, affects neither accounting profit and taxable profit (or deductible loss), the relevant deferred incometax liability shall not be recognized. Additionally, in respect of taxable temporary difference associated with
investments in subsidiaries, joint ventures and associates, where the Company can control the timing of thereversal of the temporary differences and it is probable that the temporary differences will not be reversed in theforeseeable future, the relevant deferred income tax liability shall not be recognized. Other than the aboveexceptions, the Company shall recognize deferred income tax liabilities arising out from all other taxabletemporary differences.Where the deductible temporary differences arise from the initial recognition of an asset or liability arising fromthe transaction that is not a business combination, nor, at the time of the transaction, affects neither accountingprofit and taxable profit (or deductible loss), the relevant deferred income tax liability shall not be recognized.Additionally, in respect of deductible temporary difference associated with investments in subsidiaries, jointventures and associates, where it is probable that the temporary differences will not be reversed in the foreseeablefuture or taxable profit will not be available against which the deductible temporary differences can be utilized inthe future, the relevant deferred income tax liability shall not be recognized. Other than the above exceptions, theCompany recognizes a deferred tax asset for other deductible temporary differences, to the extent that it isprobable that future taxable profit will be available against which the deductible temporary differences can beutilized.The tax effects of deductible losses and taxes available for carrying over are recognized as an asset when it isprobable that future taxable profits would be available against which these losses can be utilized.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to applyto the period when the asset is realized or the liability is settled, according to the requirements of tax laws.The book value of deferred tax assets is reviewed at the balance sheet date and written down to the extent that it isno longer probable that sufficient taxable profit will be available in future periods to allow the deferred tax assetsto be utilized. Such write-down is reversed when it becomes probable that sufficient taxable profits will beavailable.
(3) Income tax expenses
Income taxes comprise current income tax and deferred income tax.The current income tax and deferred income tax expense or income is recognized as the profit and loss of thecurrent period except that the current income tax and deferred income tax is related to transactions or events,which are recognized as other comprehensive income or directly recognized as shareholders' equity, and thusrecognized as other comprehensive income or shareholders' equity, and that the book value of goodwill is adjusteddue to deferred income tax arising from business combination.
42. Leases
(1) Accounting treatment method for operating lease
1) The Company records operating lease business as the lessee
Lease payments under an operating lease are recognized on a straight-line basis over the lease term, andrecognized as the cost of the related asset or as profit and loss of the current period. Initial direct costs arerecognized as the profit and loss of the current period. Contingent rentals are recognized as profit and loss of thecurrent period when they are actually incurred.
2) The Company records operating lease business as the lessor
Lease income under an operating lease are recognized on a straight-line basis over the lease term, and recognizedas profit and loss of the current period. The large-amount initial direct costs are capitalized when incurred, andrecognized as profit and loss of the current period on the same basis as the recognized lease income over the leaseterm; the small-amount initial direct costs are recognized as profit and loss of the current period when incurred.Contingent rentals are recognized as profit and loss of the current period when they are actually incurred.
(2) Accounting treatment method for finance lease
Leases of assets where substantially all the risks and rewards of ownership have been transferred are classified asfinance leases. Title may or may not eventually be transferred.
43. Other important accounting policies and accounting estimates: None
44. Significant changes of accounting policies and accounting estimates
(1) Significant changes of accounting policies
√ Applicable □ Not applicable
| Contents and reasons for changes to accounting policies | Approval procedure | Remarks |
| On July 5, 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 14 -- Revenue (C.K. [2017] No. 22), requiring that enterprises listed both within the borders and abroad as well as enterprises listed | On February 25, 2020, the Company convened the 21st meeting of the fourth session of the Board of Directors and the 17th meeting of the fourth session of the Board of Supervisors, and approved the Proposal on Changes to Accounting | Details can be found in the Announcement on Changes to Accounting Policies (Announcement No.: 2020-10) dated February 26, 2020 on CNINFO (http://www.cninfo.com.cn). |
| abroad and adopting IFRS or Accounting Standards for Business Enterprises to prepare financial statements should implement these revised Standards from January 1, 2018; other enterprises listed within China shall implement these revised Standards from January 1, 2020. | Policies. |
1) Accounting policy changes resulted from the execution of the New Revenue StandardsThe Ministry of Finance promulgated the Accounting Standards for Business Enterprises No. 14 –Revenue (C.K.[2017] No. 22) (hereafter referred to as the “New Revenue Standards”) on July 5, 2017. Upon deliberation, the21st meeting of the fourth session of the Board of Directors passed a resolution on February 25, 2020 that theCompany would implement the New Revenue Standards from January 1, 2020.The New Revenue Standards set up a new revenue recognition model to regulate revenues generated fromcontracts with customers. In order to implement the New Revenue Standards, the Company reassessed therecognition, measurement, accounting and presentation of revenues from major contracts. Pursuant to the NewRevenue Standards, the Company chose to only adjust the accumulative impact amount for contracts that have notbeen completed on January 1, 2020. The amounts of retained earnings and other relevant items in the financialstatements at the beginning of the period for the first time adoption of the new standards (i.e. January 1, 2020) areadjusted based on the accumulative impact amount at the first time adoption, while comparative financialinformation for the previous accounting periods is not adjusted.
2) Major changes and impacts upon implementation of the New Revenue Standards are as follows:
The Company changes the contractual consideration received from customers in advance for the transfer of goodsfrom the “payments received in advance” item to the “contract liabilities” item for presentation.The Company’s implementation of the New Revenue Standards did not have an impact on the retained earnings atthe beginning of 2020. Impacts on other relevant items in the financial statements dated January 1, 2020 are listedin the following:
Unit: RMB
| Statement item | Amount on December 31, 2019 (prior to changes) | Amount on January 1, 2020 (after changes | ||
| Consolidated statement | Parent Company’s statement | Consolidated statement | Parent Company’s statement | |
| Payments received in | 142,476,562.31 | 28,227,454.47 | ||
| advance | ||||
| Contract liabilities | 142,476,562.31 | 28,227,454.47 |
(2) Significant changes of accounting estimates
□ Applicable √ Not applicable
(3) Description on the adjustment of relevant items in the financial statements at the beginning of the yearfor the first time adoption of the New Revenue Standards and the new leasing standards since 2020ApplicableWhether to adjust the subjects of the balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjustment number |
| Current assets: | |||
| Monetary funds | 703,746,624.42 | 703,746,624.42 | |
| Settlement reserve | |||
| Lending to banks and other financial institutions | |||
| Tradable financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 301,904.32 | 301,904.32 | |
| Accounts receivable | 807,772,897.68 | 807,772,897.68 | |
| Accounts receivable financing | |||
| Prepayments | 14,877,757.16 | 14,877,757.16 | |
| Premium receivable | |||
| Reinsurance payables |
| Reinsurance contract reserves receivable | |||
| Other receivables | 8,240,417.99 | 8,240,417.99 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Financial assets held under resale agreements | |||
| Inventory | 986,405,689.17 | 986,405,689.17 | |
| Contract assets | |||
| Assets held for sale | 57,073,059.69 | 57,073,059.69 | |
| Non-current assets due within one year | |||
| Other current assets | 165,567,805.78 | 165,567,805.78 | |
| Total current assets | 2,743,986,156.21 | 2,743,986,156.21 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in creditor’s rights | |||
| Investments in other creditor’s rights | |||
| Long-term receivable | |||
| Long-term equity investment | |||
| Investment in other equity instruments | |||
| Other non-current financial assets |
| Investment property | 36,039,381.30 | 36,039,381.30 | |
| Fixed assets | 2,921,392,106.87 | 2,921,392,106.87 | |
| Construction work in progress | 55,734,236.91 | 55,734,236.91 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 168,731,781.83 | 168,731,781.83 | |
| Development expenses | |||
| Goodwill | 64,654.15 | 64,654.15 | |
| Long-term deferred expenses | 13,686,397.24 | 13,686,397.24 | |
| Deferred income tax assets | 80,331,080.17 | 80,331,080.17 | |
| Other non-current assets | 6,306,028.96 | 6,306,028.96 | |
| Total non-current assets | 3,282,285,667.43 | 3,282,285,667.43 | |
| Total assets | 6,026,271,823.64 | 6,026,271,823.64 | |
| Current liabilities: | |||
| Short-term borrowings | 14,721,492.38 | 14,721,492.38 | |
| Borrowings from PBC | |||
| Placements from banks and other financial institutions | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 202,653,860.31 | 202,653,860.31 |
| Accounts payable | 578,212,781.22 | 578,212,781.22 | |
| Payments received in advance | 142,476,562.31 | -142,476,562.31 | |
| Contract liabilities | 142,476,562.31 | 142,476,562.31 | |
| Proceeds from financial assets sold under repo | |||
| Customer bank deposits and due to banks and other financial institutions | |||
| Funds from securities trading agency | |||
| Funds from securities underwriting agency | |||
| Employee remuneration payable | 106,413,600.27 | 106,413,600.27 | |
| Tax and fees payable | 101,670,618.11 | 101,670,618.11 | |
| Other payables | 635,834,511.05 | 635,834,511.05 | |
| Including: Interests payable | 173,259.89 | 173,259.89 | |
| Dividends payable | 452,536.50 | 452,536.50 | |
| Transaction fee and commission receivable | |||
| Reinsurance payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 32,400,000.00 | 32,400,000.00 | |
| Other current liabilities | |||
| Total current liabilities | 1,814,383,425.65 | 1,814,383,425.65 | |
| Non-current liabilities: |
| Insurance contract reserves | |||
| Long-term borrowings | 22,500,000.00 | 22,500,000.00 | |
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employee remuneration payable | |||
| Provision | |||
| Deferred income | 82,367,831.33 | 82,367,831.33 | |
| Deferred income tax liabilities | 30,016,107.43 | 30,016,107.43 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 134,883,938.76 | 134,883,938.76 | |
| Total liabilities | 1,949,267,364.41 | 1,949,267,364.41 | |
| Owner's equity: | |||
| Share capital | 1,308,891,273.00 | 1,308,891,273.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 760,731,416.57 | 760,731,416.57 | |
| Less: Treasury shares | 104,792,649.00 | 104,792,649.00 |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 53,205,582.86 | 53,205,582.86 | |
| General reserves | |||
| Retained earnings | 2,058,968,835.80 | 2,058,968,835.80 | |
| Total equity attributable to owners of the parent company | 4,077,004,459.23 | 4,077,004,459.23 | |
| Equities of minority shareholders | |||
| Total owner's equity | 4,077,004,459.23 | 4,077,004,459.23 | |
| Total liabilities and owners' equities | 6,026,271,823.64 | 6,026,271,823.64 |
Description of adjustmentBalance sheet of the Parent Company
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjustment number |
| Current assets: | |||
| Monetary funds | 156,202,659.45 | 156,202,659.45 | |
| Tradable financial assets | |||
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | 127,203,426.87 | 127,203,426.87 | |
| Accounts receivable financing | |||
| Prepayments | 2,565,716.66 | 2,565,716.66 | |
| Other receivables | 637,511,752.54 | 637,511,752.54 |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventory | 84,567,041.98 | 84,567,041.98 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 129,377,576.74 | 129,377,576.74 | |
| Total current assets | 1,137,428,174.24 | 1,137,428,174.24 | |
| Non-current assets: | |||
| Investments in creditor’s rights | |||
| Investments in other creditor’s rights | |||
| Long-term receivable | |||
| Long-term equity investment | 1,231,245,128.96 | 1,231,245,128.96 | |
| Investment in other equity instruments | |||
| Other non-current financial assets | |||
| Investment property | 18,745,192.09 | 18,745,192.09 | |
| Fixed assets | 222,724,273.70 | 222,724,273.70 | |
| Construction work in progress | 35,260,100.44 | 35,260,100.44 | |
| Productive biological assets |
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 21,259,498.66 | 21,259,498.66 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | |||
| Deferred income tax assets | 18,366,334.29 | 18,366,334.29 | |
| Other non-current assets | 4,521,074.21 | 4,521,074.21 | |
| Total non-current assets | 1,552,121,602.35 | 1,552,121,602.35 | |
| Total assets | 2,689,549,776.59 | 2,689,549,776.59 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 325,506,510.90 | 325,506,510.90 | |
| Payments received in advance | 28,227,454.47 | -28,227,454.47 | |
| Contract liabilities | 28,227,454.47 | 28,227,454.47 | |
| Employee remuneration payable | 24,280,403.99 | 24,280,403.99 | |
| Tax and fees payable | 3,225,793.88 | 3,225,793.88 | |
| Other payables | 167,279,884.09 | 167,279,884.09 | |
| Including: Interests payable |
| Dividends payable | 452,536.50 | 452,536.50 | |
| Liabilities held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | |||
| Total current liabilities | 548,520,047.33 | 548,520,047.33 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employee remuneration payable | |||
| Provision | |||
| Deferred income | 7,062,818.69 | 7,062,818.69 | |
| Deferred income tax liabilities | 5,575,323.82 | 5,575,323.82 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 12,638,142.51 | 12,638,142.51 | |
| Total liabilities | 561,158,189.84 | 561,158,189.84 | |
| Owner's equity: | |||
| Share capital | 1,308,891,273.00 | 1,308,891,273.00 | |
| Other equity instruments |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 690,241,724.38 | 690,241,724.38 | |
| Less: Treasury shares | 104,792,649.00 | 104,792,649.00 | |
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 53,084,248.58 | 53,084,248.58 | |
| Retained earnings | 180,966,989.79 | 180,966,989.79 | |
| Total owner's equity | 2,128,391,586.75 | 2,128,391,586.75 | |
| Total liabilities and owners' equities | 2,689,549,776.59 | 2,689,549,776.59 |
Explanation of adjustment
(4) Description on the retrospective adjustment of previous comparable data at the first time adoption ofthe new Revenue Standards and the new leasing standards in 2020
□ Applicable √ Not applicable
45. Others: None
VI. Taxes
1. Main tax types and tax rates
| Tax | Tax basis | Tax rate |
| Value-added tax | Taxable VAT (calculated based on the difference of deducting the amount of input tax which is allowed to be deducted in the current period from the result of multiplying taxable sales by applicable tax rate) | 13% |
| City construction and maintenance tax | Turnover tax paid | 5%, 7% |
| Corporate income tax | Taxable income | 15%, 16.5%, 20%, 25%, progressive rate |
| Education surcharges | Turnover tax paid | 3% |
| Local education surcharges | Turnover tax paid | 1.5%, 2% |
Description of disclosure if different income tax rates apply to different corporate taxpayers
| Name of taxpayer | Income tax rate |
| C&S Paper Co., Ltd., Zhongshan Zhongshun Trading Co., Ltd., C&S (Hubei) Paper Co., Ltd., Xiaogan C&S Trading Co., Ltd., Zhejiang Zhongshun Paper Co., Ltd., Chengdu Zhongshun Paper Co., Ltd., Hangzhou Jie Rou Trading Co., Ltd., Beijing C&S Paper Co., Ltd., and Sun Daily Necessities Co., Ltd. | 25% |
| C&S (Zhongshan) Paper Co., Ltd., C&S (Dazhou) Paper Co., Ltd., Shanghai Huicong Paper Co., Ltd., and C&S (Yunfu) Trading Co., Ltd. | 20% |
| Zhong Shun International Co., Ltd., and C&S Hong Kong Co., Ltd. (Note 1) | 16.50% |
| Jiangmen Zhongshun Paper Co., Ltd., C&S (Sichuan) Paper Co., Ltd., and C&S (Yunfu) Paper Co., Ltd. | 15% |
| C&S (Macao) Co., Ltd. (Note 2) | Progressive rate |
2. Tax incentive
Jiangmen Zhongshun Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province in 2018, andwas awarded the Certificate of High-tech Enterprise (No. GR201844008474) on November 28, 2018, with a validterm of three years. Therefore, the corporate income tax is calculated at a tax rate of 15% in 2020.C&S (Sichuan) Paper Co., Ltd. was certified as a high-tech enterprise of Sichuan Province in 2020, and wasawarded the Certificate of High-tech Enterprise (No. GR202051001193) on September 11, 2020, with a validterm of three years. Therefore, the corporate income tax is calculated at a tax rate of 15% in 2020.C&S (Yunfu) Paper Co., Ltd. was certified as a high-tech enterprise of Guangdong Province in 2020, and wasawarded the Certificate of High-tech Enterprise (No. GR202044006774) on December 9, 2020, with a valid termof three years. Therefore, the corporate income tax is calculated at a tax rate of 15% in 2020.In accordance with relevant provisions of the Announcement of the State Administration of Taxation on IssuesConcerning the Implementation of the Inclusive Income Tax Deduction and Exemption Policies for SmallLow-profit Enterprises (STA Doc. [2019] No. 2), the policy on inclusive income tax deduction and exemption for
small low-profit enterprises is applicable to C&S (Zhongshan) Paper Co., Ltd., C&S (Dazhou) Paper Co., Ltd.,Shanghai Huicong Paper Co., Ltd., and C&S (Yunfu) Trading Co., Ltd. in 2020. To be specific, the annual taxableincome of these enterprises that is not more than RMB1 million shall be included in their taxable income at thereduced rate of 25%, with the applicable corporate income tax rate of 20%; and the annual taxable income that isnot less than RMB1 million nor more than RMB3 million shall be included in their taxable income at the reducedrate of 50%, with the applicable enterprise income tax rate of 20%.
3. Others
Note 1: C&S Hong Kong Co., Ltd. is a Hong Kong-based company incorporated according to the laws of HongKong, and adopts the tax laws thereof. The tax rate for its income tax is 16.50%;Note 2: C&S (Macao) Co., Ltd. is a Macao-based company incorporated according to the laws of Macao. Itscomplementary tax adopts a progressive rate (tax on taxable income that is less than MOP300,000 is exempted,and the taxable income that is more than MOP300,000 is taxed at 12%).VII. Notes to Items of the Consolidated Financial Statements
1. Monetary fund
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Cash on hand | 36,349.55 | 76,152.38 |
| Bank deposits | 1,047,785,634.71 | 675,589,471.75 |
| Other monetary funds | 77,374,215.30 | 28,081,000.29 |
| Total | 1,125,196,199.56 | 703,746,624.42 |
| Including: Total deposits in overseas banks | 99,311,423.25 | 63,089,915.23 |
Other description:
Balance of other monetary funds at the end of the reporting period is the security deposit for issuing letters of creditand bank acceptance bill and balance of Alipay. Refer to "Note VII (81)" for circumstances where ownership ofmonetary funds is restricted.
2. Transactional financial assets：None
3. Derivative financial assets：None
4. Notes receivable
(1) Notes receivable presentation by category
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Bank acceptance bill | 724,419.74 | 301,904.32 |
| Total | 724,419.74 | 301,904.32 |
If the bad debt reserve of notes receivable is set aside according to general model of expected credit loss, pleaserefer to the disclosure method of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
(2) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodWherein, the amount of recovered or transferred back bad debt reserve in the reporting period is important:
□ Applicable √ Not applicable
(3) Notes receivable that the Company has pledged at the end of the reporting period: None
(4) Notes receivable that the Company has endorsed or discounted at the end of the reporting period andare not due on the balance sheet date: None
(5) Notes that are transferred to notes receivable because the drawer does not perform the contract at theend of the reporting period: NoneOther descriptions:
1. The Company has no pledged notes receivable as at the end of the year.
2. The Company has no derecognized notes receivable that are endorsed or discounted but not due as at the end ofthe year.
3. The Company has no notes that are transferred to notes receivable because the drawer does not perform thecontract as at the end of the year.
(6) Notes receivable actually written off in the reporting period: None
5. Accounts receivable
(1) Accounts receivable disclosure by category
Unit: RMB
| Type | Balance at the end of the year | Balance at the beginning of the year | ||||||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Accounts receivable for which bad debt reserve is set aside individually | 34,567,651.21 | 3.17% | 10,681,068.59 | 30.90% | 23,886,582.62 | 34,567,651.21 | 4.11% | 10,681,068.59 | 30.90% | 23,886,582.62 |
| Including: | ||||||||||
| Accounts receivable for which bad debt reserve is set aside in portfolios | 1,054,953,298.93 | 96.83% | 27,415,941.96 | 2.60% | 1,027,537,356.97 | 805,681,115.48 | 95.89% | 21,794,800.42 | 2.71% | 783,886,315.06 |
| Including: | ||||||||||
| Portfolio based on aging | 1,054,953,298.93 | 96.83% | 27,415,941.96 | 2.60% | 1,027,537,356.97 | 805,681,115.48 | 95.89% | 21,794,800.42 | 2.71% | 783,886,315.06 |
| Total | 1,089,520,950.14 | 100.00% | 38,097,010.55 | 3.50% | 1,051,423,939.59 | 840,248,766.69 | 100.00% | 32,475,869.01 | 3.87% | 807,772,897.68 |
Bad debt reserve set aside individually: 10,681,068.59
Unit: RMB
| Name | Balance at the end of the period | |||
| Book balance | Impairment provision | Provision ratio | Reason for provision | |
| Institution 1 | 28,279,537.67 | 8,218,072.46 | 29.06% | It is difficult to recover all goods payments due |
| to the poor business performance of the customer. | ||||
| Institution 2 | 6,288,113.54 | 2,462,996.13 | 39.17% | It is difficult to recover all goods payments due to the poor business performance of the customer. |
| Total | 34,567,651.21 | 10,681,068.59 | -- | -- |
Bad debt reserve set aside in portfolios: 27,415,941.96
Unit: RMB
| Name | Balance at the end of the period | ||
| Book balance | Impairment provision | Provision ratio | |
| Within the credit period | 900,595,441.14 | 18,011,908.84 | 2.00% |
| Credit period - 1 year | 147,420,485.43 | 7,371,024.27 | 5.00% |
| 1 to 2 years | 2,605,538.69 | 390,830.80 | 15.00% |
| 2 to 3 years | 3,186,429.84 | 955,928.95 | 30.00% |
| 3 to 5 years | 918,309.47 | 459,154.74 | 50.00% |
| Over 5 years | 227,094.36 | 227,094.36 | 100.00% |
| Total | 1,054,953,298.93 | 27,415,941.96 | -- |
Description of reason for the portfolio:
Accounts receivable with the same aging have similar credit risk characteristics.If the bad debt reserve of accounts receivable is set aside according to general model of expected credit loss,please refer to the disclosure method of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
Disclose by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 1,048,015,926.57 |
| 1 to 2 years | 2,605,538.69 |
| 2 to 3 years | 3,186,429.84 |
| Over 3 years | 35,713,055.04 |
| 3 to 4 years | 28,542,337.67 |
| 4 to 5 years | 2,795,515.45 |
| Over 5 years | 4,375,201.92 |
| Total | 1,089,520,950.14 |
(2) Bad debt reserve that is set aside, recovered or transferred back
Provision of bad debt reserve of the reporting period:
Unit: RMB
| Type | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Accounts receivable | 32,475,869.01 | 5,735,079.40 | 113,937.86 | 38,097,010.55 | ||
| Total | 32,475,869.01 | 5,735,079.40 | 113,937.86 | 38,097,010.55 | ||
Wherein, the amount of recovered or transferred back bad debt reserve in the reporting period is important: None
(3) Accounts receivable actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
| Accounts receivable actually written off | 113,937.86 |
Description of write-offs of important accounts receivable: None
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable at | Percentage in total balance of | Balance for bad debt reserve at |
| the end of the period | accounts receivable at the end of the period | the end of the period | |
| 1st | 289,513,741.56 | 26.57% | 5,790,274.83 |
| 2nd | 118,555,127.86 | 10.88% | 3,789,979.81 |
| 3rd | 59,957,146.79 | 5.50% | 1,659,474.39 |
| 4th | 58,786,865.25 | 5.40% | 1,175,737.31 |
| 5th | 32,383,538.18 | 2.97% | 647,670.76 |
| Total | 559,196,419.64 | 51.32% |
(5) Accounts receivable derecognized due to transfer of financial assets
The Company has no accounts receivable derecognized due to the transfer of financial assets as at the end of thereporting period.
(6) Amounts of assets and liabilities that are formed by the transfer and ongoing involvement of accountsreceivableThe Company has no amounts of assets and liabilities that are formed by the transfer and ongoing involvement ofaccounts receivable as at the end of the reporting period.Other description: None
6. Accounts receivable financing
Increase and decrease of accounts receivable financing and changes in fair value in the reporting period
□ Applicable √ Not applicable
If the provisions for asset impairment of accounts receivable financing are set aside according to general model ofexpected credit loss, please refer to the disclosure method of other receivables to disclose relevant information onprovisions for asset impairment:
□ Applicable √ Not applicable
7. Prepayments
(1) Prepayments presentation by aging
Unit: RMB
| Aging | Balance at the end of the period | Balance at the beginning of the period | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 26,819,108.57 | 100.00% | 14,430,801.70 | 97.00% |
| 1 to 2 years | 446,955.46 | 3.00% | ||
| Total | 26,819,108.57 | -- | 14,877,757.16 | -- |
Explanation on the reason of untimely settlement of prepayments whose age exceeds one year with significantamount: None
(2) Top five payees in closing balance of prepayment
The Company’s total prepayment amount of the top five payees in closing balance of prepayment isRMB15,636,993.89, accounting for 58.31% of closing balance of prepayment.
8. Other receivables
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Other receivables | 15,824,945.56 | 8,240,417.99 |
| Total | 15,824,945.56 | 8,240,417.99 |
(1) Interest receivable
1) Classification of interest receivable
2) Significant overdue interest
Other description: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Significant dividends receivable exceeding one year: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
Other description: None
(3) Other receivables
1) Classification of other receivables by nature
Unit: RMB
| Nature | Book balance at the end of the period | Book balance at the beginning of the period |
| Margins and deposits | 4,621,457.93 | 4,098,736.90 |
| Current accounts | 5,350,546.55 | 3,395,872.47 |
| Reserve | 1,704,120.13 | 1,621,094.57 |
| Others | 5,999,332.44 | 255,741.34 |
| Total | 17,675,457.05 | 9,371,445.28 |
2) Provision of bad debt reserve
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| Balance as at January 1, 2020 | 1,131,027.29 | 1,131,027.29 | ||
| Balance as at January 1, | —— | —— | —— | —— |
| 2020 in the reporting period | ||||
| Provision in the reporting period | 727,073.31 | 727,073.31 | ||
| Write-off in the reporting period | 7,589.11 | 7,589.11 | ||
| Balance as at December 31, 2020 | 1,850,511.49 | 1,850,511.49 |
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 13,675,426.56 |
| 1 to 2 years | 1,463,727.95 |
| 2 to 3 years | 2,172,174.66 |
| Over 3 years | 364,127.88 |
| 3 to 4 years | 109,354.05 |
| 4 to 5 years | 27,844.60 |
| Over 5 years | 226,929.23 |
| Total | 17,675,457.05 |
3) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodProvision of bad debt reserve of the reporting period:
Unit: RMB
| Category | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other receivables | 1,131,027.29 | 727,073.31 | 7,589.11 | 1,850,511.49 | ||
| Total | 1,131,027.29 | 727,073.31 | 7,589.11 | 1,850,511.49 |
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
| Other receivables actually written off | 7,589.11 |
Description on the write-offs of other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
| Name of institution | Nature of the amount | Balance at the end of the period | Aging | Percentage in total balance of other receivables at the end of the period | Balance of bad debt reserve at the end of the period |
| 1st | Others | 5,431,871.82 | Within 1 year | 30.73% | 271,593.59 |
| 2nd | Margins and deposits | 1,100,000.00 | 2-3 years | 6.22% | 330,000.00 |
| 3rd | Margins and deposits | 786,229.23 | 1-2 years, over 5 years | 4.45% | 276,229.23 |
| 4th | Margins and deposits | 650,000.00 | Within 1 year, 2-3 years | 3.68% | 182,500.00 |
| 5th | Others | 381,138.93 | Within 1 year , 1-2 years | 2.16% | 31,582.19 |
| Total | -- | 8,349,239.98 | -- | 47.24% | 1,091,905.01 |
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement of otherreceivables: None
9. Inventory
Whether the Company needs to comply with requirements for disclosure in the real estate industry: No
(1) Classification of inventories
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Provision for impairment of inventories or provision for contract performance cost | Book value | Book balance | Provision for impairment of inventories or provision for contract performance cost | Book value | |
| Raw materials | 1,148,312,808.05 | 133,039.11 | 1,148,179,768.94 | 524,569,054.30 | 11,942.85 | 524,557,111.45 |
| Work-in-process products | 40,777,441.76 | 306,847.08 | 40,470,594.68 | 47,577,009.45 | 357,365.13 | 47,219,644.32 |
| Commodity stocks | 410,313,722.29 | 2,738,280.52 | 407,575,441.77 | 375,752,356.14 | 1,562,936.40 | 374,189,419.74 |
| Packages | 32,644,525.84 | 145,489.07 | 32,499,036.77 | 24,152,524.80 | 154,311.71 | 23,998,213.09 |
| Low-value consumables | 13,889,922.62 | 529,767.94 | 13,360,154.68 | 11,353,098.88 | 675,834.25 | 10,677,264.63 |
| Materials for consigned processing | 19,189,498.48 | 19,189,498.48 | 5,764,035.94 | 5,764,035.94 | ||
| Total | 1,665,127,919.04 | 3,853,423.72 | 1,661,274,495.32 | 989,168,079.51 | 2,762,390.34 | 986,405,689.17 |
(2) Provision for impairment of inventories or provision for contract performance cost
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period | ||
| Provision | Others | Reversal or written off | Others | |||
| Raw materials | 11,942.85 | 346,679.55 | 225,583.29 | 133,039.11 | ||
| Work-in-process products | 357,365.13 | 522,955.12 | 573,473.17 | 306,847.08 | ||
| Commodity stocks | 1,562,936.40 | 2,872,026.41 | 1,696,682.29 | 2,738,280.52 | ||
| Packages | 154,311.71 | 272,785.17 | 281,607.81 | 145,489.07 | ||
| Low-value consumables | 675,834.25 | 625,420.70 | 771,487.01 | 529,767.94 | ||
| Total | 2,762,390.34 | 4,639,866.95 | 3,548,833.57 | 3,853,423.72 | ||
(3) Explanation that balance of inventory at the end of the reporting period includes amount ofcapitalization of borrowing costs
(4) Explanation on amortized amount of contract performance cost in the reporting period
10. Contract assets
If the bad debt reserve of contrast assets is set aside according to general model of expected credit loss, pleaserefer to the disclosure method of other receivables to disclose relevant information on bad debt reserve:
□ Applicable √ Not applicable
Provision for impairment of contract assets in the reporting periodOther description: None
11. Assets held for sale
Unit: RMB
| Item | Book balance at the | Impairmen | Book value at | Fair value | Estimated | Estimated |
| end of the period | t provision | the end of the period | disposal fee | disposal time | ||
| Immovable assets of the old factory of Hubei C&S (including land use rights) | 57,073,059.69 | 57,073,059.69 | 66,285,118.00 | December 31, 2020 | ||
| Total | 57,073,059.69 | 57,073,059.69 | 66,285,118.00 | -- |
Other description:
In December 2019, in order to boost the investment and construction of Phase II of the high-end household paperproject in the industrial zone in the Economic Development Area of Xiaonan District, Xiaogan City, the Companysigned an agreement on the acquisition of the immovable assets in the old factory of Hubei C&S (including land userights) upon consultation with Xiaonan District People's Government of Xiaogan City. The Company believed thatthe immovable assets of the old factory of Hubei C&S (including land use rights) could be sold immediately in thecurrent situation, according to similar transactions where such assets were sold. The Company signed a bindingpurchase agreement with Xiaogan Changxing Investment Co., Ltd. and Xiaonan District People's Government ofXiaogan City regarding the transfer of such assets in December 2019. The Agreement contained important termsand conditions including the price and time of the transaction as well as penalty for breach of contract that was strictenough. Therefore, there is little possibility for the agreement to be significantly changed or canceled. TheCompany originally estimated that the ultimate transfer would be completed before December 2020. However,under the impact of the Covid-19 pandemic in 2020, the government shifted its focus to anti-pandemic work withpeople’s interests above everything else. Especially, Xiaogan City of Hubei Province was one of the hardest-hitareas, so the government has put all efforts in the fight against the virus and post-pandemic economic rejuvenation.As a result, it was unable to pay all asset transfer amount within the agreed period. As of the reporting date, theCompany has received most of the asset transfer payment (RMB58.14 million).
12. Non-current assets due within one year: None
13. Other current assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Reverse repos of treasury bonds | 87,105,000.00 | |
| Wealth management products | 50,000,000.00 | 40,000,000.00 |
| Input VAT to be deducted | 51,550,834.13 | 32,822,256.90 |
| Prepaid corporate income tax | 33,735.17 | 5,640,548.88 |
| Total | 101,584,569.30 | 165,567,805.78 |
Other description: None
14. Investments in creditor's rights
Provisions for asset impairmentDescription of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Other description: None
15. Other investments in creditor's rights
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Other description: None
16. Long-term receivables
(1) Long-term receivables
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
(2) Long-term receivables derecognized due to the transfer of financial assets
(3) Amounts of assets and liabilities that are formed by the transfer and ongoing involvement of long-termreceivablesOther description: None
17. Long-term equity investment: None
18. Investment in other equity instruments: None
19. Other non-current financial assets: None
20. Investment property
(1) Investment property measured at cost
√ Applicable □ Not applicable
Unit: RMB
| Item | Properties and buildings | Land use rights | Construction work in progress | Total |
| I. Original Book Value | ||||
| 1. Balance at the beginning of the period | 31,142,650.03 | 21,661,131.29 | 52,803,781.32 | |
| 2. Increase in the current period | ||||
| (1) External purchase | ||||
| (2) Inventory\fixed assets\transfer from construction work in progress | ||||
| (3) Increase in business combination | ||||
| 3. Decrease in the current period | 70,017.11 | 70,017.11 | ||
| (1) Disposal | 70,017.11 | 70,017.11 | ||
| (2) Other transfers out | ||||
| 4. Balance at the end of the period | 31,072,632.92 | 21,661,131.29 | 52,733,764.21 |
| II. Accumulated Depreciation and Amortization | ||||
| 1. Balance at the beginning of the period | 11,923,174.46 | 4,841,225.56 | 16,764,400.02 | |
| 2. Increase in the current period | 1,100,254.54 | 321,695.40 | 1,421,949.94 | |
| (1) Provision or amortization | 1,100,254.54 | 321,695.40 | 1,421,949.94 | |
| 3. Decrease in the current period | 27,951.69 | 27,951.69 | ||
| (1) Disposal | 27,951.69 | 27,951.69 | ||
| (2) Other transfers out | ||||
| 4. Balance at the end of the period | 12,995,477.31 | 5,162,920.96 | 18,158,398.27 | |
| III. Impairment Provision | ||||
| 1. Balance at the beginning of the period | ||||
| 2. Increase in the current period | ||||
| (1) Provision | ||||
| 3. Decrease in the current period | ||||
| (1) Disposal | ||||
| (2) Other transfers out | ||||
| 4. Balance at the end of the period | ||||
| IV. Book Value | ||||
| 1. Book value at the end of the period | 18,077,155.61 | 16,498,210.33 | 34,575,365.94 |
| 2. Book value at the beginning of the period | 19,219,475.57 | 16,819,905.73 | 36,039,381.30 |
(2) Investment property measured at fair value
□ Applicable √ Not applicable
(3) Investment property that the certificate of title has not been issued
The Company does not have investment property that the certificate of title has not been issued as at the end of theyear.
21. Fixed assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Fixed assets | 2,792,587,302.21 | 2,921,392,106.87 |
| Total | 2,792,587,302.21 | 2,921,392,106.87 |
(1) Information on fixed assets
Unit: RMB
| Item | Properties and buildings | Equipment | Office equipment | Motor vehicles | Production equipment | Total |
| I. Original Book Value | ||||||
| 1. Balance at the beginning of the period | 1,055,604,437.13 | 2,958,625,080.21 | 47,464,949.76 | 15,446,847.51 | 69,259,291.88 | 4,146,400,606.49 |
| 2. Increase in the current period | 66,939,711.30 | 97,821,291.65 | 10,951,427.25 | 1,740,223.44 | 10,081,107.77 | 187,533,761.41 |
| (1) Purchase | 2,143,089.37 | 10,203,739.83 | 1,740,223.44 | 5,832,610.78 | 19,919,663.42 | |
| (2) | 66,939,711.30 | 95,678,202.28 | 747,687.42 | 4,248,496.99 | 167,614,097.99 |
| Inventory\fixed assets\transfer from construction work in progress | ||||||
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | 2,521,774.14 | 41,693,285.43 | 3,733,832.28 | 48,290.60 | 47,997,182.45 | |
| (1) Disposal or scrap | 2,521,774.14 | 41,693,285.43 | 3,733,832.28 | 48,290.60 | 47,997,182.45 | |
| 4. Balance at the end of the period | 1,120,022,374.29 | 3,014,753,086.43 | 54,682,544.73 | 17,187,070.95 | 79,292,109.05 | 4,285,937,185.45 |
| II. Accumulated Depreciation | ||||||
| 1. Balance at the beginning of the period | 190,985,787.16 | 952,947,310.00 | 22,508,285.71 | 7,191,366.34 | 32,365,697.61 | 1,205,998,446.82 |
| 2. Increase in the current period | 40,086,159.01 | 236,975,142.10 | 6,815,097.93 | 1,268,020.74 | 9,300,712.53 | 294,445,132.31 |
| (1) Provision | 40,086,159.01 | 236,975,142.10 | 6,815,097.93 | 1,268,020.74 | 9,300,712.53 | 294,445,132.31 |
| 3. Decrease in the current period | 444,915.23 | 19,780,749.33 | 3,299,420.35 | 37,666.72 | 23,562,751.63 | |
| (1) Disposal or scrap | 444,915.23 | 19,780,749.33 | 3,299,420.35 | 37,666.72 | 23,562,751.63 | |
| 4. Balance at the end of the period | 230,627,030.94 | 1,170,141,702.77 | 26,023,963.29 | 8,459,387.08 | 41,628,743.42 | 1,476,880,827.50 |
| III. Impairment |
| Provision | ||||||
| 1. Balance at the beginning of the period | 18,970,596.52 | 29,332.40 | 10,123.88 | 19,010,052.80 | ||
| 2. Increase in the current period | 14,186,655.02 | 1,219.51 | 51,865.96 | 14,239,740.49 | ||
| (1) Provision | 14,186,655.02 | 1,219.51 | 51,865.96 | 14,239,740.49 | ||
| 3. Decrease in the current period | 16,741,281.27 | 29,332.40 | 10,123.88 | 16,780,737.55 | ||
| (1) Disposal or scrap | 16,741,281.27 | 29,332.40 | 10,123.88 | 16,780,737.55 | ||
| 4. Balance at the end of the period | 16,415,970.27 | 1,219.51 | 51,865.96 | 16,469,055.74 | ||
| IV. Book Value | ||||||
| 1.Book value at the end of the period | 889,395,343.35 | 1,828,195,413.39 | 28,657,361.93 | 8,727,683.87 | 37,611,499.67 | 2,792,587,302.21 |
| 2.Book value at the beginning of the period | 864,618,649.97 | 1,986,707,173.69 | 24,927,331.65 | 8,255,481.17 | 36,883,470.39 | 2,921,392,106.87 |
(2) Information on temporarily idle fixed assets
Unit: RMB
| Item | Original book value | Accumulated depreciation | Impairment provision | Book value | Remarks |
| Equipment | 34,175,187.87 | 16,895,212.30 | 16,415,970.27 | 864,005.30 | |
| Office equipment | 6,001.36 | 4,561.85 | 1,219.51 | 220.00 | |
| Production equipment | 182,633.33 | 130,267.37 | 51,865.96 | 500.00 |
| Total | 34,363,822.56 | 17,030,041.52 | 16,469,055.74 | 864,725.30 |
(3) Fixed assets acquired through finance lease: None
(4) Fixed assets leased through operating lease: None
(5) Fixed assets that the certificate of title has not been issued
Unit: RMB
| Item | Book value | Reasons for the certificate of title having not been issued |
| Workshops of Zhejiang C&S | 3,741,710.06 | Processing |
| Plants and warehouses of Tangshan Branch | 46,916,577.15 | Processing |
| Workshops, warehouses, and dormitories of Hubei C&S | 148,272,896.93 | Processing |
| Total | 198,931,184.14 |
Other descriptionThere was no limitation on the ownership of fixed assets of the Company at the end of the reporting period.
(6) Disposal of fixed assets
Other description: None
22. Construction work in process
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Construction work in process | 275,904,617.95 | 55,734,236.91 |
| Total | 275,904,617.95 | 55,734,236.91 |
(1) Construction work in progress
Unit: RMB
| Project | Balance at the end of the period | Balance at the beginning of the period |
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Construction work of Tangshan Branch | 35,260,100.44 | 35,260,100.44 | ||||
| Construction work of Jiangmen C&S | 1,028,646.43 | 1,028,646.43 | 8,149,431.17 | 8,149,431.17 | ||
| Construction work of Yunfu C&S | 24,342,285.15 | 24,342,285.15 | 6,611,423.72 | 6,611,423.72 | ||
| Construction work of Hubei C&S | 244,523,934.15 | 244,523,934.15 | 5,219,006.80 | 5,219,006.80 | ||
| Construction work of Zhejiang C&S | 249,608.17 | 249,608.17 | 494,274.78 | 494,274.78 | ||
| Construction work of Sichuan C&S | 5,760,144.05 | 5,760,144.05 | ||||
| Total | 275,904,617.95 | 275,904,617.95 | 55,734,236.91 | 55,734,236.91 |
(2) Changes of significant construction work in progress in the current period
Unit: RMB
| Project | Budget number | Balance at the beginning of the year | Increase in the current period | Amount of fixed assets transferred in the current period | Decrease in the current period | Balance at the end of the year | Proportion of the cumulative construction input in budget | Construction progress | Accumulative amount of interest capitalization | Including: Amount of interest capitalization in | Interest capitalization rate in the current period | Source of fund |
| the period | ||||||||||||
| Construction work of Tangshan Branch | 335,775,000.00 | 35,260,100.44 | 20,832,459.99 | 56,092,560.43 | 0.00 | 19.61% | 19.61% | Others | ||||
| Construction work of Jiangmen C&S | 25,712,378.02 | 8,149,431.17 | 17,429,222.81 | 24,550,007.55 | 1,028,646.43 | 99.48% | 99.48% | Others | ||||
| Construction work of Yunfu C&S | 101,430,908.80 | 6,611,423.72 | 59,756,136.05 | 42,025,274.62 | 24,342,285.15 | 76.34% | 76.34% | Others | ||||
| Construction work of Hubei C&S | 1,353,000,000.00 | 5,219,006.80 | 254,551,411.81 | 15,246,484.46 | 244,523,934.15 | 71.46% | 71.46% | Others | ||||
| Construction work of Zhejiang C&S | 5,540,871.83 | 494,274.78 | 5,014,148.00 | 5,258,814.61 | 249,608.17 | 99.41% | 99.41% | Others | ||||
| Construction work of Sichuan C&S | 30,949,919.11 | 0.00 | 30,201,100.37 | 24,440,956.32 | 5,760,144.05 | 97.58% | 97.58% | Others |
| Total | 1,852,409,077.76 | 55,734,236.91 | 387,784,479.03 | 167,614,097.99 | 275,904,617.95 | -- | -- | -- |
(3) Construction-in-progress provision set aside in the current period
There was no situation where the recoverable amount of the construction work in progress is lower than the bookvalue which required provisions in the Company in the reporting period.
(4) Construction materials
Other description: None
23. Productive biological assets
(1) Productive biological assets measured at cost
□ Applicable √ Not applicable
(2) Productive biological assets measured at fair value
□ Applicable √ Not applicable
24. Oil & gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
Other description: None
26. Intangible assets
(1) Intangible assets
Unit: RMB
| Item | Land use right | Patent right | Non-patented technology | Application software | Trademark right | Total |
| I. Original Book Value | ||||||
| 1. Balance at the beginning of the period | 189,064,322.15 | 1,342,721.84 | 12,433,710.50 | 168,370.83 | 203,009,125.32 | |
| 2. Increase in the current period | 6,385,724.17 | 0.00 | 6,385,724.17 | |||
| (1) Purchase | 6,385,724.17 | 0.00 | 6,385,724.17 | |||
| (2) Internal R&D | ||||||
| (3) Increase in business combination | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Balance at the end of the period | 189,064,322.15 | 1,342,721.84 | 18,819,434.67 | 168,370.83 | 209,394,849.49 | |
| II. Accumulated Amortization | ||||||
| 1. Balance at the beginning of the period | 26,533,474.35 | 790,967.09 | 6,784,531.22 | 168,370.83 | 34,277,343.49 | |
| 2. Increase in the current period | 2,917,485.79 | 94,269.96 | 2,749,978.01 | 5,761,733.76 | ||
| (1) Provision | 2,917,485.79 | 94,269.96 | 2,749,978.01 | 5,761,733.76 | ||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Balance at the end of the period | 29,450,960.14 | 885,237.05 | 9,534,509.23 | 168,370.83 | 40,039,077.25 | |
| III. Impairment Provision | ||||||
| 1. Balance at the beginning of the period | ||||||
| 2. Increase in the current period | ||||||
| (1) Provision | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Balance at the end of the period | ||||||
| IV. Book Value | ||||||
| 1. Book value at the end of the period | 159,613,362.01 | 457,484.79 | 9,284,925.44 | 169,355,772.24 | ||
| 2. Book value at the beginning of the period | 162,530,847.80 | 551,754.75 | 5,649,179.28 | 168,731,781.83 |
The intangible assets generated other than internal R&D of the Company at the end of the period occupy 0.00% ofthe balance of intangible assets.
(2) Information on the land use rights that the certificate of title has not been issuedOther description: None
27. Development expenses
Other description: None
28. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Name of investee or the matters forming goodwill | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period | ||
| Formed by business combination | Disposal | |||||
| Merger of Zhongshan Jie Rou Paper involving enterprises not under common control | 64,654.15 | 64,654.15 | ||||
| Total | 64,654.15 | 64,654.15 | ||||
(2) Provision for impairment of goodwill
Relevant information on the asset group or asset group portfolio in which the goodwill is locatedExplain the method to confirm the process of goodwill impairment test, key parameters (e.g. the growth rate in thepredictive period when predicting the present value of future cash flow, the growth rate in the stable period, profitrate, discount rate, and predictive period), and the goodwill impairment loss:
After conducting the asset impairment test by combining the goodwill with corresponding asset groups, there wasno impairment as at June 30, 2020, and provisions at the end of the reporting period were not set aside.Influence of the goodwill impairment testOther description: None
29. Long-term unamortized expenses
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Amortized amount of the current period | Other decreases | Balance at the end of the period |
| Use rights of sewage discharge | 3,763,858.78 | 1,455,259.85 | 2,308,598.93 |
| Decoration fees of office buildings | 8,942,538.46 | 19,387,140.38 | 5,964,044.63 | 22,365,634.21 | |
| Electricity use rights | 980,000.00 | 1,191,750.00 | 210,000.00 | 1,961,750.00 | |
| Total | 13,686,397.24 | 20,578,890.38 | 7,629,304.48 | 26,635,983.14 |
Other description: None
30. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that were not offset
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for asset impairment | 37,236,661.77 | 8,048,641.53 | 33,522,565.26 | 7,354,388.34 |
| Unrealized profit in internal transaction | 59,038,241.84 | 11,427,908.55 | 32,400,998.88 | 6,052,001.45 |
| Deductible loss | 157,221,067.56 | 39,305,266.89 | 133,306,241.56 | 33,326,560.39 |
| Provision for impairment of inventories | 3,853,423.72 | 702,165.91 | 2,762,390.34 | 535,522.47 |
| Provision for impairment of fixed assets | 16,469,055.74 | 2,795,038.08 | 19,010,052.80 | 3,472,180.20 |
| Equity incentive cost | 136,647,479.87 | 33,312,991.30 | 73,883,673.67 | 17,319,732.41 |
| Accrued expenses | 60,267,582.48 | 15,066,895.62 | 49,082,779.64 | 12,270,694.91 |
| Deferred income | 2,833,819.12 | 708,454.78 | ||
| Total | 473,567,332.10 | 111,367,362.66 | 343,968,702.15 | 80,331,080.17 |
(2) Deferred income tax liabilities that were not offset
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Pre-tax deduction of fixed assets at one time as stipulated in the tax law | 190,069,258.27 | 35,903,653.30 | 152,874,671.45 | 30,016,107.43 |
| Total | 190,069,258.27 | 35,903,653.30 | 152,874,671.45 | 30,016,107.43 |
(3) Presentation of deferred income tax assets or liabilities by the net amount after offset
Unit: RMB
| Item | Offset amount of the deferred income tax assets and liabilities at the end of the reporting period | Balance of the deferred income tax assets or liabilities after offset at the end of the reporting period | Offset amount of the deferred income tax assets and liabilities at the beginning of the reporting period | Balance of the deferred income tax assets or liabilities after offset at the beginning of the reporting period |
| Deferred income tax assets | 111,367,362.66 | 80,331,080.17 | ||
| Deferred income tax liabilities | 35,903,653.30 | 30,016,107.43 |
(4) Breakdown of unconfirmed deferred income tax assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Deductible temporary differences | 2,710,860.27 | 84,331.04 |
| Total | 2,710,860.27 | 84,331.04 |
(5) Deductible losses of the unconfirmed deferred income tax assets due in the next yearOther description: None
31. Other non-current assets
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Prepayment for software | 2,027,042.24 | 2,027,042.24 | 3,326,948.93 | 3,326,948.93 | ||
| Prepayment for engineering equipment | 26,000,909.91 | 26,000,909.91 | 2,979,080.03 | 2,979,080.03 | ||
| Total | 28,027,952.15 | 28,027,952.15 | 6,306,028.96 | 6,306,028.96 | ||
Other description: None
32. Short-term borrowings
(1) Classification of short-term borrowings
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Guaranteed borrowings | 142,942,941.34 | 14,721,492.38 |
| Total | 142,942,941.34 | 14,721,492.38 |
(2) Short-term borrowings overdue but unpaid
There were no short-term borrowings overdue but unpaid in the Company at the end of the reporting period.
33. Tradable financial liabilities
Other description: None
34. Derivative financial liabilities
Other description: None
35. Notes payable
Unit: RMB
| Category | Balance at the end of the period | Balance at the beginning of the period |
| Banker’s acceptance | 234,887,563.22 | 202,653,860.31 |
| Total | 234,887,563.22 | 202,653,860.31 |
The total amount of the notes payable due but unpaid at the end of the reporting period is RMB0.00.
36. Accounts payable
(1) List of accounts payable
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Accounts payable | 761,519,389.26 | 578,212,781.22 |
| Total | 761,519,389.26 | 578,212,781.22 |
(2) Significant accounts payable with aging over one year
The Company has no significant accounts payable with aging over one year in the reporting period.
37. Payments received in advance
(1) List of payments received in advance
(2) Significant payments received in advance with aging over one year
38. Contract liabilities
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Advances on sales | 137,333,617.40 | 142,476,562.31 |
| Total | 137,333,617.40 | 142,476,562.31 |
39. Employee remuneration payable
(1) List of employee remuneration payable
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| I. Short-term Compensation | 106,224,592.83 | 667,758,043.16 | 650,476,516.56 | 123,506,119.43 |
| II. Post-employment Benefits - Defined Contribution Plan | 189,007.44 | 14,805,067.85 | 14,975,567.61 | 18,507.68 |
| III. Dismissal Benefits | 1,091,053.15 | 1,091,053.15 | ||
| Total | 106,413,600.27 | 683,654,164.16 | 666,543,137.32 | 123,524,627.11 |
(2) List of short-term remuneration
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| 1. Salary, bonus and subsidy | 105,632,187.56 | 607,176,927.11 | 590,213,332.43 | 122,595,782.24 |
| 2. Employee welfare | 24,566,473.91 | 24,566,473.91 | ||
| 3. Social insurance premiums | 138,180.30 | 18,123,146.79 | 18,008,560.58 | 252,766.51 |
| Including: Medical insurance | 123,961.21 | 16,122,317.17 | 15,996,172.85 | 250,105.53 |
| Employment injury insurance | 7,474.96 | 453,061.36 | 460,369.26 | 167.06 |
| Maternity insurance | 6,744.13 | 1,547,768.26 | 1,552,018.47 | 2,493.92 |
| 4. Housing provident fund | 235,586.00 | 14,778,764.05 | 14,640,039.05 | 374,311.00 |
| 5. Labor union fee and staff education fee | 218,638.97 | 3,112,731.30 | 3,048,110.59 | 283,259.68 |
| Total | 106,224,592.83 | 667,758,043.16 | 650,476,516.56 | 123,506,119.43 |
(3) List of defined contribution plans
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| 1. Basic endowment insurance | 182,767.82 | 14,307,295.62 | 14,472,135.90 | 17,927.54 |
| 2. Unemployment insurance | 6,239.62 | 497,772.23 | 503,431.71 | 580.14 |
| Total | 189,007.44 | 14,805,067.85 | 14,975,567.61 | 18,507.68 |
Other description: There was no delinquency of employee remuneration payable in the Company at the end of thereporting period.
40. Tax and fees payable
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Value-added tax | 25,574,167.63 | 40,202,978.00 |
| Corporate income tax | 79,266,423.94 | 53,355,863.46 |
| Individual income tax | 1,840,329.83 | 1,419,250.54 |
| City construction and maintenance tax | 1,593,768.94 | 1,943,704.81 |
| Property tax | 1,087,129.90 | 1,074,531.92 |
| Education surcharges | 829,794.94 | 998,926.69 |
| Local education surcharges | 524,068.91 | 665,951.12 |
| Land use tax | 796,430.89 | 796,430.83 |
| Stamp tax | 596,629.80 | 561,017.55 |
| Disabled security fund | 334,989.76 | 364,478.02 |
| Environmental protection tax | 97,465.13 | 218,414.57 |
| Resource tax | 66,855.20 | 69,070.60 |
| Total | 112,608,054.87 | 101,670,618.11 |
Other description: None
41. Other payables
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Interest payable | 173,259.89 | |
| Dividend payable | 1,437,466.77 | 452,536.50 |
| Other payables | 753,407,113.32 | 635,208,714.66 |
| Total | 754,844,580.09 | 635,834,511.05 |
(1) Interest payable
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Interest of long-term borrowings with interest repayment by installment and principal repayment upon maturity | 85,143.46 | |
| Interest payable of short-term borrowings | 88,116.43 | |
| Total | 173,259.89 |
(2) Dividends payable
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Dividends for restricted shares | 1,437,466.77 | 452,536.50 |
| Total | 1,437,466.77 | 452,536.50 |
Other descriptions, including important dividends payable exceeding one year, and the reasons for non-paymentthat should be disclosed: None
(3) Other payables
1) Other payables based on amount nature
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Unpaid fees | 658,391,225.24 | 502,706,478.59 |
| Repurchase obligation of restricted shares | 68,800,189.53 | 104,792,649.00 |
| Margins and deposits | 20,964,424.40 | 15,743,185.19 |
| Authorized collection and payment of individual income tax under the equity incentive | 2,877,482.40 | 9,354,253.42 |
| Others | 2,373,791.75 | 2,612,148.46 |
| Total | 753,407,113.32 | 635,208,714.66 |
2) Other important payables with aging exceeding one year
Unit: RMB
| Item | Balance at the end of the period | Reason for unsettlement or not carry-over |
| 1st | 6,323,465.21 | Not yet settled |
| Total | 6,323,465.21 | -- |
Other description: None
42. Liabilities held for sale: None
43. Non-current liabilities due within one year
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Long-term borrowings due within one year | 32,400,000.00 | |
| Total | 32,400,000.00 |
Other description: None
44. Other current liabilities
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Tax pending changeover | 17,628,086.63 | |
| Total | 17,628,086.63 |
45. Long-term borrowings
(1) List of long-term borrowings
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Guaranteed borrowings | 22,500,000.00 | |
| Total | 22,500,000.00 |
Other descriptions, including the interval of interest rate: None
46. Bonds payable
(1) Bonds payable: None
(2) Changes in the increase and decrease of the bonds payable (excluding other financial instruments suchas preference shares and perpetual bonds that are divided into financial liabilities): None
(3) Descriptions of the conditions for converting conditions and time of converting bonds: None
(4) Descriptions of other financial instruments that are divided into financial liabilitiesBasic information on other financial instruments in issue at the end of the reporting period, such as the preferenceshares and perpetual bonds: NoneDescription of the basis for other financial instruments to be divided into financial liabilities: NoneOther description: None
47. Lease liabilities
Other description: None
48. Long-term payables
(1) Long-term payables listed based on amount nature
Other description: None
(2) Special payables
Other description: None
49. Long-term employee remuneration payable
(1) Table of long-term employee remuneration payable
(2) Changes of the defined benefit plan
Other description: None
50. Projected liabilities
Other descriptions, including description of important assumptions and estimations relevant to significant projectliabilities: None
51. Deferred income
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period | Reason |
| Government grants | 82,367,831.33 | 42,985,900.00 | 10,252,573.20 | 115,101,158.13 | Government grants related to assets |
| Total | 82,367,831.33 | 42,985,900.00 | 10,252,573.20 | 115,101,158.13 | -- |
Projects involving government grants:
Unit: RMB
| Liability item | Balance at the beginning of the period | Increased amount of grants in the current period | Amount included in non-operating income in the current period | Amount included in other income in the current period | Amount of offset costs in the current period | Other changes | Balance at the end of the period | Related to asset/income |
| Support funds for sewage centralized water treatment project | 1,093,500.00 | 121,500.00 | 972,000.00 | Related to asset | ||||
| Ex-post funds awarded to the first batch of the union enterprises for technical transformation in 2017 | 4,716,165.98 | 634,586.64 | 4,081,579.34 | Related to asset | ||||
| Support funds for the technical transformation of equipment production line | 4,447,359.44 | 806,623.44 | 3,640,736.00 | Related to asset | ||||
| Support funds for enterprise technical upgrading | 3,880,000.00 | 660,311.90 | 3,219,688.10 | Related to asset | ||||
| Subsidies for the infrastructure construction of new factory in Hubei | 31,607,370.32 | 1,071,436.32 | 30,535,934.00 | Related to asset | ||||
| Provincial funds for traditional industry transformation projects | 1,000,000.00 | 89,285.70 | 910,714.30 | Related to asset | ||||
| Subsidies for the expansion of the high-grade household paper project with an annual output of 25,000 tons | 2,066,666.79 | 159,999.96 | 1,906,666.83 | Related to asset |
| Discount interest funds for imported equipment | 2,633,468.75 | 193,875.00 | 2,439,593.75 | Related to asset | ||||
| Financial support funds for construction expansion of 25,000-ton high-grade household paper project | 8,078,701.55 | 625,447.80 | 7,453,253.75 | Related to asset | ||||
| Subsidies for "water treatment" project construction | 1,524,940.00 | 155,078.64 | 1,369,861.36 | Related to asset | ||||
| Subsidies for sewage treatment station | 3,142,045.43 | 477,272.76 | 2,664,772.67 | Related to asset | ||||
| Special funds for capacity expansion of 25,000-ton high-grade household paper project | 2,395,833.26 | 575,000.04 | 1,820,833.22 | Related to asset | ||||
| Support funds for the construction of environmental protection facilities | 3,351,587.39 | 319,047.60 | 3,032,539.79 | Related to asset | ||||
| Support funds for equipment of Phase II project | 11,438,819.16 | 1,971,248.16 | 9,467,571.00 | Related to asset | ||||
| Support funds for the transformation of Phase I project | 3,708,873.26 | 13,063,500.00 | 599,715.61 | 16,172,657.65 | Related to asset | |||
| Support funds for the construction of Automated Storage & Retrieval System | 2,162,500.00 | 20,000,000.00 | 973,529.42 | 21,188,970.58 | Related to asset | |||
| Project fund for automatic production line reconstruction | 2,042,400.00 | 652,433.33 | 1,389,966.67 | Related to asset | ||||
| Subsidy funds for the smart factory project | 3,000,000.00 | 166,180.88 | 2,833,819.12 | Related to asset | ||||
| Total | 82,367,831.33 | 42,985,900.00 | 10,252,573. | 115,101,158. |
| 20 | 13 |
Other description: None
52. Other non-current liabilities
Other description: None
53. Share capital
Unit: RMB
| Balance at the beginning of the period | Increase and decrease of this change (+ and -) | Balance at the end of the period | |||||
| Issuance of additional shares | Bonus shares | Shares transferred from surplus reserve | Others | Subtotal | |||
| Total number of shares | 1,308,891,273.00 | 3,610,416.00 | -1,014,612.00 | 2,595,804.00 | 1,311,487,077.00 | ||
For details about changes in the Company’s share capital in the reporting period, please refer to "1. Developmenthistory of the company in III. Basic Information of the Company of Section XII" for details.
54. Other equity instruments
(1) Basic information on other financial instruments in issue at the end of the reporting period, such as thepreference shares and perpetual bonds: None
(2) Table of changes in other financial instruments in issue at the end of the reporting period, such as thepreference shares and perpetual bondsOther description: None
55. Capital reserve
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| Capital premium (share premium) | 595,936,687.24 | 34,809,136.79 | 3,948,642.06 | 626,797,181.97 |
| Other capital reserve | 164,794,729.33 | 120,299,657.28 | 4,885,063.53 | 280,209,323.08 |
| Total | 760,731,416.57 | 155,108,794.07 | 8,833,705.59 | 907,006,505.05 |
Other descriptions, including increase/decrease in the reporting period and reasons of change:
(1) The exercise of stock options awarded in the first grant and the exercise of reserved stock options as per the2018 Stock Option and Restricted Stock Incentive Plan increased “capital reserve-share premium” byRMB34,809,136.79 and decreased “capital reserve-other capital reserve” by RMB4,885,063.53. The repurchaseand deregistration of incentive stocks decreased “capital reserve-other capital reserve” by RMB3,948,642.06.
(2) The Company set aside provision for equity incentive costs and fees in the reporting period andRMB95,705,148.72 was included in "capital reserve - other capital reserve". Difference between the deductibleamount before tax under the 2018 Stock Option and Restricted Stock Incentive Plan and recognized book expensewas confirmed as deferred income tax asset and RMB24,594,508.56 was included in "capital reserve - othercapital reserve".
56. Treasury shares
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| Restricted shares | 104,792,649.00 | 35,992,459.47 | 68,800,189.53 | |
| Ordinary shares | 27,680,721.76 | 27,680,721.76 | ||
| Total | 104,792,649.00 | 27,680,721.76 | 35,992,459.47 | 96,480,911.29 |
Other descriptions, including increase/decrease in the reporting period and reasons of change:
Notes: (1) The first unlock period unlocked 5,593,428 shares of first-grant stock options at RMB4.33/share and765,270 shares of reserved stock options at RMB7.02/share granted under the 2018 Stock Option and RestrictedStock Incentive Plan. Totally RMB29,591,738.64 was included in the decrease of the current period. The totalamount of revocable cash dividends of RMB 1,437,466.77 was included in the decrease of the current period.
(2) As some incentive recipients for stocks awarded in the first grant left the Company or failed to pass theappraisal, the Company repurchased and deregistered 802,722 shares with RMB4.33 per share. As some incentiverecipients for reserved stocks left the Company or failed to pass the appraisal, the Company repurchased andderegistered 211,890 shares with RMB7.02 per share. Totally 1,014,612 shares were repurchased with an amountof RMB4,963,254.06, which was included in the decrease of the current period.
(3) The share repurchase amount of RMB27,680,721.76 was included in the increase of the current period.
57. Other comprehensive income: None
58. Special reserves
Other descriptions, including increase/decrease in the reporting period and reasons of change: None
59. Surplus reserve
Unit: RMB
| Item | Balance at the beginning of the period | Increase in the current period | Decrease in the current period | Balance at the end of the period |
| Statutory surplus reserve | 53,205,582.86 | 8,263,675.41 | 61,469,258.27 | |
| Total | 53,205,582.86 | 8,263,675.41 | 61,469,258.27 |
Explanation of surplus reserves, including increase/decrease in the reporting period and reasons of change: None
60. Retained earnings
Unit: RMB
| Item | Current period | Last period |
| Retained earnings before adjustment at the end of the last period | 2,058,968,835.80 | 1,490,758,189.02 |
| Retained earnings at the beginning of the period after adjustment | 2,058,968,835.80 | 1,490,758,189.02 |
| Plus: Net profit attributable to owners of the parent company of the current period | 905,889,081.41 | 603,832,650.83 |
| Less: Withdraw of statutory surplus reserve | 8,263,675.41 | 5,900,899.85 |
| Dividends on ordinary shares payable | 97,930,094.41 | 29,721,104.20 |
| Retained earnings at the end of the period | 2,858,664,147.39 | 2,058,968,835.80 |
Details on adjusting retained earnings at the beginning of the period:
(1) As a result of retrospective adjustments according to the Accounting Standards for Business Enterprises and itsrelated new provisions, the impact on retained earnings at the beginning of the period was RMB0.00.
(2) Due to the changes in accounting policies, the impact on retained earnings at the beginning of the period wasRMB0.00.
(3) Due to the correction of material accounting errors, the impact on retained earnings at the beginning of theperiod was RMB0.00.
(4) Due to the changes in the scope of combination caused by the same control, the impact on retained earnings atthe beginning of the period was RMB0.00.
(5) Other adjustments affected retained earnings at the beginning of the period by a total of RMB0.00.
61. Operating income and operating cost
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period | ||
| Income | Cost | Income | Cost | |
| Principal business | 7,599,908,947.02 | 4,379,376,627.64 | 6,565,754,364.57 | 3,941,747,959.00 |
| Other businesses | 223,619,469.30 | 211,527,412.71 | 69,159,988.11 | 63,673,093.70 |
| Total | 7,823,528,416.32 | 4,590,904,040.35 | 6,634,914,352.68 | 4,005,421,052.70 |
Whether the lower of the audited net profit before and after deduction of non-recurring profits and losses isnegative:
□ Yes √ No
Information related to income:
Unit: RMB
| Contract classification | Branch 1 | Branch 2 | Total | |
| By product type | 7,823,528,416.32 | 7,823,528,416.32 | ||
| Including: | ||||
| Household paper | 7,499,908,172.64 | 7,499,908,172.64 | ||
| Personal care | 100,000,774.38 | 100,000,774.38 | ||
| Others | 223,619,469.30 | 223,619,469.30 | ||
| By operating region | 7,823,528,416.32 | 7,823,528,416.32 | ||
| Including: | ||||
| Domestic | 7,652,670,691.06 | 7,652,670,691.06 |
| Abroad | 170,857,725.26 | 170,857,725.26 | ||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Total | 7,823,528,416.32 | 7,823,528,416.32 |
Information related to performance obligation: NoneInformation related to the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executed contract that isnot performed or fully performed at the end of the reporting period is RMB32,714,606.53, of which the income ofRMB32,714,606.53 is expected to be confirmed as income in the year of 2021.Other description: None
62. Tax and surcharges
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| City construction and maintenance tax | 20,149,751.80 | 12,936,585.63 |
| Education surcharges | 9,597,106.24 | 6,897,849.76 |
| Resource tax | 107,367.57 | 111,579.16 |
| Property tax | 9,604,943.14 | 8,636,350.56 |
| Land use tax | 3,492,720.58 | 3,335,708.17 |
| Vehicle and vessel tax | 18,240.00 | 17,355.00 |
| Stamp tax | 6,425,868.35 | 5,715,389.63 |
| Local education surcharges | 6,368,693.14 | 4,593,846.46 |
| Environmental protection tax | 348,227.27 | 571,538.10 |
| Total | 56,112,918.09 | 42,816,202.47 |
Other description: None
63. Selling expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Employee remuneration | 289,793,524.85 | 243,696,299.26 |
| Product promotion fees | 891,673,851.97 | 607,944,031.45 |
| Transportation expenses | 90,696,221.79 | 297,280,743.60 |
| Advertising expenses | 117,926,339.81 | 88,475,224.58 |
| Shopping mall management fees | 101,261,590.30 | 82,659,469.17 |
| Traveling expenses | 24,141,592.40 | 21,502,938.35 |
| Rental fees | 17,791,905.46 | 12,325,145.27 |
| Business entertainment expenses | 2,004,195.01 | 1,682,162.96 |
| Others | 9,273,023.12 | 13,987,829.31 |
| Total | 1,544,562,244.71 | 1,369,553,843.95 |
Other description: None
64. Administrative expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Employee remuneration | 123,787,011.29 | 122,518,188.82 |
| Equity incentive cost | 95,705,148.72 | 51,897,249.18 |
| Depreciation and amortization fees | 64,793,200.48 | 48,088,129.24 |
| Office allowance | 28,815,372.03 | 23,650,606.93 |
| Consulting service fees | 11,152,882.86 | 14,358,982.09 |
| Outsourcing warehouse management fees | 13,476,942.90 | 10,775,007.49 |
| Business entertainment expenses | 4,250,313.01 | 4,599,026.44 |
| Traveling expenses | 2,007,217.94 | 4,418,275.25 |
| Environmental protection fees | 2,920,486.57 | 2,504,089.42 |
| Rental fees | 4,972,311.62 | 2,101,996.13 |
| Others | 13,033,456.88 | 9,605,386.36 |
| Total | 364,914,344.30 | 294,516,937.35 |
Other description: None
65. R&D expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Employee remuneration | 35,421,883.98 | 30,880,261.59 |
| Direct investment | 123,888,034.21 | 123,639,467.65 |
| Depreciation and amortization fees | 26,261,981.44 | 18,810,812.39 |
| Other expenses | 4,726,733.98 | 3,043,745.71 |
| Total | 190,298,633.61 | 176,374,287.34 |
Other description: None
66. Finance expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Interest fees | 2,903,635.12 | 13,452,104.83 |
| Less: interest income | 8,202,097.37 | 3,504,368.80 |
| Exchange profit and loss | -18,603,312.21 | 4,507,136.43 |
| Transaction fee | 5,954,447.70 | 6,987,828.86 |
| Others | -54,219.48 | 33,710.43 |
| Total | -18,001,546.24 | 21,476,411.75 |
Other description: None
67. Other income
Unit: RMB
| Sources of other income | Incurred in the current period | Incurred in the last period |
| Refund of individual income tax | 702,121.74 | |
| Financial support funds allocated by the bureau of finance | 7,892,985.55 | |
| Subsidies for internship, employment, job stabilization and training | 6,168,474.94 | |
| Support funds for equipment of Phase II project | 1,971,248.16 | 246,480.84 |
| Support policy rewards of the bureau of economy, science and information technology | 1,310,000.00 | |
| Infrastructure construction subsidies for the new factory of Hubei C&S | 1,071,436.32 | 535,718.15 |
| Support funds for the construction of Automated Storage & Retrieval System | 973,529.42 | 150,000.00 |
| VAT exemption for employment of retired soldiers and poor population | 961,750.00 | 850,100.03 |
| Support funds for equipment and technology upgrading | 806,623.44 | 228,640.56 |
| Provincial support funds for enterprise technical upgrading | 660,311.90 | |
| Reconstruction project of automatic production lines | 652,433.33 | |
| Ex-post funds awarded to the first batch of the union enterprises for the technical transformation in 2017 | 634,586.64 | 684,763.88 |
| Partial 2013-2017 financial support funds of the Management Committee of Pengzhou Industrial Development Zone, Sichuan Province | 625,447.80 | 625,447.83 |
| Support funds for the transformation of | 599,715.61 | 74,926.74 |
| Phase I project | ||
| 25,000 tons capacity expansion project of Tangshan Branch | 575,000.04 | 575,000.04 |
| Financial support for the sewage treatment station project of Tangshan Branch | 477,272.76 | 357,954.57 |
| Special award funds for the restructuring of industrial enterprises | 410,000.00 | |
| Subsidies of production resumption and development under Covid-19 impact | 320,000.00 | |
| Support funds for the construction of environmental protection facilities | 319,047.60 | 319,047.60 |
| Award for breakthroughs with increases in businesses | 300,000.00 | |
| Subsidies for supporting enterprises to expand import and export scale | 257,200.00 | |
| Subsidies for photovoltaic power rooftop | 224,640.00 | |
| Import interest discounts on imported equipment in 2014 | 193,875.00 | 193,875.00 |
| Subsidy funds for the smart factory project | 166,180.88 | |
| Special funds for the construction expansion of the 25,000-ton household paper project | 159,999.96 | 159,999.96 |
| Subsidies for water treatment project | 155,078.64 | 155,078.64 |
| Wage subsidiaries of Hong Kong | 126,835.56 | |
| Financial support for sewage centralized water treatment project | 121,500.00 | 121,500.00 |
| Provincial funds for traditional industry transformation projects | 89,285.70 | |
| Employment subsidies from the epidemic prevention and control fund | 73,156.71 |
| Enterprise assistance funding plan of the ten billion anti-epidemic fund | 66,525.00 | |
| Social security subsidies from the labor and employment administration | 53,532.00 | |
| Support fund for advanced energy conservation and cleaner production in 2020 | 30,000.00 | |
| Subsidies for epidemic prevention and control | 24,750.00 | |
| Energy efficiency special fund 2019 | 20,000.00 | |
| Management system certification rewards 2018 | 10,000.00 | |
| Subsidies for pandemic prevention system building of enterprises by the bureau of economy, science, and information technology | 9,000.00 | |
| One-off subsidy for delayed resumption of work | 7,440.00 | |
| Subsidies for industrial patents | 3,300.00 | |
| Technical transformation funds of the Finance Division, Shuangshui Town, Xinhui District, Jiangmen City | 6,243,528.93 | |
| Financial support funds for industry collaboration in 2018 from the Finance Bureau of Luoding City | 1,677,400.00 | |
| Subsidies for the renovation of coal-fired boilers from the Environmental Protection Bureau of Yutian County | 800,000.00 | |
| Subsidy funds for high-tech enterprise evaluation and certification (cultivation) from the Finance Bureau, Luoding City in | 800,000.00 |
| 2018 | ||
| Fourth batch of municipal industrial development funds in 2019 from the Central Treasury Payment Center of Pengzhou City | 600,000.00 | |
| Tax incremental awards 2018 | 307,100.00 | |
| Provincial subsidies from Pengzhou Municipal Bureau of Commerce and Investment Promotion | 156,000.00 | |
| Development subsidies for high-tech enterprises | 150,000.00 | |
| Total | 29,224,284.70 | 16,012,562.77 |
68. Return on investment
Unit: RMB
| Items | Incurred in the current period | Incurred in the last period |
| Others | 3,868,134.28 | 333,745.61 |
| Total | 3,868,134.28 | 333,745.61 |
Other description:
"Others" refer to returns on principal-protected wealth management products at maturity and reverse repo oftreasury bonds of the Company.
69. Profit of net exposure hedging
Other description: None
70. Income from changes in fair value
Other description: None
71. Credit impairment loss
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Bad debt loss from other receivables | -727,073.31 | -160,682.27 |
| Impairment loss from accounts receivable | -5,735,079.40 | -2,617,879.60 |
| Total | -6,462,152.71 | -2,778,561.87 |
Other description: None
72. Asset impairment loss
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| II. Impairment Loss of Inventories and Contract Performance Cost | -1,623,983.68 | -727,254.87 |
| V. Impairment Loss of Fixed Assets | -14,239,740.49 | -18,326,205.31 |
| Total | -15,863,724.17 | -19,053,460.18 |
Other description: None
73. Return on disposal of assets
Unit: RMB
| Source | Incurred in the current period | Incurred in the last period |
| Disposal of fixed assets | -1,630,681.60 | 198,268.96 |
| Total | -1,630,681.60 | 198,268.96 |
74. Non-operating income
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period | Amount recognized as profit or loss for the current period |
| Profit from damage and retirement of non-current assets | 147,882.19 | 128,947.02 | 147,882.19 |
| Including: Fixed assets | 147,882.19 | 128,947.02 | 147,882.19 |
| Intangible assets |
| Donations accepted | |||
| Government grants not related to daily activities of the enterprise | 11,000.00 | 2,410,232.29 | 11,000.00 |
| Income from fine and compensation | 3,993,312.79 | 1,937,871.09 | 3,993,312.79 |
| Amounts with no payments required | 614,936.63 | 415,420.52 | 614,936.63 |
| Others | 662,538.39 | 959,085.78 | 662,538.39 |
| Total | 5,429,670.00 | 5,851,556.70 | 5,429,670.00 |
Government grants recognized as profit and loss of the current period:
Unit: RMB
| Grants | Issuer | Reason | Nature and type | Whether the grant affected the profit and loss of the year | Whether a special grant | Amount incurred in the current period | Amount incurred in the last period | Related to asset/income |
| Party building funds for new economic organizations and new social organizations from the Mobile Party Member Management Service Center of | Mobile Party Member Management Service Center of Dongsheng Town, Zhongshan City | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 10,000.00 | Related to income |
| Dongsheng Town, Zhongshan City | ||||||||
| Subsidies for west district from the Human Resources and Social Security Bureau of Zhongshan City | Social Security Bureau of Zhongshan City | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 1,000.00 | Related to income | |
| Financial support funds for enterprises in 2015 from the Industrial Development Zone Management Committee of Pengzhou City, Sichuan Province | Industrial Development Zone Management Committee of Pengzhou City, Sichuan Province | Grant | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 1,295,600.00 | Related to income | |
| Subsidies for stable employment | Labor and Employment Administration of Pengzhou City, Sichuan Province | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially | No | No | 252,028.31 | Related to income |
| necessary product | ||||||||
| Funds for construction of party member service center from the Finance Division of Xiaonan Economic Development Zone, Hubei Province | Finance Division of Xiaonan Economic Development Zone, Hubei Province | Grant | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 200,000.00 | Related to income | |
| Subsidies for stable employment in 2018 from the Labor and Employment Administration of Xiaonan District, Xiaogan City | Labor and Employment Administration of Xiaonan District, Xiaogan City | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 135,000.00 | Related to income | |
| Subsidies for enterprise social insurance from the Labor and Employment Administration of Xiaonan | Labor and Employment Administration of Xiaonan District, Xiaogan City | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 128,000.00 | Related to income |
| District, Xiaogan City | ||||||||
| Government support fund 2017 from the Bureau of Economy and Information Technology Pengzhou City | Bureau of Economy and Information Technology Pengzhou City | Reward | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 100,000.00 | Related to income | |
| Online subsidy in 2017 from the Jiaxing Port District (Comprehensive Free Trade Zone) Brigade, Comprehensive Administrative Law Enforcement Detachment, Jiaxing City | Jiaxing Port District (Comprehensive Free Trade Zone) Brigade, Comprehensive Administrative Law Enforcement Detachment, Jiaxing City | Grant | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 80,000.00 | Related to income | |
| Refund of employment stabilization from Social Insurance Bureau of | Social Insurance Bureau of Yutian County | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially | No | No | 65,312.15 | Related to income |
| Yutian County | necessary product | |||||||
| Subsidies for employment stabilization from Zhongshan Human Resources and Social Security Bureau | Special payment account of Zhongshan Human Resources and Social Security Bureau | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 41,498.83 | Related to income | |
| Special funds for promoting the stable growth of foreign trade | Zhongshan Bureau of Commerce | Grant | Grants received as a result of compliance with local government policies such as investment attraction and other local support policies | No | No | 41,093.00 | Related to income | |
| Subsidies for stable employment from Labor and Employment Administration of Xiaonan District, Xiaogan City | Labor and Employment Administration of Xiaonan District, Xiaogan City | Grant | Subsidies received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 32,200.00 | Related to income | |
| Subsidies for water-saving enterprises from Water | Water Authority of Yutian County | Grant | Grants received as a result of compliance with local government policies such as | No | No | 30,000.00 | Related to income |
| Authority of Yutian County | investment attraction and other local support policies | |||||||
| Compensation for employment of enterprise employee from Labor and Employment Administration of Xiaonan District, Xiaogan City | Labor and Employment Administration of Xiaonan District, Xiaogan City | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 8,000.00 | Related to income | |
| Unemployment insurance from the Social Insurance Fund Administration of Luoding City | Social Insurance Fund Administration of Luoding City | Grant | Grants received for the performance of the State's function of ensuring the supply or price control of a public utility or socially necessary product | No | No | 1,500.00 | Related to income | |
| Total | 11,000.00 | 2,410,232.29 |
Other description: None
75. Non-operating expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period | Amount recognized as profit or loss of the current period |
| External donations | 15,470,536.45 | 741,655.70 | 15,470,536.45 |
| Loss from damage and retirement of non-current assets | 1,497,805.16 | 2,329,261.00 | 1,497,805.16 |
| Including: Fixed assets | 1,497,805.16 | 2,329,261.00 | 1,497,805.16 |
| Intangible assets | |||
| Others | 3,944,517.51 | 1,250,103.74 | 3,944,517.51 |
| Total | 20,912,859.12 | 4,321,020.44 | 20,912,859.12 |
Other description: None
76. Income tax expenses
(1) Table of income tax expenses
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Current income tax expense | 181,314,018.95 | 109,627,747.60 |
| Deferred income tax expense | 1,187,352.52 | 7,538,310.24 |
| Total | 182,501,371.47 | 117,166,057.84 |
(2) Adjustment process of accounting profits and income tax expenses
Unit: RMB
| Item | Incurred in the current period |
| Total profit | 1,088,390,452.88 |
| Income tax expenses calculated at the statutory/applicable tax rate | 272,097,613.22 |
| Impacts of different tax rates applied to subsidiaries | -92,418,323.76 |
| Impacts of adjustments to income taxes during the prior period | -17,976,884.62 |
| Impacts of non-deductible costs, expenses and losses | 20,798,966.63 |
| Income tax expenses | 182,501,371.47 |
Other description: None
77. Other comprehensive income
Please refer to the notes for details.
78. Items of the cash flow statement
(1) Cash received related to other operating activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Current accounts | 49,688,516.72 | 34,915,227.30 |
| Fiscal appropriation | 60,126,856.61 | 55,389,320.76 |
| Interest income | 8,196,797.10 | 3,531,225.34 |
| Authorized collection of individual income tax under the equity incentive | 22,976,763.21 | 19,769,719.72 |
| Authorized collection of payments for the first Employee Stock Ownership Plan | 131,997,028.57 | |
| Others | 11,716,603.06 | 3,761,793.02 |
| Total | 152,705,536.70 | 249,364,314.71 |
Explanation of cash received related to other operating activities: None
(2) Cash payments related to other operating activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Expenses paid | 550,689,649.13 | 580,514,369.25 |
| Current accounts | 178,777,668.81 | 52,916,045.49 |
| Authorized payment of individual income tax under the equity incentive | 26,757,243.77 | 20,737,286.80 |
| Authorized payment of Phase I employee stock ownership plan | 131,997,028.57 |
| External donations | 14,145,244.02 | 126,370.00 |
| Others | 4,113,886.93 | 1,027,896.90 |
| Total | 774,483,692.66 | 787,318,997.01 |
Explanation of cash paid related to other operating activities: None
(3) Cash received related to other investing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Principal repayment on maturity of wealth management products | 40,000,000.00 | |
| Principal repayment on maturity of treasury bonds reverse repo | 87,105,000.00 | |
| Total | 127,105,000.00 |
Explanation of cash received related to other investment activities: None
(4) Cash payments related to other investing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Purchasing wealth management products | 50,000,000.00 | 40,000,000.00 |
| Purchase of treasury bonds reverse repo products | 87,105,000.00 | |
| Total | 50,000,000.00 | 127,105,000.00 |
Explanation of cash paid related to other investment activities: None
(5) Cash received related to other financing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Payments of employee stock ownership plan | 94,613,430.64 |
| Collection of security deposits for bills and letters of credit | 16,140,348.47 | |
| Total | 110,753,779.11 |
(6) Cash payments related to other financing activities
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Deposits of security deposits for bills, letters of guarantee and letters of credit | 47,412,150.07 | |
| Repurchase and deregistration of equity incentives | 4,963,254.06 | 460,054.74 |
| Share repurchase | 27,680,721.76 | |
| Total | 80,056,125.89 | 460,054.74 |
Explanation of cash paid related to other financing activities: None
79. Supplementary information to cash flow statement
(1) Supplementary information to cash flow statement
Unit: RMB
| Supplementary information | Amount of the current period | Amount of last period |
| 1. Reconciliation of net profit to cash flows from operating activities: | -- | -- |
| Net Profit | 905,889,081.41 | 603,832,650.83 |
| Plus: Provisions for asset impairment | 22,325,876.88 | 21,832,022.05 |
| Depreciation of fixed assets, oil and gas assets and productive biological assets | 298,227,998.50 | 256,437,191.50 |
| Depreciation of use right assets | ||
| Intangible asset amortization | 5,761,733.76 | 5,271,129.93 |
| Long-term unamortized expenses | 7,629,304.48 | 857,321.08 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets ("-" indicates income) | 1,630,681.60 | -198,268.96 |
| Losses from fixed assets write-off ("-" indicates income) | 1,349,922.97 | 2,200,313.98 |
| Losses from changes in fair value ("-" indicates income) | ||
| Finance expenses ("-" indicates income) | 6,083,169.25 | 12,775,051.46 |
| Investment losses ("-" indicates income) | -3,868,134.28 | -333,745.61 |
| Decrease in deferred income tax assets ("-" indicates increase) | -4,700,193.35 | -8,473,165.51 |
| Increase in deferred income tax liabilities ("-" indicates decrease) | 5,887,545.87 | 16,011,475.75 |
| Decrease in inventories ("-" indicates increase) | -673,208,087.17 | -128,117,214.81 |
| Decrease in operating receivables ("-" indicates increase) | -283,241,489.30 | -25,573,783.82 |
| Increase in operating payables ("-" indicates decrease) | 442,728,302.91 | 551,956,674.81 |
| Others | 95,705,148.72 | 51,897,249.18 |
| Net cash flows from operating activities | 828,200,862.25 | 1,360,374,901.86 |
| 2. Significant investment and financing activities not involving cash: | -- | -- |
| Conversion of debt to capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets acquired under finance lease | ||
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Balance of cash at the end of the period | 1,050,034,135.72 | 675,996,852.97 |
| Less: Balance of cash at the beginning of the period | 675,996,852.97 | 371,129,472.06 |
| Plus: Balance of cash equivalents at the end of the period | ||
| Less: Balance of cash equivalents at the beginning of |
| the period | ||
| Net increase in cash and cash equivalents | 374,037,282.75 | 304,867,380.91 |
(2) Net cash paid to acquire subsidiaries during the period
Other description: None
(3) Net cash received from the disposal of subsidiaries during the period
Other description: None
(4) Constitution of cash and cash equivalents
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| I. Cash | 1,050,034,135.72 | 675,996,852.97 |
| Including: Cash on hand | 36,349.55 | 76,152.38 |
| Bank deposits always available for payment | 1,047,785,634.71 | 675,589,471.75 |
| Other monetary funds always available for payment | 2,212,151.46 | 331,228.84 |
| III. Balance of Cash and Cash Equivalents at the End of the Period | 1,050,034,135.72 | 675,996,852.97 |
Other description: None
80. Notes to items in the statement of changes in owner's equity
Description on the name and amount of items under "Others" whose closing balance in last year was adjusted andother relevant issues: None
81. Assets with restricted right to use or ownership
Unit: RMB
| Item | Book value at the end of the period | Reason for restriction |
| Other monetary funds | 75,162,063.84 | Security deposits for issuing letter of credit and notes |
| Total | 75,162,063.84 | -- |
Other description: None
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Balance of foreign currency at the end of the period | Conversion rate | Balance of converted RMB at the end of the period |
| Monetary funds | -- | -- | 300,324,631.68 |
| Including: USD | 44,976,762.61 | 6.5483 | 294,521,334.60 |
| EUR | |||
| HKD | 6,871,059.77 | 0.8446 | 5,803,297.08 |
| Accounts receivable | -- | -- | 134,768,125.93 |
| Including: USD | 17,172,702.19 | 6.5483 | 112,452,005.75 |
| EUR | |||
| HKD | 26,422,117.19 | 0.8446 | 22,316,120.18 |
| Long-term borrowings | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other receivables | 18,250.47 | ||
| Including: HKD | 21,608.42 | 0.8446 | 18,250.47 |
| Accounts payable | 270,776,743.22 | ||
| Including: USD | 41,334,220.06 | 6.5483 | 270,668,873.22 |
| EUR | 13,400.00 | 8.0500 | 107,870.00 |
| Other payables | 936,644.12 | ||
| Including: HKD | 1,108,979.54 | 0.8446 | 936,644.12 |
| Short-term borrowings | 52,896,691.34 | ||
| Including: USD | 8,077,927.30 | 6.5483 | 52,896,691.34 |
Other description: None
(2) For overseas business entities, especially important ones, disclose their main overseas business address,the standard currency for accounting and selection basis. If there are changes in the standard currency foraccounting, reasons shall be also provided.
√ Applicable □ Not applicable
| Overseas business entity | Business address | Standard currency for accounting |
| Zhong Shun International Co., Ltd. | Hong Kong | RMB |
| C&S Hong Kong Co., Ltd. | Hong Kong | RMB |
| C&S (Macao) Co., Ltd. | Macao | RMB |
83. Hedges
Disclosure of hedged items and related hedging instruments and qualitative and quantitative information abouthedged risks according to the type of hedging: None
84. Government grants
(1) Basic information on government grants
Unit: RMB
| Category | Amount | Reporting items | Amount recognized as profit or loss for the current period |
| Related to asset | 42,985,900.00 | Deferred income | |
| Related to asset | 10,252,573.20 | Other income | 10,252,573.20 |
| Related to income | 18,269,589.76 | Other income | 18,269,589.76 |
| Related to income | 11,000.00 | Non-operating income | 11,000.00 |
| Total | 71,519,062.96 | 28,533,162.96 |
(2) Return of government grants
□ Applicable √ Not applicable
Other description:
Please refer to Note VII (51), (67) and (74) for details.
85. Others
VIII. Changes in the Consolidated Scope
1. Business combinations of enterprises not under common control
(1) Business combinations of enterprises not under common control in the reporting periodOther description: None
(2) Combination costs and goodwill
Method of determining the fair value of combination costs and descriptions of contingent consideration and itschanges: NoneMain reasons for the formation of huge goodwill: NoneOther description: None
(3) Acquiree's identifiable assets and liabilities on the acquisition date
Method of determining the fair value of identifiable assets and liabilities: NoneAcquiree's contingent liabilities assumed in a business combination: NoneOther description: None
(4) Profit or loss arising from the recalculation based on fair value of equities held before the acquisitiondateWhether there are transactions through which business combination is achieved in stages while control is obtained
within the reporting period
□ Yes √ No
(5) Descriptions of being unable to determine the consideration or the fair value of acquiree's identifiableassets and liabilities on the acquisition date or at the end of the current period of combinationNone
(6) Other descriptions
None
2. Business combinations of enterprises under common control
(1) Business combinations of enterprises under common control in the current period
Other description: None
(2) Combination costs
Description on contingent consideration and its changes: NoneOther description: None
(3) Book value of assets and liabilities of the combined party on the date of combinationContingent liabilities of the combined party assumed in a business combination: NoneOther description: None
3. Reverse purchase
Basic information of transactions, basis for transactions constituting reverse purchase, whether assets andliabilities retained by listed companies constitute a business and its basis, determination of combination costs,adjustment of equity amount and calculation when dealing as equity transactions: None
4. Disposal of subsidiaries
Whether there is situation that one disposal of investment in a subsidiary results in a loss of control
□ Yes √ No
Whether there is situation that the disposal of investment in a subsidiary is achieved in stages through multipletransactions while the control is lost in the reporting period
□ Yes √ No
5. Changes in the scope of consolidation due to other reasons
Description of changes in the scope of combination due to other reasons (establishment or liquidation ofsubsidiaries, etc.) and related situations: NoneThe Company and its wholly-owned subsidiary Zhongshan Zhongshun Trading Co., Ltd. jointly invested andestablished Dolemi Sanitary Products Co., Ltd. with a registered capital of RMB50 million. The Company holds60% of the shares while Zhongshan Zhongshun Trading holds 40% of the shares. Since December 2020, theCompany has incorporated Dolemi Sanitary Products Co., Ltd into the scope of its consolidated statements.Currently, Dolemi Sanitary Products has no operating activities.
6. Others: None
IX. Equities in Other Entities
1. Equities in subsidiaries
(1) Composition of the enterprise group
| Name of subsidiary | Main business address | Registered address | Principal businesses | Shareholding percentage | Obtaining method | |
| Direct | Indirect | |||||
| Jiangmen Zhongshun Paper Co., Ltd. | Jiangmen, Guangdong | Jiangmen, Guangdong | R&D, production, and sales (including online sales): household paper, maternal and infant products, cosmetics, wipes, non-woven products, daily necessities, and cleaning supplies; sales (including online sales) of Class I and II medical devices. (The above items do not involve special management measures for the access of foreign investment.) (For | 88.25% | 11.75% | Capital contribution for establishment |
| items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | ||||||
| Zhejiang Zhongshun Paper Co., Ltd. | Jiaxing, Zhejiang | Jiaxing, Zhejiang | General items: manufacture of paper products; sales of paper products; sales of paper pulp; sales of personal hygiene products; sales of hygiene products and disposable medical products; sales of disinfectants (excluding hazardous chemicals); sales of Class I medical devices; retail of Class I medical devices; sales of Class II medical devices; retail of class II medical devices; wholesale of medical face masks; retail of medical face masks; sales of general merchandise; retail of daily necessities; sales of maternal and infant products; wholesale of kitchenware, sanitary ware and daily sundries; wholesale of cosmetics; retail of cosmetics; wholesale of needle textiles and raw materials; sales of needle textiles; sales of chemical industry products (excluding chemical products that need to be licensed); Internet sales (excluding the sales of commodities requiring a permit) (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 75.00% | 25.00% | Capital contribution for establishment |
| C&S Hong Kong Co., Ltd. | Hong Kong | Hong Kong | Purchase of pulp | 100.00% | Capital contribution for establishment |
| C&S (Yunfu) Paper Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | R&D, production, wholesale, retail and online sales: household paper, sanitary products, maternal and infant products, daily necessities, cosmetics, medical devices, sanitary materials, non-woven fabrics and products, polymer materials and products, daily sundries, and disinfectant products (excluding hazardous chemicals); wholesale, retail and online sales: food; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval); warehousing services (limited to warehouses qualified in fire protection without hazardous chemicals). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Capital contribution for establishment | |
| Yunfu Hengtai Trading Co., Ltd. (note) | Yunfu, Guangdong | Yunfu, Guangdong | Wholesale, retain and online sales: paper, wood pulp, sanitary products, maternal and infant products, cosmetics, daily necessities, medical equipment, daily sundries, disinfection supplies (excluding dangerous chemicals); import and export of goods or technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Capital contribution for establishment | |
| C&S (Macao) Co., Ltd. | Macau | Macau | Wholesale, trade | 100.00% | Capital contribution for establishment | |
| Zhongshan | Zhongshan, | Zhongsha | Wholesale, retail and online sales (sales only on | 100.00% | Business |
| Zhongshun Trading Co., Ltd. | Guangdong | n, Guangdong | third-party platforms) of paper supplies, paper products (excluding printing products), wood pulp, general merchandise, hygiene products, cosmetics, nonwoven products, chemical products for daily use, Class I medical devices and food; warehousing (excluding hazardous chemicals and precursor chemicals); import and export of goods and technologies; operations of Class II and Class III medical devices. (The above business scope involves food operations, import and export of goods, and import and export of technologies.) (Exclude items prohibited by laws and administrative regulations; items whose operations are restricted by laws and administrative regulations shall not be carried out unless the permit has been obtained.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | combinations involving enterprises under common control | ||
| Xiaogan C&S Trading Co., Ltd. | Xiaogan, Hubei | Xiaogan, Hubei | Import, export and sales of paper products, general merchandise and pulp boards; sales of cosmetics, shower gel and sanitary pads; sales of baby products (excluding food) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| Beijing C&S Paper Co., Ltd. | Beijing | Beijing | Sales of paper products, daily necessities, paper pulp, and pulp boards; import and export of goods. (The company may independently select business items and carry out business activities in accordance with the law; for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent | 100.00% | Business combinations involving enterprises under common |
| departments based on contents of the approval; it is prohibited to engage in business activities of items prohibited and restricted by the city’s industrial policies.) | control | |||||
| Chengdu Zhongshun Paper Co., Ltd. | Pengzhou, Sichuan | Pengzhou, Sichuan | Sales of household paper, cleaning products, general merchandise, hygiene products, baby products, cosmetics, nonwoven products, feminine hygiene products, chemical products for daily use, daily necessities, medical devices, medical supplies and disinfectant products (excluding hazardous chemicals); e-commerce (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| Hangzhou Jie Rou Trading Co., Ltd. | Hangzhou, Zhejiang | Hangzhou, Zhejiang | Wholesale, retail: paper products, paper pulp, general merchandise; import and export of goods and technologies (exclude items prohibited by laws and administrative regulations; items whose operations are restricted by laws and administrative regulations shall not be carried out unless the permit has been obtained); other legitimate items that do not need approval according to the law) (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments) | 100.00% | Business combinations involving enterprises under common control | |
| Shanghai Huicong Paper Co., Ltd. | Shanghai | Shanghai | Household paper, paper pulp, pulp boards, import and export of goods and technologies. (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control |
| C&S (Hubei) Paper Co., Ltd. | Xiaogan, Hubei | Xiaogan, Hubei | Licensed items: production of sanitary products and disposable medical supplies; production of cosmetics (for items that must be approved in accordance with the law, companies may carry out business operations upon approval by relevant departments, and the specific business items are subject to the approval document or the permit issued by competent department). General items: sales of sanitary products and disposable medical supplies; retail of cosmetics; wholesale of cosmetics; manufacture of paper; sales of personal hygiene products; sales of knitwear; manufacture of maternal and infant products; sales of maternal and infant products; sales of paper products; manufacture of paper products; sales of daily necessities; sales of daily chemical products; sales of disinfectants (excluding hazardous chemicals); Internet sales (excluding the sales of commodities requiring a permit); sales of Class I medical devices; sales of Class II medical devices; import and export of goods and technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 93.375% | 6.625% | Business combinations involving enterprises under common control |
| Zhong Shun International Co., Ltd. | Hong Kong, China | Hong Kong, China | Sales of paper products | 100.00% | Business combinations involving enterprises under common control |
| C&S (Sichuan) Paper Co., Ltd. | Pengzhou, Sichuan | Pengzhou, Sichuan | Licensed items: production of sanitary products and disposable medical supplies; import and export of goods (for items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments, and the specific business items are subject to the approval document or the permit issued by relevant department). General items: sales of sanitary products and disposable medical supplies; sales of personal hygiene products; sales of daily necessities; manufacture of paper products; sales of paper products; manufacture of paper; manufacture of daily chemical products; sales of daily chemical products; sales of Class II medical devices; sales of Class I medical devices; manufacture of industrial textile products; sales of industrial textile products; manufacture of maternal and infant products; sales of maternal and infant products. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Zhongshan) Paper Co., Ltd. | Zhongshan, Guangdong | Zhongshan, Guangdong | Production, processing and sales: high-class household paper products (excluding printing process); import and export of pulp boards (exclude items prohibited by laws and administrative regulations; items whose operations are restricted by laws and administrative regulations shall not be carried out unless the permit has been obtained). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 100.00% | Business combinations involving enterprises under common control | |
| C&S (Dazhou) | Dazhou, | Dazhou, | R&D, production, processing, and sales (including | 100.00% | Capital |
| Paper Co., Ltd. | Sichuan | Sichuan | online sales): household paper, tissue boxes, hygiene products, cosmetics, non-woven products, plastic products, metalware, rubber products, ceramics, baby products, feminine hygiene products and daily necessities; bamboo and forest trees planting; acquisition of raw materials of bamboo and wood for paper making; R&D, production and sales of bamboo pulp, wood pulp, bamboo chips and wood chips; combined heat and power and sales; warehouse leasing; processing and sales of lime and limestone; processing of industrial wastewater and gray water reuse; general import and export business; sales of construction materials, hardware and electrical products, and chemical products (excluding hazardous products). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | contribution for establishment | ||
| Sun Daily Necessities Co., Ltd. | Yunfu, Guangdong | Yunfu, Guangdong | R&D, production, processing, and online sales: paper products, hygiene products, cosmetics, nonwoven products, plastic products for daily use, chemical products for daily use, metalware for daily use, rubber products for daily use, and ceramics for daily use; import and export of goods or technologies (excluding the import and export of goods and technologies prohibited by the State or involving administrative approval). (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | 50.00% | 50.00% | Capital contribution for establishment |
| Dolemi Sanitary Products Co., Ltd. | Zhongshan, Guangdong | Zhongshan, Guangdon | General items: manufacture of paper products; Internet sales (sales only on third-party platforms) (excluding the sales of commodities requiring a | 60.00% | 40.00% | Capital contribution for |
| g | permit); sales of personal hygiene products; sales of household products, sales of hygiene products and disposable medical products; retail of cosmetics; sales of general merchandise; sales of plastic products; sales of metal products; sales of rubber products; manufacture of daily-use ceramic products. (The company may carry out business operations independently according to the law based on the business license, except for items that must be licensed according to the law.) (For items that must be approved in accordance with the law, the company may carry out business operations upon approval by competent departments.) | establishment |
Description of the difference between the percentage of shares held in a subsidiary and the percentage of votingrights: NoneBasis for holding 50% or less than of the voting rights but controlling the investee, or holding 50% or more of thevoting rights but not controlling the investee: NoneBasis for controlling the important consolidated structured entities: NoneBasis for determining whether the Company is an agent or a principal: NoneOther descriptions: all shares held indirectly belong to the shares held by wholly-owned subsidiaries of theCompany
(2) Important non-wholly-owned subsidiaries
Description that the percentage of shares held by minority shareholders in a subsidiary is different from thepercentage of their voting rights: NoneOther description: The Company does not have important non-wholly-owned subsidiaries.
(3) Main financial information of important non-wholly-owned subsidiariesOther description: None
(4) Significant restrictions on the use of the assets and the repayment of the debts of the enterprise groupNone
(5) Financial or other support provided to consolidated structured entities
Note: C&S (Yunfu) Co., Ltd. was changed to Yunfu Hengtai Trading Co., Ltd. in March 2021.
2. Transactions in which the share of owner's equity in a subsidiary changes while control of the subsidiaryis still retained
(1) Description of changes in the share of owner’s equity in the subsidiary
None
(2) Impact of the transaction on the equity of minority shareholders and the equity attributable to ownersof the Parent CompanyOther description: There are no transactions of the Company in which the share of owner's equity in a subsidiarychanges and control of the subsidiary is retained.
3. Interests in joint arrangements or associates
(1) Important joint ventures or associates
Description that the percentage of shares in joint ventures or associates is different from the percentage of votingrights: NoneBasis for holding less than 20% of the voting rights but with significant influence, or holding 20% or more of thevoting rights but without significant influence: None
(2) Main financial information of important joint ventures
Other description: None
(3) Main financial information of important associates
Other description: None
(4) Summary financial information of unimportant joint ventures and associatesOther description: None
(5) Description of significant restrictions on the ability of joint ventures or associates to transfer funds tothe CompanyNone
(6) Excess losses incurred by joint ventures or associates
Other description: None
(7) Unconfirmed commitments related to the investment in joint ventures
None
(8) Contingent liabilities related to the investment in joint ventures or associatesNone
4. Important joint operation
There was no important joint operation of the Company.
5. Interests in unconsolidated structured entities
Description of unconsolidated structured entities:
The Company does not have interests in unconsolidated structured entities.
6. Others
NoneX. Risks Associated with Financial InstrumentsThe main financial instruments of the Company include monetary funds, notes receivable, accounts receivable,notes payable, accounts payable, other payables, loans, etc. Please refer to relevant items of "Note VII" fordetailed information of all financial instruments. The risks associated with these financial instruments and the riskmanagement policies adopted by the Company to reduce these risks are as follows. The management of theCompany manages and monitors these risk exposures to ensure that the above risks are kept within control.The Company adopts the sensitivity analysis method to analyze the possible impact of reasonable and possible
changes in risk variables on the profit and loss or shareholder equities in the current period. Since any riskvariable rarely changes in isolation and the correlation between the variables will have a significant effect on theultimate financial impact of changes in a certain risk variable, the following contents are under the consumptionthat changes of a variable are independent.The goal of the Company's risk management is to strike a proper balance between risks and gains and to minimizethe negative impact of risks on the business performance of the Company while maximizing the interests ofshareholders and other equity investors. Based on this risk management goal, the basic strategy of the Company’srisk management is to determine and analyze all kinds of risks faced by the Company, clarify the minimum of riskacceptance and conduct risk management, and monitor risks of all kinds in a timely and reliable manner to controlrisks within the limits.
1. Credit risk
Credit risk refers to the risk of financial losses of one party caused by the failure of the other party to perform itsobligations. As of December 31, 2020, the largest credit exposure that may cause financial losses to the Companymainly comes from the losses of the Company’s financial assets due to failure of the other contractual party toperform its obligations.In order to reduce credit risk, the Company only conducts transactions with recognized customers with goodcredit status, and continuously monitors the accounts receivable through credit monitoring of existing customersand aging analysis to ensure that the Company does not face the risk of bad debts and keep the overall credit riskwithin control.
2. Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flow of financial instruments dueto changes in market interest rates. The interest rate risk faced by the Company mainly comes from bankborrowings (please refer to “Note VII (32), (43) and (45)” for details). By developing a good relationship withbanks and carrying out proper design of credit lines, types of credits, and credit terms, the Company ensuressufficient bank credit lines to meet its various financing needs. The risk of interest rate fluctuation can bereasonably reduced by shortening the term of a single loan and specially stipulating early prepayment terms.
3. Foreign exchange risk
Foreign exchange risk refers to the risk of fluctuations in the fair value or future cash flow of financial instrumentsdue to changes in foreign exchange rates. The Company tries its best to match foreign currency income withforeign currency expenditure to reduce foreign exchange risks.Foreign exchange risks borne by the Company are mainly related to USD and HKD. Except for purchasing andselling in USD and HKD by its overseas subsidiaries, other major business activities of the Company are pricedand settled in RMB. See "Note VII (82)" for the conversion of foreign currency financial assets and liabilities intoRMB as of December 31, 2020. During the reporting period, the Company generated exchange profit and loss of
-RMB18,603,312.21.Sensitivity analysis of foreign exchange risk:
Analysis assumption: On the basis that all other variables remain constant on the balance sheet date, the possible,reasonable changes of foreign exchange rate will have the following pre-tax effects on the Company’s profit andloss and shareholders’ equity in the current period:
Unit: RMB
| Item | End of year | |
| Impact on profit | Impact on shareholders’ equity | |
| Depreciation of RMB against foreign currency by 1.00% | -1,105,009.29 | -1,105,009.29 |
| Appreciation of RMB against foreign currency by 1.00% | 1,105,009.29 | 1,105,009.29 |
4. Liquidity risk
Liquidity risk refers to the risk of capital shortage when an enterprise fulfills its obligation to settle accounts bydelivering cash or other financial assets. The Company's policy is to ensure that it has sufficient cash to repaymature debts. Liquidity risk is centrally controlled by the financial departments of the Company. The financialdepartments monitor cash balances, negotiable securities that can be cashed in at any time, and carry out rollingforecasts on cash flows in the next six months to ensure that the Company has sufficient funds to repay debtsunder all reasonable forecasts.Financial liabilities held by the Company as of December 31, 2021 analyzed based on the maturity period ofundiscounted remaining contractual obligations are as follows:
Unit: RMB
| Item | Within 1 year | Over 1 year | Total |
| Short-term borrowing | 142,942,941.34 | 142,942,941.34 | |
| Notes payable | 234,887,563.22 | 234,887,563.22 | |
| Accounts payable | 758,915,601.87 | 2,603,787.39 | 761,519,389.26 |
| Other payables | 675,601,882.84 | 79,242,697.25 | 754,844,580.09 |
| Total | 1,812,347,989.27 | 81,846,484.64 | 1,894,194,473.91 |
XI. Disclosure of Fair Value
1. Fair value of assets and liabilities measured at fair value at the end of the reporting period
2. Basis for determining the market price of recurring and non-recurring fair value measurement items inLevel 1: None
3. Qualitative and quantitative information on important parameters and valuation techniques used forrecurring and non-recurring fair value measurement items in Level 2: None
4. Qualitative and quantitative information on important parameters and valuation techniques used forrecurring and non-recurring fair value measurement items in Level 3: None
5. Adjustment information and sensitivity analysis of unobservable parameters between the opening andclosing book values of recurring fair value measurement items of Level 3: None
6. For recurring fair value measurement items with transfer between different levels, reasons for suchtransfer and policies for determining the time of conversion: None
7. Changes in valuation techniques within the reporting period and reasons for such changes: None
8. Fair value of financial assets and financial liabilities not measured at fair value: None
9. Others: None
XII. Related Parties and Related Party Transactions
1. Information on the Parent Company of the Company
| Name of Parent Company | Registered address | Principal businesses | Registered capital | Shareholding percentage of the Parent Company to the Company | Percentage of voting right of the Parent Company to the Company |
| Guangdong Zhongshun Paper Group Co., Ltd. | Zhongshan, Guangdong | External investment; consulting of information on commodities | RMB30 million | 28.64% | 28.64% |
Information on the Company’s Parent CompanyThe ultimate controller of the Company is Mr. Deng Yingzhong, the father, and Mr. Deng Guanbiao and Mr. DengGuanjie, whose two sons.Other description: None
2. Information on subsidiaries of the Company
See Note IX Equities in Other Entities for detailed information on the subsidiaries of the Company.
3. Information on the joint ventures and associates of the Company
Other descriptionsThe Company does not have interests in joint venture arrangements or associate.
4. Information on other related parties
circulation(exclusive of realestate, laborservices, financialfutures, and studyingabroad)Name of other related parties
| Name of other related parties | Relationship between other related parties and the Company |
| (Hong Kong) Zhongshun Co., Ltd. | The second-largest shareholder of the Company, with 20.32% of the Company's shares |
| Guangzhou Zhongshun Trade Co., Ltd. | A company controlled by the nephew and the husband of the niece of Mr. Deng Yingzhong, the Chairman of the Company |
| Bama Zhongshun Health Products Co., Ltd. | A company controlled by Guangdong Zhongshun Paper Group Co., Ltd., the Company's controlling shareholder |
| Yantai Zhongshun Network Technology Co., Ltd. | The partially-owned subsidiary of Bama Zhongshun Health Products Co., Ltd. controlled by the Company's controlling shareholders |
| Shenzhen Zhongshun Caizhi Investment Co., Ltd. | Formerly known as Zhongshun Industrial Investment (Shenzhen) Co., Ltd., a company controlled by the Company’s actually |
| controllers, i.e. Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie | |
| Pengzhou Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor |
| Sichuan West Lexiangshenghuo Trading Co., Ltd. | A company where the senior manager Yue Yong's son holds shares and serves as a supervisor |
| Chongqing Qinyue Trading Co., Ltd. | A company where the senior manager Yue Yong's brother holds shares and serves as a supervisor |
Other descriptionsNote: The Company's directors, supervisors, senior managers and their close family members are relatedparties of the Company.
5. Information on related party transactions
(1) Related party transactions for purchase and sale of goods, and provision and acceptance of laborservicesPurchase of goods/acceptance of labor services
Unit: RMB
| Related party | Content of related party transaction | Incurred in the current period | Approved transaction limit | Whether to outstrip the transaction limit | Incurred in the prior period |
| Bama Zhongshun Health Products Co., Ltd. | Purchase of water, office supplies | No | 123,516.43 |
Table of sale of goods/provision of labor services
Unit: RMB
| Related party | Content of related party transactions | Incurred in the current period | Incurred in the prior period |
| Pengzhou Lexiangshenghuo Trading Co., Ltd. | Sale of goods | 1,378,011.50 | 1,096,199.07 |
| Sichuan West Lexiangshenghuo Trading Co., Ltd. | Sale of goods | 641,228.34 | 776,211.46 |
| Chongqing Qinyue Trading Co., Ltd. | Sale of goods | 330,512.87 | 726,966.96 |
| Guangdong Zhongshun Paper Group Co., Ltd. | Sale of goods | 56,637.17 |
Explanation of the related party transactions for purchase and sale of goods, and provision and acceptance of laborservices: None
(2) Related entrusted management/contracting and entrusting management/contracting outDescription of related entrusted party/contracting: NoneDescription of related entrusting management/contracting out: None
(3) Related lease
The Company as the lessee:
Unit: RMB
| Name of lessor | Type of leased assets | Lease fee confirmed in the current period | Lease fee confirmed in the last period |
| Mr. Deng Yingzhong, Mr. Deng Guanbiao and Mr. Deng Guanjie | Housing lease | 3,004,787.91 | 1,742,553.60 |
Explanation of related lease: None
(4) Related guarantee
Explanation of related guarantee: None
(5) Interbank borrowing between related parties
(6) Asset transfer and debt reorganization between related parties
(7) Remuneration for key managers
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period |
| Remuneration for key managers | 34,173,895.09 | 26,693,829.67 |
(8) Other related party transactions
6. Receivables from and payables to related parties
(1) Receivables
Unit: RMB
| Item | Related party | Balance at the end of the period | Balance at the beginning of the period | ||
| Book balance | Impairment provision | Book balance | Impairment provision | ||
| Accounts receivable | Chongqing Qinyue Trading Co., Ltd. | 60,876.03 | 3,043.80 | 130,446.49 | 2,608.93 |
| Other receivables | Chongqing Qinyue Trading Co., Ltd. | 44.63 | 2.23 | ||
(2) Payables
Unit: RMB
| Item | Related party | Book balance at the end of the period | Book balance at the beginning of the period |
| Contract liabilities | Sichuan West Lexiangshenghuo Trading Co., Ltd. | 195.90 | 4,783.90 |
| Contract liabilities | Pengzhou Lexiangshenghuo Trading Co., Ltd. | 1.67 | 503.67 |
7. Commitments of related parties: None
8. Others: None
XIII. Share-based Payment
1. Overall information on share-based payment
√ Applicable □ Not applicable
Unit: RMB
| The Company's total amount of all equity instruments granted in the current period | 0.00 |
| The Company's total amount of all equity instruments exercised in the current period | 9,969,114.00 |
| The Company's total amount of all equity instruments expired in the current period | 3,276,268.00 |
| Scope of exercise prices and remaining contractual term of the Company' stock options issued as at the end of the reporting period | The grant price for restricted stock options awarded by the Company in the first grant period as at the end of reporting period is RMB8.572/share, and that for reserved stock options is RMB13.965/share; the validity period is from the grant date of the stock options to the date when all stock options are exercised or cancelled, with a maximum period of 60 months. |
Other description: None
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
| Method of determining the fair value of equity instruments at the grant date | 1. Restricted shares: the stock closing prices at the grant date 2. Stock options: Black-Scholes model for option pricing 3. Employee stock ownership plan: the stock closing prices at the grant date. |
| Basis for determining the number of vested equity instruments | Upon approval of the general meeting of shareholders |
| Reasons for significant differences between current estimates and previous estimates | None |
| Cumulative amount of equity-settled share-based payments recognized as capital surplus | 159,384,997.90 |
| Total fees confirmed by the equity-settled share-based payment in the current period | 95,705,148.72 |
Other description: None
3. Cash-settled share-based payment
□ Applicable √ Not applicable
4. Revision and termination of share-based payment
There was no revision and termination of share-based payment of the Company during the reporting period.
5. Others: None
XIV. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date: NoneAs at December 31, 2020, the Company had no significant commitments that should have been disclosed but arenot disclosed.
2. Contingencies
(1) Significant contingent matters on the balance sheet date
As at December 31, 2020, the Company had no significant contingent matters that should have been disclosed butare not disclosed.
(2) Explanations are also necessary if the Company has no significant contingent matters to be disclosedThere are no significant contingent matters to be disclosed in the Company.
3. Others: None
XV. Events after Balance Sheet Date
1. Significant non-adjusting events:None
2. Profit distribution:None
3. Sales return: None:None
4. Explanation on other events after the balance sheet date: None
1. Important external investment
The Company convened the 31st Meeting of the fourth session of the Board of Directors and the 2ndextraordinary meeting of shareholders on January 13, 2021 and January 29, 2021, respectively. The meetingsreviewed and adopted the Proposal on Building a New 400,000-ton High-grade Household Paper Project. Thenew project aims to promote the Company to further expand its production capacity, meet the demands for futuresales growth in East China market, and create new profit growth points for the Company. With a total projectedinvestment of RMB2.550 billion and a planned capacity of 400,000 tons, the project will be implemented inphases. The first phase is planned to have an investment of RMB600 million and an output of 100,000 tons ofhigh grade household paper.In order to meet the development needs of the new project, the Company, with its own funds of RMB200 million,established a wholly-owned subsidiary C&S (Jiangsu) Paper Co., Ltd. on February 27, 2021 in Suqian City ofJiangsu Province.On March 15, 2021, the Company signed the Investment Agreement for the New 400,000-ton High-gradeHousehold Paper Project in Suqian with Sucheng District People’s Government of Suqian City and theManagement Committee of Yunhe Suqian Port Industrial Park, respectively.
2. Profit distribution plan
Pursuant to resolutions made on the fourth meeting of the fifth session of the Board of Directors on April 27, 2021,the profit distribution proposal in 2020 is as follows: distribute cash dividend of RMB 1.0 (tax included) for every10 shares to all shareholders and issue 0 bonus shares (tax included) based on the Company’s total share capitalminus the number of repurchased shares as of the registration date of the Company’s implementation of the profit
distribution plan; meanwhile, the Company will not transfer capital reserve into share capital. Where theCompany’s share capital changes due to repurchase and cancellation of restricted shares, option exercise, andother reasons on the future equity registration date for the implementation of the distribution plan, the Companywill maintain the same distribution amount for every 10 shares and change the total distributed amountaccordingly. This proposal can be implemented only after being reviewed and passed on the shareholder’s generalmeeting.
XVI. Other Significant Matters
1. Corrections to previous accounting errors
(1) Retroactive restatement approach:None
(2) Prospective approach:None
2. Debt restructuring: None
3. Assets replacing
(1) Exchange of non-monetary assets: None
(2) Other asset replacing: None
4. Annuities plan: None
5. Operation discontinuation
Other description: None
6. Segment information
(1) Determination basis and accounting policies of reporting segments
The Company does not have operating segments with different economic features and hence has notidentified operating segments according to internal organization structure, management requirements and internalreporting policies. Therefore, there was no information on reporting segments based on operating segments to bedisclosed.
(2) Financial information on reporting segments:None
(3) Explanation on reasons if the Company has no reporting segments or is unable to disclose the totalassets and liabilities of the reporting segments: None
(4) Other description: None
7. Other important transactions and matters that may affect the decisions of investors: None
8. Others
External guarantees of the CompanyIn 2020, the Company signed the XIAOYIDA Business Cooperation Agreement with Bank of China LimitedZhongshan branch and Shanghai Junmeng E-commerce Co., Ltd. (No. 2020-XYDXY-33725001), under whichthe bank offers a credit line of XIAOYIDA service up to RMB130 million to Shanghai Junmeng and theCompany provides a joint and several liability guarantee. The line of credit is valid until June 4, 2021. As ofDecember 31, 2020, Shanghai Junmeng had no financing balance of the XIAOYIDA service.In 2020, Zhongshan Trading signed the XIAOYIDA Business Cooperation Agreement with Bank of China LimitedZhongshan branch and Wuhan Jie Rou E-commerce Co., Ltd. (No. 2020-XYDXY-33725002), under which thebank offers a credit line of XIAOYIDA service up to RMB80 million to Wuhan Jie Rou and the Companyprovides a joint and several liability guarantee. The line of credit is valid until June 4, 2021. As of December 31,2020, Wuhan Jie Rou had no financing balance of the XIAOYIDA service.
XVII. Notes to Major Items of Financial Statements of the Parent Company
1.Accounts receivable
(1) Accounts receivable disclosure by category
Unit: RMB
| Type | Balance at the end of the year | Balance at the beginning of the year | ||||||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |||||
| Amount | Percentage | Amount | Provision ratio | Amount | Percentage | Amount | Provision ratio | |||
| Including: | ||||||||||
| Accounts receivable for which bad debt reserve is set aside in portfolios | 94,047,365.99 | 100.00% | 1,399,993.66 | 1.49% | 92,647,372.33 | 128,480,869.70 | 100.00% | 1,277,442.83 | 0.99% | 127,203,426.87 |
| Including: | ||||||||||
| Portfolio based on aging | 56,099,681.03 | 59.65% | 1,399,993.66 | 2.50% | 54,699,687.37 | 44,573,108.11 | 34.69% | 1,277,442.83 | 2.87% | 43,295,665.28 |
| Portfolio based on related parties | 37,947,684.96 | 40.35% | 37,947,684.96 | 83,907,761.59 | 65.31% | 83,907,761.59 | ||||
| Total | 94,047,365.99 | 100.00% | 1,399,993.66 | 1.49% | 92,647,372.33 | 128,480,869.70 | 100.00% | 1,277,442.83 | 0.99% | 127,203,426.87 |
Bad debt reserve set aside individually: NoneBad debt reserve set aside in portfolios: 1,399,993.66
Unit: RMB
| Name | Balance at the end of the period | ||
| Book balance | Impairment provision | Book balance | |
| Within the credit period | 47,886,975.14 | 957,739.50 | 2.00% |
| Credit period - 1 year | 8,058,493.48 | 402,924.67 | 5.00% |
| 1 to 2 years | 46,228.20 | 6,934.23 | 15.00% |
| 2 to 3 years | 107,984.21 | 32,395.26 | 30.00% |
| 3 to 5 years | 50.00% | ||
| Over 5 years | 100.00% | ||
| Total | 56,099,681.03 | 1,399,993.66 | -- |
Description of reason for the portfolio:
Accounts receivable with the same aging have similar credit risk characteristics.Description of reason for the portfolio: NoneProvision of bad debt reserve by portfolio:
Description of reason for the portfolio:
If the bad debt reserve of accounts receivable is set aside according to general model of expected credit loss,
please refer to the disclosure method of other receivables to disclose relevant information on bad debt reserve:
Relevant information:
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 93,893,153.58 |
| 1 to 2 years | 46,228.20 |
| 2 to 3 years | 107,984.21 |
| Total | 94,047,365.99 |
(2) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodProvision of bad debt reserve of the reporting period:
Unit: RMB
| Type | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Accounts receivable | 1,277,442.83 | 122,550.83 | 1,399,993.66 | |||
| Total | 1,277,442.83 | 122,550.83 | 1,399,993.66 | |||
(3) Accounts receivable actually written off in the reporting period
Description of write-offs of accounts receivable: The Company did not have written-off accounts receivable in thereporting period.
(4) Top five debtors in closing balance of accounts receivable
Unit: RMB
| Name of institution | Balance of accounts receivable | Percentage in total balance of | Balance for bad debt reserve at |
| at the end of the period | accounts receivable at the end of the period | the end of the period | |
| 1st | 16,054,158.77 | 17.07% | |
| 2nd | 11,773,496.66 | 12.52% | 235,469.93 |
| 3rd | 11,018,467.37 | 11.72% | |
| 4th | 10,804,984.84 | 11.49% | |
| 5th | 10,644,841.40 | 11.32% | 295,062.16 |
| Total | 60,295,949.04 | 64.12% |
(5) Accounts receivable derecognized due to transfer of financial assets
The Company has no accounts receivable derecognized due to the transfer of financial assets as at the end of thereporting period.
(6) Amounts of assets and liabilities that are formed by the transfer and ongoing involvement of accountsreceivableThe Company has no amounts of assets and liabilities that are formed by the transfer and ongoing involvement ofaccounts receivable as at the end of the reporting period.Other description: None
2. Other receivables
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period |
| Other receivables | 136,987,584.64 | 637,511,752.54 |
| Total | 136,987,584.64 | 637,511,752.54 |
(1) Interest receivable
1) Classification of interest receivable: None
2) Significant overdue interest
Other description: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable: None
2) Significant dividends receivable exceeding one year: None
3) Provision of bad debt reserve
□ Applicable √ Not applicable
Other description: None
(3) Other receivables
1) Classification of other receivables by nature
Unit: RMB
| Nature | Book balance at the end of the period | Book balance at the beginning of the period |
| Current accounts | 131,125,900.41 | 636,793,035.80 |
| Reserve | 639,681.19 | 702,001.66 |
| Margins and deposits | 113,606.00 | 31,500.00 |
| Others | 5,494,420.94 | 44,314.48 |
| Total | 137,373,608.54 | 637,570,851.94 |
2) Provision of bad debt reserve
Unit: RMB
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit loss in the next 12 months | Expected credit losses in the whole duration (without credit impairment) | Expected credit losses in the whole duration (with credit impairment) | ||
| Balance as at January 1, 2020 | 59,099.40 | 59,099.40 | ||
| Balance as at January 1, 2020 in the reporting period | —— | —— | —— | —— |
| Provision in the reporting period | 334,513.61 | 334,513.61 | ||
| Write-off in the reporting period | 7,589.11 | 7,589.11 | ||
| Balance as at December 31, 2020 | 386,023.90 | 386,023.90 |
Description of changes in the book balance where there are significant changes in provision for the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Within 1 year (inclusive) | 137,361,254.49 |
| 1 to 2 years | 2,000.00 |
| Over 3 years | 10,354.05 |
| 4 to 5 years | 8,354.05 |
| Over 5 years | 2,000.00 |
| Total | 137,373,608.54 |
3) Bad debt reserve that is set aside, recovered or transferred back in the reporting periodProvision of bad debt reserve of the reporting period:
Unit: RMB
| Category | Balance at the beginning of the period | Amount of change in the reporting period | Balance at the end of the period | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other receivables | 59,099.40 | 334,513.61 | 7,589.11 | 386,023.90 | ||
| Total | 59,099.40 | 334,513.61 | 7,589.11 | 386,023.90 | ||
The amount of other accounts receivable written-off by the Company in the year was RMB7,589.11.Where the amount of recovered or reversed bad debt reserve in the reporting period is important: None
4) Other receivables actually written off in the reporting period
Unit: RMB
| Item | Write-off amount |
| Other receivables actually written off | 7,589.11 |
Description on the write-offs of other receivables: None
5) Top five debtors in closing balance of other accounts receivable
Unit: RMB
| Name of institution | Nature of the amount | Balance at the end of the period | Aging | Percentage in total balance of other receivables at the end of the period | Balance of bad debt reserve at the end of the period |
| 1st | Current accounts | 109,851,720.66 | Within 1 year | 79.97% | |
| 2nd | Current accounts | 15,148,739.75 | Within 1 year | 11.03% | |
| 3rd | Others | 5,431,871.82 | Within 1 year | 3.95% | 271,593.59 |
| 4th | Current accounts | 4,769,618.48 | Within 1 year | 3.47% | |
| 5th | Others | 226,614.54 | Within 1 year | 0.16% | 11,330.73 |
| Total | -- | 135,428,565.25 | -- | 98.58% | 282,924.32 |
6) Receivables involving government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities that are formed by the transfer and ongoing involvement of otherreceivables: None
3. Long-term equity investment
Unit: RMB
| Item | Balance at the end of the period | Balance at the beginning of the period | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment in subsidiaries | 1,928,113,219.50 | 1,928,113,219.50 | 1,231,245,128.96 | 1,231,245,128.96 | ||
| Total | 1,928,113,219.50 | 1,928,113,219.50 | 1,231,245,128.96 | 1,231,245,128.96 | ||
(1) Investment in subsidiaries
Unit: RMB
| Investee | Opening balance (book value) | Increase/decrease in the period | Closing balance (book value) | Closing balance of impairment provision | |||
| Increase in investment | Decrease in investment | Impairment Provision | Others | ||||
| Jiangmen Zhongshun Paper Co., Ltd. | 697,499,879.18 | 1,114,942.29 | 698,614,821.47 | ||||
| C&S (Sichuan) Paper Co., Ltd. | 161,228,847.04 | 12,156,592.94 | 173,385,439.98 | ||||
| C&S (Yunfu) Paper Co., Ltd. | 135,405,965.05 | 518,000,000.00 | 4,431,500.37 | 657,837,465.42 | |||
| Zhongshan Zhongshun Trading Co., Ltd. | 91,611,393.55 | 3,205,903.13 | 94,817,296.68 | ||||
| Zhejiang Zhongshun Paper Co., Ltd. | 51,259,117.44 | 5,265,402.71 | 56,524,520.15 | ||||
| C&S (Hubei) Paper Co., Ltd. | 43,037,008.50 | 147,600,000.00 | 5,379,236.63 | 196,016,245.13 | |||
| C&S (Yunfu) Trading Co., Ltd. | 30,200,274.51 | 30,200,274.51 | |||||
| C&S (Zhongshan) Paper Co., Ltd. | 12,683,100.00 | 12,683,100.00 | |||||
| C&S (Dazhou) Paper Co., Ltd. | 6,000,000.00 | 6,000,000.00 | |||||
| Chengdu Zhongshun Paper Co., Ltd. | 1,237,694.60 | -610,170.02 | 627,524.58 | ||||
| Xiaogan C&S Trading Co., Ltd. | 539,220.62 | -227,752.96 | 311,467.66 | ||||
| Zhong Shun International Co., Ltd. | 281,784.47 | 503,258.27 | 785,042.74 | ||||
| Sun Daily Necessities Co., Ltd. | 200,000.00 | 200,000.00 | |||||
| Hangzhou Jie Rou Trading Co., Ltd. | 58,048.00 | 46,047.00 | 104,095.00 | ||||
| Huicong Paper Co., Ltd. | 2,796.00 | 3,130.18 | 5,926.18 | ||||
| Total | 1,231,245,128.96 | 665,600,000.00 | 31,268,090.54 | 1,928,113,219.50 |
(2) Investment in associates and joint ventures
(3) Other description: None
4. Operating income and operating cost
Unit: RMB
| Item | Incurred in the current period | Incurred in the prior period | ||
| Income | Cost | Income | Cost | |
| Principal business | 1,034,162,235.27 | 822,204,492.12 | 986,520,042.70 | 803,354,181.11 |
| Others | 598,353,119.61 | 555,594,473.69 | 301,127,650.65 | 281,122,201.68 |
| Total | 1,632,515,354.88 | 1,377,798,965.81 | 1,287,647,693.35 | 1,084,476,382.79 |
Information related to income:
Unit: RMB
| Contract classification | Branch 1 | Branch 2 | Total | |
| By product type | 1,632,515,354.88 | 1,632,515,354.88 | ||
| Including: | ||||
| Household paper | 1,025,893,623.14 | 1,025,893,623.14 | ||
| Personal care | 8,268,612.13 | 8,268,612.13 | ||
| Others | 598,353,119.61 | 598,353,119.61 | ||
| By operating region | 1,632,515,354.88 | 1,632,515,354.88 | ||
| Including | ||||
| Domestic | 1,632,515,354.88 | 1,632,515,354.88 | ||
| Abroad | 0.00 | 0.00 | ||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Total | 1,632,515,354.88 | 1,632,515,354.88 |
Information related to performance obligation: NoneInformation related to the transaction price apportioned to the remaining performance obligation:
The amount of income corresponding to the obligations of contract performance with an executed contract that isnot performed or fully performed at the end of the reporting period is RMB5,720,659.36, of which the income ofRMB5,720,659.36 is expected to be confirmed as income in the year of 2021.Other description: None
5. Return on investment
Unit: RMB
| Item | Incurred in the current period | Incurred in the last period |
| Income from long-term equity-based investment accounted for using the cost method | 140,000,000.00 | 60,000,000.00 |
| Others | 3,256,231.99 | 333,745.61 |
| Total | 143,256,231.99 | 60,333,745.61 |
6. Others: None
XVIII. Supplementary Information
1.List of non-recurring profits and losses of the reporting period
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Description |
| Profits/losses from the disposal of non-current asset | -2,980,604.57 | |
| Governmental grants reckoned into current profits/losses (not including grants enjoyed in quota or ration according to national standards, which are closely relevant to the | 28,533,162.96 |
| company’s business) | ||
| Profits/losses from assets entrusted to others for investment or management | 3,868,134.28 | Returns on principal-protected wealth management products at maturity and reverse repo of treasury bonds |
| Other non-operating income and expenses except for the aforementioned items | -13,442,144.41 | |
| Less: Influence of income tax | 1,642,453.66 | |
| Total | 14,336,094.60 | -- |
Reason shall be provided if the company defines non-recurring profit and loss items as defined or listed in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering their Securities to thePublic—Non-recurring Profit and Loss as recurring profit and loss items.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Profit in the reporting period | Weighted average return on net assets | Earnings per share | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profit attributable to the ordinary shareholders of the Company | 19.86% | 0.70 | 0.69 |
| Net profit attributable to the ordinary shareholders of the Company after excluding non-recurring profit and loss | 19.55% | 0.69 | 0.68 |
3. Difference in accounting data under domestic and international accounting standards
(1) Net profit and net asset differences under International Financial Reporting Standards (IFRS) andChinese Accounting Standards (CAS)
□ Applicable √ Not applicable
(2) Net profit and net asset differences under foreign accounting standards and Chinese AccountingStandards (CAS)
□ Applicable √ Not applicable
(3) Explanation of reasons for the differences between accounting data disclosed under domestic andoverseas accounting standards. If differences are adjusted based on data audited by overseas auditinstitutions, the name of the institution should be noted.
4. Others
Section XIII Documents Available for Inspection
1. The Annual Report 2020 affixed with the signature of Mr. Deng Yinzhong, the Company’slegal representative
2. Financial statements affixed with the signatures and stamps of Mr. Deng Yingzhong, thelegal representative of the Company, Mr. Dong Ye, person in charge of accounting, and Ms.Xu Xianjing, person in charge of accounting department of the Company
3. Original of the audit report affixed with the stamp of Mazars Certified Public Accountants(LLP) and the signatures and stamps of certified public accountants Mr. Wang Bing and Mr.Pan Guiquan.
4. All original copies of the Company’s documents and the original drafts of the Company’sannouncements as disclosed in the newspaper designated by the CSRC during the reportingperiod
5. Other relevant documents
6. Place for document inspection: Office of the Board of Directors