Stock code: 300888
Winner Medical Co., Ltd.
Semi-annual Report
To enhance your health, life and well-being
Full Text of 2021 Semi-annual Report of Winner Medical Products Co., Ltd.
Section 1 Important Notes, Contents, and Definitions
The Board of Directors, the Board of Supervisors and directors, supervisors and
senior management of the Company hereby guarantee that the statement in this
Semi-annual Report is true, accurate and complete without false or misleading
information or major omission and that they will assume all the legal liabilities,
individually and jointly.
Li Jianquan, the head of the Company, Fang Xiuyuan, the head of accounting
work, and Wu Kezhen, the head of accounting body (accountant in charge),
guarantee the authenticity, accuracy, and completeness of the financial report in
this semi-annual reporting period.
All directors of the Company personally attended the board meeting for
reviewing this report.
The forward-looking contents in this report, such as the future development
strategy and performance planning, are the goals sets by the Company, which
are planned matters. The achievement of the goals depends on many factors,
including market change, which is uncertain. So these contents are not the
Company’s profit forecast for the next year and do not constitute a substantial
commitment of the Company to investors and related parties. Investors and
related parties should be fully aware of related risks and understand the
differences among plans, forecasts, and commitments. Investors are asked to
beware of investment risks!
The main risks that the Company may face in the future are described in the “12.
Risks and countermeasures” in “Section 3 Management Discussion and Analysis”
of this report. Investors are asked to read the entire section carefully.
The Company does not plan to distribute cash dividends, transfer shares or
increase the share capital of the common reserve fund.
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Contents
Section 1 Important Notes, Contents, and Definitions ...................................................................................................................... 2
Section 2 Company Profile and Major Financial Indicators .............................................................................................................. 7
Section 3 Management Discussion and Analysis ............................................................................................................................ 11
Section 4 Corporate Governance ................................................................................................................................................... 72
Section 5 Environmental Protection and Social Responsibility ....................................................................................................... 74
Section 6 Important Issues ............................................................................................................................................................ 80
Section 7 Changes in Shares and Shareholders............................................................................................................................... 88
Section 8 Preferred Shares-related Information .............................................................................................................................. 96
Section 9 Bond-related Information............................................................................................................................................... 97
Section 10 Financial Statements .................................................................................................................................................... 98
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Document Catalog
(1) Financial statements containing the signatures and seals of the person in charge of the Company, the person in charge of
accounting work, and the person in charge of the accounting body (accountant in charge).
(2) The originals of all company documents and announcements publicly disclosed during the reporting period.
(3) The place where the documents are available for inspection: the Securities Department of the Company.
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Definitions
Term Refers to Definition
Company, Winner Medical Refers to Winner Medical Co., Ltd.
Winner Group Refers to Winner Group Limited, a controlling shareholder of the Company
Beijing Sequoia Xinyuan Equity Investment Center (L.P.), a shareholder
Sequoia Xinyuan Refers to
of the Company
Shenzhen Kangsheng Investment Partnership (L.P.), a shareholder of the
Kangsheng Investment Refers to
Company
Shenzhen Kangxin Investment Partnership (L.P.), a shareholder of the
Kangxin Investment Refers to
Company
SCGC Refers to Shenzhen Capital Group Co., Ltd., a shareholder of the Company
Shenzhen Kanglong Investment Partnership (L.P.), a shareholder of the
Kanglong Investment Refers to
Company
Shenzhen Kangli Investment Partnership (L.P.), a shareholder of the
Kangli Investment Refers to
Company
Winner Medical (Chongyang) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Chongyang) Refers to
Company
Winner Medical (Jiayu) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Jiayu) Refers to
Company
Winner Medical (Jingmen) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Jingmen) Refers to
Company
Yichang Winner Medical Textile Co., Ltd., a wholly-owned subsidiary of
Winner Medical (Yichang) Refers to
the Company
Winner Medical (Huanggang) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Huanggang) Refers to
Company
Winner Medical (Tianmen) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Tianmen) Refers to
Company
Shenzhen Purcotton Technology Co., Ltd., a wholly-owned subsidiary of
Shenzhen Purcotton Refers to
the Company
Guangzhou Purcotton Medical Technology Co., Ltd., a wholly-owned
Guangzhou Purcotton Refers to
subsidiary of Shenzhen Purcotton
Beijing Purcotton Technology Co., Ltd., a wholly-owned subsidiary of
Beijing Purcotton Refers to
Shenzhen Purcotton
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Shanghai Purcotton Technology Co., Ltd., a wholly-owned subsidiary of
Shanghai Purcotton Refers to
Shenzhen Purcotton
Shenzhen Qianhai Purcotton E-Commerce Co., Ltd., a wholly-owned
Qianhai Purcotton Refers to
subsidiary of Shenzhen Purcotton
Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd., a wholly-owned
Purunderwear Refers to
subsidiary of Shenzhen Purcotton
Winner (Huanggang) Cotton Processing & Trading Co., Ltd., a
Winner (Huanggang) Cotton Refers to
wholly-owned subsidiary of Winner Medical (Huanggang)
Winner Medical Malaysia Sdn. Bhd., a subsidiary controlled by the
Winner Medical Malaysia Refers to
Company
Winner Medical (Hong Kong) Ltd., a subsidiary controlled by the
Winner Medical (Hong Kong) Refers to
Company
Winner Medical (Heyuan) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Heyuan) Refers to
Company
Winner Medical (Wuhan) Co., Ltd., a wholly-owned subsidiary of the
Winner Medical (Wuhan) Refers to
Company
Pure HB (Shanghai) Co., Ltd., a wholly-owned subsidiary of the
Pure HB (Shanghai) Refers to
Company
Shenzhen PureH2B Technology Co., Ltd., a wholly-owned subsidiary of
PureH2B Refers to
the Company
Chengdu Wenjian Likang Medical Products Co., Ltd., a wholly-owned
Chengdu Wenjian Likang Refers to
subsidiary of the Company
An integrated online Business-to-Consumer (B2C) shopping platform
Tmall Refers to
(www.tmall.com) under Alibaba Group
Beijing Jingdong Century Trading Co., Ltd. (JD.com, Inc.), a company
JD.com Refers to listed on U.S. exchanges with an integrated online B2C shopping platform
(www.jd.com)
Corporate clients with bulk purchase or customized purchase needs
Key Client Refers to
regarding Purcotton business
Galaxy Real Estate Refers to Shenzhen Galaxy Real Estate Development Co., Ltd.
Reporting period Refers to The first half of 2021, from January 1, 2021 to June 30, 2021
yuan Refers to CNY
10,000 yuan Refers to CNY 10,000 yuan
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Section 2 Company Profile and Major Financial Indicators
I. Company Profile
Stock abbreviation Winner Medical Stock code 300888
Stock exchange Shenzhen Stock Exchange
Company name in Chinese Winner Medical Co., Ltd.
Chinese abbreviation of the company
Winner Medical
(if any)
Company name in foreign language (if
Winner Medical Co., Ltd.
any)
Company short name in foreign
Winner Medical
language (if any)
Legal representative of the company Li Jianquan
II. Contact Person and Contact Information
Secretary to the Board of Directors Securities affairs representative
Name Chen Huixuan Wei Na, Liu Yanxiang
F42, Building 2, Huilong Business Center, F42, Building 2, Huilong Business Center,
Shenzhen North Railway Station Area, Shenzhen North Railway Station Area,
Contact address
Minzhi Subdistrict, Longhua District, Minzhi Subdistrict, Longhua District,
Shenzhen City Shenzhen City
Tel 0755-28066858 0755-28066858
Fax 0755-28134688 0755-28134688
Email investor@winnermedical.com investor@winnermedical.com
III. Other Information
1. Company contact
Whether the registered and office addresses and their post codes, official website, and email of the Company were changed during
the reporting period
√Applicable □ Not applicable
F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area,
Registered address of the Company Minzhi Subdistrict, Longhua District, Shenzhen City; Winner Industrial Park,
No.660 Bulong Road, Longhua New District, Shenzhen City
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Postal code of the Company’s registered address 518131
F42, Building 2, Huilong Business Center, Shenzhen North Railway Station Area,
Office address of the Company
Minzhi Subdistrict, Longhua District, Shenzhen City
Postal code of the Company’s office address 518131
Website http://www.winnermedical.cn, http://www.winnermedical.com
E-mail investor@winnermedical.com
Date of inquiry on the designated website for
April 20, 2021
disclosure of interim announcements (if any)
Query index of the designated website for
http://www.cninfo.com.cn/new/index
disclosure of interim announcements (if any)
2. Information disclosure and keeping place
Whether information disclosure and the place where the semi-annual report is kept were changed during the reporting period
□ Applicable √ Not applicable
The newspapers selected by the Company for information disclosure, the websites designated by the China Securities Regulatory
Commission (CSRC) for publishing the semi-annual report, and the place where the semi-annual report is kept were not changed
during the reporting period. See the 2020 Annual Report for details.
3. Change of registration
Whether the registration status was changed during the reporting period
□ Applicable √ Not applicable
There were no changes in the Company’s registration during the reporting period. See the 2020 Annual Report for details.
IV Main Accounting Data and Financial Indicators
Whether the Company needs to retroactively adjust or restate the accounting data of the previous years
□Yes √No
Increase/decrease the
Current reporting period Same period last year reporting period compared
to the previous year
Revenue (yuan) 4,059,865,654.92 4,179,778,883.27 -2.87%
Net profits attributable to shareholders of
761,038,730.24 1,032,218,689.91 -26.27%
listed companies (yuan)
Net profits attributable to shareholders of
the listed company after deduction of 627,255,609.19 1,022,971,049.47 -38.68%
non-recurring profits and losses (yuan)
Net cash flow from operating activities
197,604,865.77 2,473,405,982.25 -92.01% Note 1
(yuan)
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Basic EPS (yuan/share) 1.7844 2.7417 -34.92%
Diluted EPS (yuan/share) 1.7715 2.7417 -35.39%
Weighted average return on net assets 7.06% 28.33% -21.27% Note 2
Increase/decrease at the end
of the reporting period
End of the reporting period End of the previous year
compared to the end of the
previous year
Total assets (yuan) 13,112,976,247.91 13,002,251,764.44 0.85%
Net assets attributable to shareholders of
10,518,676,503.69 10,453,934,045.43 0.62%
listed companies (yuan)
Note 1: (1) Cash received from the sales of goods and services decreased by 1,548 million yuan during the reporting period compared
with the same period of the previous year, mainly due to the decrease in advance payments from customers. In the same period of last
year, the Company adopted a credit policy of 100% advance payment for protection products, and the credit policy returned to the
normal level during the reporting period. (2) The increase of 899 million yuan in cash paid for operating activities in this reporting
period was mainly due to the better performance and the higher provision for various taxes in the previous year, resulting in an
increase of 403 million yuan in various taxes paid after remittance in this reporting period compared with the same period of the
previous year. In addition, the higher provision for performance bonuses in the previous year led to an increase of 160 million yuan in
employee compensation paid in this reporting period compared with the same period of the previous year. (3) The above two points
were the main reasons for the decrease of 2,276 million yuan in net cash flow from operating activities in this reporting per iod
compared with the same period of the previous year, a decrease of 92.01% year-on-year.
Note 2: -21.27% is the level of difference not the rate of change.
V. Differences in Accounting Data Under Domestic and Foreign Accounting Standards
1. The difference between net profits and net assets in financial statements disclosed according to the
International Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the International Accounting Standards
(IAS) and Chinese Accounting Standards during the reporting period.
2. The difference between net profits and net assets in financial statements disclosed according to the
Overseas Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
No difference between net profits and net assets in financial statements disclosed according to the Overseas Accounting Standards
and Chinese Accounting Standards during the reporting period.
VI. Non-Recurring Profit and Loss Items and Amount
√Applicable □ Not applicable
Unit: yuan
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Item Amount Description
Profits and losses on the disposal of non-current assets (including
(7,991,363.76)
the write-off part of the provision for asset impairment)
Government subsidies included into the current profits and losses,
except those government subsidies, which are closely related to
86,791,122.28
the business of a company and enjoyed in accordance with a
certain standard quota or quantity of the state
In addition to the effective hedging business related to the
company's normal business operations, the profit and loss from
fair value changes arising from holding tradable financial assets,
derivative financial assets, tradable financial liabilities, and
79,825,882.59
derivative financial liabilities, as well as the investment income
from disposal of tradable financial assets and derivative financial
assets, tradable financial liabilities, derivative financial liabilities,
and other debt investments
Income and expenditure other than those mentioned above 1,756,948.93
Less: Amount affected by income tax 26,599,643.40
Amount of minority shareholders' equity affected (after tax) (174.41)
Total 133,783,121.05 --
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 on
Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from the
non-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public
Securities Issuing Companies - Non-recurrent Profits and Losses
□ Applicable √ Not applicable
No definition of non-recurrent profit and loss items defined and enumerated in the Interpretative Announcement No. 1 on
Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses as non-recurrent profit and loss
items during the reporting period.
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Section 3 Management Discussion and Analysis
I. Main Business of the Company During Reporting Period
(I) Main business of the Company during reporting period
Winner Medical is a health enterprise developing both medical and consumption products under its three brands: Winner, Purcotton,
and PureH2B. Specifically, the Company has been adhering to the core business principle of “Quality before profit, brand before
speed, social value before corporate value”. Through continuous innovation and expansion of industrial boundaries, the Company has
developed from a single manufacturer of medical consumables into a large medical health enterprise covering wound care, infec tion
prevention, personal care, home care, maternal and child care, home textile and clothing and other fields.
consum
Medica
l ables
Non-woven Textile
consumer Beauty
consumer produc Health
Infect Disinf goods goods &
ion ts and
Wound ection person Home
care protec perfum
and es al care sports
tion cleani Cotton tissues Baby supplies
ng Sanitary pads Baby clothing
Wet tissues etc. Adult clothing
1. Medical consumables section
Winner Medical is a benchmarking enterprise in the domestic medical consumables industry. Its main product lines cover wound care,
infection prevention and disinfection and cleaning. The specific products include high-end wound dressing products, traditional
wound care and dressing products, infection control products in operating room, disease preventio n products and disinfection and
cleaning products for body surface cleaning.
The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cotton
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procurement, R&D, production, and direct export. The Company’s products have been certified by the EU CE certification, the US
FDA certification and the Japanese Ministry of Health, Labour and Welfare certification, and exported to Europe, America, Japan and
other countries. In 2005, “Winner” brand entered the domestic hospital and drugstore market. With its excellent product quality and
service, Winner Medical gradually established a good brand and reputation in domestic hospitals and drugstores. Since the outbreak
of COVID-19 in 2020, the “Winner” brand epidemic prevention products have entered the hospital and the civilian market. Thanks to
its public commitment not to increase prices and the quality of its products, it has won the unanimous praise at home and abr oad,
from government units and the public, and the brand reputation and popularity have been greatly improved.
In terms of products, Winner Medical focuses on market demand, is close to clinical and terminal, is driven by R&D and innova tion,
and constantly improves product layout. Its business scope extends from sales of single wound care products such as cotton gauze to
sales of integrated solutions of wound care, infection prevention, disinfection and cleaning. Disposable operating room consu mables
can more effectively reduce nosocomial infection than reusable medical products. With more attention of the state and hospitals to
nosocomial infection and residents’ attention to personal health environment, disposable operating room consumables are gradually
accepted by the domestic market. Winner Medical’s medical dressing product line has been expanded from traditional dressing
products mainly focusing on gauze products to high-end dressing products, such as silica gel foam dressing, hydrocolloid dressing,
super absorbent pad, negative pressure drainage products, etc., which are mainly applied to chronic wound healing scenes such as
diabetes, large-area burns and wounds. The Company’s technical level in the field of high-end dressings has been in the forefront of
the industry, and is expected to become the core products for the development of Winner Medical.
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2. Healthy Consumer Goods Section
Purcotton is a healthy life brand with "Medical background/Purcotton philosophy/Quality in our DNA "as its core competitiveness,
which starts with pure cotton spunlace non-woven fabric and takes “medicine close to life, Purcotton care for health” as its brand
proposition. Its products include pure cotton tissue, sanitary pads with pure cotton surface, pure cotton wet tissues and other
non-woven consumer goods, as well as baby supplies, baby clothing, baby products, adult clothing and other textile consumer goods.
Purcotton advocates the life concept of “comfort, health, environmental protection”, replacing chemical fiber with cotton and keeping
away from chemical stimulation. It provides overall solutions for different life scenes, having a good user reputation and formed a
fully differentiated brand image in the field of consumer goods with strong brand appeal.
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In terms of products, with excellent quality control ability and technology research and development ability, the Company continues
to introduce medical grade quality consumer goods. Cotton is the main raw material of core products of Purcotton, which adopts
global high-quality cotton to control product quality and safety from the source. According to the high standard of medical
consumables, all kinds of pollution sources are strictly controlled in the production process. Disposable underwear, newborn baby
clothes and other close-fitting clothing are packaged with medical grade sterilization to further ensure the safety and environmental
protection of the products. Purcotton products cover multiple consumer groups, such as mothers and infants, children and adults, and
span multiple product lines, such as high-end pure cotton tissues, female care, baby care, adult clothing, home textile products, etc.
In July 2019, the Company launched the “PureH2B” brand, aiming to build a one-stop retail platform covering beauty makeup,
personal care, sports and other healthy and beautiful life needs. As of June 30, 2020, “PureH2B” has sold products through 9 offline
stores, online official websites and Wechat mini programs, and its business is still at the initial stage.
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(II) Main Products and Purposes
Its health product system covers: wound care products, infection prevention products, disinfection & cleaning products under its
medical consumables section; the non-woven consumer goods and textile consumer goods under its healthy consumer goods section;
and pure cotton spunlace non-woven fabric, an industry intermediate product.
The main categories and images of some products under the Company's medical consumables section are as follows:
Product Class Product Category Main Purpose Product Image of Some Products
Gauze sheets,
Traditional wound care For absorbing wound exudate, non-woven sheets,
and wound dressing dressing wounds, and sports gauze bandage,
products protection dressing change
kits, etc.
Wound care
products For creating a moisture balance
at the wound interface to
Silicone dressings,
High-end wound dressing optimize its benefits for wound
alginate dressings,
products healing, reduce the frequency of
etc.
dressing replacement, and
reduce secondary damage
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Operating room infection For preventing infections in the Surgical packs,
control products operating room surgical gowns, etc.
Infection
prevention
products
For occupational protection of Masks, protective
Disease prevention and
medical staff and patient clothing, isolation
control products
isolation gowns, etc.
Cotton swabs,
Disinfection cotton pads, cotton
Disinfection & cleaning For wound cleaning and
& cleaning balls, alcohol cotton
products disinfection, and daily cleaning
products pads, disinfectant,
etc.
As the important guarantee for medical staff’s occupational protection and patient isolation protection, disease protection and control
products such as masks and protective clothing play an indispensable role in coping with major health incidents and improving public
health. The main categories and images of some products under the company's healthy consumer goods section are as follows:
Class Product Category Product Image of Some Products
Cotton tissues
Non-woven
consumer
goods
Wet tissues
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Sanitary pads
Other non-woven Cotton swabs, makeup cotton pads, disposable
consumer goods underwear, etc.
Baby supplies Baby's bath towels, handkerchiefs, and quilts, etc.
Baby's leisure wear, outing costume, underwear,
Baby clothing
footwear, etc.
Textile
consumer
goods
Adult's leisure wear, outing costume, underwear,
Adult clothing
footwear, etc.
Other textile consumer
Bedding, bathroom accessories, etc.
goods
The purposes and images of the Company's pure cotton spunlace non-woven fabric are as follow:
Class Main Purpose Image
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Pure cotton
With 100% quality cotton as raw materials, the fabric is made with the pure
spunlace
cotton spunlace non-woven fabric technology. It can be used in fields such as
non-woven
personal care, home care, medical equipment, and industrial wipes.
fabric
(III) Main Operating Modes
1. Procurement mode
The Company has established a complete procurement management system, which mainly includes the Procurement Control Process,
Procurement Price Management Process, New Supplier Selection and Review Control Process, Supplier Performance Appraisal
Management Process, and the Company also has made a Qualified Supplier Directory. According to the Company's regulations,
purchase applications shall be submitted by requiring departments based on customer orders, sales plans, and production plans. The
purchasing department shall strictly follow the purchasing management regulations after analyzing the purchasing requirements and
the raw material market. The procurement of key bulk raw materials (such as cotton and veil) is implemented in a unified manner
according to the Company's rules on its strategic procurement. The Company implements a strict supplier management system to
ensure product quality and stable product supply. The Company has set a supplier directory and a perfect update and elimination
mechanism to dynamically manage existing suppliers and new suppliers, which enables the Company to preferentially cooperate w ith
the suppliers with the highest assessment results. For new suppliers, the Company has made strict selection criteria and supplier
development and process management systems, including on-site inspection on suppliers; for suppliers with poor or even unqualified
annual performance, the Company will add them to the key watch list or eliminate them. Generally, the Company will sign an annual
framework agreement with a supplier to specify the cooperation content and the annual cooperation arrangement, and specific
procurement contracts will be signed separately.
2. Production mode
The Company formulates production plans according to customers' POs and requirements, its annual sales plans, and monthly rolling
sales plans. Based on its own production capacity and demand fluctuations, the Company adopts the production strategies of Make to
Order (MTO) and Made to Stock (MTS).
3. Sales mode
The Company sells products through multiple channels. The main sales channels are shown in the following figure:
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Medical Pure cotton Healthy
consumables spunlace consumer
non-woven goods
f abric
Offline channels
Online channels Offline channels Direct selling to domestic Online channels Offline channels
and foreign customers
Third-party B2C platforms, such as Domestic Overseas E-commerce Real stores
Tmall, JD.com and Amazon sales platforms
sales
Winner's own Winner's own Winner's own Self-operated Warehousing by Official Directly Super Bulk p urchase
OEM mode e-commerce
brand at hospitals brand at OTC brand sales flagship stores platforms, such as website, APP operated market by key
drugstores at Tmall and JingDong self-run and Wechat and sales accounts or
JD.com stores and Tmall mini program franchised customization
Supermarket of PurCotton chain stores business
4. Marketing mode
The Company is developing its products under the Winner, Purcotton, and PureH2B brands a coordinated way. With 30 years of
experience in the production of medical supplies, Winner is a leading medical consumables brand in the Chinese market and a brand
with a global vision. With “To enhance your health, life and well-being” as its vision and industry-leading product quality as the
cornerstone of its brand value, the product marketing and promotion for the brand rely more on its brand reputation. With pure cotton
products as its label, Purcotton ad opts unique, differentiated strategies to build its brand. By integrating multiple promot ion channels
such as directly-sales stores, brand roadshows, celebrity endorsements, event sponsorship, new media, and advertising, Purcotton
keeps conveying to consumers its proposition of “medicine close to life, Purcotton care for health” and its vision of “Purcotton
Changes the World”, which helps deepen the meaning of Purcotton brand and increase its brand awareness and loyalty. PureH2B
offers consumers selected products that are high-quality, healthy, and beautiful from around the world through its paid membership
system. It offers its members products with extremely competitive prices and a series of excellent offline services such as beauty
salons, free makeup, and seminars. With “Love, protect and enjoy nature” as its brand vision, and “Influence the mainstream
consumption attitude with “inner health brings outer beauty” philosophy, and attract mainstream consumers with natural products” as
its mission, PureH2B is bringing consumers a new all-round digital retail experience.
(IV) Main Driving Factors of Performance
1. Medical consumables industry and consumer goods industry will keep growing rapidly
As the global demand for healthcare of aging population increases, resident income continues to grow, and medical and healthc are
improve, the global medical consumables market is showing a steady growth trend. The COVID-19 pandemic has made global
consumers pay more attention to health and personal protection. In China, especially, most families choose to wear masks when they
take public transport and are in public places, so the demand for masks is expected to increase significantly compared with that
before the pandemic. After the COVID-19 pandemic outbreak, as the government, medical workers, and consumers in China pay
greater attention to protection and quality, the use rate of disposable medical consumables and disposable surgical packs will get
higher; on the other hand, as the Chinese government attaches importance to the medical consumables industry, the supervision over
the industry are continuously strengthened while the reserves of medical consumables are increasing. Therefore, companies that do
not comply with laws and regulations will surely be eliminated. In addition, China's medical dressings are changing from trad itional
dressings to high-end dressings, and they are expected to replace imported dressings step by step. The medical consumables market
in China is growing rapidly, creating a good external environment for enterprise development.
In recent years, the total retail sales of consumer goods in China has been rising rapidly, showing an obvious trend of consumption
upgrading. Consumers' demand for green, healthy, and environmentally friendly products is increasing, bringing good opportunities
in the consumer goods industry.
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2. The Company‘s ability to innovate and its foresight enable it to lead the market and seize opportunities
In terms of technological innovation, the Company's pure cotton spunlace non-woven fabric is a kind of pioneering fabric in the
industry, with breakthrough significance. The Company innovatively applies the fabric in healthy consumer goods and medical
consumables. In terms of product innovation, the Company keeps introducing new products based on medical consumables and
healthy consumer goods, to increase loyalty of existing customers and to win new customers. In a ddition, the Company keeps
exploring new areas based on its R&D advantages. For example, the innovative application of pure cotton spunlace non-woven
fabrics in infection prevention products such as medical protective clothing, surgical gowns, and isolatio n gowns, which has not only
alleviated the shortage of raw materials during the pandemic but also improved the breathability and comfort of anti-pandemic
products, allowing them to be more environmentally friendly. As for high-end wound dressings, the Company keeps tackling
obstacles to enrich its high-end dressing products. With a top-down innovation system established, the Company is able to grasp the
trend of market development in a timely manner to develop new products and constantly promote its self-innovation.
3. High-quality products and precise brand positioning enhance brand value
The Company is one of the earliest medical consumables enterprises in China to establish a full industrial chain covering cot ton
procurement, R&D, production, and direct export. The Company is one of the early companies that established a medical-grade
quality management system in the industry, and has passed the ISO13485 Medical Devices Quality Management System
Certification. Its product quality complies with the European, American, Japanese, and Chinese standards. Winner Medical enjoys a
high brand reputation and recognition. In 2020, Winner Medical was praised by the Joint Prevention and Control Mechanism of t he
State Council as a well-deserved “ordnance factory” in fighting the pandemic. Its wholly-owned subsidiary Winner Medical
(Huanggang) was awarded the title of “National Advanced Unit for Fighting the COVID-19 Pandemic” by the CPC Central
Committee and the State Council. It is also the only enterprise awarded the title in Hubei Province. In May 2021, Winner Medical
was selected by the Federation of Shenzhen Industries as the “Benchmarking Enterprise in China’s Medical Consumables Sector”
and at the same time recognized as an “International Renowned Brand” by the United Nations Industrial Development Organization.
Winner Medical has expanded its business from the medical field to the consumer goods field, which has also increased the bra nd
value of its consumer products.
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Purcotton is committed to fulfilling consumers’ demand for high-quality products which are “comfortable, healthy, and
environmentally friendly”. Constantly winning recognition from consumers since its launch in 2009, Purcotton has rapidly grow n
into a top brand of maternal and child products on Tmall, and has gained greater market shares in the field of maternal and child
consumer products. In October 2019, Purcotton won the reputation of “70 Brand of the 70th Anniversary of the Founding of New
China” sponsored by CCTV. In January 2021, Purcotton was honored as one of the “Shenzhen Top Brands” by Federation of
Shenzhen Industries. In April 2021, Purcotton was included into the list of the second “Shenzhen Top 100 Brands” announced by
Shenzhen Quality City Promotion Association.
In conclusion, with high brand value, the Winner and Purcotton brands will help the Company enhance customer loyalty, stabilize
product prices, and expand its market share in the fierce competitive market, thereby ensuring its sustainable and stable profitability.
(V) The Industry in Which We Operate
1. Industry definition
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According to the Classification Rules of Medical Devices (2015) (Order No. 15 of the China Food and Drug Administration) and the
Classification Catalogue of Medical Devices (Notice No. 104 of the China Food and Drug A dministration in 2017), the medical
dressings produced and sold by the Company belong to the nursing and protective devices in medical devices. According to the
Industry Classification of National Economy (GB/T4754-2017) and the Industry Classification Guidelines for Listed Companies
(revised in 2012), the industry of the Company is special equipment manufacturing industry (C35) in manufacturing industry (C).
The products of the Company's healthy consumer goods include pure cotton tissues, sanitary pads wit h pure cotton surface, cotton
wet tissues and other non-woven consumer goods, baby supplies, baby clothing, adult clothing and other textile consumer goods.
According to the Industry Classification of National Economy (GB/T4754-2017) and the Industry Classification Guidelines for
Listed Companies (revised in 2012), the consumer goods operated by the Company mainly belong to the textile industry (C17) and
the textile and apparel industry (C1 8) in the manufacturing industry (C).
2. Development of the industry
(1) Development of medical consumables industry at home and abroad
Medical consumables refer to the medical and health materials used in the process of clinical diagnosis and nursing, testing and repair.
With a wide variety of models and wide application, they are important materials for medical institutions to carry out daily medical
and nursing work. From the perspective of value, medical consumables can be divided into high-value medical consumables and
low-value medical consumables.
Size of medical consumables market in Ch ina fro m 2015 to 2025 (100 million yuan)
Data source: China Medical Consumables Market Conditions and Investment Prospect Survey Report 2021-2026, China Medical
Device Blue Book , Chinese Medicine, IBM Report
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Size of lo w-value medical consumables market in China fro m 2015 to 2025
(100 million yuan)
Data source: China Medical Device Blue Book, Chinese Medicine, Magna Information Centre, IBM Report
Compared with high-value medical consumables, low-value medical consumables are mainly injection and punching, medical
dressings and medical polymers, with low entry threshold and fierce market competition. Due to the wide application and benef it
from the improvement of people’s living standards and t he continuous growth of medical demand in China, the market space of
low-value medical consumables is huge, and will continue to maintain high-speed growth in the future. According to the research and
analysis of IBM, it is estimated that the market scale of low-value medical consumables in China will reach 221.3 billion yuan by
2025.
① Market development of operating room infection control products
Due to the growth of the number of surgical operations and the strengthening of infection control measures, the market of operating
room infection control products is growing continuously. According to the statistics of CMI, the market size of operating roo m
infection control products is expected to reach USD 3.688 billion in 2026, with an average annual compound growth rate of 4.9%.
Operating room infection control products can be divided into reusable products and disposable products. The change from reus able
products to disposable products is the development trend of the industry. The main reasons include: on the one hand, compared with
reusable products, disposable surgical infection control products can significantly reduce the risk of cross infection. According to
Coherent, disposable operating room infection control products can reduce the risk of cross infection during surgery by 60%. The
Guide to Operating Room Nursing Practice compiled by the Operating Room Professional Committee of Chinese Nursing
Association also recommends the use of disposable aseptic products in the operating room. On the other hand, disposable operating
room infection control products also have advantages in convenience and cost compared with reusable products, which makes the
demand for disposable products more active.
Compared with a single product, the market scale of customized surgical packs will show a rapid growth trend. According to the
statistics of CMI, the market size of global customized surgical packs is expected to grow to USD 21.347 billion in 2026, wit h an
average annual compound growth rate of 10.2%. In China, the market size of customized surgical packs is expected to rise to USD
1.504 billion, with an average compound annual growth rate of 12.2%, which is quite promising.
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② Market development of high-end wound dressing products
Judging from the global trend, the demand for high value-added and multifunctional medical dressings made of new materials is
increasing, and the high-end medical dressing industry will usher in good development opportunities. According to the statistics of
BMI, the global high-end dressing market is expected to reach USD 7.015 billion in 2022.
As the manufacturers in China improve their technologies and product quality, and relevant government departments and institutions
formulate and implement laws, regulations, and industry policies to support the development of medical dressings, including
high-end dressings, high-end medical dressings in China is expected to replace the imported ones in the future.
(2) Development of consumer goods segmentation industry
① Development of household paper industry
According to 2020 Annual Report of China’s Paper Industry released by China Paper Association, the production of household paper
in 2020 was 10.80 million tons, an increase of 7.46% over the previous year, and the consumption was 9.96 million tons, an increase
of 7.10% over the previous year. The average annual growth rate of production from 2011 to 2020 is 4.45%, and the average annual
growth rate of consumption is 4.43%.
Household paper has the characteristics of rigid and continuous demand, its market continues to expand, and the popularization rate
of facial tissue and wipe paper products also further increases. Because of its more environmental protection and less sensit ization,
pure cotton tissues can replace traditional paper products and have great market potential. Since cotton tissues are gaining higher
acceptance, Tmall has added cotton tissue as a category under its paper products. Cotton tissues are widely used in many scenarios
such as cleaning and personal care. As people's consumption capacity improves, cotton tissues' penetration rate is expected to rise.
The Company is the pioneer of cotton wipes, leading the industry to achieve rapid growth in the past few years. According to the data
of Leading Industry Research Institute, the demand for cotton wipes in China increased from 2.35 billion sheets in 2015 to 23.35
billion sheets in 2019, with an average annual compound growth rate of 77.5%.
② Development of disposable sanitary products industry
According to Euromonitor statistics, the market of absorptive care products in China increased from 128.9 billion yuan to 175.4
billion in 2015-2020, with an average annual compound growth rate of 6.4%. Among them, female health care products increased
from 74 billion yuan to 89.1 billion yuan, with an average annual compound growth rate of 3.8%. The market scale of infant diapers
increased from 47.9 billion yuan to 70.3 billion yuan, with an average annual compound growth rate of 8.0%. The market scale of
adult incontinence products increased from 1.6 billion yuan to 5.1 billion yuan, with an average annual compound growth rate of
26.7%. The market scale of wet tissues increased from 5.4 billion yuan to 10.9 billion yuan, with an average annual compound
growth rate of 15.3%. Adult incontinence products started late in China and are still in the introduction period. With the gradual
emergence of aging population, the huge potential of adult incontinence products market in China will be released. The market
penetration rate of wipes in China is relatively low. At present, the market is dominated by baby wet tissues and general-purpose wet
tissues. Female hygiene wet tissues, makeup removal wet tissues, home cleaning wet tissues and other categories account for a
relatively small proportion, so there is a large market space to develop.
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③ Development of textile industry and textile clothing and apparel industry
China has become the world's largest producer and consumer of textiles and clothing. The sales of specialized retail goods of textiles,
clothing and daily necessities increased from 70.302 billion yuan in 2007 to 667.640 billion yuan in 2019, with an average compound
annual growth rate of 20.63%. Among them, the sales of textile, clothing and daily necessities in chain retail enterprises ha ve
increased rapidly in recent years, reaching 144.802 billion yuan in 2019.
The development of e-commerce industry also led to the transformation and upgrading of textile, clothing and daily necessities
industries. According to the statistics of China National Textile And Apparel Council, the total volume of e-commerce transactions of
textile and clothing in China in 2019 was 6.69 trillion yuan, accounting for 19.22% of the total volume of national e -commerce
transactions, which is the most active trading category of e-commerce platform. Among them, the scale of online retail of textile and
apparel is 1.67 trillion yuan, accounting for 19.59% of the total online retail sales of physical goods.
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④ Development of maternal and child supplies industry
On May 31, 2021, the Political Bureau of the Communist Party of China held a meeting to deliberate and approve the Decision on
Optimizing the Fertility Policy and Promoting the Long-term Balanced Development of the Population. The meeting proposed to
implement the policies that a couple can have three children and supporting measures are conducive to improving China’s population
structure, implementing the national strategy of actively responding to the aging population, and maintaining China’s advanta ges in
human resources endowment. The supporting policies for three-child policy - the Decision of the Central Committee of the
Communist Party of China and the State Council on Optimizing the Fertility Policy and Promoting the Long-term Balanced
Development of the Population, and the Notice of the Office of the National Healthcare Security Administration on Improving Birth
Insurance to Support the Three-Child Policy - were released in July 2021. With the release of the three-child policy and its supporting
fertility policy dividend as well as the trend of consumption upgrade, the domestic maternal and infant market will usher in a broader
space for development. According to Nielsen, the proportion of high-end & mid-to-high-end products sales in the baby care segment
increased by 2.5ppt in 2020. According to the Research and Investment Value Analysis Report on China’s Maternal and Infant
Industry Chain 2021 released by iiMedia Research, the maternal and infant market size in China exceeded 4 trillion yuan in 2020 and
is expected to increase to7.546 trillion yuan by 2024.
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3. Competitive position of the Company
(1) Medical consumables business
Winner Medical is a manufacturer with comprehensive leading advantage in China's medical consumables industry. It has established
a medical-grade quality management system earlier in the industry and realized the whole industry chain operation mode from cotton
procurement to R & D, production and sales. As a leading enterprise in the medical dressings industry, the Company promotes the
establishment of the medical dressings branch of China Chamber of Commerce for Import and Export of Medicines and Health
Products, and serves as the president of the medical dressings industry, leading the industry to continuously expand its inte rnational
market share with innovative and high-quality products. After the outbreak of COVID-19, the Company has fully exerting its core
business principle, “social value before corporate value”, strictly controlled the quality of epidemic prevention products, a nd did not
increase the price of terminal products. Its products were highly praised by the country and the public, and the brand value was
greatly improved.
(2) Healthy consumer goods business
Purcotton takes “cotton” as the core, covering multiple consumer groups, such as mothers and infants, children and adults, and span
multiple product lines, such as high-end pure cotton tissue, female care, baby care, adult clothing, home textile products, etc. The
Company takes the self-developed pure cotton spunlace non-woven fabric as the basic material carrier, and successfully realizes the
expansion of medical products to household products. The Company is the pioneer and industry leader of cotton non-woven
consumer goods market. With its leading product R & D ability, medical-grade product quality and popular brand image, the
Company has rapidly increased the market share of cotton non-woven products. Purcotton has developed into a flagship national
brand among high-quality domestic consumer brands, which is one of the primary choices for consumers to buy cotton consumer
goods.
The Company needs to comply with the disclosure requirements of the No. 10 Guideline of Shenzhen Stock Exchange's GEM Board
for Information Disclosure of Listed Companies Engaging in Medical Device Business.
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The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry
Information Disclosure of Listed Companies Engaging in Textile and Apparel Business.
II. Discussion and Analysis of Operations
(1) Overview of business performance
During the reporting period, the COVID-19 pandemic has been effectively controlled in China, the Company’s quality and brand
advantages have been brought into full play, the sales volume of epidemic prevention products has increased significantly compared
with that in the same period last year, and the sales price has gradually returned to normal. At the same time, the international
community still faces a severe epidemic situation during the reporting period, the turnover velocity of g lobal cargo transportation
slowed down dramatically, and the global transportation capacity was extremely tight, which promoted a substantial increase in
export freight, resulting in the delayed delivery of some of the Company’s overseas orders. The above factors caused the Company’s
revenue of medical consumables business to drop to 2.127 billion yuan, a year-on-year decrease of 15.28%. Fortunately, domestic
consumer demand and consumption capacity have gradually recovered, the Company upgraded its products, and saw effective
marketing and promotion results. The revenue of the Company’s healthy consumer goods business increased to 1.79 billion yuan, a
year-on-year increase of 20.64%.
During the reporting period, the Company’s revenue reached 4.060 billion yuan, a decrease of 2.87% compared with the same period
of the previous year and an increase of 92.87% compared with the first half of 2019. The net profits attributable to shareholders of
the listed company was 761 million yuan, a decrease of 26.27% compared with the same period of the previous year and an increase
of 230.87% compared with the first half of 2019. The incomes by channels and by products during the reporting period are as
follows:
1. Income from main operations through main channels
Unit: ’0,000 yuan
Business Income in Income in Changes Income in Changes YoY performance
Channel type
type 1H21 1H20 over 1H20 1H19 over 1H19 Reason for change
Increase in brand’s
influences, more channels,
Hospitals in and more disposable
59,701.88 39,267.22 52.04% 9,112.46 555.17%
China operating room consumables
accepted by hospitals in
China
Domestic
21,248.24 21,083.19 0.78% 9,309.80 128.24% No major changes
drugstores
Medical
consumables The Company’s
anti-epidemic actions in last
year were recognized by the
community and its brand
E-commerce
Note 1
35,272.19 10,128.90 248.23% 1,261.90 2,695.16% awareness and reputation on
the consumer side increased
significantly. As a key
category and the product that
helps drive traffic to the
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Company, masks are gaining
popularity among consumers,
and introducing more and
more home care products to
customers.
Larger purchase amount of
enterprises and institutions as
Domestic well as government
1,719.83 72,488.42 -97.63% 2,511.44 -31.52%
direct selling departments in the same
period last year due to severe
pandemic situation
The slowdown in global
cargo transportation leading
Overseas to global capacity constraints
94,714.23 108,037.64 -12.33% 39,355.57 140.67%
sales and resulting in delays in the
delivery of some of the
Company’s overseas orders
Subtotal 212,656.37 251,005.37 -15.28% 61,551.17 245.50% /
110,278.98 99,304.17 11.05% 71,641.20 53.93% /
E-commerce
Among them:
(1) Tmall,
JD.com and
other
86,924.58 82,002.85 6.00% 69,275.40 25.48% /
third-party
e-commerce
platform
channels
(2)
healthy
consumer Company-ow
ned platform
goodsNote 2
channels
such as See Note 3 of the Table for
23,354.40 17,301.32 34.99% 2,365.80 887.17%
official details
website,
Wechat mini
program and
APP
Effective control of the
Offline COVID-19 pandemic in
54,263.42 38,223.85 41.96% 52,528.79 3.31%
Note 4
stores China enabling recovery of
consumer demand and
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spending power, resulting in
store expansion and internal
operational capacity
improvement across the
Company
Internal management
improvement leading to the
improvement of human
Supermarket
10,617.06 6,045.82 75.61% 5,030.07 111.07% efficiency; new product
channels
introduction; new maternal &
infant stores and hypermarket
chains
Key Client 3,874.40 4,832.25 -19.82% 3,494.48 10.87% /
Subtotal 179,033.86 148,406.09 20.64% 132,694.54 34.92% /
Pure cotton Coil products more for
spunlace Direct selling 9,835.25 15,236.24 -35.45% 1,3685.50 -28.13% private use, reducing external
non-woven sales
fabric Subtotal 9,835.25 15,236.24 -35.45% 13,685.50 -28.13% /
Total 401,525.48 414,647.70 -3.16% 207,931.21 93.10% /
Note 1: The “e-commerce” channel of medical consumables business includes domestic e-commerce platforms and cross-border
e-commerce platforms.
Note 2: The healthy consumer goods business consists of Purcotton business and PureH2B business, of which PureH2B’s sales
amounted to 24,564,700 yuan.
Note 3: In terms of healthy consumer goods business, the reason for the change in the performance of “company-owned platform
channels such as official website, Wechat mini program and APP”: improving the purchase conversion of regular users by focusing
on the operation of users and categories, resulting in a YoY increase of 24.9% in the purchase rate of regular users (“regular users”
refers to users who made purchases in the previous year).
In addition, the data of “company-owned platform channels such as official website, Wechat mini program and APP” of healthy
consumer goods business include the data driving from company-owned channels to online platforms, and the income hereof is
97,425,600 yuan.
Note 4: The data of the “offline stores” channel of healthy consumer goods business cover directly-operated stores and franchised
stores.
2. Income from main operations of main products
Unit: ’0,000 yuan
Income in Income in Changes Income in Changes YoY performance
Business type Product type
1H21 1H20 over 1H20 1H19 over 1H19 Reason for change
Traditional
Medical wound care
25,573.22 24,141.90 5.93% 28,780.08 -11.14% /
consumables and wound
dressing
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products
High-end
wound
4,374.06 4,113.21 6.34% 4,123.15 6.09% /
dressing
products
Benefiting from the product
Operating quality and
room environmentally-friendly
infection 22,804.66 10,333.10 120.70% 11,522.11 97.92% pure cotton recognized by
control hospitals; improvement in
products the coverage rate of
channels
Effective control of
COVID-19 pandemic in
Disease
China, and sufficient supply
prevention
146,319.30 199,058.52 -26.49% 8,330.68 1,656.39% of disease prevention and
and control
control products all over the
products
world; gradual recovery of
prices to normal
Disinfection
& cleaning 13,585.13 13,358.64 1.70% 8,795.15 54.46% /
products
Subtotal 212,656.37 251,005.37 -15.28% 61,551.17 245.50% /
Cotton
40,885.23 37,004.54 10.49% 39,889.58 2.50% /
tissues
Enhancing brand awareness
and reputation by marketing
Sanitary
26,454.67 17,085.23 54.84% 13,293.44 99.01% activities; launching new
pads
products; attracting more
young people
Wet tissues 9,019.84 9,627.70 -6.31% 10,032.28 -10.09% /
Healthy
Other
consumer
non-woven
goods 22,693.78 30,022.09 -24.41% 9,383.00 141.86% /
consumer
goods
Baby
17,998.93 11,734.25 53.39% 12,678.01 41.97% Model, design and color
supplies
enhancement of products;
Baby storytelling and theme
20,690.19 14,612.59 41.59% 15,684.13 31.92%
clothing enhancement on
Adult communication; digital
27,451.73 17,897.45 53.38% 17,519.08 56.70% automatic replenishment on
clothing
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Other textile new effect release
consumer 13,839.49 10,422.24 32.79% 14,215.02 -2.64%
goods
Subtotal 179,033.86 148,406.09 20.64% 132,694.54 34.92% /
Pure cotton
Pure cotton Coil products more for
spunlace
spunlace 9,835.25 15,236.24 -35.45% 13,685.50 -28.13% private use, reducing
non-woven
non-woven external sales
fabric
fabric
Subtotal 9,835.25 15,236.24 -35.45% 13,685.50 -28.13% /
Total 401,525.48 414,647.70 -3.16% 207,931.21 93.10% /
(2) Overview of operation and management
During the reporting period, the Company focused on the following work:
1. Digital transformation
The Company has adopted numerous reform measures since 2019 to promote “consumer-centric” and “digital and intelligent
manufacturing-driven” business transformation, and carry out the five digital strategies of “centralized commodity digital operation”,
“omni-channel digital operation”, “consumer omni-channel operation”, “digital smart logistics digital operation” and “smart
manufacturing digital operation”. During the reporting period, the first phase of “omni-channel digital operation” and “centralized
commodity digital operation” enabled the support of multiple e-commerce platforms, one inventory for online and offline, intelligent
distribution of orders, omni-channel price and unified membership rights across channels. Consumer omni-channel operation is
mainly provided by Tencent’s CDP (Consumer Data Platform) and MA (Marketing Automation), which have created a domain-wide
consumer operation system and are committed to realizing the accurate matching of people, goods and fields at the data and
technology levels. Digital smart logistics digital operation is mainly launched together with JDLogistics, which is committed to
transforming the Company’s existing logistics system from a growth supporter to a revenue driver, and to building an integrated,
intelligent, expandable and fast-responding active logistics system based on customer’s demand. Smart manufacturing digital
operation also refers to the advice of top consulting firms, and is committed to creating a green, low-carbon and agile platform for
ecological synergy in industry chain and group unified control, promoting the Company to rapidly and significantly reduce
manufacturing costs and continuously improve management, operational performance and overall competitiveness.
In March 2021, the Company launched the SAP Reinvention Project, and partnered with the world’s largest information technology
and business solutions consulting firm again to upgrade and reinvent SAP ERP in order to make the system agile enough to supp ort
mobile terminals, accelerate IoT and big data applications, improve operational efficiency, and better meet the challenges of a rapidly
changing market and globalization. With SAP Big Data solution, the Company will establish a unified information platform cove ring
R&D and innovation, commodity management, production operation and control, warehousing and logistics management, retail
management, financial management, human resource management and corporate decision-making, which will enhance the
Company’s capability of managing strategic decision making, operation control, technological innovation and comprehensive
information application and other related businesses.
Through the Salesforce CRM solution, the Company has completed the foundation of CRM system and established end-to-end
digital capabilities for marketing and sales to support Winner Medical’s customer, marketing, sales and channel management
business with efficient processes and business collaboration. During the reporting period, the CRM project has been launched online
as a whole, which helps each sales department enable the full lifecycle management of customers and develop a unified sales
configuration and quotation tool, aiming to improve customer acquisition capability and marketing ROI.
2. R&D and Innovation
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In terms of medical consumables, the Company has successfully developed anti-bacterial and anti-viral masks, which have better
disinfection and sterilization effect, to fight against the constantly changing pandemic and the variation of viruses, and pr otect
everyone’s health. At the same time, the Company develops 100% pure cotton triple resistance surgical gown, which improves the
comfort and is more environmentally friendly and biodegradable, to deal with problems of wearing protective clothing for a lo ng
time and suffocation in surgical wear. Thanks to the aforementioned product advantages, the Company’s protective clothing is in
short supply in patchy distribution of affected area in many regions during the COVID-19 pandemic. To solve the problem of wound
infection, which is an annoying problem for clinicians, the Company has developed a variety of antibacterial dressings to solve the
infection problem at different stages of wound healing and different types of wounds, so as to reduce pain for patients, lowe r the cost
of care and mitigate the risk for a hospital bed shortage. In the concept of health and beauty, the product range has been expanded to
include medical aesthetics, such as hyaluronic acid sheet mask (hyaluronic acid dressings) and scar repair products based on silicone
gel technology.
In terms of healthy consumer goods business, the Company successfully completed research and development of “soft and flexible
gauze free of additive”. Thanks to its independent innovation of new process of yarns, together with physical batting, the fabric is
softer and more flexible. This kind of material is applied to pure cotton bedding and gauze toiletries, allowing more energy-saving
and environmentally-friendly production as well as safer and healthier products. The “pure cotton antibacterial cooling fabric”
developed by the Company integrates cooling microcapsules and herbal cotton antibacterial technology with pure cotton fabric,
which can quickly absorb heat and achieve long-lasting cooling effect. This kind of fabric has 5A antibacterial effect, and can be used
for baby and adult’s cooling T-shirts, pants, summer sleeping mats, etc. At the same time, the Company developed “pure cotton
unidirectional moisture-guiding fabric” for children’s loungewear and baby supplies, which completely solves the pain point of
children who are easy to catch a cold after sweating. In terms of industry-university-research collaboration, the research project of
“temperature scale of gauze quilt and sleep comfort” carried out by the Company and Soochow University has been completed,
providing guidance for consumers to make rational choice in scientific parenting and sleep comfort.
As the first and major drafter, Purcotton, a wholly-owned subsidiary of the Company, led the development of national standards for
cotton tissues (GB/T 40276-2021), which requires that the fiber composition and content of cotton tissues shall be identified, and the
fiber content tolerance shall comply with the provisions of GB/T 29862 (released on May 21, 2021 and imple mented on December 1,
2021). During the reporting period, the Company obtained 3 new invention patent certificates, 49 utility model patents and 44 design
patents. The certificates are conducive to the further establishment of product technology and compet itive barriers and the
enhancement of the core competitiveness of the Company.
3. Brand marketing
2021 marks the 30th anniversary of the founding of the Company. It plans to increase the investment in marketing activities to
enhance brand influence. During the reporting period, Winner Medical enhanced its brand influences by involving in the shooting
projects of “Days and Nights in Wuhan”, the first documentary film in China focusing on the war against COVID -19 pandemic, and
“Chinese Doctors”, a blockbuster adopted from the real story of Wuhan Jinyintan Hospital. It also worked with Shenzhen TV to
produce the “My White Gown 2: the Ace Sections”, Shenzhen TV’s first documentary observation program of doctors, to improve
consumer awareness in a way of pan-entertainment shows. Moreover, it strives to drive traffic to e-commerce and Wechat mini
program through live-streaming with goods. In the professional academic field, Winner Medical influenced the professional market
through the dissemination of academic conferences at all levels. In the first half of the year, more than 2,000 people participated in
the “Winner Medical Academy (Sensitive Control)” and other thematic activities jointly sponsored by Winner Medical and Beijin g
Infection Control and Disinfection Technology Industry Association, and many renowned national experts delivered new concepts of
sensitive control and operating rooms. Through the Nurses’ Day thematic activities, the Company built partnerships with nearly 100
hospitals and influenced key customers. It also attended CMEF, World Health Expo and other exhibitions to consolidate its influence
in the industry. In addition, Winner Medical is promoting a clinical comparative observation program for surgical caps in the middle
and large operating rooms, and strengthening clinical academic cooperation with domestic top hospitals.
Purcotton continues to deepen communication with consumers, aiming to deliver the multiple advantages “cotton” in terms of
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environmental protection, sustainable development, etc., and constantly communicate with consumers emotionally. During the
reporting period, thanks to the upgrading of store image provided by an international team, the Company integrates cotton stories and
its natural benefits into the core of the design. As a designated partner brand, it appeared in the “Kids Fashion Week 2021” of China
Oil Painting Institute in Beijing, combining fashion trends with happiness and care and creating a secure and comfortable
environment for children to grow up with its quality products, so as to lead the new trend of kids’ fashion. The Company also worked
with CCTV Technology Channel to produce “Fashion Technology Show”. The Programme led the public into the world of cotton to
discover the wonders of cotton, and enhanced the public’s attention to the brand of Purcotton, which is the pioneer and leader of pure
cotton tissue. On the occasion of the Earth Day, Purcotton held a “Cotton Nature Excellent” conference in Beijing, and wor ked
with the authoritative color agency COLORO to launch the “cotton” theme series color numbers for the first time, enabling people
to sense the vitality of cotton and the beauty of diversity of the earth. On the 12th China International Cotton Conference held in
Suzhou, Purcotton, as the first batch of participating companies on the consumer side, made a wonderful appearance and talked about
the sustainable development of cotton, aiming to create a quality image of “Chinese cotton”. In addition, Purcotton actively carries
out brand marketing activities through living stream, and invites KOLs in maternal & infant and travel segments to the living events
to promote attractive cotton products. Thanks to the long-term activities of “normalized store livestream shopping” and “normalized
plant livestream shopping”, Purcotton can display its unique advantages of stores and plant industrial chain, and direct online and
offline traffic to each other.
4. Internal management
At the beginning of 2021, the Company launched a risk control system project and hired a well-known external consultant to sort out
the operational risks of each business module. The project consists of three parts: risk diagnosis, special governance and system
development. The external consultant has sorted out potential business risks and respons ible departments at all levels, initially
completed the building of the organizational structure and operation process of risk control, established the internal contro l
management committee, formulated the Comprehensive Risk Management System, the Mechanism for Regular Reporting of Risk
Information, the Mechanism for Emergency Handling of Sudden and Significant Risks, the Definition of Routine and Significant
Risk Events, and the Mechanism for Accountability for Risks, and established the normalized operation mechanism of risk
management. At present, the Company is sorting out risks one by one, and for each risk, carry out risk research, build risk w arning
foundation and risk control mechanism, and develop a risk control and management platform, with a view to realizing the
controllability, visibility, warning and transformation of risks.
The company has always focused on strategic development and guided the strategic planning and execution of each business modu le
at a strategic level. In addition to self-exploration, it has also engaged internationally renowned consultants for strategic project
collaboration. In October 2020, the Company launched the “Process Diagnosis Project” to comprehensively scan the overall business
flow from the perspective of “strategic relevance” and “process maturity”, and sort out hundreds of processes at all levels covering
both To B and To C. Starting from quick wins in a short term, agility in medium term and growth in long term, the Company car ries
out special projects through professional project management to build short-, medium- and long-term business capabilities in a
hierarchical and graded manner, so as to improve the Company’s overall management maturity. In addition, the Company has
formulated a “three-year enhancement and deployment project of process maturity”, aiming to complete process assetization by 2021,
significantly improve process efficiency by 2022, and provide more professional products and services to customers through more
efficient management methods and tools by 2023.
In 2021, the Company’s businesses entered a new round of rapid expansion, with a surge in demand for talents. To enhance the
overall competitiveness of the Company and deepen and thicken the talent pool, a group of experienced professional management
teams was introduced from the industry. The Company has recruited many talents in management, marketing and R&D from P&G,
Wal-Mart, SF and Nielsen to further optimize the Company’s management strategy, improve marketing effectiveness and enhance
product creativity.
(3) Business strategy at later stages
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In the field of medical consumables, operations are mainly carried out in the following three areas: channels, products and production
capacity. In terms of channels, the Company will take advantages of brands and products to get new customers and increase its
market shares and coverage through domestic and overseas channels in 2020. In addition, it will invest more in academic and c linical
promotion, and expand business in hospital channel for operating room consumables and high-end dressings. Thanks to its more than
4 million fans, Winner Medical’s e-commerce in China has increased marketing investment, focused on the user and category
operations, and improved purchase conversion and customer unit price. In terms of products, the Company focuses on three areas:
wound care, infection control and home care, among which wound care products are expanding to high-end dressing from traditional
wound dressing, and after years of technology reserves of high-end dressings, its products have been widely recognized in the
European and American markets. Infection control products are expanding from the existing medical field to the personal prote ction
field and other application fields, where the market space is larger, aiming to replace chemical fibers with cotton as much as possible
and make efforts for sustainable social development. Home care products are expanding in the direction of the consumer side, and
exploring the adult incontinence, personal care and postoperation care of medical aesthetics based on the Company’s existing
respiratory protection, wound care and disinfection and cleaning business. The Company’s production capacity grew over last year.
To create a more reasonable production capacity, the Company will further transform the automation equipment and eliminate the
inefficient equipment.
The operations of healthy consumer goods business are mainly carried out from such aspects as channels, products and brands. In
terms of channels, the Company improved its business performance of the offline store channel through strategies such as upgrading
the image of stores, optimizing customer shopping circulation, enhancing scenario-based displays, creating experiential services, and
strengthening communication and cooperation with shopping malls. In addition, the Company takes advantages of the existing 33
million users of Purcotton, and ultimately improves the business performance of the e-commerce channel by strengthening
operational capabilities, increasing marketing efforts, expanding the customer base (especially the Gen Z). Finally, it reduces the
payback period of the supermarket channel through scale expansion and diversified category strategy. In terms of products, the
Company is committed to the deve lopment of pure cotton products in order to provide the customers with high-quality cotton
products to meet the needs of different scenarios. It continues to focus on the unique advantages of fabric research and deve lopment
efforts, thus reducing the quantity of long-tail ineffective products. It also increases the relevance of the product mix, improves
product refinement operation and management capabilities, and increases customer unit prices. In terms of branding, the Compa ny
strictly follows “Quality before profit, brand before speed, social value before corporate value”, and insists on creating a full range of
pure cotton lifestyle. It strengthens the building of brand system, realizes brand unity to the outside world, enhances brand credibility,
and increases brand communication through media matrix and precise marketing. It also gains deep insight into consumers,
establishes warm communication and interaction, actively fulfills social responsibility and gives back to society.
III. Analysis of Core Competitiveness
1. Advantages of Business Philosophy and Corporate Culture
With offering quality products as its mission, the Winner brand aims to lead in the medical dressing industry, to grow from a small
Chinese enterprise to a large international enterprise offering high-quality products recognized by developed countries, bringing
Chinese medical dressings to the international stage. With "To enhance your health, life and well-being" as its vision, the brand keeps
focusing on product quantity and innovations, and making its way into the medical consumables and high-end medical dressing
market. Cotton fiber has ten prominent advantages, including natural, safe, comfortable, naturally degradable, high output ra tio,
drought-resistant, salt and alkali-resistant, environmentally friendly, time-honored, and high social value. With its brand vision of
"Purcotton Changes the World", Purcotton applies "comfortable, healthy, and environmentally friendly" cottons in household su pplies
and home care products to help customers raise life quality, constantly bringing them happiness and reassurance. Sticking to the
"cotton fiber only" principle in its operation, Purcotton aims to develop recyclable and renewable resources, gradually repla ce
chemical fibers with natural fibers, and give full play to the use value and environmental protection value of cotton fibers, following
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the path of sustainable development. With "Love, protect and enjoy nature" as its brand vision, PureH2B insists on the principle of
pursuing beauty without sacrificing health for health is beauty. PureH2B select natural cosmetics and toiletries, healthy food and
health products, 3C and health equipment with excellent experience from around the world for customers. Meanwhile, the
groundbreaking, innovative natural products developed independently by PureH2B are winning the trust of consumers with their
applicability and safety, meeting the needs of consumers who pursue both quality life and health and environmental protection. The
visions and business philosophies regarding the company's three brands are focused on human health, environmental protection, and
improving the quality of life, which are in line with humans' sustainable development strategy.
The Company will always uphold its core operating principle of "Quality before profit, brand before speed, social value before
corporate value", and stick by its core values of "Self-sacrifice / Responsible / Collaborative / Innovative / Tenacity / Self-criticism /
Sustainable development". The Company promotes healthy sports such as running, mountain climbing, and ball games. The
Company is weakening the power from titles to reduce bureaucracy, and creating open workplaces to ensure efficient
cross-department communication. During the epidemic, the Company responded quickly and made every effort to ensure the
production of protective products. It carried out a series of activities to improve the rapid response capability to market demand in
terms of decision-making management, process integration, product and equipment innovation, and industry chain integration.
Within one month at the beginning of the epidemic outbreak in January 2020, the Company provided 108.9 million masks and
114,000 pieces of protective clothing to major hospitals in Hubei, which played a key role in the initial absence of any reserves.
During the outbreak of COVID-19 pandemic in Guangdong Province in May 2021 and in Nanjing City in July 2021, the Company
fully mobilized internal forces, and delivered medical protective products to customers immediately, so as to effectively help
frontline medical staff and volunteers to fight against the pandemic.
2. Advantages of R&D and Innovation
The Company independently developed the pure cotton spunlace non-woven technology in 2005, and has built a complete
technology cluster based on the technology, obtaining patent licenses in more than 30 countries and regions including the United
States, Europe, and Japan. The innovative application of pure cotton spunlace non-woven fabrics in infection prevention products,
such as protective clothing, surgical gowns, and isolation gowns, has not only alleviated the shortage of raw materials during the
pandemic but also improved the breathability and comfort of anti-pandemic products, which is safe and environmentally friendly. In
the field of consumer products, the Company has developed pure cotton tissues, pure cotton wet tissues, sanitary pads with pure
cotton surface, as well as disposal cleansing towels, disposable underwear and other products. It has been invited to participate in the
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development of 14 national standards and industry standards, drafting and developing performance requirements for pure cotton
non-woven surgical dressings, and technical specifications for contact trauma dressings and children's masks. As the first and major
drafter, Purcotton, a wholly-owned subsidiary of the Company, led the development of national standards for cotton tissues (GB/T
40276-2021), which requires that the fiber composition and content of cotton tissues shall be identified, and the fiber content
tolerance shall comply with the provisions of GB/T 29862 (released on May 21, 2021 and implemented on December 1, 2021).
Since its establishment, the Company has been attaching great importance to scientific and technological innovation and cooperation.
It has carried out industry–university–research (IUR) projects with many universities and research institutes, including Hong Kong
Polytechnic University, Hong Kong Research Institute of Textiles and Apparel, Wuhan Textile University, and Soochow University.
The Company worked with Soochow University to carry out “temperature scale of gauze quilt and sleep comfort” project, and
partnered with Wuhan Textile University to carry out “repolymer gauze” for spinning technology. The Company and the Shenzhen
Institute of Advanced Technology of the Chinese Academy of Sciences have jointly established the “Joint Lab for Wound Dressin g
Innovative Technology Research” to conduct cutting-edge technology research and new product development of wound dressings At
present, the Company has two provincial R&D platforms, the “Guangdong Functional Cotton Engineering Technology Research
Center” and the “Guangdong Wound Repair Material Engineering Technology Research Center” that are dedicated to the research of
functional cotton and wound repair materials.
As of June 30, 2021, the Company has obtained 41 invention patents, 460 utility model patents, and 264 design patents in China; 56
invention patents and 6 utility model patents have been obtained overseas. The Company was regarded as a “Leading Enterprise in
Independent Innovation” by the Shenzhen Municipal People's Government, and a “Shenzhen Enterprise with Intellectual Property
Advantages” by the Shenzhen Administration for Market Regulation.
3. Advantages of quality control
The Company is one of the early companies that established a complete medical-grade quality management system in the industry,
including SO13485, FDA21CFR820, China’s Good Manufacturing Practice for Medical Devices, and ISO9001, which have been
certified or approved. Its medical dressings meet the quality standards of many countries and regions, including Europe, the United
States, Japan, and China, and have been accepted by these countries and regions. It also implements the qua lity control requirements
of medical devices when expanding its heath consumer goods business. In addition, the Company's R&D Center and Lads have the
professional capabilities for product testing certified by the China National Accreditation Service for Conformity Assessment
(CNAS). The medical masks have passed the Type I, Type II and Type IIR product certification of EU MDR, PPE certification, and
Level 1, Level 2 and Level 3 certification of FDA 510K in the United States, respectively, in overseas marke ts. The Company ranked
1st in the white book for exporters of epidemic prevention materials issued by the General Administration of Customs and Gene ral
Administration of Market Supervision of China during the epidemic in 2020. In China, the masks have passed the testing and
certification of Beijing Institute of Medical Device Testing, National Medical Products Administration. The protective clothing have
been CE certified for EU Type 5 and Type 6. The Company‘s N95 masks and protective clothing are of good quality and high
reputation, allowing it to be the designated reserve unit of the government's prevention and control command, as well as the main
material supplier for Guangzhou, Shenzhen and Nanjing which have been hit by the COVID-19 pandemic in 2021. In addition, the
Company’s product quality has been widely recognized by the market. During the Tokyo Olympic Games, many athletes wear the
Company’s protective products, which protected athletes to ensure their excellent performance in the field.
To ensure the safety of raw materials for its products, Purcotton uses high-quality cotton from around the world to produce its core
products, such as its pure cotton tissue, sanitary pads with pure cotton surface, and pure cotton wet tissues. All the workshops are
managed according to the management requirements for the workshops of medical dressings, which can help strictly control bacterial
contamination and pollution sources. With its medical-level quantity management control system, Purcotton is able to provide
customers with high-quality consumer goods that are safe and environmentally friendly. Adhering to the concept of “medicine close
to life, Purcotton care for health”, Purcotton not only applies quality natural cotton but also attaches importance to the green weaving
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and finishing process. To ensure that its products are safe and natural, no fluorescent brighteners are added to its products . Some of
its products are OEKO-TEX Standard 100 certified and Shenzhen Standard certified, the latter is used for advanced evaluation of
Shenzhen Standard for infant textile and clothing product standards. Some non-woven products have passed the EU AP (2002) 1 and
EC1935/2004 EU Food Contact Materials CE certification, and are in line with food-grade standard testing.
4. Product advantages
(1) Medical consumables
The Company's product categories include wound care, infection protection, and cleaning and disinfection, covering applicatio n
scenarios like clinical and medical institutions and families, which can better meet clients' needs of one-stop procurement. In addition
to traditional acute wound care products, the Company has also developed representative high-end wet dressings like silicone foam
dressings, hydrocolloid dressings, and super absorbent pads for chronic wounds that are difficult to heal, which has further enrich its
products. For the clinical use scenarios, the Company is committed to changing from selling single products to providing customers
with integrated solutions. Its infection prevention products include dozens of surgical packs for various sections, such as heart and
brain, abdominal cavity, urology, reproduction, facial features, and limbs. In terms of disease protection and control, the C ompany
replaces chemical fiber fabrics with pure cotton spunlace non-woven fabrics for masks, protective clothing, surgical gowns, and
isolation gowns. Such innovative products not only meet infection prevention and control standards but also are more comforta ble
and environmentally friendly with better breathability. In the field of home care, the Company provides professional products for
clinical use such as hyaluronic acid masks, saline cleaning pads, hydrocolloid band-aids and medical sheet masks to consumers
through portable, sterilized and diversified packages. These professional health care products and services in daily home care help
customers reduce the frequency of going to the hospital.
(2) Healthy consumer goods
The Company's healthy consumer goods consist of non-woven consumer goods and textile consumer goods. The non-woven
consumer goods include cotton tissues, sanitary pads, and wet tissues; the textile consumer goods include baby supplies, baby
clothing, adult clothing, and bedding. The Company accurately captured the market demand for domestic high-quality consumer
products under the backdrop of consumption upgrading, and took the lead in proposing the innovative concept of replacing chem ical
fibers with cotton and getting rid of chemical stimulation, and provide consumers with healthy consumer goods of medical grade.
And its cotton tissues are pioneering tissues in the industry, which can partially replace household paper. Pure cotton tissues are made
of degradable cotton after physical processing. There are less chemical stimulation and the tissues can be reuse d. Both the production
and use of the tissues are more comfortable, safe, and environmentally friendly, so consumer acceptance of the tissues has be en
significantly improved, and there are many imitators in the market. For pure cotton wet tissues and sanitary pads with pure cotton
surface, cotton materials are innovatively used in the parts of these products that contact human skin to replace traditional chemical
fiber and effectively reduce chemical irritation, so they are popular in the markets of baby and female consumers. Due to the
excellent breathability and softness of gauze fabrics, the Company's woven consumer products such as gauze bedding and bath
towels are getting more popular.
5. Brand advantages
(1) Brand advantages in the field of medical consumable s
As one of the market leaders in the field of medical consumables, the Company attaches great importance to product quality and
service, and holds exhibitions worldwide to launches the “Winner Medical Academy”, aiming to invite experts to educate, organ ize
and participate in academic forums and public welfare activities, thus promoting the brand, allowing “Winner Medical” to enjoy a
high reputation in the industry, and enabling the products to be widely recognized by customers at home and abroad. During the
COVID-19 pandemic, the Company’s actions were highly recognized by the government of China. Winner Medical was praised by
the Joint Prevention and Control Mechanism of the State Council as a well-deserved “ordnance factory” in fighting the pandemic.
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Winner Medical (Huanggang) was awarded the title of “National Advanced Unit for Fighting the COVID-19 Pandemic” by the CPC
Central Committee and the State Council. The Company's medical consumables are mainly sold to developed countries and regions
such as Europe, Japan and the United States, and the products under its brand Winner are mainly sold to developing countries and
regions such as Asia, Africa, and Latin America. The Company are providing services for world-renowned medical supplies
companies such as Mlnlycke, Lohmann, and PAUL HARTMANN. According to statistics from the China Chamber of Commerce
for Import and Export of Medicines and Health Products (CCCMHPIE), the Company has been ranked among the top three exporters
of Chinese medical dressings for many consecutive years. The products of “Winner Medical” brands have covered all public and
most private hospitals in Hong Kong. In May 2021, Winner Medical was selected by the Federation of Shenzhen Industries as the
“Benchmarking Enterprise in China’s Medical Consumables Sector” and at the same time recognized as an “International Renowned
Brand” by the United Nations Industrial Development Organization.
(2) Brand advantages in the field of healthy consumer goods
Consumers' demand for high-quality products is increasing due to consumption upgrading. Sticking to the “cotton fiber only”
principle in its operations, Purcotton insists on offering “comfortable, healthy, and environmentally friendly” cotton produc ts with
high quality to consumers to constantly bring them happiness and quality products, which makes Purcotton products popular among
consumers. Adhering to the concept of “medicine close to life, Purcotton care for health”, Purcotton advocates the use of cotton, to
reduce environ mental pollution and to enable consumers to return to a natural and sustainable lifestyle with pure cotton. The pure
cotton tissues developed by Purcotton is a pioneering category. Purcotton is creating new categories and lifestyles by applying cotton
materials in its core products , including pure cotton wet tissues, sanitary pads with pure cotton surface, BBNice, as well as gauze
textile products and clothing. It has shaped an brand image of “new Chinese products” with cotton as the core material and excellent
product quality. Its brand awareness is increasing and its reputation is improving year by year, forming effective competition barriers
and bringing powerful added value of products for Purcotton.
6. Advantages of sales channels
(1) Advantages of online channels
In terms of online channels, the Company’s “Winner Medical” and “Purcotton” have completed the deployment of mainstream
third-party e-commerce platforms, including Tmall, JD.com and Amazon. With the huge user traffic gathered, its sales has covered
most online shopping consumer groups, and the sales data indicated that the sales of its products rank among the top in the relevant
product categories in major e-commerce platforms. At the same time, Purcotton is also actively exploring cooperation with new
social retail and e-commerce platforms by the way of setting brand counters in these platforms, which helps it open up new sales
growth channels. With the attributes of “sales + social”, Purcotton’s official website is an important platform for its product display,
user interaction, and brand promotion. In addition, its self-own official platform, Wechat mini program and APP are also important
parts of the Company's marketing channels.
(2) Advantages of offline channels
In the medical consumables section, the Company’s domestic medical business distributors (hospital market) have covered over
3,000 hospitals in more than 30 provinces (incl. municipalities and autonomous regions); retail pharmacy market distributors have
covered nearly 110,000 retail pharmacies in more than 20 provinces (incl. municipalities and autonomous regions); foreign medical
business customers and distributors have covered more than a hundred countries and regions such as Europe, Japan and the United
States.
As for healthy consumer goods section, the Company has opened a total of 302 offline stores as of June 30, 2021. Among them,
Purcotton has opened 279 offline stores (including 10 franchisees) in more than 60 mid- and high-end shopping malls in Shenzhen,
Shanghai, Beijing, Guangzhou and other key cities in China; Purunderwear opened 14 offline stores; and PureH2B opened 9 offline
stores. The Company integrates its brand concept into its store design. It hires well-known designers at home and abroad to upgrade
its store image and to enhance its consumer experience with an exhibition-style product display balancing both aesthetics and
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richness of products. It also adds an experience area to highlight product display and user experience, which has helped incr ease the
Company's sales revenue and further increase its brand awareness.
As for offline terminals like chain stores and supermarkets, based on Purcotton's positioning of high-quality consumer goods, the
Company mainly deploys Purcotton products in High-end boutique supermarkets and local leading supermarkets. Meanwhile, the
Company also has set up dedicated sales teams to cover the bulk purchase or customized purchase needs of corporate clients. The
Company’s core products, such as Purcotton’s cotton tissue and Nice Princess, have successfully entered supermarke t chains,
convenience store chains and offline maternal & infant stores and communities, including about 5,500 outlets of China Resourc es
Vanguard, Ole' Supermarket, Yonghui Supermarket, Sam's Clubs, Wal-Mart and other mainstream supermarket chains, over 6,000
outlets of 7-11, Rosen, Convenience Bee, Today, Every Day and other convenience store chains, as well as offline maternal & infant
stores in over 20 provinces and cities.
(3) Advantages of integration between online and offline channels
The omnichannel retail model is a newly emerging retail form that provides consumers with a consistent shopping experience by
integrating physical channels, e-commerce channels, and mobile e-commerce channels. In such form, the convenience of online
channels and the consumer experience of offline channels can complement each other. Having a deep insight into the development
trend of integrating online and offline channels, the Company thoroughly optimized and integrated various channels to integra te
traffic and sales of offline stores and online Wechat mini programs, thereby further improving its operating efficiency and
performance. Online channels can meet offline consumers subsequent consumption needs while offline channels can provide online
consumers further product information and service experience. Flows of traffics can be directed between the two kinds of channels,
so online and offline traffic can be effectively obtained. As of the end of the reporting period, the number of Purcotton use rs has
exceeded 33 million, including 15 million registered members of its private platforms (6.17 million store registered members, and
nearly 9 million registered members of its official website and WeChat mini programs).
7. Advantages of full industrial chain
Since its establishment, the Company has always been attaching great importance to its product quality, cost and delivery
management and control. It has built a full industrial chain with advantages from raw material procurement, production, sterilization,
warehousing, to delivery. The Company has seven wholly-owned production subsidiaries in Hubei, covering a total area of more than
one million square meters, including 105,000 square meters of clean workshops. The seven factories supply large quantities of
high-quality medical supplies and daily necessities to all over the world each year. Established in 2005 with an area of 550,000
square meters, Winner Medical (Huanggang) is the main production site of pure cotton spunlace non-woven fabrics, cotton tissues,
sanitary pads, and masks; with an area of 67,000 square meters, Winner Medical (Jingmen) is the main production site of gauze
clothing, degreased medical bleached gauze, and dyed medical gauze; with an area of 93,000 square meters, Winner Medical (Jia yu)
has four product categories with pure cotton as basic materials, i.e. the cleaning, disinfection, beauty, and care categories, and two
product collections: medical and daily use products; established in 2001 with an area of 140,000 square meters, Winner Medica l
(Chongyang) is the Company's main force of producing its disposable medical consumables, disposable surgical kits, all kinds of
cotton balls and cotton pads; established in 2017 with a total area of about 467,000 square meters of its phase I and phases II sites,
Winner Medical (Wuhan) has brought in electron beam sterilization and international modern cotton spunlace production line;
established in 2000, Winner Medical (Tianmen) is the production base of medical gauze in China for trade; established in 1999 ,
Winner Medical (Yichang) is the main production base for its grey cloth.
With constant improvement, the Company's excellent production management system has been upgraded from 1.0 to 3.0, covering
seven modules (i.e. standardization, visualization, automation, Just-in-Time, rapid response, value engineering, organizational
guarantee). It has gradually established and improved its daily management system in factory. It has improved its production
efficiency through equipment innovation. For example, its self-developed soft ear loop mask manufacturing equipment truly realize
the unmanned manufacturing of masks with high-efficient equipment; it has basically realized the fully automated production of its
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products like cotton tissues and wet tissues; it has preliminarily replace manual production with machinery production for cotton
swabs, cotton balls, cotton pads, makeup cotton, packages, and drapes, which has greatly supported its rapid production and s upply.
The Company is also going to explore and build smart factories. It will realize "unmanned production, process-based management,
and process digitalization" step by step.
IV. Analysis of Main Business
Overview
Please refer to the relevant information in “I. Main Business of the Company During Reporting Period”.
YoY changes in key financial data
Unit: yuan
Year-on-year
Current reporting period Same period last year Reason for change
increase/decrease
Revenue 4,059,865,654.92 4,179,778,883.27 -2.87% No major changes
Note 1
Costs 1,921,789,702.47 1,900,091,985.00 1.14% No major changes
For details, please refer
to “3. selling expenses
and Composition” of “V.
Other information
Selling expenses 825,805,820.57 655,948,904.24 25.89% required by the
disclosure guidelines for
textile and
apparel-related sectors”
below.
This is mainly due to the
YoY increase in
share-based payment
expenses of
142,429,497.69 yuan,
and the administrative
Administrative expenses 310,652,551.64 158,666,340.89 95.79%
expenses after deducting
the equity incentive fees
increased by 6.02%
compared with the same
period of the previous
year
This is mainly due to the
increase in revenues from
Financial expenses (12,616,456.80) (465,911.33) -2,607.91%
daily cash management
of self-owned funds
Income tax expenses 143,286,407.76 173,749,962.63 -17.53% No major changes
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This is mainly due to the
R&D expenses 189,917,265.47 168,845,188.59 12.48% increase in R&D
investment
Please refer to Note 2 at
Net cash flow from
197,604,865.77 2,473,405,982.25 -92.01% the end of the Table for
operating activities
details
This is mainly due to the
increase in cash
Net cash flow from (517,565,700.23)(517,56
1,134,322,825.18 319.16% management funds
investing activities 5,700.23)
recovered in the
reporting period
This is mainly due to the
increase in dividends
Net cash flow from (821,629,805.97)(821,62 (201,673,801.32)(201,67
307.41% distributed to
financing activities 9,805.97) 3,801.32)
shareholders in the
reporting period
See the explanation of
changes in cash flow
Net increase in cash and
510,599,067.48 1,754,428,329.70 -70.90% from operating activities,
cash equivalents
investment activities and
financing activities
This is mainly due to the
Investment income 50,073,259.81 7,158,219.52 599.52% increase in cash
management revenues
This is mainly due to the
increase in government
Other incomes 86,754,859.99 19,765,789.73 338.91%
subsidies related to
operations
This is mainly due to the
increase in the loss on
Gains from asset disposal (37,621.25) 15,447.79 -343.54%
disposal of long-current
assets
This is mainly due to the
Income from changes in
31,408,220.30 0.00 100.00% increase in cash
fair value
management revenues
This is mainly due to the
recovery of other
Credit impairment Loss 11,808,406.71 (787,646.99) -1,599.20% receivables and the
decrease in credit
impairment losses
Non-revenue 2,339,463.94 13,659,135.49 -82.87% This is mainly due to the
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decrease in government
subsidies not related to
operations
This is mainly due to the
Non-operating expenses 8,502,804.42 21,986,722.02 -61.33% decrease in the scrapping
loss of non-current assets
The amount of costs disclosed in the review report for the same period of the previous year was 1,767,729,037.00 yuan, and the
difference of 132,362,948.00 yuan of the comparative data disclosed in the current period is the reclassification adjustment of freight
costs. When the review report for the same period of the previous year was disclosed, there was no clear regulation on the ad justment
of freight costs to the main costs as performance costs in the new income guidelines, so this reclassification was not completed for
the same period of the previous year. The reclassification adjustment was made to the data of the same period of the previous year in
the comparative data of the current reporting period.
Note 2: (1) Cash received from the sales of goods and services decreased by 1,548 million yuan during the reporting period co mpared
with the same period of the previous year, mainly due to the decrease in advance payments from customers. In the same period of last
year, the Company adopted a credit policy of 100% advance payment for protection products, and the credit policy returned to the
normal level during the reporting period. (2) The increase of 899 million yuan in cash paid for operating activities in this reporting
period was mainly due to the better performance and the higher provision for various taxes in the previous year, resulting in an
increase of 403 million yuan in various taxes paid after remittance in this reporting period compared with the same period of the
previous year. In addition, the higher provision for performance bonuses in the previous year led to an increase of 160 million yuan in
employee compensation paid in this reporting period compared with the same period of the previous year. (3) The above two points
were the main reasons for the decrease of 2,276 million yuan in net cash flow from operating activities in this reporting per iod
compared with the same period of the previous year, a decrease of 92.01% year-on-year.
Significant changes in the profit composition or profit source of the Company during the reporting period
□ Applicable √ Not applicable
No major change occurred in the profit composition or profit source of the Company during the reporting period.
Products or services accounting for more than 10%
√Applicable □ Not applicable
Unit: ’0,000 yuan
Increase or
Year-on-year
Year-on-year decrease in costs
Gross margin increase/decrease
Revenue Costs increase/decrease over the same
ratio of gross margin
of revenue period of the
ratio
previous year
By products or services
Medical
consumables -
146,319.30 59,260.95 59.50% -26.49% -19.16% -3.67%
protective
products
Healthy
40,885.23 21,649.58 47.05% 10.49% 8.73% 0.86%
consumer goods -
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cotton tissues
Note: The incomes in this Table are from main busineses
The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry
Information Disclosure of Listed Companies Engaging in Textile and Apparel Business.
Unit: yuan
Increase or
Year-on-year
Year-on-year decrease in costs
Gross margin increase/decrease
Revenue Costs increase/decrease over the same
ratio of gross margin
of revenue period of the
ratio
previous year
By sectors
Medical
2,126,563,787.23 1,014,408,882.34 52.30% -15.28% -1.90% -6.50%
consumables
Healthy
1,790,338,558.90 820,820,906.35 54.15% 20.64% 10.03% 4.42%
consumer goods
By products
Medical
consumables -
1,463,192,999.33 592,609,477.85 59.50% -26.49% -19.16% -3.67%
protective
products
Healthy
consumer goods - 408,852,296.85 216,495,822.12 47.05% 10.49% 8.73% 0.86%
cotton tissues
By regions
Domestic 2,905,937,643.85 1,407,515,963.89 51.56% -3.63% -4.07% -0.22%
Abroad 1,109,317,192.89 491,678,856.56 55.68% -1.93% 19.45% -7.94%
Note: The incomes in this Table are from main busineses
In the event that the statistical caliber of the Company’s main business data is adjusted in the reporting period, the Compan y shall
follow the main business data in the past year adjusted by the caliber at the end of the reporting period
□ Applicable √ Not applicable
Whether the Company has sales terminals in brick-and-mortar stores
√ Yes □ No
Distribution of brick-and-mortar stores
Number of stores
Number of new
closed at the end Reasons for store
Types of stores Number of stores Area of stores stores during the Brands involved
of the reporting closings
reporting period
period
Direct-sale stores 292 116,141 26 5 The closed stores 269 stores for
44
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are under the Purcotton, 9
brand of stores for
Purcotton, PureH2B, and 14
resulting mainly stores for
the Company’s Purunderwear
active strategies
against the
epidemic control
and contract
expirations.
Franchises 10 2,313 5 0 N/A Purcotton
Total area and performances of direct-sale stores
Number of Revenue in 1H21 (‘0,000 Same period last year (‘0,000
Levels of areas Total area (m2)
stores YUAN) YUAN)
Less than 300m2 87 17,559.99 14,444.07 12,062.82
300-500㎡ 57 21,240.98 11,768.80 9,200.96
500-800㎡ 56 35,106.97 13,475.58 9,957.72
More than 800m2 23 21,754.81 5,680.43 4,289.98
Total 223 95,662.75 45,368.88 35,511.48
Note: The above are the stores of Purcotton that have opened for more than 12 months as of June 30, 2021.
Top 5 Stores in terms of Operating Revenues
Average performance of
S/N Name of stores Opening date Revenue (yuan)
the store
The Store in Shenzhen
1 October 25, 2017 7,299,509.88 18,077.04
Uniwalk Center
The Store in Futian
2 May 15, 2010 5,547,610.13 8,528.22
COCOPARK
The Store in Suzhou
3 November 11, 2017 5,495,739.33 4,955.58
Center Mall
The Store in Beijing
4 August 6, 2012 4,968,968.10 8,497.01
Jinyuan Yansha Mall
The Store in Shenzhen
5 January 18, 2018 4,736,947.06 3,553.60
UpperHills
Total -- -- 28,048,774.50 6,872.86
New stores of listed companies
√ Yes □ No
Name of Address Opening Contract area Investment amount Product Business Business Property Number
stores of stores time (m2) (yuan) Category type model ownership of
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status stores
Direct-sale Healthy
Northeast Direct-sale Purcotton
stores of 2021 288.00 1,881,019.90 consumer Retail 1
China stores leasing
Purcotton goods
Direct-sale Healthy
North Direct-sale Purcotton
stores of 2021 1,715.88 8,644,405.33 consumer Retail 6
China stores leasing
Purcotton goods
Direct-sale Healthy
East Direct-sale Purcotton
stores of 2021 1,223.00 6,134,151.79 consumer Retail 4
China stores leasing
Purcotton goods
Direct-sale Healthy
South Direct-sale Purcotton
stores of 2021 2,148.30 11,788,677.11 consumer Retail 7
China stores leasing
Purcotton goods
Direct-sale Healthy
Central Direct-sale Purcotton
stores of 2021 650.92 2,377,684.39 consumer Retail 1
China stores leasing
Purcotton goods
Direct-sale Healthy
Southwest Direct-sale Purcotton
stores of 2021 859.76 4,720,649.18 consumer Retail 3
China stores leasing
Purcotton goods
Healthy
Purcotton North Franchisee
2021 280.00 685,918.96 consumer Retail Franchises 1
franchises China leasing
goods
Healthy
Purcotton East Franchisee
2021 208.00 510,670.55 consumer Retail Franchises 1
franchises China leasing
goods
Healthy
Purcotton Southwest Franchisee
2021 477.00 884,673.16 consumer Retail Franchises 3
franchises China leasing
goods
Total 7,850.86 37,627,850.37 27
Note: The number of new stores in this table is for Purcotton only, excluding the new stores of Purunderwear and PureH2B
Does the Company disclose the information on Top 5 franchises
□Yes √No
V. Other information required by the disclosure guidelines for textile and apparel-related
sectors
1. Production capacity
The Company’s own production capacity
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Current reporting period Same period last year
More than 10% YoY change in production capacity utilization rate
√ Yes □ No
January-June 2021 January-June 2020 Percentage
of change
in Change
Business Product Production Production
Unit production reason
category Category Production capacity Production capacity
Output Output capacity description
capacity Utilization capacity Utilization
utilization
rate rate
rate
No major
Gauze ton 5,275.63 3,210.30 60.85% 4,960.33 2,605.50 52.53% 8.32%
changes
No major
Cotton ton 1,029.60 856.96 83.23% 947.70 718.40 75.80% 7.43%
changes
Production
capacity
gradually
increased in
2H20, and
thanks to the
’0,000
Mask 197,350.56 148,799.00 75.40% 89,678.00 88,405.00 98.58% -23.18% further
pieces
control of
pandemic in
1H21, the
Medical
demands and
consumables
outputs
decreased
Production
capacity
gradually
increased in
2H20, and
thanks to the
Protective ’0,000
780.00 517.40 66.33% 468.00 386.95 82.68% -16.35% further
clothing suits
control of
pandemic in
1H21, the
demands and
outputs
decreased
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Production
capacity
gradually
increased in
2H20, and
thanks to the
Surgical ’0,000
1,560.00 1,214.66 77.86% 468.00 453.27 96.85% -18.99% further
gowns suits
control of
pandemic in
1H21, the
demands and
outputs
decreased
Medical ’0,000 No major
2,595.00 2,219.00 85.51% 2,160.00 1,971.00 91.25% -5.74%
combo kits kits changes
Cotton ’0,000 No major
13,821.95 6,934.47 50.17% 13,821.95 5,889.35 42.61% 4.56%
tissues kits changes
In the first
half of last
year, the
production
staff focused
on the
Healthy production of
consumer
anti-pandemic
goods products,
Sanitary ’0,000
25,039.87 18,925.16 75.58% 25,039.87 12,164.64 48.58% 27.00% resulting in
pads pieces
fewer
production
staff available
for this
category and
a
corresponding
decrease in
outputs
Pure cotton Pure Thanks to the
spunlace cotton effective
ton 24,089.86 12,435.18 51.62% 24,089.85 15,468.99 64.21% -14.60%
non-woven spunlace control of
fabric non-woven COVID-19
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fabric pandemic in
the first half
of 2021, the
demand for
cotton
protective
clothing,
isolation
gowns and
surgical
gowns
declines, and
the
corresponding
demand for
semi-finished
products for
self-use
declines
Is there overseas production capacity?
□Yes √No
2. Sales model and channels
Sales channels and actual operation of products
The Company’s healthy consumer goods and 100% cotton spunlace non-woven fabrics are involved in textile and apparel industries.
The sales channels for healthy consumer goods include e-commerce, direct chains and supermarkets, key accounts and franchisees;
while the sales channel of 100% cotton spunlace non-woven fabrics is direct selling.
Unit: yuan
Increase or
Year-on-year
Year-on-year decrease in costs
Gross margin increase/decrease
Sales channels Revenue Costs increase/decrease over the same
ratio of gross margin
of revenue period of the
ratio
previous year
Online sales 1,102,789,788.54 554,967,079.25 49.68% 109,748,088.69 4,941,000.57 5.06%
Direct selling 537,968,951.60 207,218,926.91 61.48% 156,659,256.47 53,154,686.76 1.89%
Franchising 4,665,282.20 3,618,471.16 22.44% 3,736,462.32 2,885,741.13 1.33%
Supermarket
106,170,642.36 36,192,846.86 65.91% 45,712,399.52 15,080,909.44 0.83%
channels
Key Client 38,743,894.20 18,823,582.17 51.42% (9,578,527.42) (1,224,460.72) -7.10%
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Subtotal of
healthy living 1,790,338,558.90 820,820,906.35 54.15% 306,277,679.58 74,837,877.18 4.42%
consumer product
Direct selling 98,352,490.63 63,965,031.74 34.96% (54,009,938.04) (34,760,398.95) -0.24%
Subtotal of pure
cotton spunlace
98,352,490.63 63,965,031.74 34.96% (54,009,938.04) (34,760,398.95) -0.24%
non-woven
fabrics
Reasons for change
As the Company has only two businesses involved in the textile and apparel: healthy consumer goods and pure cotton spunlace
non-woven fabric, the above-mentioned revenue and costs by channel are not equal to the total revenue and costs in the consolidated
statements. The Company’s gross margin ratio for each channel fluctuated by less than 10% in the first half of 2021, without any
significant changes.
3. Selling expenses and composition
Unit: yuan
Year-on-year Description of significant
Selling expenses January-June 2021 January-June 2020
increase/decrease changes
Employee
229,922,405.33 218,246,955.67 5.35% No major changes
compensation
This is mainly due to the
travel restrictions against
Travel expenses 5,786,992.03 2,213,199.29 161.48%
the pandemic in the same
period last year
This is mainly due to the
Office communication
3,075,901.11 7,111,983.72 -56.75% decrease in office and
costs
network expenses
Sales commission 98,622,807.60 97,068,184.37 1.60% No major changes
Insurance premiums 2,574,426.91 2,271,675.17 13.33% No major changes
This is mainly due to the
increase in amortization of
Depreciation and the right-of-use asset
113,209,102.14 29,276,701.85 286.69%
amortization added for the first
application of the new
lease standard in 2021
This is mainly due to the
Advertising and increase in advertising and
233,984,397.50 115,342,907.94 102.86%
marketing expenses marketing expenses for
e-commerce channels of
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Purcotton’s consumer
products and medical
consumables on
third-party platforms
This is mainly due to the
decrease in lease payment
Rent 85,737,804.97 139,580,079.91 -38.57% as a result of first
application of the new
lease standard in 2021
Others 52,891,982.98 44,837,216.32 17.96% No major changes
Total 825,805,820.57 655,948,904.24 25.89% No major changes overall
Note: The amount of selling expenses in the review report for the same period last year was 788,311,852.24 yuan, of which the
amount of freight was 132,362,948.00 yuan (the amount after deducting the freight was 655,948,904.24 yuan). Since the new
revenue standard had not yet specified the adjustment of freight to the main cost at the time of the disclosure of the review report in
the same period last year, there was no reclassification, which was only completed in Annual Report 2020. During this reporting
period, the freight costs for the same period last year were reclassified into main costs.
4. Franchising and distribution
The proportion of franchisees and distributors’ sales revenues exceeds 30%
□Yes √No
Top 5 franchisees
A related party or
S/N Name of franchisee Time of cooperation Total sales (RMB) Level of franchisee
not
The Stores in Lhasa
Shenli Times Square
1 First May 01, 2020 No 1,706,157.78 / Shanshan Outlets in
Xining Wangfujing
Daxiangcheng
The Store in
2 Second November 09, 2020 No 1,008,109.52 Hengyang Shanshan
Outlets
The store in
3 Third June 12, 2020 No 679,182.25
Yinchuan CCPark
The Store in
4 Fourth December 24, 2020 No 566,673.13 Dujiangyan IMIX
Park
The Store in
Yongsheng Shopping
5 Fifth March 31, 2021 No 372,386.66
Mall, Jinhua,
Zhejiang
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Total -- -- -- 4,332,509.34 --
Top 5 distributors
S/N Name of franchisee Time of cooperation A related party or not Total sales (RMB)
5. Online sales
The proportion of online sales in sales revenues exceeds more than 30%
□Yes √No
Is there a self-built sales platform?
√ Yes □ No
Operation starting time January 06, 2014
Number of registered users 15,060,000
Average number of monthly active users 2,100,000
Does it work with a third-party sales platform?
√ Yes □ No
Unit: yuan
Transaction amount during the
Name of platform Payment to the platform Return rate
reporting period
Taobao (healthy consumer
594,184,171.14 102,049,089.66 1.46%
goods)
Jingdong (healthy consumer
215,144,181.52 42,294,085.90 0.98%
goods)
Amazon (medical consumables) 104,636,793.87 7,157,281.14 1.86%
Opening or closing online sales channels by the Company
□ Applicable √ Not applicable
Description of the impact on the current and future development of the Company
Not applicable.
6. Agency operation
Does it adopt agency operation?
□Yes √No
7. Inventory
Inventory
Inventory YoY increase/decrease in
Main products Inventory amount Reasons
turnover in days inventory balance
Medical consumables 84 417,335,870.29 (54,324,962.39) Decreasing by 11.52% over
52
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the end of last year without
significant changes
Increasing by 16.21% over the
Healthy consumer goods 192 802,311,473.15 111,929,167.50 end of last year without
significant changes
Decreasing by 17.68% over
Pure cotton spunlace
149 44,818,211.81 (9,625,590.07) the end of last year without
non-woven fabric
significant changes
Overall increasing by 3.94%
Overall 133 1,264,465,555.25 47,978,615.04 over the end of last year
without significant changes
Provision accrual for inventory depreciation
Proportion Inventory age
of
Provision for
Product provision Net value of Original value
inventory 3 years and
Category for inventories of inventories Within 1 year 1-2 years 2-3 years
depreciation above
depreciatio
n
Medical
consumable 31,640,302.41 7.0% 417,335,870.29 448,976,172.70 442,044,603.45 4,946,095.99 1,257,351.66 728,121.60
s
Healthy
110,608,892.0 4,587,011.8
consumer 12.1% 802,311,473.15 912,920,365.18 853,857,341.61 45,109,105.91 9,366,905.80
4 6
goods
Pure cotton
spunlace
2,639,304.64 5.6% 44,818,211.81 47,457,516.46 46,720,391.53 734,084.29 718.63 2,322.01
non-woven
fabric
144,888,499.0 1,264,465,555.2 1,409,354,054.3 1,342,622,336.5 950,789,286.1 10,624,976.0 5,317,455.4
Total 10.3%
9 5 4 7 9 9 7
Inventory information of end channels such as franchises or distributors
Purcotton, a brand of the Company’s healthy consumer goods business, started franchises in 2020. Its business model requires
franchisees to be responsible for the construction and daily operation of stores while Purcotton providing goods and supply chain
supports. After the sales of goods, Purcotton and franchisees realize their respective benefits through sharing. The ownership of the
franchisee’s inventory belongs to Purcotton, and as of June 30, 2021, the inventory balance of ten franchisees were 5.28 million yuan.
8. Brand building
Whether the company is involved in the production and sales of branded clothing, apparel and home textile products
√ Yes □ No
53
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Private brand
Trademark Main product Target Main product Main market
Brand name Features Level of cities
name types customers price bands territory
Made of 100%
high-quality
natural cotton
without
fluorescent 5-30 yuan Second- and
All-age
Purcotton Purcotton Cotton tissues whitening /pack (100 Nationwide third-tier cities
customer base
agent; mild and pieces) and above
non-irritating;
meeting the
daily needs of
consumers
100% cotton
surface layer Female
Second- and
(surface layer, population at 1.99-3.99 yuan
Purcotton Nice Princess Sanitary pads Nationwide third-tier cities
spacer, sanitary appropriate /piece
and above
wing surface ages
layer)
100% cotton
surface layer;
unique in the
market; made
from natural Second- and
Parental 3.32-4.14 yuan
Purcotton BBNice BBNice cotton; 2mm Nationwide third-tier cities
population /piece
ultra-thin core and above
with 28 times
ultra-high
absorption
capacity
100% cotton
material; soft
Second- and
and All-age 20-40 yuan
Purcotton Purcotton Wet tissues Nationwide third-tier cities
non-slippery; customer base /pack
and above
gentle and
non-irritating
100% cotton Expecting
Baby material mothers, Second- and
100-400 yuan
Purcotton Purcotton supplies/clothin without newborns, Nationwide third-tier cities
/piece
g fluorescent nor toddlers, and above
formaldehyde; children
54
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the unique
gauze fabric to
provide more
comfortable
care
100% cotton
material; Outwear:
high-quality 200-600 yuan
cotton without /piece; home
fluorescent nor wear: 200-500
Clothing / adults at
formaldehyde; yuan /piece; Second- and
intimate appropriate
Purcotton Purcotton soft to the thermal Nationwide third-tier cities
apparel for ages, boys and
touch; the underwear: and above
outing girls
unique gauze 100-500 yuan
fabrics to /piece; socks:
provide more 20-80 yuan
comfortable /pair
care
100% cotton
material;
Baby/toddler
high-quality
bedding:
cotton without
Expecting 300-800 yuan
fluorescent nor
mothers, /set; adult
formaldehyde; Second- and
Bedding, newborns, bedding:
Purcotton Purcotton soft to the Nationwide third-tier cities
toiletries toddlers and 500-2000 yuan
touch; the and above
adult customer /set; bathroom
unique gauze
base supplies:
fabrics to
50-200 yuan
provide more
/piece
comfortable
care
Partner brands
Brand
Main and
Main Main
Brand Trademar Target product Level of trademark Partner Cooperati Cooperati
product Features market
name k name customers price cities rights name on mode on period
types territory
bands ownershi
p
Licensed brand
Main Main Main Exclusive
Brand Trademark Target Level of License
product Features product market Licensor license or
name name customers cities period
types price territory not
55
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bands
The
product is
made from
Cotton
100%
tissue,
cotton Second-
baby KT
Purcotton, material All-age 5-300 and
Purcotton, clothing, Nationwid Licensing 2020.1.1-2
Sanrio and customer yuan third-tier
Sanrio underwear e (Shanghai) 021.12.31
characters designed base /piece cities and
and Co., Ltd.
with above
loungewea
HELLO
r
KITTY
cartoon
image
Marketing and operation of each brand during the reporting period
Please refer to the “Brand marketing” in “II. Discussion and Analysis of Operations” of “Section 3 Management Discussion and
Analysis” for details.
Cases involved in trademark ownership disputes
□ Applicable √ Not applicable
9. Others
Whether the Company is engaged in apparel design-related business
√ Yes □ No
The number of fashion The number of contracted
37 1
designers in the Company fashion designers
The operation of the built Construction of PLM and 3D design platform were started in the second half of 2020 and would
designer platform be put into operation in spring and summer of 2022.
Did the company hold an order meeting?
□Yes √No
VI. Analysis of Non-main Business
□ Applicable √ Not applicable
VII. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: yuan
End of the reporting period End of the previous year Increase/d Description of significant changes
56
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The The ecrease in
Amount proportion in Amount proportion in proportio
total assets total assets ns
Cash and cash 4,700,529,527. 4,162,539,245.
35.85% 32.01% 3.84% No major changes
equivalents 85 78
Accounts
863,667,816.94 6.59% 844,317,708.12 6.49% 0.10% No major changes
receivable
1,264,465,555. 1,216,486,940.
Inventory 9.64% 9.36% 0.28% No major changes
25 21
Long-term equity
15,079,827.94 0.11% 13,424,230.41 0.10% 0.01% No major changes
investment
1,437,854,645. 1,400,749,050.
Fixed assets 10.97% 10.77% 0.20% No major changes
76 00
It is mainly due to the increase in plant
Construction in
104,425,911.11 0.80% 61,383,340.97 0.47% 0.33% and equipment investment by
progress
subsidiaries
Right-of-use It is mainly due to the first application
551,278,768.29 4.20% 0.00% 4.20%
assets of the new lease standard
It is mainly due to the repayment of
Short-term loans 150,071,416.66 1.15% -1.15%
matured short-term loans
It is mainly because the Company’s
Contract
328,875,043.44 2.51% 530,188,257.63 4.08% -1.57% credit policy for medical protective
liabilities
materials has returned to normal levels
It is mainly due to the first application
Lease liabilities 616,985,285.44 4.71% 0.00% 4.71%
of the new lease standard
It is mainly due to structural
TradableTradable 2,707,384,233. 4,131,178,589.
20.65% 31.77% -11.12% adjustment of cash management
financial assets 24 44
products
Amounts It is mainly due to the decrease in bank
receivable 9,263,087.17 0.07% 18,182,662.70 0.14% -0.07% acceptance bills that have not been
financing transferred out
Advances to It is mainly due to the increase in
179,107,611.07 1.37% 124,031,239.05 0.95% 0.42%
suppliers prepaid raw material purchases
It is mainly due to structural
Other current
317,280,449.51 2.42% 35,184,227.09 0.27% 2.15% adjustment of cash management
assets
products
Other
It is mainly due to the increase in
non-current 133,729,374.90 1.02% 63,807,415.75 0.49% 0.53%
prepaid long-term asset purchases
assets
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It is mainly due to the increase in
Notes payable 69,765,505.06 0.53% 29,418,100.00 0.23% 0.30% outstanding bank acceptance bills
payable
It is mainly due to the decrease in
Taxes payable 109,204,542.62 0.83% 444,381,369.49 3.42% -2.59% corporate income tax after the annual
settlement and payment
Dividends It is mainly due to the increase in
200,000,000.00 1.53% 0.00 0.00% 1.53%
payable dividends payable to shareholders
Other current It is mainly due to the decrease in the
16,270,217.30 0.12% 23,638,266.47 0.18% -0.06%
liabilities amount of sales tax to be transferred.
2. Major overseas assets
□ Applicable √ Not applicable
3. Assets and liabilities measured at fair value
√Applicable □ Not applicable
Unit: yuan
Accumulated Purchase
Gain/loss Sales amount
fair value Impairment in amount
Opening from changes during the Other Closing
Item changes accrual of during the
balance in fair value reporting changes balance
included in current period reporting
for the period period
equity period
Financial assets
1.
TradableTr
adable
financial
4,131,178,589 2,650,000,000 4,090,000,000 2,707,384,233
assets 16,205,643.80 0.00 0.00 0.00
.44 .00 .00 .24
(excluding
derivative
financial
assets)
Financial
4,131,178,589 2,650,000,000 4,090,000,000 2,707,384,233
assets 16,205,643.80 0.00 0.00 0.00
.44 .00 .00 .24
subtotal
Total of the 4,131,178,589 2,650,000,000 4,090,000,000 2,707,384,233
16,205,643.80 0.00 0.00 0.00
above .44 .00 .00 .24
Financial
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
liabilities
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Other changes
Not applicable.
Whether there were any significant changes in the measurement attributes of the Company’s major assets during the reporting period
□Yes √No
4. Restricted rights to assets as of the end of the reporting period
The breakdown of monetary funds with restrictions on use due to mortgages, pledges or freezes, as well as those placed outside
China with restrictions on repatriation of funds, is as follows:
Unit: yuan
Item Ending book value Causes for restriction
It is mainly the deposit made for domestic
L/C deposit 34,512,382.24
Letters of Credit
It is mainly the deposit made for transactions
Performance bond 2,200,068.49
with customers
It refers to the balance of special deposit
accounts for restricted non-budget units
opened by Shenzhen Purcotton in
Other restricted monetary fund balances 3,483,315.26
accordance with the regulations of prepaid
card issuance formulated by the Ministry of
Commerce.
Total 40,195,765.99
VIII. Analysis of Investment Situation
1. Overall situation
√Applicable □ Not applicable
Investment amount in the reporting period Investment amount in the same period of
Change percentage
(yuan) the previous year (yuan)
2,855,178,484.95 0.00 100.00%
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Significant non-equity investments in progress during the reporting period
√Applicable □ Not applicable
Unit: yuan
Project name Investme Investme Industrie Investme Cumulat Source Project Estimat Cumula Reasons Date of Disclos
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nt method nt in s nt ive of funds progres ed tive for not disclosu ure
fixed involved amount actual s income realized meeting re (if index
assets or in in the investme gains as the any) (if any)
not investme current nt of the schedul
nt reporting amount end of ed
projects period as of the the progres
end of reportin s and
the g period projecte
reporting d
period earning
s
High-end
dressing Medical
Independ 2,804,99 29,324,1
production line Yes consuma Proceeds 13.52% 0.00 0.00 N/A
ent 9.18 38.24
construction bles
project
Marketing
Healthy
network Independ 43,867,3 166,159,
Yes consume Proceeds 23.58% 0.00 0.00 N/A
construction ent 71.69 286.32
r goods
project
Medical
consuma
R&D Center
Independ bles + 6,006,82 56,703,1
construction Yes Proceeds 24.09% 0.00 0.00 N/A
ent healthy 7.09 85.36
project
consume
r goods
Medical
consuma
Digital
Independ bles + 17,203,1 75,514,1
management Yes Proceeds 28.09% 0.00 0.00 N/A
ent healthy 76.12 51.15
system project
consume
r goods
Winner Medical
Independ 37,910,0 37,910,0
Industrial Park Yes consuma Proceeds 9.48% 0.00 0.00 N/A
ent 00.00 00.00
(Jiayu) Project bles
Phase II Medical
Expansion consuma
Project of Independ bles + 97,386,1 102,386,
Yes Proceeds 17.06% 0.00 0.00 N/A
Winner ent healthy 10.87 110.09
Medical consume
Wuhan r goods
Total -- -- -- 205,178, 467,996, -- -- 0.00 0.00 -- -- --
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484.95 871.16
4. Financial assets measured at fair value
√Applicable □ Not applicable
Unit: yuan
Accumulated Purchase Sales
Gain/loss Accumulate
Initial fair value amount in the amount in
from changes d Closing Source of
Asset classes investment changes current the current
in fair value investment balance funds
cost included in reporting reporting
for the period income
equity period period
200,000,00 50,000,000. 5,856,502.3 500,000,000 Self-owned
Trust products 0.00 350,000,000.00
0.00 00 9 .00 funds
Proceeds +
3,920,000, 16,205,643.8 2,300,000,000. 4,040,000,0 42,490,809. 2,207,384,2
Others 0.00 self-owned
000.00 0 00 00.00 79 33.24
funds
4,120,000, 16,205,643.8 2,650,000,000. 4,090,000,0 48,347,312. 2,707,384,2
Total 0.00 --
000.00 0 00 00.00 18 33.24
5. The use of proceeds
√Applicable □ Not applicable
(1) The overall use of proceeds
√Applicable □ Not applicable
Unit: ’0,000 yuan
Total amount of proceeds 355,884.93
Total amount of proceeds invested during the reporting
20,517.84
period
Total accumulated amount raised for proceeds 110,699.68
Total amount of proceeds for alteration purposes during
0
the current reporting period
Total accumulated amount of proceeds for alteration
0
purposes during the current reporting period
Proportion of total amount of proceeds for alteration
0.00%
purposes during the current reporting period
Description of the overall use of proceeds
The China Securities Regulatory Commission (CSRC) approved that, in its “CSRC License [2020] No. 1822” document, the
Company made an initial public offering of 50 million yuan ordinary shares (A shares) at an offer price of 74.30 yuan per sha re,
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and the total proceeds amounted to 3,715.0000 million yuan. After deducting issuance fees of 156.1507 million yuan (excluding
tax), net proceeds totaled 3,558.8493 million yuan. The above-mentioned proceeds were in place in September 2020 and verified
by BDO Certified Public Accountants (Special General Partnership) with a “Capital Verification Report” (Xin Kuai Shi Bao Zi
[2020] No. ZI10584). As of June 30, 2021, the Company mobilized 1,106,996,800,000 yuan of proceeds (of which
467,996,800,000 yuan of proceeds were actual used for fund-raising projects and 639,000,000 yuan of idle proceeds for
permanently replenishing the working capital), 25,531,200,000 yuan of revenues from bank financial products (tax included), a nd
1,055,900,000 yuan of net amount of interest income from special account deposits deducting bank charges. As of June 30, 2021,
the balance of unused proceeds of the Company was 2,487.9396 yuan million, of which: the balance of cash management was
2,385.0000 million yuan and the balance deposited in the proceeds account was 102.9396 million yuan.
(2) Committed proceeds projects
√Applicable □ Not applicable
Unit: ’0,000 yuan
Cumulat
Investme
ive Cumulat Whether
Whether nt The
Investme investme ive there is a
the Total progress project Benefits
nt nt benefits Whether significa
Committed project investme Adjusted as of the reaches realized
amount amount realized projecte nt
investment projects has been nt in total end of the in the
in the as of the as of the d change
and investment of changed committ investme the intended current
current end of end of benefits in
over-raised proceeds (includin ed nt (1) reporting usable reporting
reporting the the are met project
g partial proceeds period status period
period reporting reporting feasibilit
change) (3) = date
period period y
(2)/(1)
(2)
Committed investment projects
High-end dressing
21,685.8 21,685.8 October
production line No 280.5 2,932.42 13.52% 0 0 N/A No
6 6 01, 2022
construction project
Marketing network 70,456.8 70,456.8 16,615.9 October
No 4,386.73 23.58% 0 0 N/A No
construction project 7 7 2 01, 2023
R&D Center 23,542.1 23,542.1 October
No 600.69 5,670.33 24.09% 0 0 N/A No
construction project 5 5 01, 2022
Digital management 26,881.0 26,881.0 October
No 1,720.31 7,551.4 28.09% 0 0 N/A No
system project 5 5 01, 2022
Subtotal of
142,565. 142,565. 32,770.0
committed -- 6,988.23 -- -- 0 0 -- --
93 93 7
investment projects
Investment of over-raised proceeds
Winner Industrial June 01,
40,000 40,000 3,791 3,791 9.48% 0 0 N/A No
Park (Jiayu) Project 2023
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Phase II Expansion Decemb
10,238.6
Project of Winner 60,000 60,000 9,738.61 17.06% er 01, 0 0 N/A No
1
Medical Wuhan 2022
Bolster working
-- 63,900 63,900 0 63,900 100.00% -- -- -- -- --
capital (if any)
Subtotal of use of 13,529.6 77,929.6
-- 163,900 163,900 -- -- 0 0 -- --
over-raised proceeds 1 1
306,465. 306,465. 20,517.8 110,699.
Total -- -- -- 0 0 -- --
93 93 4 68
Information on and
reasons for not
meeting the
N/A
scheduled progress or
projected earnings
(by specific project)
Description of
significant changes in N/A
project feasibility
Applicable
On October 12, 2020, the 13th meeting of the Second Board of Directors and the seventh meeting of the
Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of
Some Over-raised Proceeds To Permanently Supplement the Working Capital”, and agreed that the Company
could allocate 639.00 million yuan of the over-raised proceeds to permanently supplement the working
capital. As of November 2, 2020, 639.00 million yuan of over-raised proceeds have been used to bolster
working capital.
On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the
Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of
Over-raised Proceeds for the Investment in Winner Industrial Park (Jiayu) Project”. The main body of the
Proposal is as follows: The Company plans to allocate 400.0000 million yuan of the over-raised proceeds to
Amount, purpose and
the investment in the Winner Industrial Park (Jiayu) Project. The total investment in Winner Industrial Park
progress of use of
(Jiayu) Project is estimated at 900.0000 million yuan, and the implementing entity is Winner Medical (Jiayu)
over-raised proceeds
Co., Ltd. The project is located in Hubei Jiayu Economic Development Zone, adjacent to the Park’s 2nd
Road in the north, 3rd Road in the south, Jiayu Avenue in the east, and Shijingpu Road in the west. The total
land area is about 451 mu. The project relies on independent research and development of patented
technology achievements, and based on the existing advantages of the Company in the industry, considers
natural cotton as the main raw material to innovate and improve degreasing and spunlace technology. It
adopts comprehensive use of high-pressure “water needle” and other high-efficiency production
technologies, and plans to build production projects in relation to spunlace, wash care, wet tissues, medical
cotton/gauze/non-woven fabrics, hand sanitizer and other products. As of June 30, 2021, the total amount
invested in the above project is 37.9100 million yuan.
On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the
Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of
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Over-raised Proceeds for the Phase II Expansion Project of Winner Medical Wuhan”. The main body of the
Proposal is as follows: The Company plans to allocate 600.0000 million yuan of the over-raised proceeds to
the investment in the Phase II Expansion Project of Winner Medical Wuhan. The total investment in Phase II
Expansion Project of Winner Medical Wuhan totals 1,500.0000 million yuan, and the implementing entity is
Winner Medical (Wuhan) Co., Ltd. The project includes non-woven coil center, sterilization processing
center, domestic medical sales and marketing center, intelligent distribution center of Hubei regional
headquarters, regional headquarters in Central China and the second R&D center of the Group, which are
fully invested and independently operated by the Company. Thanks to the project construction, the
Company’s production capacity and market share will be increased, enabling it to become a global leader in
overall technical level and product quality scale. As of June 30, 2021, the total amount invested in the above
project is 102.3861 million yuan.
Applicable
Occurred in the previous year
On November 27, 2020, the 15th meeting of the Second Board of Directors and the 9th meeting of the
Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding Capital
Increase in Wholly owned Subsidiaries with Some of the Proceeds, Changes to Implementing Entity of the
Fundraising Projects, and Addition of Implementation Sites of Some Fundraising Projects”. The main body
Change of location of the Proposal is as follows: To further improve the production, management efficiency and comprehensive
for the utilization rate of resources, seize market development opportunities, and better promote the implementation
implementation of of fundraising projects, the Company plans to use some of the proceeds to increase the capital of the
the proceeds wholly-owned subsidiaries and change the impleme nting entity of the fundraising projects, and add new
investment project implementation sites for the fundraising projects. Among them, the original implementing entity of the
“R&D Center Construction Project” was Winner Medical (Wuhan) Co., Ltd. According to the Company’s
development strategy and actual business needs, it plans to include Winner Medical Products Co., Ltd. as the
implementing entity of “R&D Center Construction Project”, a fundraising project. A new implementation
site in Winner Industrial Park, No. 660 Bulong Road, Longhua New District, Shenzhen is also included
accordingly.
Adjustment of the N/A
implementation mode
of the proceeds
investment project
Applicable
On October 12, 2020, the 13th meeting of the Second Board of Directors and the seventh meeting of the
Second Board of Supervisors of the Company reviewed and approved the “Proposal Regarding the Use of
Pre-investment and
Proceeds to Replace Self-raised Funds Pre-invested in the Fundraising Project”, respectively, and agreed that
replacement of the
the Company could replace the self-raised funds pre-invested in the fundraising project with 233.7173
proceeds investment
million yuan of proceeds. It has been verified by the “Special Auditor’s Report on Proceeds Replacement of
project
Winner Medical Products Co., Ltd.” issued by BDO Certified Public Accountants (Special General
Partnership) on October 12, 2020. Among them: the actual investment amount of the Company’s self-raised
funds pre-invested in the proceeds investment project is 233.7173 million yuan, of which: 26.5062 million
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yuan was invested in high-end dressing production line construction project, 110.0794 million yuan was
invested in marketing network construction project, 50.2174 million yuan was invested in R&D center
construction project, 46.9143 million yuan was invested in digital management system project. In October
and November 2020, the Company transferred 73.4204 million yuan and 160.2968 million yuan respectively
from the special account for proceeds to replacing the self-raised funds that had been invested in advance in
the proceeds project.
On February 26, 2021, the 18th meeting of the Second Board of Directors and the 12th meeting of the
Second Board of Supervisors were held by the Company to deliberate and approve the “Proposal Regarding
the Opening of Bank Accounts and Replacement of Pre-invested Self-raised Funds for the New Project of
Over-raised Proceeds”. The meetings agreed that the Company could use over-raised funds of 100.1742
million yuan to replace the self-raised funds invested in new fund-raising projects in advance. It has been
verified by the “Special Auditor’s Report on Proceeds Replacement of Winner Medical Products Co., Ltd.”
([2021] No. ZI10031) issued by BDO Certified Public Accountants (Special General Partnership) on
February 23, 2021. Among them: the pre-investment of self-raised funds of Phase II Expansion Project of
Winner Medical Wuhan was 85,894,200 yuan and that of self-raised funds of Winner Industrial Park (Jiayu)
Project was 14,280,000 yuan, tota ling 100.1742 million yuan.
Temporary N/A
replenishment of
working capital with
idle proceeds
Amount of and N/A
reasons for the
balance of proceeds
resulting from project
implementation
Usage and purposes
As of June 30, 2021, the balance of unused proceeds of the Company was 2,487.9396 million yuan, of
of proceeds not used
which: the balance of cash management was 2,385.0000 million yuan and the balance deposited in the
during the current
proceeds account was 102.9396 million yuan.
reporting period
Problems or other
circumstances in the
NA
use and disclosure of
proceeds
(3) Changes in proceeds projects
□ Applicable √ Not applicable
The Company did not have any change in the proceeds project during the reporting period.
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6. Information of entrusted financial management, derivatives investment and entrusted loans
(1) Information of entrusted financial management
√Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: ’0,000 yuan
The amount of
Source of funds for Amount incurred in
Overdue amount not impairment for
Specific type entrusted financial entrusted financial Outstanding balance
recovered overdue financial
management management
management
Bank financial
Proceeds 204,606.56 204,606.56 0 0
products
Bank financial
Self-owned funds 25,500.00 16,131.86 0 0
products
Trust financial
Self-owned funds 50,000.00 50,000.00 0 0
products
Total 280,106.56 270,738.42 0 0
Specific circumstance of high-risk entrusted financing with significant single amount or with low security, poor liquidity and not
break-even
□ Applicable √ Not applicable
The entrusted financing is expected not to recover the principal or has other circumstances that may cause impairment
□ Applicable √ Not applicable
(2) Derivatives investment
□ Applicable √ Not applicable
No derivative investment in the Company during the reporting period
(3) Information of entrusted loans
□ Applicable √ Not applicable
The Company had no entrusted loan during the reporting period.
IX. Sales of Significant Asset and Equity
1. Information of significant assets for sale
□ Applicable √ Not applicable
The Company did not sell any significant assets during the reporting period.
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2. Information of significant equity for sale
□ Applicable √ Not applicable
X. Analysis of Major Holding Companies and Joint Stock Companies
√Applicable □ Not applicable
Information on major subsidiaries and joint stock companies with an impact of 10% or more on the Company’s net profit
Unit: yuan
Company Principal Registered Operating
Company type Total assets Net assets Revenue Net profit
name operation capital profit
It is mainly
responsible
for the
Winner
production of
Medical 259,459,200. 1,260,590,79 1,123,306,94 708,821,921. 127,247,68
Subsidiaries pure cotton 104,794,838.11
(Huanggang) 00 5.96 8.24 35 9.65
spunlace
Co., Ltd.
non-woven
fabrics and
cotton tissues
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable √ Not applicable
Description of major holding companies and joint stock companies
The operating revenues of the above subsidiaries include sales to the parent company and other subsidiaries in the Group.
XI. Structured Subjects Controlled by the Company
□ Applicable √ Not applicable
XII. Risks to the company and countermeasures
1. Risk of earnings volatility due to the COVID-19 outbreak and countermeasures
With the sudden outbreak of the epidemic in early 2020, the global demand for protective products grew geometrically. The
Company overcame all difficulties to increase production capacity and secure supply, resulting in significant growth in the
performance in 2020, especially in the third quarter when sales and profits of overseas CDC protective products surged in a s hort
period of time and reached a peak. However, with the effective prevent ion and control of the global epidemic, the significant growth
in production capacity of CDC protective products, and the perfection of global supply chain of protective products, prices have
returned to normal. The Company expects to see a decrease in the volume and price of protective products exported abroad in the
third quarter of 2021 compared to that in the same period of 2020.
Although the sales and profits of protective products cannot maintain substantial growth in 2020, after the baptism of the ep idemic,
the country, hospitals and the public have raised the requirements for a hygienic environment, the Company’s brand awareness,
reputation and influence has been greatly enhanced, and the sales channels have been further expanded. Based on the widespread
impact of the COVID-19 pandemic, public awareness of epidemic control and prevention has been significantly enhanced, and CDC
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protective products become essential for public travel. Governments and hospitals around the world will increase the stockpile and
quality of protective products, so the demand for medical protective products will increase substantially than that before the
pandemic. The Company will seize the market opportunity to rapidly increase its market shares and coverage of medical
consumables, further enhance the reputation and awareness of the Winner Medical brand, and establish a far-leading market position
in the industry.
2. Risk of raw material price fluctuations and countermeasures
The Company’s main raw materials are cotton as well as cotton yarn and cotton greige fabric for medical use made from cotton. The
prices of cotton are affected by multiple factors such as planting area, natural production, inventory cycle, agricultural pr ice policy of
origin, consumer demand and even futures prices. In addition, the prices of imported cotton are also affected by other factors such as
international trade policies and exchange rate fluctuations. If the purchase price of raw materials such as cotton continues to rise in
the future, it will have a greater cost pressure on the Company’s production and operation. If the Company fails to the adjustment of
sales price with that of raw material price, it may have a negative impact on the stability of the Company’s profitability.
To deal with the risk of cotton price fluctuations, the Company usually purchases forward contracts when the cotton price is
relatively low, and when the cotton price rises to a certain level, it will adjust the sales price appropriately to reduce the negative
impact on the Company’s profitability.
3. Exchange rate risks and countermeasures
Medical consumables are the main exports of the Company, which are settled in major international currencies such as US dolla rs. In
recent years, the Company’s foreign sales amount accounted for a high proportion of the main business income, and with the
accelerated pace of RMB internationalization and further marketization of the RMB exchange rate formation mechanism, the
exchange rate flexibility of RMB against the above currencies has increased. Fluctuations in the RMB exchange rate will, on the one
hand, affect the Company’s product export sales prices; on the other hand, it will also cause the Company to generate exchange gains
and losses. If there is a significant appreciation of RMB in the future, it will affect the price competitiveness of the Company in
overseas markets, and cause exchange losses, which will adversely affect the Company’s operating revenues and profits.
To reduce the impact of exchange rate fluctuations on the Company’s performance, (1) for long-term stable customers, the Company
has an agreed price adjustment mechanism, and in case of significant fluctuations in key elements affecting the price, the pr ice shall
be adjusted normally according to the agreed price adjustment mechanism; and at the same time, the Company adjusts the quotation
cycle for new orders received, shortens the quotation cycle, and adjusts the quotation exchange rate in a timely manner; (2) the
Company carries out forward settlement and sale of foreign exchange for the purpose of hedging, and locks the forward settlement
exchange rate in advance to reduce the risk and hedge the exchange rate risk in international business; and (3) The Company w ill
strengthen its research and analysis of exchange rates, pay attention to changes in the international market environment in real time,
and adjust its business strategies in a timely manner to minimize the risk of exchange rate fluctuations.
4. Risk of fluctuations in downstream market demand and less -than-expected customer development and countermeasures
Thanks to its three brands, i.e., “Winner Medical”, “Purcotton” and “PureH2B”, the Company realized synergetic development of
medical and consumer sectors. Its business and development prospects depend on the sustainable and healthy development of macro
economy, the continued growth of national per capita disposable income, and the consumers’ increasing attention to the concept of
health and environmental protection. Therefore, in the event of a macroeconomic downturn, a decline in national per capita
disposable income or purchasing power, or an uncertain expected economic outlook, the downstream demand situation of the Issuer,
especially consumers’ willingness and ability to purchase high-quality products, may be affected, which would adversely affect the
Company’s operating results. In addition, after more than ten years of rapid development, the growth of e -commerce in China has
slowed down and the difficulty of acquiring customers has increased. If the Company cannot adjust its business strategy based on
market conditions, it may not be able to continuously expand its customer base and reduce customer acquisition costs, which w ould
adversely affect the Company’s long-term profitability.
5. Risk of changes in industry policies and standards and countermeasures
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Medical device, which directly affects the life and health safety of users, has been a key supervised industry. In recent yea rs, as China
further deepens the reform of the medical and health system, relevant government departments have introduced a series of
regulations and policies on industry standards, bidding, price formation mechanisms, circulation systems, etc., which have a wide and
profound impact on the development of the medical device industry. As the Company gradually make more efforts in the investment
and development in the domestic market of medical consumables, its domestic sales of medical consumables are expected to further
increase in the future. Affected by the COVID-19 pandemic, the foreign economic environment has been relatively sluggish, which
may lead to medical budget cuts, and the price sensitivity of medical products has increased, resulting in a risk of further
compressing the operating profits. If the Company fails to adapt to profound changes in industry policies in a timely manner, it may
have an impact on the Company’s operations.
6. Risk of not receiving reimbursement for the Medical Investment Project of Winner Medical (Heyuan) and
countermeasures
Due to the planning of the square of Heyuan High-speed Railway Station and the surrounding high-speed railway new town along the
Jiangxi-Shenzhen High-speed Railway, the“Agreement on Investment and Construction of Medical Combo Kits and Cotton
Household Products Production Project” entered into by and between the Company and the People’s Government of Zijin County,
Heyuan City in May 2016 could not be fulfilled. In November 2019, the International Arbitration Court in Ganjiang New Distric t
issued an “Award” confirming the termination of the “Investment and Construction Agreement of Medical Combo Kits and Cotton
Household Products Production Project”, and the People’s Government of the Zijin County shall compensate the Company for
economic losses of 550 million yuan, with 50% to be paid by the People’s Government of Zijin County by December 31, 2019 and
50% by February 29, 2020. As of the disclosure date of the report, the company has received a land transfer deposit of 3 million yuan
and a compensation payment of 314 million yuan returned by the People’s Government of Zijin County. There is a risk that the
remaining amount may not be received on time in accordance with the “Award”. The Company is currently closely following up on
the subsequent payment plan of the People’s Government of Zijin County, Heyuan City.
7. Risks of proceeds projects and countermeasures
The Company plans to allocate the proceeds from this issuance to the construction projects of high-end dressing production lines,
marketing network, R&D Center and digital management system, Winner Industrial Park (Jiayu) Project, and Phase II Expansion
Project of Winner Medical Wuhan. The development progress and operation of such projects will contribute to the Company’s
development and profitability in the next few years.
Based on the forecast of the future market, the Company has conducted a prudential and sufficient feasibility study and
demonstration of the proceeds investment project. Thanks to the Company’s rich business experience and market foundation
accumulated over the years, it is expected that the proceeds investment project could realize good investment income. However, if
there are changes in external factors such as the industry market, it cannot rule out that some projects may not be implemented as
scheduled or the actual investment returns may be lower than expected. In accordance with changes in the external market and the
internal control and management system of proceeds projects, the Company will strictly control the progress of capital investment in
various projects and keep an eye on the risk of project investment.
XIII. Registration forms for receptions of surveys, communication, interviews and other
activities during the reporting period
√Applicable □ Not applicable
Main contents of
Types of Basic information
Time Location Method Objects discussions and
objects index of surveys
documents provided
January 22, Headquarters Telephone Institutions 267 investors Operation status and For details, please
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Full Text of 2021 Semi-annual Report of Winner Medical Products Co., Ltd.
2021 conference communication including development plan of refer to Shenzhen
rooms Invesco Great each business segment Stock Exchange
Wall, Great Interactive
Wall Fund, (http://irm.cninfo.com
China Southern )
Fund
151 investors
For details, please
including China
refer to Shenzhen
Headquarters Life Asset
February 19, Telephone Operation status of Stock Exchange
conference Institutions Management,
2021 communication each business segment Interactive
rooms Harvest Fund,
(http://irm.cninfo.com
and BOCOM
)
Schroders Fund
Winner Medical
(Huanggang)
For details, please
Co., Ltd., E Fund, Da
refer to Shenzhen
Winner Medical Cheng Fund,
Information related to Stock Exchange
March 18, 2021 (Chongyang) Field surveys Institutions Manulife Teda
each production base Interactive
Co., Ltd., and many other
(http://irm.cninfo.com
Winner Medical institutions
)
(Jiayu) Co.,
Ltd.
TF Securities, For details, please
CITIC refer to Shenzhen
Panorama Securities, Operation status of Stock Exchange
April 20, 2021 Others Institutions
studio Bosera Funds each business segment Interactive
and other (http://irm.cninfo.com
investors )
For details, please
China Post
refer to Shenzhen
Headquarters Fund, Fullgoal
Telephone Operation status of Stock Exchange
April 28, 2021 conference Institutions Fund, Qian He
communication each business segment Interactive
rooms Capital and
(http://irm.cninfo.com
other investors
)
For details, please
GF Securities,
refer to Shenzhen
Headquarters Bosera Funds,
Operation status of Stock Exchange
May 10, 2021 conference Field surveys Institutions Guosen
each business segment Interactive
rooms Securities and
(http://irm.cninfo.com
other investors
)
Operation status of For details, please
May 14, 2021 Panorama Others Institutions Investors
each business segment refer to Shenzhen
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Full Text of 2021 Semi-annual Report of Winner Medical Products Co., Ltd.
Stock Exchange
Interactive
(http://irm.cninfo.com
)
For details, please
refer to Shenzhen
Headquarters Da Cheng
Operation status of Stock Exchange
May 24, 2021 conference Field surveys Institutions Fund, Baoying
each business segment Interactive
rooms Fund
(http://irm.cninfo.com
)
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Section 4 Corporate Governance
I. Information about the annual general meeting of shareholders and extraordinary general
meeting of shareholders held during the reporting period
1. General meeting of shareholders during the reporting period
Investor
Resolutions of the
Meeting session Meeting type participation Convening date Date of disclosure
meeting
proportion
Announcement of
Resolutions of the
2020 Annual
General Meeting of
2020 Annual General Annual general
Shareholders
Meeting of meeting of 89.42% May 10, 2021 May 11, 2021
(Announcement
Shareholders shareholders
No.:2021-025),
disclosure website:
http://www.cninfo.co
m.cn/new/index
2. The preferred shareholders with voting rights restored request an extraordinary general meeting of
shareholders
□ Applicable √ Not applicable
II. Change of directors, supervisors and senior manage ment
□ Applicable √ Not applicable
There were no changes in the directors, supervisors and senior management of the Company during the reporting period. See the
2020 Annual Report for details.
III. Profit distribution and capitalization of capital reserve during the reporting period
□ Applicable √ Not applicable
The Company does not plan to distribute cash dividends, transfer shares or increase the share capital of the common reserve fund
within half a year.
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IV. Imple mentation of the company's equity incentive plan, e mployee stock ownership plan or
other employee incentive measures
√Applicable □ Not applicable
On November 27, 2020, the Company held the 15th meeting of the Second Board of Directors and the 9th meeting of the Second
Board of Supervisors, and on December 15, 2020, it held the 6th extraordinary general meeting of shareholders in 2020. The
Company deliberated and agreed Proposal on the Company's Restricted Stock Incentive Plan in 2020 (Draft) and Its Abstract at the
meetings, and proposed to grant 6.5 million of Class II restricted stocks. For details, please refer to Company's Restricted Stock
Incentive Plan in 2020 (Draft) disclosed by the Company on the website (http://www.cninfo.com.cn) on November 30, 2020.
On December 18, 2020, the Company held the 17th meeting of the Second Board of Directors and the 11th meeting of the Second
Board of Supervisors. It deliberated and agreed Proposal on the Proposal on the First Grant of Restricted Stocks to the Incentive
Objects, and determined that 5.833 million of of Class II restricted stocks should be granted to 1,036 eligible incentive objects. For
details, please refer to relevant announcement disclosed by the Company on the website (http://www.cninfo.com.cn) on December 22,
2020.
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Section 5 Environmental Protection and Social Responsibility
I. Major environmental issues
Whether the listed company and its subsidiaries are key pollutant discharging units announced by environmental protection
authorities
√ Yes □ No
Names of
Pollutant
main
Company or Number of Distribution Emission emission Total Emissions
pollutants Emission Total
subsidiary discharge of discharge concentratio standards emissions beyond
and mode emissions
name outlets outlets n implemente approved standards
characteristi
d
c pollutants
Winner NOX:
Boiler 7mg/m 20mg/m NOX: Not
Medical PM, SO2, 13.28T/a,
/ 1 discharge <3mg/m 50mg/m 1.57T, SO2: exceeding
(Chongyang NOX SO2: 3.32
outlet 160mg/m 200mg/m 0.037T the standard
) Co., Ltd. T/a
7.95, 6-9,
Winner COD: COD:
PH, COD, Sewage 41mg/L, 80mg/L, Not
Medical Direct 7.86T, 57.6T/a,
BOD, 1 discharge 15.3mg/L, 20mg/L, exceeding
(Chongyang discharge NH3-N: NH3-N:
NH3-N, SS outlet 0.476mg/L, 10mg/L, the standard
) Co., Ltd. 0.227T 7.27 T/a
5mg/L 50mg/L
Winner NOX:
Boiler 5.5mg/m 20mg/m NOX: Not
Medical PM, SO2, unlicensed,
/ 1 discharge <3mg/m 50mg/m 1.26T, SO2: exceeding
(Jiayu) Co., NOX SO2:
outlet 90mg/m 200mg/m 0.034T the standard
Ltd. unlicensed
7.8, 6-9,
Winner COD: COD:
PH, COD, Sewage 24.7mg/L, 100mg/L, Not
Medical Direct 5.87T, 34.29T/a,
BOD, 1 discharge 7.4mg/L, 20mg/L, exceeding
(Jiayu) Co., discharge NH3-N: NH3-N:
NH3-N, SS outlet 0.319mg/L, 15mg/L, the standard
Ltd. 0.01T 1.19T/a
9mg/L 70mg/L
19/13mg/m
Winner , NOX:
1#2# boiler 20mg/m NOX: Not
Medical PM, SO2, <3/<3mg/m 23.52T/a,
/ 2 discharge 50 mg/m 3.41T, SO2: exceeding
(Huanggang NOX SO2:
outlet 200mg/m 0.414T the standard
) Co., Ltd. 125/68mg/ unlicensed
m
Winner 8.2, 6-9, COD: COD:
PH, COD, Indirect Sewage Not
Medical 1 47mg/L, 500mg/L, 27.59T, 90T/a,
BOD, discharge discharge exceeding
(Huanggang 13.3mg/L, 300mg/L, NH3-N: NH3-N:
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) Co., Ltd. NH3-N, SS outlet 0.354mg/L, 45mg/L, 0.376T 13.5 T/a the standard
9mg/L 400mg/L
Winner NOX:
Boiler 6.0mg/m 20mg/m NOX: Not
Medical PM, SO2, 16.235T/a,
/ 1 discharge <3mg/m 50mg/m 1.71T, SO2: exceeding
(Tianmen) NOX SO2:
outlet 122mg/m 200mg/m 0.05T the standard
Co., Ltd. 4.059T/a
7.54, 6-9,
Winner COD:
PH, COD, Sewage 72mg/L, 400mg/L, COD: Not
Medical Indirect 132.52T/a,
BOD, 1 discharge 19.4mg/L, 150mg/L, 10.9T/NH3- exceeding
(Tianmen) discharge NH3-N:
NH3-N, SS outlet 0.440mg/L, 30mg/L, N: 1.08T the standard
Co., Ltd. 16.57 T/a
8mg/L 250mg/L
Winner
Medical PM, SO2, No boiler,
/ / / / / / /
(Wuhan) NOX no license
Co., Ltd.
Winner 7.79, 6-9, COD:
PH, COD, Sewage COD: 8.1T, Not
Medical Indirect 35mg/L, 500mg/L, 61T/a,
BOD, 1 discharge NH3-N: exceeding
(Wuhan) discharge 11.7mg/L, 300mg/L, NH3-N:
NH3-N, outlet 0.8T the standard
Co., Ltd. 1.48mg/L, 2 45mg/L, 64 6.1T/a
Winner NOX: NOX:
Boiler 4.9mg/m 20mg/m Not
Medical PM, SO2, 1.426T, 10.83T/a,
/ 1 discharge <3 mg/m 50mg/m exceeding
(Jingmen) NOX SO2: SO2:
outlet 80mg/m 150mg/m the standard
Co., Ltd. 0.055T 3.11T/a
8.43, 6-9,
Winner COD: COD:
PH, COD, Sewage 26mg/L, 280mg/L, Not
Medical Indirect 7.36T, 19.48T/a,
BOD, 1 discharge 12.4mg/L, 150mg/L, exceeding
(Jingmen) discharge NH3-N: NH3-N:
NH3-N, SS outlet 0.79mg/L, 25mg/L, the standard
Co., Ltd. 0.736T 1.95T/a
11mg/L 210mg/L
Yichang
Winner Boiler Plan to 20mg/m Not
PM, SO2,
Medical / 1 discharge monitor in 50mg/m Unlicensed Unlicensed exceeding
NOX
Textile Co., outlet H2 150mg/m the standard
Ltd.
Yichang 6-9,
Winner PH, COD, Sewage Plan to 500mg/L, Without Not
Indirect
Medical BOD, 1 discharge monitor in 300mg/L, production Unlicensed exceeding
discharge
Textile Co., NH3-N, SS outlet H2 45mg/L, waterwater the standard
Ltd. 400mg/L
Construction and operation of pollution prevention and control facilities
In order to ensure the normal operation of environmental protection facilities, the Company selects advanced, mature and tech nically
feasible environmental protection facilities and treatment processes, formulates environmental protection responsibility system,
emergency management system, safe operation rules of environmental protection facilities, etc., assigns special personnel to be
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responsible for the operation and maintenance of environmental protection facilities, formulates maintenance plan, makes operation
records and daily monitoring of environmental protection facilities. The environmental protection facilities operate normally, and all
the pollutant discharge indexes meet the requirements of pollutant discharge permit.
All subsidiaries build hazardous waste rooms, manage the whole process of hazardous waste, sign entrusted disposal agreements with
third-party companies, and regularly transfer them to third parties for treatment.
Environmental impact assessment of construction projects and other administrative permits for environmental protection
The branches and subsidiaries of Winner Medical Co., Ltd. have implemented the environmental impact assessment system and the
"three simultaneities" system as required, and have done a good job in the environmental protection acceptance after completion.
Winner Medical (Chongyang) Co., Ltd.: “Medical absorbent gauze series product line” obtained the EIA approval from
Environmental Protection Bureau of Chongyang County on September 21, 2005, and passed the environmental protection acceptance
after completion of Environmental Protection Bureau of Chongyang County on August 22, 2008; “the project of sterile packaging
and sterile production line” obtained the EIA approval (C.H.S.H [2013] No.07) from Environmental Protection Bureau of Chongyang
County on March 29, 2013, and passed the environmental protection acceptance after completion of Environmental Protection
Bureau of Chongyang County on June 26, 2014; “Qingshan plant construction project” went through the environmental impact
assessment in July 2014 and obtained EIA approval from Environmental Protection Bureau of Chongyang County on November 18,
2015; the new 6390M2 workshop project” of Xianning Winner Medical (Chongyang) Co., Ltd. completed the declaration of
registration form on May 17, 2017.
Winner Medical (Jiayu) Co., Ltd.: “Absorbent cotton project with annual production of 800 tons ” obtained the EIA approval from
Environmental Protection Bureau of Jiayu County on March 20, 2013, and passed the environmental protection acceptance after
completion of Environmental Protection Bureau of Jiayu County on September 20, 2014. “Winner Purcotton construction project”
obtained the EIA approval (J.H.S [2014] No.083) from Environmental Protection Bureau of Jiayu County on December 25, 2014,
and passed the environmental protection acceptance after completion of Environmental Protection Bureau of Jiayu County on
September 28, 2017. The environmental impact assessment report of the Winner Industrial Park (Jiayu) Project was approved by the
Xianning Municipal Bureau of Ecology and Environment on March 15, 2021, with the approval document number Xian Huan Shen
[2021] No. 21.
Yichang Winner Medical Textile Co., Ltd.: “Medical gauze project with an annual output of 90 million meters” obtained the EIA
approval from Environmental Protection Bureau of Zhijiang City on December 19, 2014, and passed the environmental protection
acceptance after completion of Environmental Protection Bureau of Zhijiang City on October 14, 2015.
Winner Medical (Tianmen) Co., Ltd.: “Cotton spun laced non-woven fabric and medical dressing products production project”
obtained the EIA approval (T.H.H. [2015] No.35) from Environmental Protection B ureau of Tianmen City on March 11, 2015. At
present, phase I of the project has been completed and passed the environmental protection acceptance after completion of
Environmental Protection Bureau of Tian men City on January 25, 2017; the independent acceptance of phase II will be completed
on May 10, 2020. “Medical dressing production line automation upgrading and transformation project” obtained the EIA approval
(T.H.H. [2016] No.23) from Environmental Protection Bureau of Tianmen City on January 19, 201 6, and completed the independent
acceptance on March 23, 2018.
Winner Medical (Jingmen) Co., Ltd.: “30 million meters per year medical gauze bleaching and refining production line expansion
project” obtained the EIA approval from Environmental Protection Bureau of Jingmen City on October 18, 1999, and passed the
environmental protection acceptance after completion of Environmental Protection Bureau of Jingmen City on December 14, 2001;
“renovation and expansion project o f gauze pad, gauze sheet and shrinkage bandage” obtained the EIA approval from Environmental
Protection Bureau of Jingmen City on September 23, 2003 and passed the environmental protection acceptance after completion of
Environmental Protection Bureau of Dongbao District, Jingmen City on August 3, 2005; “degreasing and bleaching medical gauze
project with annual production of 1,500 tons” obtained the EIA approval from Environmental Protection Bureau of Dongbao Distr ict,
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Jingmen City on April 5, 2006, and accepted together with the constructio n project of Purcotton on September 27, 2017; “Winner
Purcotton construction project” obtained the EIA approval (D.H.H [2016] No.138) from Environmental Protection Bureau of
Jingmen City on October 19, 2016, and passed the environmental protection acceptance of Environmental Protection Bureau of
Jingmen City on September 27, 2017; the expansion project of absorbent gauze production line (Purcotton phase II expansion project)
obtained the EIA approval (J.H.S. [2020] No.112) from Jingmen Municipal Bureau of Ecology and Environment on December 24,
2020.
Winner Medical (Huanggang) Co., Ltd.: “Cotton spun laced non-woven fabric production project (phase I and phase II)” obtained
the EIA approval (E.H.H. [2011] No.628) from Environmental Protection Department of Hubei Province on August 5, 2011; the
phase I project passed the environmental protection acceptance after completion (E.H.H.[2012] No.348) of Environmental Protec tion
Department of Hubei Province on May 8, 2012. The Phase II project obtained the EIA approval (H.H.H. [2015] No.304) from
Environmental Protection Bureau of Huanggang City on December 31, 2015, and the Phase I project passed the environmental
protection acceptance after completion of Environmental Protection Bureau of Huanggang City on January 2 4, 2017; “the new
project of Purcotton distribution center” obtained the EIA approval (H.H.H. [2016] No.114) from Environmental Protection Bure au
of Huanggang City on June 27, 2016, and the independent acceptance of the project was completed on October 10, 2018; the “boiler
transformation project” obtained the EIA approval (H.H.H. [2018] No.20) from Environmental Protection Bureau of Huanggang Cit y
on January 29, 2018, and completed self acceptance on November 14, 2019; the “foam coiled material production line project
(expansion)” obtained the EIA approval (H.H.H. [2018] No.26) from Environmental Protection Bureau of Huanggang City on
February 5, 2018, and completed the project's independent acceptance on October 8, 2018; the “construction project of high-end
dressing production line” obtained the EIA approval (H.H.H. [2018] No.178) from Environmental Protection Bureau of Huanggang
City on November 6, 2018, and the project is currently in the construction period and has not been completed; the “upgrading and
transformation project of medical protective products” obtained the EIA approval (H.H.H. [2020] No.109) from Huanggang
Municipal Bureau of Ecology and Environment on July 20, 2020, which is under acceptance.
Winner Medical (Wuhan) Co., Ltd.: “Hubei Winner Medical Co., Ltd. cotton spunlace non-wovens and products production
project” obtained the EIA approval (X.S.P.Zi [2017] No.68) from Administrative Approval Bureau of Xinzhou District, Wuhan Cit y
on July 12, 2017 (see Annex 3 for the approval), and completed the independent acceptance of Phase I on January 18, 2020; “R&D
center construction project” obtained the EIA approval (X.S.P.Zi [2018] No.193) from Administrative Approval Bureau of Xinzho u
District, Wuhan City on December 24, 2018 (see Annex 4 for the approval), but the project has not started construction yet; “new
electron accelerator irradiation device project” obtained the EIA approval (W.H.G. [2018] No.5) from Wuhan Environmental
Protection Bureau on January 15, 2018, and the independent acceptance of phase I was completed on May 15, 2020. The
environmental impact report form of the protective product upgrading project was approved by Administrative Approval Bureau of
Xinzhou District on May 7, 2021, with the approval number of Xin Shen P i Zi [2021] No. 95.
Emergency plan for environmental emergencies
In order to further improve the emergency management system of environmental pollution accidents, improve the ability of branches
and subsidiaries of Winner Medical Co., Ltd. to deal with major envir onmental pollution accidents to ensure the safety of production
and operation, improve the ability of employees to deal with accidents, standardize the Company's emergency management and
corresponding emergency procedures, and implement emergency rescue work in a timely and effective manner, prevent and reduce
the occurrence of accidents to the greatest extent, branches and subsidiaries of Winner Medical Co., Ltd. have set up an
environmental accident emergency leading group and formulated the Emergency Plan for Environmental Accidents. The branches
and subsidiaries of Winner Medical Co., Ltd. have prepared the emergency plans for environmental accidents according to the
requirements, and sent them to the local environmental protection authorities for record. They also conduct regular emergency drills
for environmental emergencies.
Environmental self-monitoring scheme
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The Company implements the environmental self-monitoring scheme according to the requirements of the pollutant discharge permit,
and detects the pollutants through the methods of manual testing + entrusted monitoring + online monitoring. The online monitoring
system of enterprises with production wastewater discharge carries out real-time monitoring and networking with the competent
government departments. The entrusting party of the online monitoring equipment carries out the operation and maintenance of the
online monitoring equipment, and the manual testing and entrusted monitoring results are released in time on the provincial p ollutant
platform.
Note: the self-monitoring scheme is stipulated in the pollutant discharge permit, and the pollutant discharge permit and
self-monitoring scheme are made public on the national pollutant discharge permit management platform. Monitoring data shall be
entered into the pollution source monitoring information management platform of Hubei Province.
Administrative penalties imposed due to environmental issues during the reporting period
Impacts on the
Rectification
Company or production and
Reasons for penalty Violations Punishment measures of the
subsidiary name operation of listed
Company
companies
None None None None None None
Other environmental information that should be disclosed
None
Other information related to environmental protection
None
The Company needs to comply with the disclosure requirements of the No. 17 Guideline of Shenzhen Stock Exchange for Industry
Information Disclosure of Listed Companies Engaging in Textile and Apparel Business.
Environmental compliance of the Company during the reporting period
II. Social responsibility
Winner Medical has been founded for almost thirty years, and kept on upholding the determinations of “To enhance your health, life
and well-being” and “Purcotton Changes the World” to continue to promote the progress of and efforts to medical consumables, so as
to provide consumers with better quality products and explore more beneficial practices for the benefit of mankind.
(1) Pick up courage to move forward and fight against the pandemic.
Time is of the essence, and Winner Medical is always at the warfront against the pandemic. After the outbreak of COVID-19
pandemic, the Mask Shop of Winner Medical (Huanggang), as well as Protective Product Shops of Winner Medical (Jiayu) and
Winner Medical (Chongyang), as the manufacturer who supplying the protective materials that were badly needed at frontlines, kept
working overtime during the Spring Festival, so as to fully guarantee the production and supply of protective materials. The
Company overcame the huge impact on production caused by the shortage of raw materials and supplies as well as rising prices, and
successfully achieved a several-fold expansion of production capacity. The Company provided 108.9 million masks and 114,000
pieces of protective clothing on January 26, 2020; nearly 300 million masks and 3 million pieces of protective clothing on March 31,
2020; and 700 million masks, 5 million pieces of protective clothing, and 5 million surgical and isolation gowns on May 31, 2020.
Most of these were delivered to the most urgently needed hospitals and pandemic prevention institutions in China. At the end of
December 2020, a total of nearly 4 billion masks and more than 86 million pieces of protective clothing, isolation and surgic al gowns
were delivered to the most affected areas around the world.
(2) Be honesty and fulfill the dream of pure cotton
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Since the creation of the first piece of cotton tissue in Purcotton in 2009, the Company has sold more than 13 million pure c otton
garments and bedding, more than 21.5 billion cotton tissues and more than 6.8 million non-woven environmental protection shopping
bags, which help reduce the use and emission of tens of thousands of tons of chemical fibers, and protect tens of thousands of trees
from being cut down. The innovation is conductive to environmentally-friendly development.
(3) Support the frontline, and assume social responsibility
In January 2021, Hebei Province was hit by the COVID-19 pandemic for a second time. The Company donated materials worth of
600,000 yuan (incl. N95 masks and disposable protective clothing) to Pandemic Prevention and Control Office of Luancheng District,
Shijiazhuang City, aiming to help Hebei Province to fight against the pandemic.
In late July 2021, Henan Province was hit by torrential rains that touched the nation's attention. The Company and its subsidiary,
Purcotton, donated about 18 million yuan worth of pure cotton tissues, wet tissues, baby diapers, sanitary pads and other dis aster
relief materials to Henan Women's Federation and Henan Women's and Children's Development Foundation through Shenzhen
Women's Federation and Shenzhen Women's and Children's Development Foundation. Winner Medical donated about 3.3 million
yuan worth of medical and health materials to Zhengzhou Welfare Institute, Zhengzhou Women's and Children's Hospital, the First
Affiliated Hospital of Zhengzhou University and other institutions and hospitals to make a modest contribution to the disaste r relief
work.
(4) Care for women and children, guard people’s health
In March 2021, Purcotton, the subsidiary of the Company, participated in the Care Action themed on “Assisting Women to Brightly
Bloom” organized by Shenzhen Women's and Children's Development Foundation in celebration of the Women’s Day, to present
gifts for female workers at the frontlines of pandemic control and women in need in the community, including masks, sanitary pads,
cotton tissues and other feminine care products, as well as socks, gauze square towels, alcohol tablets and other daily needs .
In May 2021, on the occasion of Nurses' Day, the Company donated masks worth a total of 945,000 yuan to dozens of hospitals in
China to help healthcare workers prevent occupational exposure and protect themselves from infection control. In the same mon th,
on the National Disability Day, the Company as a member of “Dingdong FSC Pharmaceutical Alliance” donated a total of 370,000
yuan worth of medicines and medical kits to help people with disabilities.
In June 2021, the Company donated 25,000 pieces of “Wow! Shadow” theme co-branded masks to SUSTECH Experimental
Education Group No. 1 Primary School in Shenzhen to help elementary school students realize their entrepreneurial dreams and
spread traditional Chinese culture. In the same month, as a co-sponsor of the # Weaving Youth Action # public welfare project,
Purcotton, the subsidiary of the Company, donated a total of 8.9 million yuan worth of cotton materials such as classic pure cotton
tissue, cotton wet tissues and cotton knitting sets, in the hope of bringing peace of mind and happiness to children in the depths of the
mountains and protecting the healthy growth of young people.
In the past 30 years, Winner Medical which has three top brands including Winner, Purcotton and PureH2B has strived to achieve
synergistic development of the medical and consumer sectors, and will not waver to continue to implement innovation-driven and
high-quality development strategy. It will make efforts to build resource-saving and environmentally friendly development model,
continue to improve the Company's social responsibility system, and truly put into practice the development vision of “making life
better” and “Purcotton Changes the World”.
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Section 6 Important Issues
1. Commitments of the Company's actual controller, shareho lders, related parties, acquirers
and other parties related to the Company's commitme nts that have been fulfilled during the
reporting period and those that have been overdue as of the end of the reporting period
□ Applicable √ Not applicable
During the reporting period, there were no commitments of the Company's actual controller, shareholders, related parties, acquirers
and other parties related to the Company's commitments that have been fulfilled during the reporting period and those that ha ve been
overdue as of the end of the reporting period
II. Non-operating occupation of funds of listed companies by controlling shareholders and
other related parties
□ Applicable √ Not applicable
No non-operating occupation of funds of listed companies by controlling shareholders and their related parties during the reporting
period.
III. Illegal external guarantee
□ Applicable √ Not applicable
No illegal external guarantee of the Company during the reporting period.
4. Appointme nt of and dismissal of accounting firms
Whether the semi-annual financial report is audited
□Yes √No
The Company's semi-annual report has not been audited.
V. Explanations of the Board of Directors and the Board of Supervisors on the “Non-standard
Auditor's Report” of the Accounting Firm During the Reporting Period
□ Applicable √ Not applicable
VI. Explanation of the Board of Directors on the “Non-standard Auditor's Report” of the
Previous Year
□ Applicable √ Not applicable
VII. Matters Related to Bankruptcy and Reorganization
□ Applicable √ Not applicable
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No bankruptcy reorganization of the Company during the reporting period.
VIII. Litigation matters
Major litigation and arbitration matters
√Applicable □ Not applicable
Amount Trial result and Implementation
Basic information Whether to form Progress of
involved influence of of litigation Date of Disclosure
of litigation estimated litigation
(RMB litigation (arbitration) disclosure index
(arbitration) liabilities (arbitration)
10,000) (arbitration) judgment
On June 2,
2020, the
Reexaminati
on and
Invalidation
Department
If the lawsuit does
of the Patent
not support the
Office of
plaintiff's claim,
China
the patent is
National
finally found to be
Intellectual
Winner Medical invalid. The
Property
(Tianmen), reason for the
Administrati
Shenzhen patent invalidation
on issued
Purcotton, Winner decision is not that
the Decision
Medical the Company and
on
(Huanggang) v. / or the patent
Examinatio
China National 0 No infringes the N/A
n of
Intellectual rights of others.
Invalidation
Property Therefore, the
Request,
Administration, Company can still
which
administrative use the technology
decided to
dispute case of and will not have
declare the
patent invalidation a significant
patent right
adverse impact on
of
the normal
“production
production and
method of
operation of the
cotton
company
non-woven
medical
dressings”
(Patent No.
ZL2005100
33147.1,
81
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valid until
February 6,
2025)
invalid. On
August 26,
2020,
Winner
Medical
(Tianmen),
Shenzhen
Purcotton,
Winner
Medical
(Huanggang
) filed a
lawsuit to
Beijing
Intellectual
Property
Court in
accordance
with the
provisions
of the Patent
Law for
revocation
of the patent
invalidation
decision. On
August 28,
2020,
Beijing
Intellectual
Property
Court issued
the Notice
of
Acceptance
of
Administrati
ve Case. On
May 17,
2021, the
case was
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heard by the
Beijing
Intellectual
Property
Court, and
as of the
disclosure
date of the
report, the
Beijing
Intellectual
Property
Court has
not yet
made
sentences.
The ruling
As of the
confirmed that the
disclosure date
original
of the report, the
Investment
company has
Agreement was
received a land
terminated, and
transfer deposit
the People's
of 3 million
Government of
yuan and a
Zijin County had
compensation
to bear the
payment of 314
Winner Medical v. The lawyer's fees,
million yuan
the People's Company legal costs and
returned by the
Government of has received other expenses
People’s
Zijin County, the award of totaling 2.6553
55,565.53 No Government of
arbitration case of (2019) million yuan,
Zijin County.
contract dispute G.G.Z Zi return 3 million
The Company
[Case No.: (2019) No. 095 yuan of land
has handed over
G.G.Z Zi No. 095] Case. transfer deposit to
the project site,
the Company, and
above-ground
compensate for
buildings,
economic losses
equipment and
of 550 million
facilities and
yuan. The land,
supporting
above-ground
materials to the
buildings,
People’s
equipment and
Government of
facilities and
Zijin County.
relevant
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supporting
materials of
Heyuan Winner
investment and
construction
project were
handed over to the
People's
Government of
Zijin County.
There will be no
adverse impact on
the Company.
Other litigation matters
√Applicable □ Not applicable
Amount Trial result and Implementation
Basic information Whether to form Progress of
involved influence of of litigation Date of Disclosure
of litigation estimated litigation
(RMB litigation (arbitration) disclosure index
(arbitration) liabilities (arbitration)
10,000) (arbitration) judgment
In the
process of
proceeding
according to
the
litigation
process, the
No significant
plaintiffs of The case closed
impacts on the
Total of other some cases by mediation
297.61 No Company's
small claims withdrew, has been
production and
some cases fulfilled
operation
were closed
through
mediation,
and the
departmenta
l cases are
under trial
IX. Punishme nt and rectification
□ Applicable √ Not applicable
No punishment or rectification of the Company during the reporting period.
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X. Credit conditions of the company, its controlling shareholders and actual controllers
√Applicable □ Not applicable
During the reporting period, the Company and its controlling shareholder and the actual controller did not have any outstanding court
judgments or outstanding debts of significant amount due to be settled.
XI. Major connected transactions
1. Connected transactions related to daily operation
□ Applicable √ Not applicable
There were no connected transactions related to the daily operation of the Company during the reporting period.
2. Connected transactions arising from the acquisition or sale of assets or equity
□ Applicable √ Not applicable
No connected transactions arising from the acquisition or sale of assets or equity of the Company during the reporting period.
3. Connected transaction of joint foreign investments
□ Applicable √ Not applicable
No connected transactions of joint foreign investment of the Company during the reporting period.
4. Related credit and debt transactions
√Applicable □ Not applicable
Whether there are non-operating related debt transactions
□Yes √No
The Company does not have non-operating related debt transactions during the reporting period.
5. Transactions with the related finance companies and the finance companies controlled by the
Company
□ Applicable √ Not applicable
There are no deposits, loans, credits or other financial operations between the Company and the finance companies with which it has
affiliated relationships, or between the finance companies controlled by the Company and related parties.
6. Other major connected transactions
□ Applicable √ Not applicable
No other major connected transactions of the Company during the reporting period.
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XII. Major contracts and their performance
1. Trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No contracting of the Company during the reporting period.
(3) Lease
√Applicable □ Not applicable
Lease description
The Company's major leased assets are self-operated store leases, all of which have been recognized as right-of-use assets in
accordance with the requirements of the new leasing standards, and there are no other significant leased assets. For details, see
Section 10. Financial Statements \7. Notes to consolidated financial statements \25. Right-of-use assets.
Project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to the Compa ny
□ Applicable √ Not applicable
No lease project bringing the profits or losses more than 10% of the total profits of the Company in the reporting period to the
Company during the reporting period.
2. Major guarantee
□ Applicable √ Not applicable
No major guarantees of the Company during the reporting period.
3. Major contracts for daily operation
Unit:
Any
significant
Amount of Any
change in the
sales revenue Cumulative Collection significant
Name of the Name of the Progress of conditions
Total contract recognized amount of status of risk that may
Company to other party to contract that may
amount during the sales revenue accounts hamper the
the contract the contract performance affect the
reporting recognized receivable performance
performance
period of contracts
of major
contracts
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4. Other major contracts
□ Applicable √ Not applicable
No other major contracts of the Company during the reporting period.
13. Explanation of other major matters
□ Applicable √ Not applicable
There are no other significant matters that the Company needs to explain in the reporting period.
14. Major matters of the Company's subsidiaries
□ Applicable √ Not applicable
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Section 7 Changes in Shares and Shareholders
I. Change in shares
1. Change in shares
Unit: share
Before this change Increase/decrease (+, -) After this change
Share
capital
New issue Share increase Proportio
Quantity Proportion Others Subtotal Quantity
of shares donation from n
reserved
funds
381,502,4 (2,543,539 (2,543,539 378,958,9
I. Restricted shares 89.45% 88.85%
51 ) ) 12
1. State shareholding
2. State legal person
8,535,444 2.00% (43,136) (43,136) 8,492,308 1.99%
shareholding
3. Other domestic 82,525,72 (2,497,970 (2,497,970 80,027,75
19.35% 18.76%
holdings 6 ) ) 6
Wherein: domestic
77,572,68 77,561,15
legal person 18.19% (11,535) (11,535) 18.19%
7 2
shareholding
Domestic natural
person 12,655 0.00% (12,655) (12,655) 0 0.00%
shareholding
Fund financial (2,473,780 (2,473,780
4,940,384 1.16% 2,466,604 0.58%
products, etc. ) )
290,441,2 290,438,8
4. Foreign shareholding 68.10% (2,433) (2,433) 68.10%
81 48
Wherein: foreign
290,441,2 290,438,8
legal person 68.10% (2,433) (2,433) 68.10%
81 48
shareholding
Foreign natural
person 0
shareholding
II. Unrestricted shares 44,989,85 10.55% 2,543,539 2,543,539 47,533,39 11.15%
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7 6
44,989,85 47,533,39
1. RMB common share 10.55% 2,543,539 2,543,539 11.15%
7 6
2. Foreign shares listed in
China
3. Foreign shares listed
abroad
4. Others
426,492,3 426,492,3
III. Total amount of shares 100.00% 0 0 100.00%
08 08
Causes for change in shares
√Applicable □ Not applicable
The 2,965,739 shares restricted for sale under the offline placement at the time of the Company's initial public offering were listed for
circulation on March 17, 2021 upon the expiration of the six-month lock-up period, resulting in a decrease of 2,965,739 shares in the
Company's restricted shares. In addition, the number of shares lent under the China International Capital Corporation Limited - China
Merchants Bank - CICC Fengzhong No.26 employee participating in the GEM strategic placement collective asset management plan
for the strategic placement decreased by 422,200 shares, resulting in an increase of 422,200 shares in the Company's restricted shares.
In summary, the Company's restricted shares decreased by 2,543,539 shares during the reporting period.
Approval of changes in shares
□ Applicable √ Not applicable
Transfer of share changes
□ Applicable √ Not applicable
Implementation progress of share repurchase
□ Applicable √ Not applicable
Implementation progress of reducing repurchased shares by centralized competitive bidding
□ Applicable √ Not applicable
Influence of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the company
and other financial indexes in the most recent year and the most recent period
□ Applicable √ Not applicable
Other information the company deems necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√Applicable □ Not applicable
Unit: share
Number of Number of shares Number of Number of
The proposed
Shareholder's restricted shares released from restricted shares restricted shares Reasons for
date of lifting the
name at the beginning restricted sale in increased in at the end of the restricted sale
restricted sale
of the period current period current period period
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10% of the final
allocated
accounts of the
IPO offline
offline issuance
placement of 2,965,739 2,965,739 0 0 March 17, 2021
part of the IPO
restricted shares
are restricted
according to the
lottery results
China
International
Capital
Corporation
Limited - China
Merchants Bank -
CICC Fengzhong Strategic September 17,
2,044,404 0 422,200 2,466,604
No.26 employee placement 2021
participating in
the GEM
strategic
placement
collective asset
management plan
Total 5,010,143 2,965,739 422,200 2,466,604 -- --
II. Securities issuance and listing
□ Applicable √ Not applicable
III. Number and shareholding of the Company's shareholders
Unit: share
Total number of preferred Total number of
Total number of common shareholders with voting shareholders
shareholders at the end of the 33,529 rights restored at the end of 0 holding special 0
reporting period the reporting period (if any) voting shares (if
(see Note 8) any)
Shareholding of common stockholders holding more than 5% of the shares or the top 10 shareholders
Numb Increase Numbe Number Pledge, mark or frozen
er of or r of of shares
Shareholder's Shareholder shares decreas shares held with
Shareholding ratio
name nature held e during held unlimited Status of shares Quantity
at the the with sales
end of reportin limited condition
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the g period sales s
report conditi
ing ons
period
Wenjian Group 290,4
Overseas 290,43
Company 68.10% 38,84 0 0
legal person 8,848
Limited 8
Beijing
Sequoia
Xinyuan Domestic
34,50 34,500
Equity non-state 8.09% 0 0
0,000 ,000
Investment legal person
Center (limited
partnership)
Shenzhen
Kangsheng
Domestic
Investment 21,37 21,371
non-state 5.01% 0 0
Partnership 1,232 ,232
legal person
(limited
partnership)
Shenzhen
Kangxin
Domestic
Investment 11,33 11,334,
non-state 2.66% 0 0
Partnership 4,400 400
legal person
(limited
partnership)
Shenzhen
State legal 8,492, 8,492,
Capital Group 1.99% 0 0
person 308 308
Co., Ltd.
Shenzhen
Kanglong
Domestic
Investment 6,844, 6,844,
non-state 1.60% 0 0
Partnership 432 432
legal person
(limited
partnership)
Shenzhen
Kangli
Domestic
Investment 3,511, 3,511,0
non-state 0.82% 0 0
Partnership 088 88
legal person
(limited
partnership)
China Others 0.58% 2,466, 422,200 2,466, 0
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International 604 604
Capital
Corporation
Limited -
China
Merchants
Bank - CICC
Fengzhong
No.26
employee
participating in
the GEM
strategic
placement
collective asset
management
plan
Schroder
Investment
Management
(Hong Kong) Overseas 1,937, 1,937,1 1,937,12
0.45% 0
Limited - legal person 125 25 5
Schroder ISF*
China A. Fund
(Exchange)
Schroder
Investment
Management
(Hong Kong) Overseas 1,703, 1,703,7 1,703,76
0.40% 0
Limited - legal person 765 65 5
Schroder ISF*
Greater China
(Exchange)
Situation of strategic
investors or general legal China International Capital Corporation Limited - China Merchants Bank - CICC Fengzhong No.26
persons becoming the top 10 employee participating in the GEM strategic placement collective asset management plan has been
shareholders due to the frozen for one year due to the placement of new shares for Top 10 shareholders of the Company. The
allotment of new shares (if plan will be released on September 17, 2021.
any) (see note 3)
Description of the
above-mentioned shareholder
N/A
association or concerted
action
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Description of the above
shareholders involved in
entrusting / entrusted voting N/A
right and waiver of voting
right
Special note on the existence
of repurchase special
N/A
accounts among the Top 10
shareholders (see Note 11)
Shareholding of top 10 shareholders with unlimited sales conditions
Number of shares with unlimited sales conditions held at the Share type
Shareholder's name
end of the reporting period Share type Quantity
Schroder Investment
Management (Hong Kong) RMB common
1,937,125 1,937,125
Limited - Schroder ISF* share
China A. Fund (Exchange)
Schroder Investment
Management (Hong Kong) RMB common
1,703,765 1,703,765
Limited - Schroder ISF* share
Greater China (Exchange)
JPMORGAN CHASE
RMB common
BANK, NATIONAL 899,457 899,457
share
ASSOCIATION
China Construction Bank
Corporation－Bank of
RMB common
Communications Schroder 835,031 835,031
share
kernel driven hybrid
securities investment funds
China CITIC Bank Co., Ltd.
－Bank of Communications
RMB common
Schroder new vitality flexible 773,160 773,160
share
allocation of hybrid securities
investment funds
Schroder Investment
Management (Hong Kong)
RMB common
Limited - Schroder ISF* 625,871 625,871
share
China Opportunities
(Exchange)
China Construction Bank
RMB common
Corporation - Zhong Ou 535,897 535,897
share
GEM One-Year Interval
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Hybrid Fund
Hong Kong Securities RMB common
514,788 514,788
Clearing Company Ltd. share
Schroder Investment
Management Co., Ltd. - RMB common
416,400 416,400
Schroder China Equity Alpha share
Fund
Agricultural Bank of China
Limited－Bank of
Communications Schroder RMB common
385,027 385,027
regular payment double share
interest balanced hybrid
securities investment funds
Description of the association
or concerted action between
top 10 public shareholders
with unlimited sales
N/A
conditions, and between top
10 public shareholders with
unlimited sales conditions and
top 10 shareholders
Explanation of Top 10
common shareholders’
participation in the securities N/A
margin trading (if any) (see
Note 4)
Whether the company has a voting rights differential arrangement
□ Applicable √ Not applicable
Whether the Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions agreed on a
repurchase transaction during the reporting period
□Yes √No
The Company’s top 10 common shareholders and op 10 common shareholders with unlimited sales conditions did not agree on a
repurchase transaction during the reporting period
IV. Changes in shareholdings of directors, supervisors and senior manage ment
□ Applicable √ Not applicable
There were no changes in the shareholdings of directors, supervisors and senior management of the Company during the reporting
period. See the 2020 Annual Report for details.
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V. Changes in controlling shareholders or actual controllers
Change of controlling shareholders during the reporting period
□ Applicable √ Not applicable
No change in controlling shareholders during the reporting period.
Changes in actual controller during the reporting period
□ Applicable √ Not applicable
No change in actual controller during the reporting period.
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Section 8 Preferred Shares-related Information
□ Applicable √ Not applicable
No preferred shares of the Company during the reporting period.
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Section 9 Bond-related Information
□ Applicable √ Not applicable
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Section 10 Financial Statements
I. Auditor's Report
Whether the semi-annual report is audited
□Yes √No
The Company's semi-annual financial statements have not been audited.
II. Financial Statements
Unit of statements in financial notes: RMB
1. Consolidated Balance Sheet
Prepared by: Winner Medical Co., Ltd.
June 30, 2021
Unit: yuan
Item June 30, 2021 December 31, 2020
Current assets:
Cash and cash equivalents 4,700,529,527.85 4,162,539,245.78
Deposit reservation for balance
Lending funds
Tradable monetary assets 2,707,384,233.24 4,131,178,589.44
Derivative financial assets
Notes receivable
Accounts receivable 863,667,816.94 844,317,708.12
Accounts receivable financing 9,263,087.17 18,182,662.70
Advances to suppliers 179,107,611.07 124,031,239.05
Insurance premiums receivables
Reinsurance premium receivable
Receivable reserve for reinsurance
contract
Other receivables 343,344,829.42 458,174,652.72
Including: Interest receivable
Dividends receivable
Monetary assets purchased under
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resale agreements
Inventory 1,264,465,555.25 1,216,486,940.21
Contract assets
Assets held for sales
Non-current assets due within a
year
Other current assets 317,280,449.51 35,184,227.09
Total current assets 10,385,043,110.45 10,990,095,265.11
Non-current assets:
Loans and advances
Debt investment
Other debt investments
Long-term receivables
Long-term equity investment 15,079,827.94 13,424,230.41
Other equity instrument
investments
Other non-current financial assets
Investment in real estates
Fixed assets 1,437,854,645.76 1,400,749,050.00
Construction in progress 104,425,911.11 61,383,340.97
Productive biological assets
Oil and gas assets
Right-of-use assets 551,278,768.29
Intangible assets 205,887,320.95 208,325,103.79
Development expenditure
Goodwill
Long-term unamortized expenses 130,081,773.95 121,335,007.33
Deferred income tax assets 149,595,514.56 143,132,351.08
Other non-current assets 133,729,374.90 63,807,415.75
Total non-current assets 2,727,933,137.46 2,012,156,499.33
Total assets 13,112,976,247.91 13,002,251,764.44
Current liabilities
Short-term loans 150,071,416.66
Borrowings from the Central Bank
Borrowing funds
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Tradable monetary liabilities
Derivative financial liabilities
Notes payable 69,765,505.06 29,418,100.00
Accounts payable 568,615,255.29 726,577,306.94
Advance from customers
Contract liabilities 328,875,043.44 530,188,257.63
Monetary assets sold for
repurchase
Deposits from customers and
interbank
Acting trading securities
Acting underwriting securities
Payroll payable 125,171,666.85 169,957,077.81
Taxes payable 109,204,542.63 444,381,369.49
Other payables 615,888,545.12 352,543,008.89
Including: Interest payable
Dividends payable 200,000,000.00
Fees and commissions payable
Dividend payable for reinsurance
Liabilities held for sales
Non-current liabilities due within
one year
Other current liabilities 16,270,217.30 23,638,266.47
Total current liabilities 1,833,790,775.69 2,426,774,803.89
Non-current liabilities
Reserve fund for insurance
contracts
Long-term loans
Bonds payable
Including: Preferred stock
Perpetual bond
Lease liabilities 616,985,285.44
Long-term payable
Long-term payroll payable
Estimated liabilities
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Deferred income 115,665,393.69 94,921,260.87
Deferred income tax liabilities 13,473,459.98 12,165,608.24
Other non-current liabilities
Total non-current liabilities 746,124,139.11 107,086,869.11
Total liabilities 2,579,914,914.80 2,533,861,673.00
Owner's equity:
Capital stock 426,492,308.00 426,492,308.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Additional paid-in capital 4,613,368,622.92 4,481,709,983.24
Less: treasury stock
Other comprehensive income (1,251,154.32) (1,111,035.08)
Special reserve
Surplus reserve 420,212,778.13 420,212,778.13
General risk reserve
Undistributed profit 5,059,853,948.96 5,126,630,011.14
Total shareholders’ equity attributable
10,518,676,503.69 10,453,934,045.43
to the owners of parent company
Noncontrolling interest 14,384,829.42 14,456,046.01
Total shareholders’ equity 10,533,061,333.11 10,468,390,091.44
Total liabilities and equity 13,112,976,247.91 13,002,251,764.44
Legal representative: Li Jianquan Chief Financial Officer: Fang Xiuyuan Head of accountingoffice : Wu Kezhen
2. Balance sheet of parent company
Unit: yuan
Item June 30, 2021 December 31, 2020
Current assets:
Cash and cash equivalents 3,860,008,726.73 3,669,286,043.43
Tradable financial assets 1,664,858,598.16 3,779,510,798.34
Derivative financial assets
Notes receivable
Accounts receivable 566,565,311.15 679,644,839.39
Accounts receivable financing 9,263,087.17 26,281,743.01
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Advances to suppliers 1,994,666,629.63 1,141,185,179.88
Other receivables 224,254,705.29 361,160,139.37
Including: Interest receivable
Dividends receivable
Inventory 273,636,246.87 244,264,320.15
Contract assets
Assets held for sales
Non-current assets due within a
year
Other current assets 236,311,739.18 2,986,600.60
Total current assets 8,829,565,044.18 9,904,319,664.17
Non-current assets:
Debt investment
Other debt investments
Long-term receivables
Long-term equity investment 919,730,512.09 738,074,914.56
Other equity instrument
investments
Other non-current financial assets
Investment in real estates
Fixed assets 49,946,853.37 47,677,210.41
Construction in progress 5,509,692.70 625,889.08
Productive biological assets
Oil and gas assets
Right-of-use assets 69,456,113.49
Intangible assets 11,576,658.89 11,093,821.43
Development expenditure
Goodwill
Long-term unamortized expenses 4,435,315.80 4,270,865.79
Deferred income tax assets 27,997,121.37 18,761,956.53
Other non-current assets 30,473,036.20 7,420,450.61
Total non-current assets 1,119,125,303.91 827,925,108.41
Total assets 9,948,690,348.09 10,732,244,772.58
Current liabilities
Short-term loans 120,071,416.66
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Tradable financial liabilities
Derivative financial liabilities
Notes payable 8,757,000.00
Accounts payable 399,264,345.80 734,959,933.53
Advance from customers
Contract liabilities 278,286,169.30 483,370,540.77
Payroll payable 27,635,972.03 57,086,457.61
Taxes payable 53,338,428.78 332,551,933.15
Other payables 484,550,934.28 261,840,719.70
Including: Interest payable
Dividends payable 200,000,000.00
Liabilities held for sales
Non-current liabilities due within
one year
Other current liabilities 5,383,827.69 14,855,171.12
Total current liabilities 1,248,459,677.88 2,013,493,172.54
Non-current liabilities
Long-term loans
Bonds payable
Including: preferred stock
Perpetual bond
Lease liabilities 70,238,412.51
Long-term payable
Long-term payroll payable
Estimated liabilities
Deferred income 21,413,050.50 22,798,583.10
Deferred income tax liabilities 3,728,789.72 1,426,619.75
Other non-current liabilities
Total non-current liabilities 95,380,252.73 24,225,202.85
Total liabilities 1,343,839,930.61 2,037,718,375.39
Owner's equity:
Capital stock 426,492,308.00 426,492,308.00
Other equity instruments
Including: preferred stock
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Perpetual bond
Capital reserve 4,638,775,385.27 4,507,116,745.59
Less: treasury stock
Other comprehensive income
Special reserve
Surplus reserve 411,397,111.21 411,397,111.21
Undistributed profit 3,128,185,613.00 3,349,520,232.39
Total owners' equities 8,604,850,417.48 8,694,526,397.19
Total liabilities and owners' equities 9,948,690,348.09 10,732,244,772.58
3. Consolidated Income Statement
Unit: yuan
Item Six Months Ended June 30, 2021 Six Months Ended December 31, 2020
I. Total revenue 4,059,865,654.92 4,179,778,883.27
Including: Revenue 4,059,865,654.92 4,179,778,883.27
Interest revenue
Premium earned
Fee and commission
revenue
II. Total costs 3,268,705,562.33 2,916,563,382.74
Including: Costs of sales 1,921,789,702.47 1,900,091,985.00
Interest expense
Fee and commission
expense
Surrender value
Net payments for insurance
claims
Net withdrawal of insurance
liability reserve
Bond insurance expense
Reinsurance costs
Taxes and surcharges 33,156,678.98 33,476,875.35
Selling and marketing 825,805,820.57 655,948,904.24
General and administrative 310,652,551.64 158,666,340.89
Research and development 189,917,265.47 168,845,188.59
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Financial expenses (12,616,456.80) (465,911.33)
Including: Interest
13 ,939,734.50 1,935,306.63
expense
Interest revenue 35,424,028.29 2,586,023.70
Plus: Other incomes 86,754,859.99 19,765,789.73
Income from investment (loss
50,073,259.81 7,158,219.52
expressed with “-”)
Including: Income from
investment in joint venture and 1,655,597.53 2,288,557.50
cooperative enterprise
Income from
derecognition of financial
assets measured at
amortized cost
Foreign exchange gain (loss
expressed with “-”)
Net exposure of hedging gain
(loss expressed with “-”)
Income from fair value changes
31,408,220.30
(loss expressed with “-”)
Credit impairment losses (loss
11,808,406.71 (787,646.99)
expressed with “-”)
Assets impairment losses (loss
(60,597,532.59) (72,609,085.32)
expressed with “-”)
Gain ondisposal of assets (loss
(37,621.25) 15,447.79
expressed with “-”)
III. Operating profits (loss expressed with
910,569,685.56 1,216,758,225.26
“-”)
Plus: Non-operating income = 2,339,463.94 13,659,135.49
Less: Non-operating expense 8,502,804.42 21,986,722.02
IV. Total profits (total loss expressed with
904,406,345.08 1,208,430,638.73
“-”)
Less: Income tax expenses 143,286,407.76 173,749,962.63
V. Net profits (net loss expressed with
761,119,937.32 1,034,680,676.10
“-”)
(I) Classified by business continuity
1. Net profits from continuing
761,119,937.32 1,034,680,676.10
operations(net loss expressed with
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“-”)
2. Net profits from discontinued
operations (net loss expressed with
“-”)
(II) Classified by ownership
1. Net profit (loss) attributable to
761,038,730.24 1,032,218,689.91
common shareholders
2. * Net profits (loss) attributable to
81,207.08 2,461,986.19
noncontrolling interest
VI. After-tax other comprehensive
(292,542.91) 280,240.87
income
Net amount of after-tax other
comprehensive income attributed to (140,119.24)(140,119.24) 194,140.97
common shareholders
(I) Other comprehensive income not
reclassified as profit or loss
1. Changes from defined
benefit plans
remeasurement
2. Other comprehensive
income notclassified as
profit or loss based on
equity method
3. Changes in fair value for
other equity instruments
investment
4. Changes in fair value for
the enterprise credit risks
5. Others
(II) Other comprehensive income
(140,119.24)(140,119.24) 194,140.97
reclassified as profit or loss
1. Other comprehensive
income reclassified
asprofit or losse based on
equity method
2. Changes in the fair value
of other debt investment
3. The amount of financial
asset reclassified as other
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comprehensive income
4. Provisions for other debt
investment impairment
5. Cash flow hedging
instrument
6. foreign currency
reporting translation (140,119.24)(140,119.24) 194,140.97
discrepancy
7. Others
Net amount of after-tax other
comprehensive income attributed to (152,423.67) 86,099.90
noncontrolling interest
VII. Total comprehensive income 760,827,394.41 1,034,960,916.97
Total comprehensive income
attributable to common 760,898,611.00 1,032,412,830.88
shareholders
Total comprehensive income
(71,216.59)(71,216.59) 2,548,086.09
attributed to noncontrolling interest
VIII. Earnings per share
(I) Basic earnings per share 1.7844 2.7417
(II) Diluted earnings per share 1.7715 2.7417
In the case of merger and acquisition under the same control, the net profits of acquired entity prior to acquisition is 0 yuan during
the current period. The net profits of the acquired entity prior to the acquisition is 0 yuan in the prior period.
Legal representative: Li Jianquan Head of accounting work: Fang Xiuyuan Head of accounting body: Wu Kezhen
4. Income statement of the parent company
Unit: yuan
Item Six Months Ended June 30, 2021 Six Months Ended December 31, 2020
I. Revenue 2,152,770,959.97 2,664,223,582.83
Subtract: Costs 1,237,349,900.78 1,506,375,076.61
Taxes and surcharges 8,841,847.49 14,189,199.10
Selling and marketing 120,613,735.57 143,989,392.45
General and administrative 206,394,645.48 62,551,090.14
Research and development 82,054,298.04 87,372,077.51
Financial expenses (22,564,403.10) (1,185,532.96)
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Including: Interest expense 1,399,298.44 1,352,621.03
Interest revenue 31,213,130.97 2,125,568.15
Plus: Other incomes 43,098,834.69 9,868,657.45
Income from investment (loss
45,603,797.04 6,637,748.79
expressed with “-”)
Including: Income from
investment in joint venture 1,655,597.53 2,288,557.50
and cooperative enterprise
Income from
derecognition of
financial assets
measured at amortized
cost
Net exposure of hedging gain
(loss expressed with “-”)
Income from fair value
changes (loss expressed with 28,642,089.79
“-”)
Credit impairment losses (loss
17,063,895.54 3,179,193.78
expressed with “-”)
Assets impairment losses (loss
(13,698,792.65) (7,168,074.65)
expressed with “-”)
Gain onfrom disposal of assets
15,447.79
(loss expressed with “-”)
II. Operating profit (loss to be filled out
640,790,760.12 863,465,253.14
with the minus sign "-")
Plus: Non-operating income 810,681.71 20,698.49
Less: Non-operating expense 152,332.97 3,422,613.71
III. Total profit (total loss to be filled
641,449,108.86 860,063,337.92
out with the minus sign "-")
Less: Income tax expenses 95,097,573.86 135,279,734.35
IV. Net profit (net loss to be filled out
546,351,535.00 724,783,603.57
with the minus sign "-")
(I) Net profits from continuing
operations (net loss expressed 546,351,535.00 724,783,603.57
with “-”)
(II) Net profits from discontinued
operations (net loss expressed
with “-”)
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V. Net amount of after-tax other
comprehensive income
(I) Other comprehensive income
not reclassified as profit or loss
1. Changes from defined
benefit plans remeasurement
2. Other comprehensive
income notclassified as
profit or loss based on
equity method
3. Changes in fair value for
other equity instruments
investment
4. Changes in fair value for
the enterprise credit risks
5. Others
(II) Other comprehensive income
reclassified as profit or loss
1. Other comprehensive
income reclassified asprofit
or losse based on equity
method
2. Changes in the fair value
of other debt investment
3. The amount of financial
asset reclassified as other
comprehensive income
4. Provisions for other debt
investment impairment
5. Cash flow hedging
instrument
6. foreign currency reporting
translation discrepancy
7. Others
VI. Total comprehensive income 546,351,535.00 724,783,603.57
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
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5. Consolidated Cash Flow Statement
Unit: yuan
Item Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
I. Cash flow from financing activities:
Cash collected from sales of
4,211,780,432.64 5,760,224,442.10
goods or rendering of service
Net increase of customer deposit
and deposit from other banks
Net increase of borrowings from
central bank
Net increase of borrowing funds
from other financial institutions
Cash from obtaining original
insurance contract premium
Cash received from insurance
premium of original insurance
contract
Net increase of deposit and
investment of insured
Cash from interest, handling
charges and commissions
Net increase of borrowing funds
Net increase of repurchase of
business funds
Net cash from acting trading
securities
Refund of tax and levies 24,562,159.29 8,509,312.90
Other cash received related to
150,416,678.31 71,859,754.40
operating activities
Subtotal of cash inflow from operating
4,386,759,270.24 5,840,593,509.40
activities
Cash paid to buy products and
2,731,814,025.31 2,415,280,745.46
accept labor services
Net increase of customer loans
and advances
Net increase of amount due from
the Central Bank and interbank
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Cash paid for original insurance
contract claims payment
Net increase of lending funds
Cash paid for interest, handling
charges and commissions
Cash paid for insurance policy
dividend
Cash paid to and for employees 596,881,901.63 436,533,307.90
Taxes and fees paid 573,374,688.67 170,689,857.22
Other cash paid related to
287,083,788.86 344,683,616.57
operating activities
Subtotal of cash inflow from operating
4,189,154,404.47 3,367,187,527.15
activities
Net cash flow from operating activities 197,604,865.77 2,473,405,982.25
II. Cash flow from investment
activities:
Cash from investment withdrawal 4,090,000,000.00
Cash from investment income 63,620,238.79 4,869,662.02
Net cash from the disposal of
fixed assets, intangible assets and 153,218,248.95 141,831,006.66
other long-term assets
Net cash received from the
disposal of subsidiaries and other
business entities
Other cash received related to
100,000,000.00
investment activities
Subtotal of cash inflow from investment
4,306,838,487.74 246,700,668.68
activities
Cash paid for the purchase and
construction of fixed assets,
327,515,662.56 153,731,218.78
intangible assets and other long
term assets
Cash paid for investment 2,845,000,000.00 610,535,150.13
Net cash received from
reinsurance business
Net cash paid for obtaining
subsidiaries and other business
units
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Other cash paid related to
investment activities
Subtotal of cash inflow from investment
3,172,515,662.56 764,266,368.91
activities
Net cash flow from investing activities 1,134,322,825.18 (517,565,700.23)(517,565,700.23)
III. Cash flow from financing activities:
Receipts from equity securities
Including: Cash received from
subsidies’ absorption of minority
shareholders’ investment
Cash received from borrowings 150,000,000.00
Other cash received related to
financing activities
Subtotal of cash inflow from financial
150,000,000.00
activities
Cash repayments of amounts
150,000,000.00 249,210,746.07
borrowed
Cash paid for distribution of
dividends or profits and for 568,137,284.96 100,660,939.62
interest expenses
Including: Dividends and profits
paid by subsidiaries to minority
shareholders
Other cash paid related to
103,492,521.01 1,802,115.63
financing activities
Subtotal of cash inflow from financial
821,629,805.97 351,673,801.32
activities
Net cash flow from financing activities (821,629,805.97)(821,629,805.97) (201,673,801.32)(201,673,801.32)
IV. Impact of exchange rate movements
301,182.50 261,849.00
on cash and cash equivalents
V. Net increase of cash and cash
510,599,067.48 1,754,428,329.70
equivalents
Plus: Cash and cash equivalents at
4,149,734,694.38 459,169,719.65
the beginning of the period
Cash and cash equivalents at the end of
4,660,333,761.86 2,213,598,049.35
the period
112
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6. Cash flow statement of the parent company
Unit: yuan
Item Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
I. Cash flow from financing activities:
Cash Received from Sales of
2,095,126,701.06 4,300,448,536.45
Goods or Rendering of Service
Refund of tax and levies 15,568,316.68 5,633,329.18
Other cash received related to
320,575,959.00 122,048,510.32
operating activities
Subtotal of cash inflow from operating
2,431,270,976.74 4,428,130,375.95
activities
Cash paid to buy products and
2,269,677,579.57 2,145,062,671.93
accept labor services
Cash paid to and for employees 144,426,888.77 83,100,928.44
Taxes and fees paid 418,581,781.00 87,300,152.40
Other cash paid related to
552,812,218.15 60,954,639.88
operating activities
Subtotal of cash inflow from operating
3,385,498,467.49 2,376,418,392.65
activities
Net cash flow from operating activities (954,227,490.75) 2,051,711,983.30
II. Cash flow from investment
activities:
Cash from investment withdrawal 3,705,000,000.00
Cash from investment income 43,683,535.21 4,349,191.29
Net cash from disposal of fixed
assets, intangible assets and other 54,520,000.00 50,000.00
long-term assets
Net cash received from the
disposal of subsidiaries and other
business entities
Other cash received related to
100,000,000.00
investment activities
Subtotal of cash inflow from investment
3,803,203,535.21 104,399,191.29
activities
Cash paid for the purchase and
construction of fixed assets, 30,867,495.67 65,432,616.94
intangible assets and other long
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term assets
Cash paid for investment 1,949,823,493.17 349,986,884.33
Net cash paid for obtaining
subsidiaries and other business
units
Other cash paid related to
investment activities
Subtotal of cash inflow from investment
1,980,690,988.84 415,419,501.27
activities
Net cash flow from investing activities 1,822,512,546.37 (311,020,309.98)
III. Cash flow from financing activities:
Receipts from equity securities
Cash received from borrowings 120,000,000.00
Other cash received related to
financing activities
Subtotal of cash inflow from financial
120,000,000.00
activities
Cash repayments of amounts
120,000,000.00 60,000,000.00
borrowed
Cash paid for distribution of
dividends or profits and for 566,402,956.84 99,026,262.05
interest expenses
Other cash paid related to
1,802,115.63
financing activities
Subtotal of cash inflow from financial
686,402,956.84 160,828,377.68
activities
Net cash flow from financing activities (686,402,956.84) (40,828,377.68)
IV. Impact of exchange rate movements
8,840,584.52 217,162.14
on cash and cash equivalents
V. Net increase of cash and cash
190,722,683.30 1,700,080,457.78
equivalents
Plus: Balance of cash and cash
equivalents at the beginning of the 3,669,286,043.43 183,064,001.14
period
Plus: Balance of cash and cash
equivalents at the beginning of the 3,860,008,726.73 1,883,144,458.92
period
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7. Consolidated Statement on Changes in Owners' Equity
Current amount
Unit: yuan
Six Months Ended June 30, 2021
Owners' equities attributable to the owners of parent company
Other equity Other Total
instruments compr Genera Minori owners
Item
Capit Less: Specia Surplu Undist
Capital ehensi l risk Subtot ty '
al Prefe Perpe treasur l s ributed Others
Other reserve ve provisi al equity equitie
stock rred tual y stock reserve reserve profit
incom on s
s
stock bond
e
I. Balance at the 426,4 4,481, (1,111, 420,21 5,126, 10,453 14,456 10,468
end of previous 92,30 709,98 035.08 2,778. 630,01 ,934,0 ,046.0 ,390,0
year 8.00 3.24 ) 13 1.14 45.43 1 91.44
Plus:
(60,12 (60,12 (60,12
Changes in
8,638. 8,638. 8,638.
accounting
03) 03) 03)
policies
Prior
period
error
correcti
on
Busine
ss
combin
ation
under
commo
n
control
Others
II. Beginning 426,4 4,481, (1,111, 420,21 5,066, 10,393 14,456 10,408
balance in 92,30 709,98 035.08 2,778. 501,37 ,805,4 ,046.0 ,261,4
current year 8.00 3.24 ) 13 3.11 07.40 1 53.41
III.
(140,1 (71,21
Increase/decreas 131,65 (6,647, 124,87 124,79
19.24)( 6.59)(7
e in the current 8,639. 424.15 1,096. 9,879.
140,11 1,216.
period (less to 68 ) 29 70
9.24) 59)
be filled out
115
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with the minus
sign "-)
(140,1 (71,21
(I) Total 761,03 760,89 760,82
19.24)( 6.59)(7
comprehensive 8,730. 8,611. 7,394.
140,11 1,216.
income 24 00 41
9.24) 59)
(II) Owner’s
131,65 131,65 131,65
invested and
8,639. 8,639. 8,639.
decreased
68 68 68
capital
1. Common
stock invested
by the owner
2. Capital
invested by
other equity
instrument
holders
3. Amount of
share-based 131,65 131,65 131,65
payment 8,639. 8,639. 8,639.
included in the 68 68 68
owner’s equity
4. Others
(767,6 (767,6 (767,6
(III) Profit
86,154 86,154 86,154
distribution
.39) .39) .39)
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
preparation
3. Distribution (767,6 (767,6 (767,6
of owners (or 86,154 86,154 86,154
shareholders) .39) .39) .39)
4. Others
(IV) Internal
transfer of
owner’s equity
116
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1. Capital
surplus transfer
to paid-in
capital (or
capital stock)
2. Earned
surplus transfer
to paid-in
capital (or
capital stock)
3. Earned
surplus covering
the deficit
4. Carryforward
retained
earnings in
variation of
defined benefit
plan
5. Carryforward
retained
earnings of
other
comprehensive
income
6. Others
(V) Special
reserve
1. Draw in this
current
2. Use in this
current
(VI) Others
IV. Balance at 426,4 4,613, (1,251, 420,21 5,059, 10,518 14,384 10,533
the end of 92,30 368,62 154.32 2,778. 853,94 ,676,5 ,829.4 ,061,3
current period 8.00 2.92 ) 13 8.96 03.69 2 33.11
Last term amount
Unit: yuan
Six Months Ended June 30, 2020
Item
Owners' equities attributable to the owners of parent company Minorit Total
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Other equity Other y equity owners'
instruments compr Genera equities
Capit Less: Specia Surplu Undist
Capital ehensi l risk Subtot
al Prefe Perp treasur l s ributed Others
Other reserve ve provisi al
stock rred etual y stock reserve reserve profit
s incom on
stock bond
e
I. Balance at 376,4 948,91 116,85 1,718, 3,160, 3,163,5
44,623 3,167,5
the end of 92,30 3,284. 5,107. 075,17 380,50 48,003.
.87 02.50
previous year 8.00 10 20 7.67 0.84 34
Plus:
Changes in
accounting
policies
Prior
period
error
correct
ion
Busine
ss
combi
nation
under
comm
on
control
Others
II. Beginning 376,4 948,91 116,85 1,718, 3,160, 3,163,5
44,623 3,167,5
balance in 92,30 3,284. 5,107. 075,17 380,50 48,003.
.87 02.50
current year 8.00 10 20 7.67 0.84 34
III.
Increase/decrea
se in the current 933,71 933,91
194,14 2,548,0 936,460
period (less to 8,689. 2,830.
0.97 86.09 ,916.97
be filled out 91 88
with the minus
sign "-)
(I) Total 1,032, 1,032, 1,034,9
194,14 2,548,0
comprehensive 218,68 412,83 60,916.
0.97 86.09
income 9.91 0.88 97
(II) Owner’s
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invested and
decreased
capital
1. Common
stock invested
by the owner
2. Capital
invested by
other equity
instrument
holders
3. Amount of
share-based
payment
included in the
owner’s equity
4. Others
(98,50 (98,50 (98,500
(III) Profit
0,000. 0,000. ,000.00
distribution
00) 00) )
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
preparation
3. Distribution (98,50 (98,50 (98,500
of owners (or 0,000. 0,000. ,000.00
shareholders) 00) 00) )
4. Others
(IV) Internal
transfer of
owner’s equity
1. Capital
surplus transfer
to paid-in
capital (or
capital stock)
2. Earned
surplus transfer
to paid-in
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capital (or
capital stock)
3. Earned
surplus
covering the
deficit
4. Carryforwar
d retained
earnings in
variation of
defined benefit
plan
5. Carryforwar
d retained
earnings of
other
comprehensive
income
6. Others
(V) Special
reserve
1. Draw in this
current
2. Use in this
current
(VI) Others
IV. Balance at 376,4 948,91 116,85 2,651, 4,094, 4,100,0
238,76 5,715,5
the end of 92,30 3,284. 5,107. 793,86 293,33 08,920.
4.84 88.59
current period 8.00 10 20 7.58 1.72 31
8. Statement on changes in owners' equity of the parent company
Current amount
Unit: yuan
Six Months Ended June 30, 2021
Other equity
Other
instruments Less: Undistr Total
Item Capital Capital compreh Special Surplus
Preferr Perpet treasury ibuted Others owners'
stock reserve ensive reserve reserve
ed ual Others stock profit equities
income
stock bond
120
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I. Balance at the 426,49 3,349,5
4,507,11 411,397, 8,694,526,
end of previous 2,308.0 20,232.
6,745.59 111.21 397.19
year 0 39
Plus:
Changes in
accounting
policies
Prior
period
error
correcti
on
Others
II. Beginning 426,49 3,349,5
4,507,11 411,397, 8,694,526,
balance in 2,308.0 20,232.
6,745.59 111.21 397.19
current year 0 39
III.
Increase/decreas
e in the current (221,33
131,658, (89,675,97
period (less to be 4,619.3
639.68 9.71)
filled out with 9)
the minus sign
"-)
(I) Total 546,35
546,351,5
comprehensive 1,535.0
35.00
income 0
(II) Owner’s
131,658, 131,658,6
invested and
639.68 39.68
decreased capital
1. Common
stock invested by
the owner
2. Capital
invested by other
equity
instrument
holders
3. Amount of
share-based 131,658, 131,658,6
payment 639.68 39.68
included in the
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owner’s equity
4. Others
(767,68
(III) Profit (767,686,1
6,154.3
distribution 54.39)
9)
1. Withdrawal of
surplus reserves
2. Distribution of (767,68
(767,686,1
owners (or 6,154.3
54.39)
shareholders) 9)
3. Others
(IV) Internal
transfer of
owner’s equity
1. Capital
surplus transfer
to paid-in capital
(or capital stock)
2. Earned
surplus transfer
to paid-in capital
(or capital stock)
3. Earned
surplus covering
the deficit
4. Carryforward
retained earnings
in variation of
defined benefit
plan
5. Carryforward
retained earnings
of other
comprehensive
income
6. Others
(V) Special
reserve
1. Draw in this
current
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2. Use in this
current
(VI) Others
IV. Balance at 426,49 3,128,1
4,638,77 411,397, 8,604,850,
the end of 2,308.0 85,613.
5,385.27 111.21 417.48
current period 0 00
Last term amount
Unit: yuan
Six Months Ended June 30, 2020
Other equity
Other
instruments Less: Undistrib Total
Item Capital Capital compre Special Surplus
Preferr Perpet treasury uted Others owners'
stock reserve hensive reserve reserve
ed ual Others stock profit equities
income
stock bond
I. Balance at the 376,49
974,320 108,039 717,801,1 2,176,652,9
end of previous 2,308.
,046.45 ,440.28 93.98 88.71
year 00
Plus:
Changes in
accounting
policies
Prior
period
error
correct
ion
Others
II. Beginning 376,49
974,320 108,039 717,801,1 2,176,652,9
balance in 2,308.
,046.45 ,440.28 93.98 88.71
current year 00
III.
Increase/decrea
se in the current
626,283,6 626,283,60
period (less to
03.57 3.57
be filled out
with the minus
sign "-)
(I) Total
724,783,6 724,783,60
comprehensive
03.57 3.57
income
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(II) Owner’s
invested and
decreased
capital
1. Common
stock invested
by the owner
2. Capital
invested by
other equity
instrument
holders
3. Amount of
share-based
payment
included in the
owner’s equity
4. Others
(III) Profit (98,500,0 (98,500,000
distribution 00.00) .00)
1. Withdrawal
of surplus
reserves
2. Distribution
(98,500,0 (98,500,000
of owners (or
00.00) .00)
shareholders)
3. Others
(IV) Internal
transfer of
owner’s equity
1. Capital
surplus transfer
to paid-in
capital (or
capital stock)
2. Earned
surplus transfer
to paid-in
capital (or
capital stock)
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3. Earned
surplus
covering the
deficit
4. Carryforward
retained
earnings in
variation of
defined benefit
plan
5. Carryforward
retained
earnings of
other
comprehensive
income
6. Others
(V) Special
reserve
1. Draw in this
current
2. Use in this
current
(VI) Others
IV. Balance at 376,49
974,320 108,039 1,344,084 2,802,936,5
the end of 2,308.
,046.45 ,440.28 ,797.55 92.28
current period 00
III. Basic status of Company
Winner Medical Co., Ltd. (hereinafter referred to as the “the Company” or “our company”), formerly known as
Winner Industries (Shenzhen) Co., Ltd. (hereinafter referred to as “Winner Industries”), is a wholly foreign-owned
enterprise established on August 24, 2000 with the approval of Shenzhen Municipal Administration for Industry
and Commerce. The original business license number of the Company is: Q.D.Y.S.Z.Zi No. 307199. The original
registered capital is HKD 30 million, and the total investment is HKD 60 million. The Company is wholly owned
by Winner International Trading Corporation. The registered capital was invested in three phases. On April 2,
2001, the registered capital of HKD 18,023,154.30 was invested in monetary funds, which was verified by the
capital verification report (Z.T.Z.T. No.Y2001-1133) of Zhuhai Zhongtuo Zhengtai Accounting Firm. The
business scope of the original company is: the production and operation of sanitary materials, dressings and their
products, medical clothing, textiles, non-woven products and moulded packaging (excluding the products subject
to national export license management).
On May 18, 2001, the Board of Directors of the Company decided to increase the registered capital from HKD
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30.00 million to HKD 60.00 million, and the total investment from HKD 60.00 million to HKD 120.00 million,
which was paid in three installments since the date of registration of the Company. On June 5, 2001, the Company
obtained the changed business license of the enterprise legal person issued by Shenzhen Municipal Bureau for
Industry and Commerce and amended the Articles of Association accordingly.
As of December 21, 2001, it has received the second installment of the registered capital paid by Winner
International Trading Corporation. Winner International Trading Corporation contributed HKD 31,445,194.91 in
monetary funds, and t his investment was verified by Shenzhen Zhongpeng Certified Public Accountants, Ltd.
(S.P.K.Y. Zi [2002] No.037 capital verification report). As of February 21, 2002, it has received the third
installment of the registered capital totaling HKD 6,005,722.20 paid by Winner International Trading Corporation,
including HKD 3,665,722.20 in currency and HKD 2,340,000.00 in kind. This investment was verified by
Shenzhen Lishang Certified Public Accountants Co., Ltd . (S.L.S.Y. Zi [2002] No.039 capital verification report)
On October 8, 2002, the Board of Directors of the Company decided to increase the Company’s registered capital
from HKD 60.00 million to HKD 70.00 million, and the total investment from HKD 120.00 million to HKD
134.00 million. On December 10, 200 2, the Company obtained the changed business license of the enterprise
legal person issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of
Association accordingly. As of May 27, 2003, it has received the fourth installment of the registered capital
totaling HKD 14,525,928.59 paid by (Hong Kong) Winner International Trading Corporation. This capital
increase was verified by Shenzhen Yuehua Certified Public Accountants Co., Ltd. (S.Y.H.Y. Zi [2003] No.339
capital verification report).
On May 25, 2003, with the approval of the Board of Directors of the Company, the shareholder Winner
International Trading Corporation signed the Equity Transfer Agreement with Winner Group Limited, under
which Winner International Trading Corporation transferred 100% of its equity to Winner Group Limited. On July
28, 2003, the Company obtained the changed business license of the enterprise legal person issued by Shenzhen
Municipal Bureau for Industry and Commerce and amended the Articles of Association accordingly.
On June 8, 2006, the Board of Directors of the Company decided to increase the Company’s registered capital
from HKD 70.00 million to HKD 126.00 million, and the total investment from HKD 134.00 million to HKD
270.00 million. The newly increased registered capital was invested within half a year after the registration of the
change. On June 30, 2006, the Company obtained the changed business license of the enterprise legal person
issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Association
accordingly.
As of August 30, 2006, the Company transferred undistributed profits HKD 49,423,804.00 to paid -in capital, and
the paid-in capital after the change was HKD 119,423,804.00. This capital increase was verified by the Shenzhen
Branch of Beijing Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi [2007] No.043 capital
verification report).
On December 2, 2006, the Board of Directors of the Company decided to change the original investment period of
the shareholders from June 30, 2006 to December 31, 2006 into June 30, 2006 to June 30, 2007. On December 6,
2006, the Company was approved by General Administration for Industry and Commerce of Shenzhen to change
its type of enterprise from a wholly foreign-owned enterprise into a limited liability company (wholly owned by
foreign legal person) and change its business term.
As of March 15, 2007, the Company transferred undistributed profits HKD 6,576,196.00 to paid -in capital, and
the cumulative paid-in capital after the change was HKD 126.00 million. This capital increase was verified by
Shenzhen Hengping Certified Public Accountants Co., Ltd. (S.H.P.W.Y. Zi [2007] No.0004 capital verification
report). On August 13, 2007, the Company obtained the changed business license of the enterprise legal person
issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of Association
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accordingly. The registration number was changed from Q.D.Y.S.Z. Zi No. 307199 to 440306503230896.
On June 8, 2009, the Board of Directors of the Company decided to add sterilization technology services to the
business scope. On June 30, 2009, the Company obtained the changed business license of the enterprise legal
person issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of
Association accordingly.
On April 1, 2010, the Board of Directors of the Company decided to increase the Company’s registered capital
from HKD 126.00 million to HKD 192.00 million, and the total investment from HKD 270.00 million to HKD
380.00 million. The increased amount of the registered capital was contributed by the original shareholders in
cash in foreign currency.
As of June 18, 2010, it has received the registered capital totaling USD 8,473,500.00 (equivalent to HKD
66,000,653.75) paid by Winner Group Limited. This capital increase was verified by Shenzhen Hengping
Certified Public Accountants LLP (S.H.P.S. (W.) Y. Zi [2010] No.13 capital verification report). On July 2, 2010,
the Company obtained the changed business license of the enterprise legal person issue d by Shenzhen
Administration for Market Regulation (since September 9, 2009, Shenzhen Municipal Bureau for Industry and
Commerce has been integrated into Shenzhen Administration for Market Regulation) and amended the Articles of
Association accordingly.
On April 27, 2011, with the approval of General Administration for Industry and Commerce of Shenzhen, the Co
mpany changed its residence from No. 1 Wenjian Avenue, Bulong Road, Longhua Street, Bao‘an District,
Shenzhen City to Winner Industrial Park beside Bulong Road, Longhua Street, Bao’an District, Shenzhen City.
On February 20, 2013, the Board of Directors of the Company decided and agreed to increase the Company’s
registered capital by HKD 4,271,300. The registered capital after the change was HKD 19,6271,300, and the total
investment was still HKD 380.00 million.
The shareholder, Winner Group Limited made capital contribution with its equity in the six enterprises.
The equity contribution is as follows:
Name of invested entity Proportio Book value of Amount of Amount included in Amount of equity
n (%) equity equity capital surplus contribution
contribution net contribution (RMB 10,000) (Convert to HKD
assets (RMB 10,000) 10,000)
(RMB 10,000)
(a) (b) (c)=(a)-(b) (D)=(b)*Converted
exchange rate
Winner Medical (Chongyang) Co., Ltd. 100.00 3,232.93 32.33 3,200.60 39.94
(formerly known as “Chongyang Winner
Medical Textile Co., Ltd.”)
Winner Medical (Jiayu) Co., Ltd. 100.00 3,520.95 35.21 3,485.74 43.50
(formerly known as “Jiayu Winner
Medical Textile Co., Ltd.”)
Winner Medical (Jingmen) Co., Ltd. 100.00 2,527.24 25.27 2,501.97 31.22
(formerly known as “Jingmen Winner
Medical Textile Co., Ltd.”)
Yichang Winner Medical Textile Co., 100.00 1,800.69 18.01 1,782.68 22.25
Ltd.
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Winner Medical (Huanggang) Co., Ltd. 75.00 19,729.30 197.29 19,532.01 243.76
Winner Medical (Tianmen) Co., Ltd. 100.00 3,760.89 37.61 3,723.28 46.46
(formerly known as “Hubei Winner
Textile Co., Ltd.”)
Total 34,572.00 345.72 34,226.28 427.13
After the capital increase, the original shareholders still have 100% of the Company's equity, and the above six
companies become the Company's subsidiaries. On July 25, 2013, the Company obtained the changed business
license of the enterprise legal person issued by Shenzhen Municipal Bureau for Industry and Commerce and
amended the Articles of Association accordingly. This capital increase was verified by the Shenzhen Branch of
Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi [2013] No.102 capital verification report).
On September 2, 2013, the Board of Directors of the Company decided to increase the Company’s registered
capital by HKD 18,068,200. The registered capital after the change was HKD 214,339,500, and the total
investment was still HKD 380.00 million. The new investment was subscribed by Shenzhen Kangsheng
Investment Partnership (limited partnership) (hereinafter referred to as the “Kangsheng Investment”), Shenzhen
Kangxin Investment Partnership (limited partnership) (hereinafter referred to as the “Kangxin Investment”),
Shenzhen Kanglong Investment Partnership (limited partnership) (hereinafter referred to as the “Kanglong
Investment”) with HKD 10,322,400, HKD 4,414,500 and HKD 3,331,300 respectively. After the completion of
the capital increase, the Company’s ownership structure was changed as follows:
Investor Capital contribution amount (HKD ten Proportion (%)
thousand)
Winner Group Limited 19,627.13 91.5703
Kangsheng Investment 1,032.24 4.8159
Kangxin Investment 441.45 2.0596
Kanglong Investment 333.13 1.5542
Total 21,433.95 100.0000
On October 17, 2013, the Company obtained the changed business license of the enterprise legal person issued by
Shenzhen Administration for Market Regulation and amended the Articles of Association accordingly. This capital
increase was verified by Shenzhen Hengping Certified Public Accountants LLP (S.H.P.S.Y. Zi [2013] No.035
capital verification report).
On October 26, 2013, the Board of Directors of the Company decided to change its residence from Winner
Industrial Park beside Bulong Road, Longhua Street, Bao’an District, Shenzhen City to Winner Industrial Park,
No. 660 Bulong Road, Longhua New District, Shenzhen City. On November 4, 2013, the Company completed the
industrial and commercial registration of changes, obtained the changed business license of the enterprise legal
person issued by Shenzhen Municipal Bureau for Industry and Commerce and amended the Articles of
Association accordingly.
On July 1, 2014, the Board of Directors of the Company decided and agreed to increase the Company’s registered
capital by HKD 3646,600. The registered capital after the change was HKD 217,986,100, and the total investment
was still HKD 380.00 million. The capital increase was made by the original shareholder, Kangsheng Investment,
which subscribed HKD 3,646,600 with RMB 13.585 million, and the increased registered capital was paid in two
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installments. After the completion of the capital increase, the Company’s ownership structure was changed as
follows:
Investor Capital contribution amount (HKD ten Proportion (%)
thousand)
Winner Group Limited 19,627.13 90.0385
Kangsheng Investment 1,396.90 6.4082
Kangxin Investment 441.45 2.0251
Kanglong Investment 333.13 1.5282
Total 21,798.61 100.0000
On July 24, 2014, the Company obtained the changed business license of the enterprise legal person issued by
Shenzhen Administration for Market Regulation and amended the Articles of Association accordingly. This capital
increase was verified by Shenzhen Hengping Certified Public Accountants LLP (S.H.P.S.Y. Zi [2014] No.030 and
S.H.P.S.Y. Zi [2015] No.003 capital verification reports.
On July 28, 2014, the Board of Directors of the Company decided to agree that the shareholder of the Company,
Winner Group Limited, would transfer its 2.9503% equity of the Company to Kangxin Investment, Kanglong
Investment, and the newly introduced shareholder, Shenzhen Kangli Investment Partnership (limited partnership)
(hereinafter referred to as “Kangli Investment”). After the completion of the equity transfer, the Company’s
ownership structure was changed as follows:
Investor Capital contribution amount (HKD ten Proportion (%)
thousand)
Winner Group Limited 18,984.01 87.0882
Kangsheng Investment 1,396.90 6.4082
Kangxin Investment 740.83 3.3985
Kanglong Investment 447.37 2.0523
Kangli Investment 229.50 1.0528
Total 21,798.61 100.0000
On August 29, 2014, the Company obtained the changed business license of the enterprise legal person issued by
Shenzhen Administration for Market Regulation and amended the Articles of Association accordingly.
On September 28, 2014, the Board of Directors of the Company decided and agreed to increase the Company’s
registered capital by HKD 22,550,300. The registered capital after the change was HKD 240,536,400, and the
total investment was still HKD 380.00 million. The new registered capital was subscribed by Beijing Sequoia
Xinyuan Equity Investment Center (limited partnership) (hereinafter referred to as “Sequoia Xin yuan”) with
300.00 million yuan. After the completion of the capital increase, the Company’s ownership structure was
changed as follows:
Investor Capital contribution amount (HKD ten thousand) Proportion (%)
Winner Group Limited 18,984.01 78.9236
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Kangsheng Investment 1,396.90 5.8074
Kangxin Investment 740.83 3.0800
Kanglong Investment 447.37 1.8599
Kangli Investment 229.50 0.9541
Sequoia Xinyuan 2,255.03 9.3750
Total 24,053.64 100.0000
As of October 31, 2014, it has received 300.00 million yuan from Sequoia Xinyuan in monetary funds. On
November 06, 2014, the Company obtained the changed business license of the enterprise legal person issued by
Shenzhen Administration for Market Regulation and amended the Articles of Association accordingly. This capital
increase was verified by the Shenzhen Branch of Zhonglian Certified Public Accountants Co., Ltd. (Z.L.S.S.Y. Zi
[2014] No.087 capital verification report).
On April 30, 2015, through the resolution of the Board of Directors of the Company, with February 28, 2015 as
the base date, Winner Industries was wholly changed into a limited liability Company, with a registered capital of
368 million yuan. In accordance with the provisions of the Sponsorship Agreement and Articles of Association,
the shareholders converted their audited net assets as of February 28, 2015 of 1,058,194,956.32 yuan into 368
million shares at a ratio of 1:0.3478, par value of each share was 1 yuan, and the total share capital was 368
million yuan and held separately by the original shareholders in accordance with their original proportions; the
remaining 690,194,956.32 yuan was included in the capital surplus (due to the change of calculation policy of
Company’s receivables bad debt provision during the reporting period, the audited net assets of the Company as of
the base date of share reform were adjusted to 1,050,812,354.45 yuan, and the corresponding share conversion
ratio was adjusted to 1: 0.3502). June 4, 2015, with the approval of Economy, Trade and Information Commission
of Shenzhen Municipality, Winner Industries was wholly changed into a limited liability company, renamed as
“Winner Medical Co., Ltd.”, and obtained the business license of enterprise legal person with the registration
number of 440306503230896.
On May 28, 2018, after voted through and approved by the extraordinary general meeting of shareholders, the
Company agreed to increase the registered capital by 8,492,308 yuan, with the registered capital after the change
of 376,492,308 yuan. The new registered capital was subscribed by Shenzhen Capital Group Co., Ltd. (hereinafter
referred to as “SCGC”) with 300.00 million yuan. After the completion of the capital increase, the Company’s
ownership structure was changed as follows:
Investor Amount of contribution (RMB 10,000) Proportion (%)
Winner Group Limited 29,043.8848 77.1434
Kangsheng Investment 2,137.1232 5.6764
Kangxin Investment 1,133.4400 3.0105
Kanglong Investment 684.4432 1.8179
Kangli Investment 351.1088 0.9326
Sequoia Xinyuan 3,450.0000 9.1635
SCGC 849.2308 2.2556
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Total 37,649.2308 100.0000
As of June 13, 2018, it has received 300.00 million yuan from SCGC in monetary funds. On June 15, 2018,
Shenzhen Administration for Market Regulation issued the Notice of Change (Filing) (No.: 21801665051) on this
change and approved the capital increase. The Company amended the Articles of Association in respect of the
above matters. The Company amended the Articles of Association in respect of the above matters. This capital
increase was verified by BDO China Shu Lun Pan Certified Public Accountants LLP (X.K.S.B.Zi [2018]
No.ZI10525 capital verification report).
On February 28, 2018, the Company obtained the renewed business license of the enterprise legal person issued
by Shenzhen Administration for Market Regulation with the unified social credit code 91440300723009295R.
On August, 18, 2020, after the reply of China Securities Regulatory Commission on Approval of the Registration
of the Initial Public Offering of Winner Medical Co., Ltd. (Z.J.X.K. [2020] No.1822), the Company issued 50
million RMB ordinary shares to the public, which was listed on the Shenzhen Stock Exchange on September 17,
2020. Upon completion of the issuance, the registered capital of the Company was 426,492,308 yuan.
The Company belongs to textile industry.
Business term: sustainable operation.
Business scope: production and operation of Class II, III 6864 medical hygiene materials, medical biological
materials, dressings and products, medical clothing, protective articles, textiles, non-woven products and molded
packaging (the above products do not include the goods subject to national export license administration) and
related products, disposable consumables and molded packaging; engaging in wholes ale, import and export, retail
(including online sales) and other related ancillary businesses of all Class I medical devices, all Class II medical
devices (excluding in vitro diagnostic reagents), Class III medical devices: medical hygiene materials and
dressings, medical suture materials and adhesives, medical polymer materials and products (except disposable
transfusion apparatus (needle)), general diagnostic instruments, medical cold treatment, low temperature,
refrigerating equipment and tools, cotton household articles, cotton clothing, cotton costume, cotton spun laced
non-woven fabric and its manufactured products, cotton, disinfection products, daily necessities, cosmetics,
protective equipment and instruments and meters (if it does not involve goods subject to state trading, or involves
goods subject to quotas, license management and other special provisions, it shall apply in accordance with
relevant regulations of the state); provide the technical consulting, technical services and after-sales services of
above-mentioned products; sterilization technical services (if it needs to obtain relevant qualifications to operate,
it shall apply in accordance with relevant regulations); enterprise management consulting, business information
consulting, economic information consulting, warehouse services (excluding hazardous chemicals, precursor
chemicals, refined oil and other dangerous goods), own property leasing (it can be operated only with the legal
real estate ownership certificate under the company's name). The above business scope does not include the items
subject to special administrative measures for access stipulated by the state, and those involving the record and
licensing qualifications need to obtain the relevant certificates before operation.
Corporate domicile: Winner Industrial Park, No.660 Bulong Road, Longhua New District, Shenzhen City; F42,
Building 2, Huilong Business Center, Shenzhen North Railway Station Area, Minzhi Subdistrict, Longhua District,
Shenzhen City
The financial statements were approved by the Board of Directors of the Company on XXXX, 2021.
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As of June 30, 2021, the subsidiaries in the consolidated financial statements of the Company are as
follows:
Subsidiary name
Winner Medical (Jingmen) Co., Ltd. (hereinafter referred to as “Winner Medical (Jingmen)”)
Yichang Winner Medical Textile Co., Ltd. (hereinafter referred to as “Winner Medical (Yichang)”)
Winner Medical (Tianmen) Co., Ltd. (hereinafter referred to as “Winner Medical (Tianmen)”)
Winner Medical (Chongyang) Co., Ltd. (hereinafter referred to as “Winner Medical (Chongyang)”)
Winner Medical (Jiayu) Co., Ltd. (hereinafter referred to as “Winner Medical (Jiayu)”)
Winner Medical (Hong Kong) Ltd. (hereinafter referred to as “Hong Kong Winner”)
Winner (Huanggang) Cotton Processing & Trading Co., Ltd. (hereinafter referred to as “Winner (Huanggang) Cotton”)
Winner Medical (Huanggang) Co., Ltd. (hereinafter referred to as “Winner Medical (Huanggang)”)
Shenzhen Purcotton Technology Co., Ltd. (hereinafter referred to as “Shenzhen Purcotton”)
Guangzhou Purcotton Medical Technology Co., Ltd. (hereinafter referred to as “Guangzhou Purcotton”)
Beijing Purcotton Technology Co., Ltd. (hereinafter referred to as “Beijing Purcotton”)
Shanghai Purcotton Technology Co., Ltd. (hereinafter referred to as “Shanghai Purcotton”)
Shenzhen Qianhai Purcotton E-Commerce Co., Ltd. (hereinafter referred to as “Qianhai Purcotton”)
Winner Medical Malaysia Sdn. Bhd. (hereinafter referred to as “Winner Medical Malaysia”)
Winner Medical (Heyuan) Co., Ltd. (hereinafter referred to as “Winner Medical (Heyuan)”)
Winner Medical (Wuhan) Co., Ltd. 2* (hereinafter referred to as “Winner Medical (Wuhan)”) (former name: Hubei Winner
Medical Co., Ltd.)
Shenzhen PureH2B Technology Co., Ltd. 3* (hereinafter referred to as “PureH2B”)
Pure HB (Shanghai) Co., Ltd. 4* (hereinafter referred to as “Pure HB (Shanghai)”)
Shenzhen Purunderwear Sci-Tech Innovation Co., Ltd. 5* (hereinafter referred to as “Purunderwear”)
Huanggang Purcotton Ltd. 6* (hereinafter referred to as “Huanggang Purcotton”)
1*: Heyuan Winner was established on May 18, 2016.
2*: Winner Medical (Wuhan) was established on January 23, 2017, of which the former name was Hubei Winner
Medical Co., Ltd. (abbreviated as “Hubei Winner”). On August 28, 2020, Hubei Winner was renamed as Winner
Medical (Wuhan) Co., Ltd.
3*: PureH2B was established on January 25, 2018.
4*: Pure HB (Shanghai) was established on March 16, 2018.
5*: Purunderwear was established on July 9, 2019.
6*: Huanggang Quanmian was established on September 27, 2020.
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The scope of the consolidated financial statements for this reporting period and its changes are detailed in
the notes “VIII. Consolidation scope changes” and “IX. Interests in other entities”.
IV. Preparation Basis of Financial Statements
1. Preparation basis
This financial statement is prepared in accordance with the Accounting Standard for Business Enterprises -- Basic
Standard issued by the Ministry of Finance, various special accounting standards, guideline for application of
accounting standard for business enterprises, ASBE interpretations and other relevant regulations (hereinafter
collectively referred to as “Accounting Standard for Business Enterprises”) and No.15 of Compilation Rules for
Information Disclosure by Companies Offering Securities to the Public - General Provisions of Financial Reports
issued by China Securities Regulatory Commission.
2. Continual operation
There are no events affecting the Company's going-concern ability and it is expected that the Company will be
able to operate as a going concern within the next 12 months. The Company's financial statements are prepared on
the basis of the assumption of going concern.
V. Significant accounting policy and accounting estimate
Specific accounting policy and accounting estimate:
The following significant accounting policy and accounting estimate of the Company are formulated in
accordance with the Accounting Standards for Business Enterprises. The business not mentioned is implemented
in accordance with the relevant accounting policies in the Accounting Standards for Business Enterprises.
1. Statement of compliance with Accounting Standards for Business Enterprises
These financial statements comply with the requirements of the Accounting Standards for Business Enterprises
issued by the Ministry of Finance, and truly and completely reflect the consolidated and parent company financial
position of the Company on June 30, 2021 and the business performance and cash flows of the Company in the
first half of 2021.
2. Accounting period
The fiscal year of the Company runs from January 1 to December 31 of each calendar year.
3. Operating cycle
The operating cycle of the Company is 12 months.
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4. Reporting currency
The reporting currency of the Company is RMB.
5. Accounting treatment of business combination involving enterprises under and not under common
control
Business combination involving enterprises under the same control: the assets and liabilities acquired by the
merging party in the business combination (including the goodwill formed by the final controlling party by
purchasing the merged party) shall be measured on the basis of the book value of the assets and liabilities of the
merged party in the consolidated financial statements of the final controlling party on the merger date. The
difference between the book value of the net assets obtained and the consideration paid for the combination (or
total par value of issued shares) is adjusted against capital reserve (capital stock premium); if the capital reserve
(capital stock premium) is not sufficient to absorb the difference, the retained earnings shall be adjusted.
Business combination not involving enterprises under common control: the cost of combination is the fair value of
the assets paid, liabilities incurred or assumed and equity securities issued by the acquirer on the acquiring date
for acquisition of the control right of the acquiree. If the cost of combination is greater than the share of the fair
value of the acquiree's identifiable net assets acquired in the combination, the difference is recognized as goodwill;
if the cost of combination is less than the share of the fair value of the acquiree's identifiable net assets acquired in
the combination, the difference is included in the profit and loss of the current period. The acquiree's identifiable
assets, liabilities and contingent liabilities obtained by the acquirer in the combination meeting the recognition
conditions are measured at fair value on the acquiring date.
The directly related expenses incurred for the business combination are included in the profit and loss of the
current period; the transaction costs associated with the issue of equity or debt securities for the business
combination are included in the initially recognized amounts of the equity or debt securities.
6. Methods for preparing consolidated financial statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on a control basis and includes the
Company and all subsidiaries. Control means that the Company has the power over the invested entity, enjoys
variable returns by participating in the relevant activities of the invested entity, and has the ability to use the power
to influence the amount of returns.
(2) Consolidation procedures
The Company regards the whole enterprise group as an accounting entity and prepares consolidated financial
statements in accordance with unified accounting policies to reflect the overall financial position, operating
results and cash flow of the enterprise group. The impact of internal transactions between the Company and its
subsidiaries and between the subsidiaries are offset. If the internal transaction indicates that impairment loss has
occurred to relevant assets, such loss shall be recognized in full. If the accounting policies and the accounting
periods adopted by the subsidiaries are inconsistent with those of the Company, necessary adjustments shall be
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made in accordance with the accounting policies and the accounting periods of the Company when preparing the
consolidated financial statements.
The minority shareholders' share of the subsidiary's owners' equity, current net profit and loss and current
comprehensive income shall be separately listed under the owners' equity item in the consolidated balance sheet,
under the net profit item and under the total comprehensive income item in the consolidated income statement. If
the current loss shared by the minority shareholders of the subsidiary exceeds their share in the owner's equity of
the subsidiary at the beginning of the period, the minority equity shall be offset by the balance.
1) Increase of subsidiaries or business
During the reporting period, if subsidiaries or business are increased due to business combination involving
enterprises under the same control, the operating results and cash flow from the beginning of the current period to
the end are incorporated into the consolidated financial statements, and the opening balance in the consolidated
financial statements and the related items in comparative statements are adjusted, which shall be regarded that the
reporting subject after combination has been existed since the initial control point of the ultimate controlling
party.
If the invested party under the same control is controlled by the additional investment and other reasons, the
equity investment held before obtaining the control of the merged party, and the relevant profits and losses, other
comprehensive income and other net assets and other net assets changes between the date of acquisition of the
original equity and the date on which the merging party and the merged party are under the same control
(whichever is later) and the merger date shall offset the period of between the opening retained earnings or current
profits and losses in the comparative reporting period.
During the reporting period, if subsidiaries or business are increased due to business combination of enterprises
not under the same control, it shall be included in the consolidated financial statements as of the acquisition date
on the basis of the fair value of all identifiable assets, liabilities and contingent liabilities determined on the
acquisition date.
If it is able to exercise control over the invested entity that is not under the same control due to additional
investment or other reasons, the equity held by the acquiree before the acquisition date shall be re-measured
according to the fair value of the equity on the acquisition date, and the difference between the fair value and the
book value shall be included into the current investment income. Other comprehensive income, which can be
reclassified into profit and loss in the future, and other changes in owners' equity under the equity method as
related to the acquiree's equity held before the acquisition date are converted to the investment income of the
current period as of the acquisition date.
2) Disposal of subsidiary
① General disposal method
When the Company loses the control right over the invested entity due to disposal of part of the equity investment
or other reasons, the residual equity investment after the disposal shall be re-measured at its fair value on the date
of losing the control right. The difference between the sum of the consideration acquired by disposal of the equity
and the fair value of the residual equity, minus the sum of the share of the net assets of the original subsidiary
continuously calculated from the acquisition date or the merging date and the goodwill according to the original
shareholding ratio, shall be included in the investment income in the period of lose of the control right. Other
comprehensive income related to the equity investment of the original subsidiary that can be reclassified into
profit and loss in the future, and other changes in owners' equity under the equity method are converted to the
investment income in the period of lose of the control right.
② Disposal of subsidiary by steps
For disposal of the equity investment in the subsidiary by steps through multiple transactions till loss of the
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control right, the terms, conditions and economic impact of the disposal on each transaction in respect of the
equity investment of the subsidiary are subject to one or more of the following circumstances, which generally
indicate that the multiple transactions are package deals:
i. The transactions were entered into simultaneously or with consideration of their mutual influence;
ii. These transactions as a whole can only achieve a complete business result;
iii. The occurrence of one transaction depends on the occurrence of at least one other transaction;
iv. A transaction is not economical alone, but economic when considered with other transactions.
If each transaction belongs to a package deal, each transaction shall be subject to accounting treatment as a deal
for disposal of subsidiary and loss of the control right; the difference between the disposal price and the share of
net assets of the subsidiary corresponding to the disposal of investment before the loss of control right is
recognized as other comprehensive income in the consolidated financial statements and transferred into the
current profit and loss in the period of loss of control right.
If each transaction does not belong to a package deal, the equity investment of the subsidiary shall be subject to
accounting treatment without loss of control right before losing the control right; and accounting treatment shall
be carried out in accordance with the general disposal method of the subsidiary when losing the control right.
(3) Purchase of the minority equity of the subsidiaries
The difference between the long-term equity investment obtained due to the purchase of minority equity and the
share of the net assets to be enjoyed and continuously calculated from the acquisition date or merging date
according to the increased shareholding ratio is adjusted against the capital stock premium in the capital reserve in
the consolidated balance sheet; if the capital stock premium in the capital reserve is not sufficient to offset the
difference, the retained earnings shall be adjusted.
(4) Partial disposal of equity investment in subsidiaries without loss of control right
The difference between the disposal price and the disposal of long-term equity investment and the share of the net
assets to be enjoyed and continuously calculated from the acquisition date or merging date, is adjusted against the
capital stock premium in the capital reserve in the consolidated balance sheet; if the capital stock premium in the
capital reserve is not sufficient to offset the difference, the retained earnings shall be adjusted.
7. Joint venture arrangements classification and Co-operation accounting treatment
The joint venture arrangement is divided into joint management and joint venture.
Joint management means the joint venture arrangement in which the joint venture parties enjoy the assets and
assumes the liabilities related to the arrangement.
The Company confirms the following items related to the share of interests in the joint operation:
(1) Recognize the assets held solely by the Company and the assets jointly held according to the share of the
Company;
(2) Recognize the liabilities undertaken solely by the Company and the liabilities jointly undertaken according
to the share of the Company;
(3) Recognize the income generated from the sale of the Company’s share of the joint operation output;
(4) Recognize the income generated from the sale of outputs of the joint operation according to the share of the
Company;
(5) Recognize the expenses incurred separately and the expenses incurred in joint operation according to the
share of the Company
The Company's investment in the joint venture shall be accounted by the equity method. See Note “V. 22
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Long-term equity investment" for details.
8. Determining standards of cash and cash equivalents
Cash represents the Company’s cash on hand and the deposit readily available for payment. Cash equivalents
represent the short-term, highly liquid investments that are readily convertible into known amounts of cash and
that are subject to an insignificant risk of change in value.
9. Foreign currency transaction and foreign currency statement translation
(1) Foreign Currency Business
Foreign currency transaction adopts the spot exchange rate on the date of the transaction as the conversion
exchange rate to convert the foreign currency amount into RMB for reporting.
At the balance sheet date, the balance of foreign currency monetary items are converted by using the spot
exchange rates at the balance sheet date. Exchange differences arising therefrom are recognized in current profit
and loss, except the exchange differences related to a specific-purpose borrowing denominated in foreign currency
that qualify for capitalization are treated according to the capitalization of borrowing costs.
(2) Conversion of financial statements denominated in foreign currencies
The asset and liability items in the foreign currency balance sheets shall be translated at a spot exchange rate on
the balance sheet date. Among the owner's equity items, except the ones as “undistributed profits”, others shall be
translated at the spot exchange rate at the time when they are incurred. The income and expense items in the
income statement are converted at the spot rate on the date of transaction.
When disposing of the overseas operation, the balance of the financial statements denominated in foreign
currencies related to the overseas operation shall be transferred from the owner's equity item to the profit and loss
of the disposal period.
10. Financial instruments
The Company recognizes a financial asset, financial liability or equity instrument when becoming a party of the
financial instrument contract.
(1) Classification of financial instruments
According to the Company's business model of managing financial assets and the contractual cash flow
characteristics of financial assets, the financial assets are classified at the initial recognition as: financial assets
measured at the amortized cost, financial assets measured at fair value of which changes are recorded into other
comprehensive income, and financial assets at fair value of which changes are recorded in current profit and loss.
The Company classifies the financial assets that meet the following conditions and are not designated to be
measured at fair value and whose changes are recorded into the profits and losses of the current period as financial
assets measured at the amortized cost:
- The business model is aimed at collecting contract cash flows;
- The contract cash flow is only the payment of the principal and interest based on the outstanding principal
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amount.
The Company classifies the financial assets that meet the following conditions and are not designated to be
measured at fair value and whose changes are recorded into the profits and losses of the current period as financial
assets measured at fair value of which changes are recorded into other comprehensive income (debt instrument):
- The business model is aimed at collecting contract cash flows and the sale of such financial assets;
- The contract cash flow is only the payment of the principal and interest based on the outstanding principal
amount.
For non-trading equity instrument investments, the Company may, at the time of initial recognition, irrevocably
designate them as financial assets measured at fair value of which changes are recorded into other comprehensive
income (equity instrument). The designation is made on a single investment basis and the related investments
meet the definition of an equity instrument from an issuer's perspective.
Except the above financial assets measured at the amortized cost and the financial assets measured at fair value of
which changes are recorded into other comprehensive income, the Company classifies all other financial assets as
financial assets at fair value of which changes are recorded in current profit and loss. Upon initial recognition, if
accounting mismatches can be eliminated or significantly reduced, the Company can irrevocably designate the
financial assets that should have been classified as those measured at the amortized cost or measured at fair value
of which changes are recorded into other comprehensive income as the financial assets measured at fair value of
which changes are recorded in current profit and loss.
Financial liabilities are classified at the initial recognition as: financial liabilities measured at fair value of which
changes are recorded in current profit and loss and financial liabilities measured at the amortized cost.
Financial liabilities that meet one of the following conditions may be designated at the initial recognition as the
financial liabilities measured at fair value of which changes are recorded in current profit and loss.
1) This designation can eliminate or significantly reduce accounting mismatches.
2) Manage and conduct performance evaluation of the financial liability portfolio or financial assets and
financial liability portfolio on the basis of fair value according to the enterprise risk management or
investment strategy set forth in the official written documents, and rep ort to the key management
personnel within the enterprise on this basis.
3) The financial liability contains embedded derivatives that need to be split separately.
(2) Recognition basis and measurement method of financial instruments
① Financial asset measured on the basis of post-amortization costs
The financial assets measured at the amortized costs include bills receivable, accounts receivable, other
receivables, long-term receivables, debt investment, etc., which shall be initially measured at fair value, and the
relevant transaction expenses are included in the initial recognized amount; the receivables excluding major
financing components and the accounts receivable that the Company decides not to consider the financing
components of less than one year shall be initially measured at the contract transaction price.
The interest calculated by the effective interest rate method during the holding period is recorded into the current
profit and loss.
Upon recovery or disposal, the difference between the price obtained and the book value of the financial assets
shall be recorded into the current profit or loss.
② Financial assets measured at fair value of which changes are recorded into other comprehensive income (debt
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instrument)
Financial assets measured at fair value of which changes are recorded into other comprehensive income (debt
instrument), including receivables financing and other debt investments, are initially measured at fair value and
related transaction costs are included in the initial recognized amount. The financial asset is subsequently
measured at its fair value, and changes in the fair value are recorded in other comprehensive income, except the
interest, impairment loss or gains and exchange gain and loss calculated by the effective interest rate method.
Upon the de-recognition, the accumulated gains or losses previously recorded in other comprehensive income will
be transferred from other comprehensive income to current profit and loss.
③ Financial assets measured at fair value of which changes are recorded into other comprehensive income (equity
instrument)
Financial assets measured at fair value of which changes are recorded into other comprehensive income (equity
instrument), including other equity instrument investment, are initially measured at fair value and related
transaction costs are included in the initial recognized amount. Such financial assets are subsequently measured at
the fair value and the change in the fair value is recorded into other comprehensive income. The dividends
obtained are recorded in current profit and loss.
Upon the de-recognition, the accumulated gains or losses previously recorded in other comprehensive income will
be transferred from other comprehensive income to retained earnings.
④ Financial assets measured with fair value and with the changes included in current profit and loss
Financial assets measured at fair value of which changes are recorded in current profit and loss, including tradable
financial assets, derivative financial assets, other non-current financial assets, etc., are initially measured at fair
value and related transaction expenses are recorded in current profit and loss. Such financial assets are
subsequently measured at the fair value and the change in the fair value is recorded into current profit and loss.
⑤ Financial liabilities measured at fair values, changes of which recorded in the current profits or losses
Financial liabilities measured at fair value of which changes are recorded in current profit and loss, including
tradable financial liabilities, derivative financial liabilities, etc., are initially measured at fair value and related
transaction expenses are recorded in current profit and loss. Such financial liabilities are subsequently measured at
the fair value and the change in the fair value is recorded into current profit and loss.
Upon the de-recognition, the difference between its book value and the consideration paid is recorded in current
profit and loss.
⑥ Financial liabilities measured at the amortized cost
Financial liabilities measured at amortized cost, including short-term loans, notes payable, accounts payable, other
payables, long-term borrowings, bonds payable and long-term payables, are initially measured at fair value, and
related transaction expenses are included in the initial recognized amount.
The interest calculated by the effective interest rate method during the holding period is recorded into the current
profit and loss.
Upon the de-recognition, the difference between the consideration paid and the book value of such financial
liability is recorded in current profit and loss.
(3) De-recognition and transfer of financial assets
The Company shall derecognize the financial assets if one of the following conditions is satisfied:
- Termination of the contractual right to collect the cash flow of financial assets;
- The financial assets have been transferred, and almost all the risks and remuneration in its ownership have been
transferred to the transferee;
- The financial assets have been transferred, and while the Company has neither transferred nor retained virtually
all of the risks and remuneration in the ownership of the financial assets, it has not retained control of the financial
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assets.
In the event of a financial asset transfer, if almost all the risks and remuneration in the ownership of the financial
asset are retained, the recognition of the financial asset will not be terminated.
The principle of substance over form is adopted when judging whether the transfer of financial assets meets the
above conditions for de-recognition of financial assets.
The Company divides the transfer of financial assets into the whole transfer of financial assets and the partial
transfer of financial assets. If the overall transfer of the financial asset meets the de-recognition conditions, the
difference between the following two amounts shall be recorded into the current profits and losses:
① The book value of the transferred financial asset;
② The sum of the consideration received from the transfer and the cumulative amount of the fair value changes
originally included in owner’s equity directly (where the financial asset involved in the transfer is measured at fair
value and the change is recorded in other comprehensive income (debt instrument)).
If the partial transfer of the financial asset meets the de-recognition conditions, the book value of the overall
transferred financial asset is distributed between the derecognized and non-derecognized part according to the
relative fair value and the difference between the following two amounts is included in current profit and loss:
① The book value of derecognized part;
② Sum of the consideration of the derecognized part and the amount of corresponding derecognized part in the
total fair value changes originally included in owner’s equity directly (where the financial asset involved in the
transfer is measured at fair value and the change is recorded in other comprehensive income (debt instrument)).
If the transfer of the financial asset does not meet the conditions of de-recognition, such financial asset shall
continue to be recognized and the consideration received shall be recognized as a financial liability.
(4) De-recognition of financial liabilities
Where the current obligation of a financial liability has been discharged in whole or in part, such financial liability
or part thereof shall be derecognized; if the Company enters into an agreement with the creditor to replace the
existing financial liabilities by assuming new financial liabilities, and the contract terms of the new financial
liabilities and the existing financial liabilities are substantially different, the Company shall derecognize the
existing financial liabilities and recognize the new financial liabilities at the same time.
If all or part of the contract terms of the existing financial liabilities are substantially modified, the existing
financial liability or part thereof shall be derecognized, and the financial liabilities after the modification shall be
recognized as new financial liabilities.
When a financial liability is derecognized in whole or in part, the difference between the book value of the
derecognized financial liability and the consideration paid (including non-cash asset transferred out or the new
financial liability undertaken) is recorded in current profit and loss.
If the Company repurchases part of the financial liability, it shall allocate the overall book value of the financial
liability on the repurchase date according to the relative fair value of the continuing recognition part and the
de-recognition part. The difference between the book value allocated to the derecognized part and the
consideration paid (including non-cash asset transferred out or the liability undertaken) is recorded in current
profit and loss.
(5) Fair value determination method of financial assets and financial liabilities
The fair value of a financial instrument with an active market shall be recognized based on the quotation in the
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active market. The fair value of a financial instrument without an active market shall be recognized by means of
valuation techniques. Upon valuation, the Company adopts valuation techniques applicable to the current situation
and supported by sufficient available data and other information, selects input values consistent with the asset or
liability characteristics considered by market participants in the transaction of related assets or liabilities, and
gives priority to relevant observable input values. The Company uses non-observable input values only when
relevant observable input values cannot be obtained or are not practicable to obtain.
(6) Test method and accounting treatment method of financial assets impairment
The Company estimates the expected credit losses of financial assets measured at amortized cost, financial assets
measured at fair value of which changes are recorded into other comprehensive income (debt instrument) and
financial guarantee contracts on a single or combined basis.
The Company calculates the probabilistic weighted amount of the present value of the difference between the cash
flows receivable under the contracts and the cash flows expected to be received and recognizes the expected credit
loss, taking into account reasonable and evidential information concerning past events, current conditions and
projections of future economic conditions, and weighting the risk of default.
If the credit risks of such financial instrument have increased significantly since the initial recognition, the
Company shall measure its loss provision according to the amount equivalent to the expected credit loss in the
entire duration of such financial instrument. If the credit risks of such financial instrument have not increased
significantly since the initial recognition, the Company shall measure the loss provision according to the amount
equivalent to the expected credit loss of such financial instrument in the next 12 months. The amount of the
increase or reversal of the loss provision resulting therefrom shall be recorded into the current profit and loss as an
impairment loss or profit.
By comparing the risk of default of financial instruments on the balance sheet date with the risk of default on the
initial recognition date, the Company determines the change of the default risk during the expected duration of the
financial instruments, so as to assess whether the credit risks of financial instruments have significantly increased
since the initial recognition. In general, the Company will consider that the credit risks of the financial instrument
has increased significantly if it is more than 30 days overdue, unless there is conclusive evidence that the credit
risks of such financial instrument have not increased significantly since the initial recognition.
If the credit risks of the financial instrument is low on the balance sheet date, the Company considers that the
credit risks of the financial instrument have not increased significantly since the initial recognition.
If there is objective evidence that a certain financial asset has suffered credit impairment, the Company shall make
provision for the impairment of the financial asset on an individual basis.
For receivables and contract assets formed by transactions regulated by Accounting Standards for Business
Enterprises No.14 - Revenue (2017), the Company always measures its loss provision at an amount equivalent to
the expected credit loss over the entire duration, whether o r not it contains major financing components.
For lease receivable, the Company shall always measure its loss provision according to the amount equivalent to
the expected credit loss within the entire duration.
If the Company no longer reasonably expects that the contract cash flow of a financial asset can be recovered in
whole or in part, it will directly write down the book balance of such financial asset.
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11. Notes receivable
(1) Impairment of notes receivable and accounts receivable
For notes receivable and accounts receivable, whether or not they contain major financing components, the
Company always measures its loss provision at an amount equivalent to the expected credit loss over the entire
duration, and the increase or reversal amount of the loss provision thus formed is recorded into the current profit
and loss as impairment loss or gain.
For notes receivable, the Company shall always measure its loss provision according to the amount equivalent to
the expected credit loss within the entire duration. Based on the credit risk characteristics of notes receivable, it is
divided into different portfolios:
Item Basis for recognition of combination and accrual method of provision for bad debt
Banker's acceptance If the acceptor is a bank with higher credit rating (such as large state-owned commercial banks and listed
bill joint-stock commercial banks), no provision for bad debts shall be made; if the acceptor is another bank or
financial company, the expected credit loss is analyzed based on historical information and judged whether it
is necessary to make provision for bad debts.
Trade acceptance If the acceptor is a non-financial institution, its division is the same as that of accounts receivable (if accounts
receivable are transferred to notes receivables, the age of accounts is calculated continuously).
The Company combines the notes receivable-trade acceptance, accounts receivable (except in the consolidation)
and prepayments with similar credit risk characteristics (aging), and estimates the proportion of bad debt provision
for notes receivable -trade acceptance, accounts receivable and prepayments based on all reasonable and informed
information, including forward-looking information, as follows:
Aging Accruing proportion of accounts Accruing proportion of trade Accruing proportion of prepaid
receivable (%) acceptance (%) accounts (%)
Within 1 year (including 1 5 5 0
year)
1-2 years 10 10 0
2-3 years 30 30 50
3-4 years 50 50 100
4-5 years 80 80 100
More than 5 years 100 100 100
If there is objective evidence that a certain note receivable, account receivable or prepayment has incurred credit
impairment, the Company shall make a provision for bad debts for the note receivable or account receivable or
prepayment separately and recognize the expected credit loss.
12. Accounts receivable
Please refer to this Note 5-11: Notes receivable.
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13. Amounts receivable financing
For the recognition methods and accounting treatment methods of the Company's expected credit loss on
financing receivables, please refer to Note “V. 10. Financial Instruments (6) Test method and accounting treatment
method of financial assets impairment".
14. Other receivables
Recognition method and accounting treatment method of the expected credit loss of other receivables
For the measurement of impairment loss of other receivables other than accounts receivable and notes receivable
(including other receivables, long-term receivables, etc.), it shall be treated by referring to the “V. 10. Financial
instruments (6) Test method and accounting treatment method of financial assets impairment”.
15. Inventory
(1) Classification and cost of inventories
The inventories are classified as raw materials, low priced and easily worn articles, merchandise inventory, work
in progress, goods shipped in transit, goods processed by commission, wrappage, etc.
Inventories are initially measured at cost. The inventory cost includes procurement costs, processing costs, and
other expenses incurred to bring the inventory to its current location and condition.
(2) Valuation method of delivered inventory
The sales of purchased finished products are priced according to the moving weighted average method at the time
of shipment; the sales of self-produced products are priced according to the standard cost method at the time of
shipment, and the difference between the actual cost and the standard cost shall be apportioned according to the
inventory and sales ratio at the end of the period.
(3) Recognition basis of net realizable value of different types of inventories
The inventories shall be measured on the balance sheet date according to the cost of inventories or net realizable
value, whichever is lower. If the cost of the inventories is higher than the net realizable value, the inventory falling
price reserves shall be withdrawn. The net realizable value of inventories is the amount of the estimated sale price
of the inventories subtracted by the estimated cost about to occur in completion, estimated selling expenses and
related taxes in daily activities.
For the finished products, merchandise inventory, materials for sale and other merchandise inventories directly
used for sale, the net realizable value is recognized by the amount of the estimated sale price of the inventories
subtracted by the estimated selling expenses and related taxes in normal production and operation process; for the
material inventory required to be processed, the net realizable value is recognized by the amount of the estimated
sale price of the finished products subtracted by the estimated cost about to occur in completion, estimated selling
expenses and related taxes in normal production and operation process; for the inventories held to perform the
sales contract or labor contract, the net realizable value is calculated on the basis of contract price. If the number
of the inventories held is greater than the quantity ordered in the sales contract, the net realizable value of the
excessive inventories is calculated on the basis of general sale price.
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If the influence factors writing down the inventory value before have disappeared after withdrawal of the
inventory falling price reserves, resulting in the net realizable value of the inventories higher than the book value,
the amount written down is reversed within the originally withdrawn amount of inventory falling price reserves
and the amount reversed is included in current profits and losses.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization methods of low priced and easily worn articles and wrappage
(1) The 50-50 amortization method is adopted for low-value consumables;
(2) The packaging adopts the one-time write-off method.
16. Contract assets
(1) Methods and standards for the recognition of contract assets
The Company lists the contractual assets or contractual liabilities in the balance sheet according to the relationship
between performance obligations and customer payment. The Company's rights to receive consideration for the
transfer of goods or services to the customer (and such rights are subject to factors other than the passage of time)
are listed as contractual assets. The contractual assets and contractual liabilities under the same contract are listed
in the net amount. The rights that the Company owns and unconditionally (depending only on the passage of time)
to collect consideration from the customer are listed separately as receivables.
(2) Recognition method and accounting treatment method of the expected credit loss of contractual assets
For the recognition methods and accounting treatment methods of the expected credit loss of the contract assets,
please refer to Note “V. 10. Financial Instruments (6) Test method and accounting treatment method of financial
assets impairment".
17. Contract cost
Contract cost includes the contract performance cost and the contract acquisition cost.
If the cost incurred by the Company for the performance of the contract is not within the scope of relevant
standards for inventory, fixed assets or intangible assets, it shall be recognized as an asset as a contract
performance cost when the following conditions are met:
The cost is directly related to a current or anticipated contract.
The cost increases the Company’s future resources to meet its performance obligations.
The cost is expected to be recoverable.
If the Company is expected to recover the incremental cost incurred in acquiring the contract, it shall be
recognized as an asset as the contract acquisition cost.
Assets related to contract costs are amortized on the same basis as income recognition of goods or services related
to the asset; however, if the amortization period of the contract acquisition cost is less than one year, the Company
shall record it into the current profit and loss when it is incurred.
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If the book value of an asset related to the contract cost is higher than the difference between the following two
items, the Company shall draw an impairment provision for the excess portion and recognize it as the assets
impairment loss:
① Remaining consideration expected to be obtained as a result of the transfer of the goods or services related to
the asset;
② The costs is estimated and to be incurred for the transfer of the relevant goods or services.
If the factors of impairment in the previous period change so that the difference above is higher than the book
value of the asset, the Company shall reverse the withdrawn impairment provision and include it into the current
profit and loss, but the book value of the reversed asset shall not exceed the book value of such asset on the
reversal date if the impairment provision is not withdrawn.
18. Assets held for sales
If the book value of an asset is recovered mainly through the sale (including the non-monetary assets exchange of
commercial nature) rather than continuous use of a non-current asset or disposal group, such asset is classified as
an asset held for sale.
The Company classifies non-current assets or disposal groups as held for sale if they meet the following
conditions simultaneously:
(1) Immediately available for sale under current conditions in accordance with the usual practice of selling such
type of assets or disposal groups in similar transactions;
(2) The sale is highly likely, that is, the Company has resolved a sale plan and obtained a firm purchase
commitment, and the sale is expected to be completed within one year. Where the relevant provisions require
the approval of the relevant authority or regulatory authority of the Company before the sale, the approval
has been obtained.
Where it is classified as non-current assets (not including financial assets and deferred income tax assets, the
assets formed by the employee compensation) or disposal groups held for sale, if its book value is higher than the
net amount of the fair value minus the selling expense, the book value is written down to the net amount of the
fair value minus the selling expense, the amount written down is recognized as the assets impairment loss and
included in the current profit and loss. The provision for impairment of available for sale assets is withdrawn.
19. Debt investment
20. Other debt investments
21. Long-term receivables
22. Long-term equity investment
(1) Criteria for determining joint control and significant influence
Joint control refers to the joint control over an arrangement in accordance with the relevant agreement, and the
related activities of the arrangement can only be decided upon the unanimous consent of the parties sharing the
control. Where the Company and other joint venture parties jointly exercise joint control over the invested entity
and enjoy rights over the net assets of the invested entity. The invested entity shall be the joint venture of the
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Company.
Significant influence means the power to participate in the formulation of financial and operating decisions of the
invested entity, but not the power to control or jointly control the formulation of these policies together with other
parties. If the Company is able to exert significant influence on the invested entity, the invested entity is a joint
venture of the Company.
(2) Recognition of initial investment cost
① Long-term equity investment formed by business combination
For the long-term equity investment in a subsidiary formed by business combination under common control, the
share of the book value of the owner’s equity of the combining party in the consolidated financial statements of
the final controlling party, on the combination date, is regarded as the initial cost of the long-term equity
investment. The difference between the initial cost of the long-term equity investment and the book value of paid
consideration shall adjust the capital stock premium in capital reserve. If the capital stock premium in capital
reserve is insufficient to offset, the retained earnings shall be adjusted. Where it implements the control upon the
invested entity under the same control due to additional investment or other reasons, the difference between the
initial investment cost of the long-term equity investment recognized according to the above principle and the sum
of the book value of the long-term equity investment before the combination plus the book value of the new
consideration for the acquisition of further shares on the merging date shall adjust the capital stock premium. If
the capital stock premium is insufficient to offset, the retained earnings shall be offset.
For the long-term equity investment in a subsidiary formed by business combination not under common control,
the combined cost recognized on the acquisition date is regarded as the initial cost of the long-term equity
investment. Where it implements the control upon the invested entity not under the same control due to additional
investment and other reasons, the sum of the book value of the original equity investment plus the new investment
cost is taken as the initial investment cost.
② Long-term equity investment acquired by means other than business combination
If the long-term equity investment is acquired by means of cash payment, the initial investment cost shall be the
purchase price actually paid.
If the long-term equity investment is acquired by issuing equity securities, the initial investment cost shall be the
fair value of the equity securities issued.
(3) Subsequent Measurement and Approach for the Determination of Profit and Loss
① Long-term equity investment checked by cost method
The long-term equity investment made by the Company in its subsidiaries adopts the cost method, unless the
investment meets the conditions of holding for sale. Except for cash dividends or profits already declared but not
yet paid that are included in the price or consideration actually paid upon acquisition of the investment, the
Company recognize the investment income in current period in accordance with the attributable share of cash
dividends or profit distributions declared by the invested entity.
② Long-term equity investment checked by equity method
The long-term equity investment of joint ventures and cooperative enterprises shall be calculated by the equity
method. The initial in vestment cost of the long-term equity investment is not adjusted if it is greater than the
difference between the fair value share of the net identifiable assets of the invested entity in the investment; if the
initial investment cost of the long-term equity investment is less than the difference between the fair value share
of the net identifiable assets of the invested entity in the investment, it is recorded in current profit and loss and
the cost of the long-term equity investment is adjusted.
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The Company recognizes the investment income and other comprehensive income according to its share of net
profit or loss and other comprehensive income of the invested entity, and adjusts the boot value of the long-term
equity investment accordingly; the Company decreases the book value of the long-term equity investment
accordingly in accordance with the share of the profit distribution or cash dividends declared by the invested
entity; for changes in owner’s equity of the invested entity other than those arising from its net profit o r loss,
other comprehensive income and profit distribution (abbreviated as “other changes in owner’s equity”), the
Company adjusts the book value of the long-term equity investment and records in the owner’s equity.
Upon recognizing the share of the net profit and loss, other comprehensive income and other changes in owner's
equity of the invested entity, it shall be recognized after adjusting the net income and other comprehensive income
of the invested entity on the basis of the fair value of the identifiable net assets of the invested entity when
obtaining the investment, and in accordance with the Company's accounting policies and accounting periods.
The profits and losses of unrealized internal transactions between the Company and joint ventures, cooperative
enterprises shall be calculated according to the proportion that should be enjoyed by the Company and shall be
offset. On this basis, investment income shall be recognized, except that the assets invested or sold constitute
business. The unrealized internal deal loss between the Company and the invested entity is recognized in full
amount if attributable to the assets impairment loss.
The net loss incurred by the Company to the cooperative enterprise or joint venture, except for the liability for
additional loss, shall be written down to zero by the book value of long-term equity investment and other
long-term equity substantially constituting the net investment in the cooperative enterprise or joint venture. If the
cooperative enterprise or joint venture achieves the net profits in the later periods, the Company recovers to
recognize the gain sharing amount after making up for the unrecognized loss sharing amount with the gain sharing
amount.
③ Disposal of long-term equity investment
On disposal of the long-term equity investment, the balance between the book value of the equity disposed of and
the actual price obtained is charged to current profit and loss.
If part of the long-term equity investment is disposed of by the equity method, and the remaining equity is still
accounted by the equity method, the other comprehensive income recognized by the original equity method shall
be carried forward on the same basis as the relevant assets or liabilities directly disposed of by the invested entity
at the corresponding proportion, and the changes in other owners' equity shall be carried forward to the current
profit and loss on a proportional basis.
If the joint control or significant influence on the invested entity is lost due to the disposal of equity investment or
other reasons, other comprehensive income of the original equity investment recognized by the equity method
shall be subject to accounting treatment through adopting the basis for the direct disposal of relevant assets or
debts when the equity method is terminated. Other changes in owners' equity will be transferred to current profit
and loss when the equity method is terminated.
If the Company loses its control rights over the invested entity due to the disposal of part of the equity investment,
when preparing individual financial statement, in case of the residual equity with joint control or significant
influence on the invested entity, the Company shall calculate and adjust the residual equity with equity method as
upon obtaining. Other comprehensive income recognized before the acquisition of the control right of the invested
entity shall be carried forward proportionately on the same basis as the direct disposal of relevant assets or
liabilities by the invested entity, and other changes in owners' equity recognized by the equity method shall be
carried forward proportionately to the current profit and loss. If the residual equity cannot exercise joint control or
exert significant influence on the invested entity, it shall be recognized as financial assets, the difference between
its fair value and book value on the date of loss of control shall be included in the current profit and loss, and all
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other comprehensive income and other changes in owner’s equity recognized before obtaining the control right of
the invested entity shall be carried forward.
If the deals for disposal of the subsidiary’s equity investment by steps through several times of transaction until
the loss of the control right belong to a package deal, the deals shall be subject to accounting treatment as a deal
for disposal of the equity investment in the subsidiary and loss of the control right; the difference between each
disposal price and the book value of the long-term equity investment corresponding to the equity disposed of
before the loss of control right is, in individual financial statements, recognized as other comprehensive income
and then transferred into the current profit and loss in the period of loss of control right. If it does not belong to a
package deal, each deal shall be accounted for separately.
23. Investment real estates
Measurement mode of investment real estate
N/A
24. Fixed assets
(1) Recognition conditions
The fixed assets refer to the tangible assets which are held for production of goods, provision of labor, lease or operating
management and whose service life exceeds a fiscal year. The fixed assets can be recognized when meeting the following conditions:
(1) The expected economic benefits related to the fixed assets are likely to flow to the enterprise; and (2) The cost of the fixed assets
can be reliably measured. The fixed assets are initially measured according to the cost (and the influence of the expected disposal
cost factors).
Subsequent expenditure related to fixed assets, if the economic benefits related may flow in and the cost can be reliably mea sured, is
included in the fixed asset cost; and the book value of the replaced part is derecognized; all other subsequent expenditures are
recorded into current profit and loss when incurred.
(2) Depreciation method
Class Depreciation method Depreciation life Residual rate Yearly depreciation
Houses and building Straight-line depreciation 10-35 10.00 2.57-9.00
Machinery equipment Straight-line depreciation 2-15 10.00 6.00-45.00
Transportation
Straight-line depreciation 3-10 10.00 9.00-30.00
equipment
Electronic equipment and
Straight-line depreciation 2-10 10.00 9.00-45.00
office equipment, etc.
Depreciation of fixed assets is calculated by straight-line depreciation method and the depreciation rate is
determined according to the category, expected useful life and expected net residual rate of the fixed assets. For
fixed assets with provision for impairment, the amount of depreciation shall be recognized in future periods
according to the book value after deducting the provision for impairment and based on the usable life. If the
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components of the fixed assets have different useful life or provide economic benefits for the Company in
different ways, the depreciation is calculated respectively by different depreciation rates or depreciation methods.
The fixed assets leased by financial leasing shall adopt the depreciation policy consistent with the own fixed
assets. Where it can be reasonably determined that the ownership of the leased assets can be acquired upon the
expiration of the lease term, depreciation shall be calculated and withdrawn within the service life of the leased
assets; where it is impossible to reasonably determine that the ownership of the leased assets can be acquired upon
the expiration of the lease term, the depreciation shall be calculated and withdrawn within a shorter period of the
lease term and the service life of the leased assets.
The depreciation method, expected service life, ratio of remaining value and yearly depreciation of various fixed
assets are as follows:
(3) Recognition basis, valuation and depreciation methods of fixed assets under financing lease
If one of the following conditions is stipulated in the lease agreement between the Company and the lessor, it shall be recognized as
the assets acquired under finance leases: (1) The ownership of the leased assets will belong to the Company upon the expiration of
the lease term; (2) The Company has the option to purchase the asset, and the purchase price is much lower than the fair value of the
asset when exercising the option; (3) The lease period accounts for most of the service life of the leased asset; (4) There is no
significant difference between the present value of the minimum lease payment on the beginning date of the lease and the fair value
of the asset; and (5) The property of the leased asset is special. If no major transformation is made, only the lessee can use it.
Upon commencement of the lease term, the Company takes the lower of the fair value of the leased asset on the lease commencement
date and the present value of the minimum lease payment as the entry value of the leased asset, and the minimum lease payment as
the entry value of the long-term payables, and their balance as the unrecognized finance fees.
25. Construction in progress
The construction in progress is measured according to the actual cost incurred. Actual costs include construction
costs, installation costs, borrowing costs eligible for capitalization, and other expenses necessary to bring the
construction in progress to a predetermined usable state. When the construction in progress reaches the intended
serviceable condition. it is transferred into fixed assets and begin to withdraw the depreciation since the next
month.
26. Borrowing costs
(1) Recognition principle of capitalization of borrowing costs
If the borrowing costs incurred by the Company can be directly attributed to the purchase, construction or
production of the assets eligible for capitalization, they shall be capitalized and recorded into the cost of the
relevant assets; other borrowing costs shall be recognized as expenses according to the amount incurred at the
time of occurrence and shall be recorded into the current profit and loss.
Assets meeting the capitalization conditions refer to the fixed assets, investment real estate, inventories and other
assets which can reach the intended usable or marketable status only after quite a long time of construction or
production activities.
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(2) Capitalization period of borrowing costs
Capitalization period refers to the period from the time point at which borrowing costs begin to be capitalized to
the time point at which borrowing costs cease to be capitalized, excluding the period during which the
capitalization of borrowing costs is suspended. Capitalization begins when borrowing costs meet the following
conditions:
① Asset expenditures have been incurred, including expenditures incurred in the form of cash payment, transfer
of non-cash assets or undertaking interest-bearing liabilities for the purchase and construction of or production of
assets eligible for capitalization;
② Borrowing costs have been incurred;
③ The purchase, construction or production activities which are necessary to prepare the asset for its intended use
or sale have started.
When the purchase, construction or production of assets that meet the capitalization conditions reach the
predetermined usable or marketable state, the capitalization of borrowing costs shall cease.
(3) Capitalization suspension period
If the assets that meet the capitalization conditions are abnormally interrupted in the process of purchase and
construction or production, and the interruption period is more than 3 consecutive months, the capitalization of
borrowing costs shall be suspended; if the interruption is necessary for the purchase, construction or production of
the assets that meet the capitalization conditions to reach the predetermined usable state or marketable state, the
borrowing costs shall continue to be capitalized. The borrowing costs incurred during the interruption period are
recognized as the current profit and loss, until the borrowing costs continue to be capitalized after the purchase
and construction or the production activities of the assets are restarted.
(4) Calculation method of capitalization rate and capitalization amount of borrowing costs
For the specific borrowing for the purchase and construction or production of assets eligible for capitalization, the
capitalization amount of borrowing costs shall be recognized by the borrowing costs actually occurring in the
current period of specific borrowing, minus the amount of the interest income obtained by depositing the unused
borrowing funds in the bank or the investment income obtained by making temporary investment.
For the general borrowing occupied for the purchase, construction or production of assets that meet the
capitalization conditions, the amount of borrowing expenses to be capitalized for the general borrowing shall be
calculated and recognized according to the weighted average of the accumulated asset expenditure exceeding the
specific borrowing multiplied by the capitalization rate of the general borrowing occupied. The capitalization rate
is calculated and recognized according to the weighted average effective interest rate of the general borrowing.
During the capitalization period, the difference between the exchange of the principal and interest of the specific
foreign currency borrowing shall be capitalized and recorded into the cost of the assets eligible for capitalization.
The exchange difference arising from the principal and interest of foreign currency borrowings other than specific
foreign currency borrowing is recorded into the current profit and loss.
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27. Biological assets
28. Oil and gas assets
29. Right-of-use assets
The right-of-use asset is initially measured at cost, which includes:
1) The initial measurement amount of the lease liabilities;
2) If there is a lease incentive for the lease payment paid on or before the start of the lease term, the
amount of the granted lease incentive shall be deducted;
3) The initial direct expenses incurred by the Company;
4) Costs expected to be incurred by the Company to disassemble and remove a leased asset, restore the site
where the leased asset is located, or restore the leased asset to the condition agreed upon under the
terms of the lease (excluding costs incurred to produce inventory).
After the commencement date of the lease term, the Company adopts the cost model for subsequent measurement
of the right-of-use assets.
If it can be reasonably determined that the ownership of the leased asset can be obtained at the end of the lease
term, the depreciation shall be accrued within the remaining service life of the leased asset. If it is impossible to
reasonably determine that the ownership of the leased asset can be obtained at the end of the lease term, the
depreciation shall be accrued within the shorter of the lease term and the remaining service life of the leased asset.
For right-of-use assets with provision for impairment, the amount of depreciation shall be recognized in future
periods according to the book value after deducting the provision for impairment with reference to the above
principles.
30. Intangible assets
(1) Valuation method, service life and impairment test
① Pricing methods for intangible assets
1) The intangible assets are initially measured according to the cost;
The costs of purchased intangible assets include the purchase price, related taxes as well as other expenses
incurred to make the assets reach the intended serviceable conditions and attributable to the assets.
2) Subsequent measurement
The Company analyzes and judges the useful life of the intangible assets when obtaining.
The intangible assets with limited useful life are amortized within the period when the intangible assets bring
economic benefits to the Company; the intangible assets that cannot be expected to bring economic benefits to the
Company are deemed to have uncertain life and are not amortized.
② Estimation of useful life of intangible assets with limited life
Item Expected useful life Basis
Land use right 50 Term of use specified in the land-use right
certificate
Software use right 2-8 years Useful life estimated by the management
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Trademark right 5-10 years Benefit period specified in the certificate of
trademark use
Patent right 5-10 years Benefit period specified in the certificate of
patent use
Franchised use right 3 years Term of use stipulated in the contract
③ Basis for judging intangible assets with uncertain service life and the procedures for reviewing their
service life
During this reporting period, the Company has no intangible assets with uncertain service life.
(2) Accounting policy of expenditure for internal research and development
① Specific criteria for dividing research stage and development stage
The expenditure of the Company's internal R&D projects is classified into the expenditure at the research stage
and the expenditure at the development stage.
Research stage: the stage of original, planned investigation and research activities to acquire and understand new
scientific or technical knowledge, etc.
Development stage: the stage in which research or other knowledge is applied to a plan or design to produce new
or substantially improved materials, devices, products, etc., prior to commercial production or use.
② Specific conditions for the capitalization of expenditures in the development stage
The expenditure at the research stage is charged to the current profit and loss in occurrence. The expenditure at the
development stage can be recognized as intangible assets only when meeting the following conditions and charged
to the current profit and loss if not meeting the following conditions:
1) Technically feasible to complete the intangible assets, so that they can be used or sold;
2) It is intended to finish and use or sell the intangible assets;
3) Ways of intangible assets to generate economic benefits, including those can prove that the products generated
by the intangible assets can be sold or the intangible assets themselves can be sold and prove that the intangible
assets to be used internally are useful;
4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the
support of sufficient technologies, financial resources and other resources; and
5) The development expenditures of the intangible assets can be reliably measured
If the expenditure at the research stage and the expenditure at the development stage cannot be distinguished, the
R&D expenditure incurred is fully charged to the current profit and loss.
Companies are required to comply with the disclosure requirements of “Guidelines of Shenzhen Stock Exchange on Information
Disclosure by Growth Enterprises Market No. 10: Listed Companies Engaged in Medical Device Business”
31. Long-term assets impairment
Long-term assets such as long-term equity investment, fixed assets, construction in progress, intangible assets
with limited service life, and oil and gas assets, which show signs of impairment on the balance sheet date, shall
be subject to impairment tests. If the impairment test results show that recoverable amount of the asset is below its
book value, the provision for impairment is withdrawn according to the balance and charged to the impairment
loss. The recoverable amount is determined according to the higher of the net amount of the assets fair value
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subtracted by the disposal costs and the present value of the expected future cash flow of the assets. The provision
for impairment of assets is calculated and recognized on the basis of single asset. The Company recognizes the
recoverable amount of the asset group based on the asset group to which the asset belongs if the recoverable
amount of the single asset is difficult to estimate. An asset group is the smallest group of assets that can generate
cash inflows independently.
The goodwill formed due to business combination, intangible assets with uncertain service life and intangible
assets that have not yet reached the usable state shall be subject to impairment test at least at the end of each year
regardless of whether there are signs of impairment.
The Company conducts the goodwill impairment tests. For the book value of the goodwill formed due to business
combination, it shall be apportioned to the relevant asset group by a reasonable method from the date of purchase;
if it is difficult to apportion to the relevant asset group, it shall be apportioned to the relevant asset group
combination. The relevant asset group or asset group combination is an asset group or asset group combination
that can benefit from the synergies of business combination.
When conducting impairment test on the relevant asset group or asset group combination containing goodwill, if
there are signs of impairment in the asset group or asset group combination related to goodwill, conduct
impairment test on the asset group or asset group combination without goodwill at first, calculate the recoverable
amount and recognize the corresponding impairment loss compared with the relevant book value. Then conduct
an impairment test on the asset group or asset group combination containing goodwill to compare its book value
with the recoverable amount. If the recoverable amount is less than the book value, the amount of impairment loss
shall first offset the book value of goodwill amortized to the asset group or asset group combination, and then
offset the book value of other assets proportionally according to the proportion of the book value of assets other
than goodwill in the asset group or asset group combination. The above impairment loss of assets will not be
reserved in subsequent accounting periods once recognized.
32. Long-term unamortized expenses
Long-term unamortized expenses refer to the expenses that have occurred but shall be burdened in current period
and later periods with the apportionment period more than one year.
Amortization method: long-term unamortized expenses are amortized on an average basis over the benefit period.
33. Contract liabilities
The Company lists the contractual assets or contractual liabilities in the balance sheet according to the relationship
between performance obligations and customer payment. The obligations of the Company to transfer goods or
provide services to customers for which consideration has been received or receivable are listed as contractual
liabilities. The contractual assets and contractual liabilities under the same contract are listed in the net amount.
34. Employee compensation
(1) Short-term compensation accounting method
The Company recognizes the short-term compensation incurred actually during the accounting period when the
employees provide services for the Company as the liabilities and includes in current profits and losses or related
asset costs.
For the social insurance premiums and housing funds paid by the Company for the employees as wells as the
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labor union expenditure and personnel education fund withdrawn according to the provisions, the corresponding
employee compensation amount is recognized according to the stipulated accruing basis and accruing proportion
during the accounting period when the employees provide services for the Company.
The employee welfare expenses incurred by the Company shall be recorded into the current profit and loss or
relevant asset cost according to the actual amount when actually incurred, and the non-monetary welfare shall be
measured at its fair value.
(2) Post-employment benefits accounting method
① Defined contribution plan
The Company pays the basic endowment insurance and unemployment insurance for the employees according to
relevant provisions of the local government, calculates the amount payable according to local payment base and
proportion in the accounting period when the employees provide services for the Company, recognizes the amount
payable as the liabilities and includes in current profits and losses or related asset costs. In addition, the Company
has also participated in the corporation pension plan / supplementary pension insurance fund approved by the
relevant departments of the state. The Company pays the fees to the pension plan / local social security institution
according to a certain proportion of the total employee wages and includes corresponding expenses in current
profits and losses or related asset costs.
② Defined benefit plan
The Company attributes the welfare obligations generated from the defined benefit plan to the period when the
employees provide services by the formula recognized according to the expected cumulative welfare unit method
and includes in current profits and losses or related asset costs.
The deficit or surplus formed from the present value of the defined benefit plan obligation subtracted by the fair
value of the defined benefit plan assets is recognized as a net liability or net asset of the defined benefit plan. In
case of surplus in the defined benefit plan, the Company measures the net assets of the defined benefit plan
according to the lower of the surplus and asset upper limits of the defined benefit plan.
All defined benefit plan obligations, including the obligations for payment within 12 months after the end of the
expected annual reporting period in which the employees provide services, are discounted according to the
national debts matching the defined benefit plan obligatory term and currency or the market return of the
high-quality corporation bonds active in the market on the balance sheet date.
The service costs generated from the defined benefit plan and the net interest of the net liabilities or net assets of
the defined benefit plan are included in current profits and losses or related asset costs; the changes from
re-measurement of the net liabilities or net assets of the defined benefit plan are included in other comprehensive
income and not written back to the profits and losses in subsequent accounting period. Upon the termination of the
original defined benefit plan, the part originally recorded into other comprehensive income within the scope of
rights and interests shall be carried forward to undistributed profit.
In the settlement of the defined benefit plan, the settlement profits or losses are recognized according to the
balance between the present value of the defined benefit plan obligation and the settlement price recognized on
the settlement date.
(3) Termination benefits accounting method
When providing dismission welfare, the Company shall recognize the employee compensation liabilities arising
from the dismission welfare and record it in the current profit and loss whenever is earlier below: when the
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Company fails to unilaterally withdraw the dismission welfare due to termination of labor relation plan or
downsizing suggestions; when the Company recognizes the costs or expenses related to restructuring involving
payment of dimission welfare.
(4) Other long-term employee benefits accounting method
35. Lease liabilities
The Company initially measures the lease liabilities at the present value of the lease payments outstanding at the
commencement date of the lease term. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company’s incremental borrowing rate is used. Lease payments
include:
1) Fixed payment and actual fixed payment after deducting the relevant amount of lease incentives;
2) Variable lease payments that depend on an index or rate;
3) If the Company reasonably determines that the option will be exercised, the lease payment includes the
exercise price of the purchase option;
4) If the lease term reflects that the Company will exercise the option to terminate the lease, the lease
payment includes the amount required to be made at the time of exercising the option to terminate the
lease;
5) The amount to be paid shall be estimated based on the residual value of the guarantee provided by the
Company.
The Company calculates the interest expense of the lease liability during each period of the lease term according
to a fixed discount rate, and includes it in the current profit and loss or the cost of related assets.
Variable lease payments that are not included in the measurement of the lease liabilities should be included in
current profit or loss or the cost of the related asset when they are actually incurred.
36. Estimated liabilities
The estimated liabilities are recognized when the obligation related to contingencies meets the following
conditions simultaneously:
(1) The obligation is the current obligation undertaken by the Company;
(2) Performance of the obligation is likely to lead to the outflow of economic benefits;
(3) The amount of the obligation can be reliably measured.
The estimated liabilities are initially measured at the best estimate of the expenditure required to perform the
relevant current obligations.
In recognizing the best estimate, factors such as risk, uncertainty and time value of money related to contingencies
are taken into account. If the time value of money has a significant impact, the best estimate is determined by
discounting the relevant future cash outflows.
If there is a continuous range of expenditure required and the probability of various outcomes within this range is
the same, the best estimate is recognized according to the middle value within this range; in other cases, the best
estimates are handled as follows:
When a contingency involves a single item, the best estimate is recognized by the most possible amount.
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When a contingency involves more than one item, the best estimate is recognized according to a variety of
possible outcomes and related probabilities.
When all or some of the expenses necessary for the liquidation of an estimated liabilities is expected to be
compensated by a third party, the compensation shall be separately recognized as an asset only when it is virtually
certain that the reimbursement will be obtained. Besides, the amount recognized for the reimbursement shall not
exceed the book value of the estimated liabilities.
The Company reviews the book value of the estimated liabilities on the balance sheet date, and if there is
conclusive evidence that the book value cannot reflect the current best estimate, it shall adjust the book value
according to the current best estimate.
37. Share-based payment
The Company's share-based payment refers to a transaction in which the company grants equity instruments or
undertakes equity-instrument-based liabilities in return for services from employee or other parties. The
Company's share-based payments shall consist of equity-settled share-based payments and cash-settled
share-based payments.
(1) Equity-settled share-based payments and equity instruments
Where the equity-settled share-based payment is exchanged for the services provided by the employee, it shall be
measured at the fair value of the equity instrument granted to the employee. For share-based payment transactions
with exercisable rights immediately after the grant, it shall be included in the relevant costs or expenses in
accordance with the fair value of the equity instrument on the grant date, and the capital reserves shall be
increased accordingly. For the share-based payment transaction where the service within the waiting period is
completed after the grant or specified performance conditions are met, on every balance sheet date of the waiting
period, the Company shall include the service obtained at the current period into relevant costs or expenses
according to the fair value of the grant date on the basis of the best estimate of the number of equity instruments
with exercisable rights, and increase the capital reserve accordingly.
If the terms of the equity-settled share-based payment are modified, the services acquired are recognized at least
in terms of the unmodified terms. In addition, any modification that increases the fair value of the equity
instrument granted, or that is beneficial to the employee at the date of modification, recognizes an increase in the
acquisition of services.
During the waiting period, if the granted equity instrument is canceled, the company will treat the canceled equity
instrument as the accelerated exercise of power, and immediately include the balance that shall be recognized in
the remaining waiting period into the current profit and loss, and simultaneously confirm the capital reserve.
However, if a new equity instrument is granted and the new equity instrument granted is deemed to be a
replacement for the cancelled equity instrument on the grant date, the granted replacement equity instrument will
be handled in the same manner as any amendment to the terms and conditions of the original equity instrument.
(2) Cash-settled share-based payments and equity instrument
The share-based payment settled by cash will be measured according to the fair value of the liability confirmed
basing on the shares borne by the company and other equity instruments. For share-based payment transactions
with exercisable rights immediately after the grant, the Company shall include it in the relevant costs or expenses
in accordance with the fair value of the equity instrument on the grant date, and the liabilities shall be increased
accordingly. If the rights can only be exercised after the situation that service within the waiting period is
completed and set performance is achieved, the service obtained in the current period, according to the fair value
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of the liabilities borne by the Company, and basing on the best estimate for the condition of exercising rights, will
be recorded into relevant costs or expenses on each and every balance sheet date during the waiting period, and
correspondingly recorded into the liabilities. Each and every balance sheet date and settlement before relevant
liability settlement, the fair value of liability will be remeasured, of which changes occurred will be counted into
the current period.
38. Preferred shares, perpetual bonds and other financial instruments
At the time of initial recognition, the Company classifies the financial instrument or its components as a financial
asset, financial liability or equity instrument based on the terms of the contract and the economic substance
reflected in the issued preferred stock / perpetual bond, and not solely in legal form.
In case that the financial instrument such as perpetual bond / preferred stock issued by the Company meet one of
the following conditions, it, in whole or in part thereof, is classified as financial liabilities at the time of initial
recognition:
(1) There are contractual obligations which the Company cannot unconditionally avoid fulfilling by delivering
cash or other financial assets;
(2) It contains contractual obligations of delivering a variable number of its own equity instruments for
settlement;
(3) It contains derivative instrument (such as equity transfer, etc.) that is settled with its own equity, and such
derivative instrument does not exchange a fixed number of its own equity instruments for a fixed amount of
cash or other financial assets for settlement;
(4) There are contract clauses that indirectly form contractual obligations;
(5) When the issuer liquidates, the perpetual bonds are in the same order of liquidation as the ordinary bonds and
other debts issued by the issuer.
In case that the financial instrument such as perpetual bond / preferred stock issued by the Company does not
meet one of the above conditions, it, in whole or in part thereof, is classified as equity instrument at the time of
initial recognition.
39. Income
Accounting policies for income recognition and measurement
The Company has fulfilled its contractual obligation to recognize income when the customer acquires control of
the relevant goods or services. Obtaining control of the relevant goods or services is the ability to dominate the
use of the goods or services and gain almost all economic benefits from them.
If the contract contains two or more performance obligations, the Company shall, on the commencement date of
the contract, apportion the transaction price to each individual performance obligation according to the relative
proportion of the individual selling price of the goods or services committed by each individual performance
obligation. The Company's income shall be measured according to the transaction price apportioned to each
individual performance obligation.
The transaction price means the amount of consideration that the Company is expected to be entitled to collect for
the transfer of goods or services to the customer, excluding payments collected on behalf of third parties and
amounts expected to be returned to the customer. The Company determines the transaction price in accordance
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with the terms of the contract and in combination with its past practices, and in determining the transaction price,
it takes into account the impact of variable consideration, material financing elements in the contract, non-cash
consideration, consideration payable to customers and other factors. The Company determines the transaction
price including the variable consideration by an amount not exceeding the amount of accumulated recognized
income which is highly unlikely to be materially reversed when the relevant uncertainty is eliminated. If there is a
material financing component in the contract, the Company shall determine the transaction price based on the
amount payable in cash when the customer acquires control of the goods or services, and shall amortize the
difference between the transaction price and the contract consideration by the effective interest method during the
contract period.
If one of the following conditions is satisfied, it shall be deemed to have performed its performance obligation
within a certain period of time; otherwise, it shall be deemed to have performed its performance obligation at a
certain time point:
The customer obtains and consumes the economic benefits arising from the Company’s performance at the
same time of the Company’s performance.
The customer can control the goods under construction during the Company’s performance.
The goods produced by the Company during the performance are of irreplaceable use, and the Company
shall be entitled to receive payment for the accumulated part of the performance completed so far during the
whole contract period.
For the performance obligations performed within a certain period of time, the Company shall recognize the
income in accordance with the performance progress during that period, except where the performance progress
cannot be reasonably determined. Taking into account the nature of the goods or services, the Company will use
the output method or input method to determine the performance schedule. If the performance schedule cannot be
reasonably determined and the cost already incurred is expected to be compensated, the Company shall recognize
the income according to the cost already incurred until the performance schedule can be reasonably determined.
For performance obligations performed at a certain time point, the Company recognizes income at the time point
when the customer acquires control of the relevant goods or services. In determining whether the customer has
acquired control of goods or services, the Company considers the following indications:
The Company has the current collection right for the goods or services, that is, the customer has the current
payment obligation for the goods or services.
The Company has transferred legal ownership to the goods to the customer, that is, the customer has legal
ownership of the goods.
The Company has physically transferred the goods to the customer, that is, the customer has physically
possessed the goods.
The Company has transferred the main risk and remuneration in the ownership of the goods to the customer,
that is, the customer has acquired the main risk and remuneration in the ownership of the goods.
The customer has accepted the goods or services, etc.
40. Government subsidies
(1) Type
Government subsidies refer to the monetary assets or non-monetary assets obtained free of charge by the
Company from the government, and are classified into asset related government subsidies and the income related
government subsidies.
Government subsidies related to assets refer to the government subsidies obtained by the Company for the
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purchase and construction of long-term assets or the formation of long-term assets by other means. Government
subsidies related to income refer to government subsidies in addition to government subsidies related to assets.
The Company's classifying government subsidies as related to assets is subject to the following specific criteria:
the government documents clearly stipulate the use of funds, and the expected use direction of the funds is
expected to form related assets;
The Company's classifying government subsidies as related to income is subject to the following specific criteria:
the government documents do not stipulate the use purpose, and the expected use direction of the funds is to
supplement working capital;
If the subsidy object is not clearly specified in the government documents, the judgment basis for the Company to
classify the government subsidy as related to assets or related to income is as follows: except that the Company
designates its purpose as related to assets, it will be included in the current profit and loss.
(2) Recognition time point
Government subsidies will be recognized when the conditions attached to them are met and received by the
Company.
(3) Accounting treatment
The government subsidies related to assets write down the book value of the relevant assets or is recognized as
deferred income. If it is recognized as deferred income, it shall be recorded into the current profit and loss by
stages in accordance with reasonable and systematic methods during the service life of the relevant assets (if it is
related to the daily activities of the Company, it shall be recorded into other income; those not related to the daily
activities of the Company shall be included in non-revenue);
If the government subsidy related to the income is used to compensate the Company's related costs, expenses or
losses in the following period, it shall be recognized as deferred income and recorded into the current profit and
loss during the period of recognition of the relevant costs, expenses or losses (if it is related to the Company's
daily activities, it shall be recorded into other income; if it is not related to the daily activities of the Company, it
shall be included in non-revenue) or write down relevant costs, expenses or losses; those used to compensate the
relevant costs, expenses or losses incurred by the Company shall be directly recorded into the current profit and
loss (if it is related to the daily activities of the Company shall be recorded into other income; if it is not related to
the daily activities of the Company, it shall be included in non-revenue or write down relevant costs, expenses or
losses.
The interest subsidy on policy-based preferential loans obtained by the Company shall be accounted for under the
following two conditions:
① If the finance department allocates the interest subsidy fund to the lending bank, and the lending bank provides
the loan to the Company at the policy-based preferential interest rate, the Company shall take the loan amount
actually received as the entry value of the borrowing, and calculate the relevant borrowing cost in accordance with
the loan principal and the policy-based preferential interest rate.
② If the finance department allocates the interest subsidy fund directly to the Company, the Company will offset
the corresponding interest subsidy against the related borrowing costs.
41. Deferred income tax assets and deferred income tax liabilities
The income tax includes current income tax and deferred income tax. Except for the income tax arising from the
business combination and the transaction or item directly booked into the owners’ equity (including other
comprehensive income), the Company will record the current income tax and deferred income tax into the current
profit and loss.
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Deferred income tax assets and deferred income tax liabilities shall be calculated and recognized on the basis of
the difference (temporary difference) between the tax basis of the assets and liabilities and their book value.
For the deferred income tax assets recognized through deductible temporary difference, it is limited to the amount
of taxable income which is likely to be obtained to offset the deductible temporary difference in the future period.
For the deductible loss and tax deduction that can be carried forward to the subsequent year, the corresponding
deferred income tax assets are recognized within the limit of the future taxable income amount that is possibly
obtained to deduct the deductible loss and tax deduction.
For taxable temporary differences, except in special circumstances, the deferred income tax liability is recognized.
Special circumstances in which deferred income tax assets or deferred income tax liabilities are not recognized
include:
Initial recognition of goodwill;
Transaction or item that is neither a business combination nor does it affect accounting profit and taxable
income (or deductible loss) at the time of occurrence.
For the taxable temporary difference related to the investment of the subsidiaries, associated enterprises and joint
ventures, relevant deferred income tax liabilities are not recognized, unless the Company can control the
temporary difference write-back time and the temporary difference will probably not be written back in the
foreseeable future. For the deductible temporary difference related to the investment of the subsidiaries, joint
ventures and cooperative enterprises, deferred income tax assets are recognized when it is likely to write back the
temporary difference in the foreseeable future or to obtain the income tax payable used to offset the deductible
temporary difference in the future.
The deferred income tax assets and deferred income tax liabilities are measured on the balance sheet date
according to the tax law and the applicable tax rate in the period of expected recovery of relevant assets of
liquidation of relevant liabilities.
On the balance sheet date, the Company reviews the book value of the deferred income tax assets. If it is likely
not to obtain sufficient income tax payable to deduct the interests of the deferred income tax assets in the future,
the book value of the deferred income tax assets is written down. If it is likely to obtain sufficient income tax
payable, the amount written down is written back.
When the Company has the legal right to settle with net amount and intends to settle with net amount or obtain the
assets and liquidate the liabilities simultaneously, the income tax assets and income tax liabilities in the current
period are presented by the net amount after offset.
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are listed in net
amount after offset when both of the following conditions are met:
The tax payer has the legal right to settle the current income tax assets and current income tax liabilities on a
net basis;
The deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the
same tax col lection and management department from the same subject of tax payment or from different
subjects of tax payment but the subject of tax payment involved intends to settle the current income tax
assets and liabilities with the net amount or obtain the assets and liquidate the liabilities simultaneously in
each future important period when the deferred income tax assets and liabilities are written back.
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42. Leased
(1) Accounting treatment method of operating lease
Accounting policy effective on January 1, 2021.
Lease refers to a contract in which the lessor transfers the right to use the asset to the lessee within a certain period
of time to for consideration. On the commencement date of the contract, the Company assesses whether the
contract is a lease or contains a lease. If a party to the contract transfers the right to control the use of one or more
identified assets within a certain period in exchange for consideration, the contract is a lease or contains a lease.
① Split of lease contracts
When a contract contains several separate leases, the Company will split the contract and conduct accounting
treatments for each of the separate leases.
When a contract contains both lease and non-lease components, the Company splits the lease and non-lease
components, and the lease component is accounted for in accordance with the lease standard, while the non-lease
component should be accounted for in accordance with other applicable corporate accounting standards.
② Consolidation of lease contracts
If two or more contracts containing leases entered into by the Company and the same counterparty or its related
parties at the same or at a similar time, the contracts shall be combined into one contract for accounting purposes
in any of the following conditions:
(1) If the two or more contracts are entered into for a general business purpose and constitute a package deal, the
general business purpose of the contracts cannot be identified unless considered as a whole.
(2) The amount of consideration for one of the two or more contracts depends on the pricing or performance of
the other contract(s).
(3) The rights to use assets assigned by the two or more contracts together constitute a single lease.
③ Accounting treatment for the Company as a lessee
At the beginning of the lease term, in addition to short-term leases and low-value asset leases that apply simplified
processing, the Company recognizes the right-of-use assets and lease liabilities for leases.
(1) Short-term leases and low-value asset leases
Short-term leases are leases that do not include purchase options and the lease term does not exceed 12 months. A
low-value asset lease is a lease with a lower value when the single leased asset is a new asset.
(2) See this Note V. 29/ V. 35 for accounting policies for right-of-use assets and lease liabilities.
④ Accounting treatment for the Company as a lessor
(1) Classification of lease
The Company classifies leases as finance leases and operating leases at the lease commencement date. Finance
lease refers to a lease that has substantially transferred almost all the risks and rewards related to the ownership of
the leased asset, and its ownership may or may not be transferred in the end. Operating leases refer to leases other
than financial leases.
The Company usually classifies a lease as a finance lease if it is in any one or more of the following
circumstances:
1) The ownership of the leased asset is transferred to the lessee when the term of lease expires;
2) The lessee has the option to buy the leased asset at a price which is expected to be lower enough than the
fair value of the leased asset at the date when the option becomes exercisable. Thus, on the lease
beginning date, it can be reasonably determined that the option will be exercised by the lessee;
3) Even if the ownership of the asset is not transferred, the lease term covers the major part of the use life of
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the leased asset;
4) The present value of the lease payments on the lease beginning date amounts to substantially all of the
fair value of the leased asset;
5) The leased assets are of a specialized nature that only the lessee can use them without making major
modifications.
The Company may also classify a lease as a finance lease if it has any one or more of the following signs:
1) If the lessee cancels the lease, the loss caused by the cancellation to the lessor shall be borne by the
lessee.
2) Gains or losses arising from fluctuations in the fair value of the residual value of assets shall be borne by
the lessee.
3) The lessee has the ability to continue the lease to the next period at a rent much lower than the market
level.
(2) Accounting treatment method of finance lease
On the commencement date of the lease term, the Company recognizes finance lease receivables for finance
leases and derecognizes the finance lease assets.
When the finance lease receivable is initially measured, the sum of the unguaranteed residual value and the
present value of the lease receipts that have not been received at the commencement date of the lease, discounted
at the interest rate implicit in the lease, is used as the entry value of the finance lease receivables. Lease receipts
include:
1) Fixed payment and actual fixed payment after deducting the relevant amount of lease incentives;
2) Variable lease payments that depend on an index or rate;
3) When it is reasonably determined that the lessee will exercise the purchase option, the lease payment
includes the exercise price of the purchase option;
4) If the lease term reflects that the lessee will exercise the option to terminate the lease, the lease receivable
includes the amount required to be made by the lessee at the time of exercising the option to terminate the
lease;
5) The residual value of the guarantee provided to the lessor by the lessee, a party related to the lessee, and
an independent third party that has the financial ability to perform the guarantee obligation.
The Company calculates and recognizes interest income for each period of the lease term based on the fixed
interest rate implicit in the lease. Variable lease payments obtained that are not included in the net lease
investment measurement are included in profit or loss when they are actually incurred.
(3) Accounting treatment method of operating lease
During each period of the lease term, the Company adopts the straight-line method or other systematic and
reasonable methods to recognize the lease receipts from operating leases as rental income; the initial direct costs
incurred related to operating leases are capitalized and amortized over the lease term on the same basis as rental
income, and is included in the current profit and loss in installments; variable lease payments related to operating
leases that are not included in the lease receipts are included in the current profit and loss when they actually
occur.
⑤ Sale-leaseback
The Company evaluates and determines whether the asset transfer in the sale and leaseback transaction is a sale in
accordance with the principles described in this Note “V. 39 Revenue”.
(1) As a lessee
If the transfer of an asset in a sale-and-leaseback transaction is a sale, the Company, as the lessee, measures the
right-of-use asset resulting from the sale-and-leaseback at the portion of the original asset's book value that relates
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to the right to use acquired by the leaseback, and recognizes a gain or loss related to the right transferred to the
lessor only; if the transfer of an asset in a sale-and-leaseback transaction is not a sale, the Company, as the lessee,
continues to recognize the transferred asset and at the same time recognizes a financial liability equal to the
transfer income. See this Note “V. 10 Financial instruments” for the accounting treatment of financial liabilities.
(2) As a lessor
If the transfer of assets in a sale-and-leaseback transaction is a sale, the Company, as a lessor, accounts for the
purchase of the assets, and accounts for the lease of the assets in accordance with the aforementioned policy of “4.
The Company as a lessor"; if the transfer of assets in a sale-and-leaseback transaction is not a sale, the Company,
as a lessor, does not recognize the transferred assets, but recognizes a financial asset equal to the transfer income.
See this Note “V. 10 Financial instruments” for the accounting treatment of financial assets.
Accounting policy before January 1, 2021
Leases are classified into finance lease and operating lease. Finance lease refers to the lease where all risks and
rewards related to asset ownership have been substantively transferred. Operating leases refer to leases other than
financial leases.
1. Accounting treatment method of operating lease
(1) The lease payments made by the Company for leased assets shall be amortized on a straight-line basis
(reminder: if other reasonable methods are used, please specify) over the entire lease term without deducting
the rent-free period and included in the current expense. The initial direct expenses paid by the Company in
connection with the lease transaction are included in the current expenses.
When the lessor of the asset bears the lease-related expenses that should be borne by the Company, the Company
shall deduct such expenses from the total rent, apportion the deducted rent expenses in the lease term and record
them into the current expenses.
(2) The lease payments received by the Company for leasing assets shall be amortized on a straight-line basis
(reminder: if other reasonable methods are used, please specify) over the entire lease term without deducting
the rent-free period and recognized as lease-related income. The initial direct expenses paid by the Company
in connection with the lease transaction shall be included in the current expenses; if the amount is large, it
will be capitalized and recorded into the current income by stages according to the same basis as the
lease-related income recognition throughout the lease period.
When the Company bears the lease-related expenses that should be borne by the leasee, the Company shall deduct
such expenses from the total rental income, apportion them according to the deducted rental expenses during the
lease period.
2. Accounting treatment method of finance lease
(1) Assets acquired under finance leases: upon commencement of the lease term, the Company takes the lower
of the fair value of the leased asset on the lease commencement date and the present value of the minimum
lease payment as the entry value of the leased asset, and the minimum lease payment as the entry value of
the long-term payables, and their balance as the unrecognized finance fees. The Company adopts the
effective interest rate method to amortize the unrecognized financing costs within the period of the asset
lease and record them into financial expenses. The initial direct expenses incurred by the Company shall be
included in the value of the leased assets.
(2) Assets rent out under finance leases: upon commencement of the lease, the Company recognizes the
difference between the s um of the receivable finance lease amount and the unguaranteed residual value and
its present value as unrealized financing income, and recognizes it as rental income in each period in which
the rent is received in the future. The initial direct expenses incurred by the Company in connection with the
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leasing transaction shall be included in the initial measurement of the finance lease receivable, and the
amount of income recognized during the lease term shall be reduced.
(2) Accounting treatment method of finance lease
43. Other significant accounting policy and accounting estimate
(1) Discontinued operation
Discontinued operation is a separate component that meets one of the following conditions and has been disposed
of or classified into the held for sale category by the Company:
① The component represents an independent principal business or an independent principal area of operation;
② The component is part of an associated plan proposed to dispose of an independent principal business or an
independent principal area of operation;
③ The component is a subsidiary acquired exclusively for resale.
(2) Hedge accounting
Classification of hedging
① A fair value hedge refers to a hedge of the fair value change risk of an asset or liability that has been
recognized and a certain commitment that has not been recognized (except foreign exchange risk).
② A cash flow hedge refers to a hedge of the risk of changes in cash flow arising from a particular type of risk
relating to a recognized asset or liability, an anticipated transaction that is likely to occur, or the foreign exchange
risk contained in an unrecognized firm commitment
③ A hedge of net investment in overseas operations refers to a hedge of foreign exchange risks of net investment
of overseas operations. Net investment in overseas operations refers to the equity share of the enterprise in the net
assets of overseas operations.
Designation of hedging relationship and identification of hedging effectiveness
At the beginning of the hedging relationship, the Company has a formal designation of the hedging relationship
and has prepared formal written documents on the hedging relationship, risk management objectives and hedging
strategies. The documents specify the nature and quantity of the hedging instrument, the nature and quantity of the
hedged items, the nature of the hedged risk, type of hedging, and the Company's evaluation of the effectiveness of
the hedging instrument. Hedging effectiveness refers to the degree to which the change in the fair value or cash
flow of the hedging instrument can offset the change in the fair value or cash flow of the hedged item caused by
the hedged risk.
The Company continuously evaluates the effectiveness of hedging and judges whether the hedging meets the
requirements of hedging accounting for effectiveness during the accounting period in which the hedging
relationship is designated. If it is not satisfied, the hedging relationship shall be terminated.
The application of hedge accounting shall meet the following requirements for the effectiveness of hedging:
① There is an economic relationship between the hedged item and the hedging instrument.
② In the value changes caused by the economic relationship between the hedged item and the hedging instrument,
the influence of credit risk does not play a dominant role.
③ Adopting the appropriate hedge ratio will not cause the imbalance between the relative weight of the hedged
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item and the hedging instrument, thus generating accounting results inconsistent with the hedge accounting
objectives. If the hedge ratio is no longer appropriate, but the hedging risk management objectives have not
changed, the number of hedged items or hedging instruments shall be adjusted to make the hedge ratio meet the
requirements of effectiveness again.
Hedge accounting treatment methods
① Fair value hedging
Changes in the fair value of hedge derivative instruments are recorded in the current profit and loss. Changes
formed by the fair value of the hedged item due to the hedging risk shall be included in the current profit and loss,
and the book value of the hedged item shall be adjusted simultaneously.
For fair value hedging related to financial instruments measured at amortized cost, the adjustments to the book
value of the hedged item are amortized during the remaining period between the adjustment to the due date and
recorded in the current profit and loss. Amortization under the effective interest rate method may commence
immediately after the book value adjustment and shall not be later than the adjustment of fair value changes in the
termination of hedging risks by the hedged item.
If the hedged item is terminated, the unamortized fair value is recognized as the current profit and loss.
Where the hedged item is a firm commitment that has not been recognized, the accumulative change in the fair
value of the firm commitment caused by the hedging risk is recognized as an asset or liability, and the relevant
gains or losses are recorded into the current profits and losses. Changes in the fair value of hedging instruments
are also recorded in the current profit and loss.
② Cash flow hedging
The part of the gain or loss of the hedging instrument that belongs to the effective hedging shall be directly
recognized as other comprehensive income, while the part that belongs to the invalid hedging shall be recorded
into the current profit and loss.
If the hedged transaction affects the current profit and loss, such as when the hedged financial income or financial
expense is recognized or when the expected sale occurs, the amount recognized in other comprehensive income
will be transferred to the current profit and loss. If a hedged item is the cost of a non-financial asset or
non-financial liability, the amount originally recognized in other comprehensive income amount is transferred out
and recorded into the amount of initial recognition of the non-financial asset or non-financial liability (or the
amount originally recognized in other comprehensive income is transferred out during the same period as the
non-financial asset or non-financial liability affecting the profit and loss, and recorded into the current profit and
loss).
If the expected transaction or firm commitment is not expected to occur, the accumulated gains or losses of the
hedging instrument previously recorded in other comprehensive income are transferred out and recorded in the
current profit and loss. If the hedging instrument has expired, been sold, the contract terminated or exercised (but
not replaced or renewed), or the designation of the hedging relationship is withdrawn, the amount previously
recorded in other comprehensive income is not transferred out until the anticipated transaction or firm
commitment affects the current profit or loss.
③ Hedging of net investment in overseas operations
The hedging of net investment in overseas operations, including the hedging of monetary items that are part of the
net investment, shall be treated similarly to the cash flow hedging. In the gain or loss of the hedging instrument,
the part that is recognized as effective hedging is recorded in other comprehensive income, while the part that is
invalid hedging is recognized as current profit and loss. When disposing of overseas operations, any accumulated
gains or losses previously recorded in other comprehensive income will be transferred out and recorded into
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current profit and loss.
(3) Segmental reporting
The Company determines the operating segments based on the internal organizational structure, management
requirements and internal reporting system, and determines the reporting segments based on the operating
segments and discloses the information of the segments.
Operating segments refer to the components of the Company that meet the following conditions at the same time:
(1) The component is able to generate revenue and incur expenses in its daily activities; (2) The management of
the Company can regularly evaluate the operating results of the component to determine the allocation of
resources to it and evaluate its performance; (3) The Company can obtain relevant accounting information such as
the financial position, operating results and cash flow of the component. If two or more operating segments have
similar economic characteristics and meet certain conditions, they may be merged into one operating segment.
44. Significant accounting policy and accounting estimate change
(1) Changes in significant accounting policies
√Applicable □ Not applicable
Content and reasons of changes in
Approval procedures Remark
accounting policies
Since January 1, 2021, the Company has
implemented the Accounting Standards for
Business Enterprises No. 21 - Leases
(revised 2018) developed by Ministry of
Finance.
1. Impacts the new lease standards on the Company
Since January 1, 2021, the Company has implemented the Accounting Standards for Business Enterprises No. 21 -
Leases (revised 2018) developed by Ministry of Finance. See this Note V. 42. for details of the revised accounting
policy.
The cumulative effect amount of the first execution adjusts the amounts of the relevant items in the financial
statements at the beginning of the period in which the first execution occurs (January 1, 2021) and does not adjust
the information for comparable periods.
Impacts of the new lease standards on the relevant items in the balance sheet at the beginning of the current period
are listed as follows:
Item December 31, 2020 Cumulative effect amount January 01, 2021
Reclassic Remeasurement Subtotal
ations
Right-of-use assets 504,205,737.73 504,205,737.73 504,205,737.73
Total assets 504,205,737.73 504,205,737.73 504,205,737.73
Lease liabilities 564,334,375.76 564,334,375.76 564,334,375.76
Total liabilities 564,334,375.76 564,334,375.76 564,334,375.76
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Undistributed profit 5,126,630,011.14 (60,128,638.03) (60,128,638.03) 5,066,501,373.11
Total owners' equities 5,126,630,011.14 (60,128,638.03) (60,128,638.03) 5,066,501,373.11
Note: The above table presents only the affected items in the financial statement and does not include the
unaffected ones; therefore, the subtotals and totals disclosed cannot be recalculated from the figures presented in
the above table.
(2) Changes in major accounting estimates
□ Applicable √ Not applicable
(3) The adjustment of the financial statements at the beginning of the year for the first implementation of
the new lease standards from 2021
Applicable
Whether to adjust the balance sheet accounts at the beginning of the year
√ Yes □ No
Consolidated Balance Sheet
Unit: yuan
Item December 31, 2020 January 1, 2021 Adjusted figure
Current assets:
Cash and cash
4,162,539,245.78 4,162,539,245.78
equivalents
Deposit reservation for
balance
Lending funds
Tradable financial
4,131,178,589.44 4,131,178,589.44
assets
Derivative financial
assets
Notes receivable
Accounts receivable 844,317,708.12 844,317,708.12
Accounts receivable
18,182,662.70 18,182,662.70
financing
Advances to suppliers 124,031,239.05 124,031,239.05
Insurance premiums
receivables
Reinsurance premium
receivable
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Receivable reserve for
reinsurance contract
Other receivables 458,174,652.72 458,174,652.72
Including: Interest
receivable
Dividends
receivable
Monetary assets
purchased under resale
agreements
Inventory 1,216,486,940.21 1,216,486,940.21
Contract assets
Assets held for sales
Non-current assets due
within a year
Other current assets 35,184,227.09 35,184,227.09
Total current assets 10,990,095,265.11 10,990,095,265.11
Non-current assets:
Loans and advances
Debt investment
Other debt investments
Long-term receivables
Long-term equity
13,424,230.41 13,424,230.41
investment
Other equity instrument
investments
Other non-current
financial assets
Investment in real
estates
Fixed assets 1,400,749,050.00 1,400,749,050.00
Construction in
61,383,340.97 61,383,340.97
progress
Productive biological
assets
Oil and gas assets
Right-of-use assets 504,205,737.73 504,205,737.73
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Intangible assets 208,325,103.79 208,325,103.79
Development
expenditure
Goodwill
Long-term unamortized
121,335,007.33 121,335,007.33
expenses
Deferred income tax
143,132,351.08 143,132,351.08
assets
Other non-current
63,807,415.75 63,807,415.75
assets
Total non-current assets 2,012,156,499.33 2,516,362,237.06 504,205,737.73
Total assets 13,002,251,764.44 13,506,457,502.17 504,205,737.73
Current liabilities
Short-term loans 150,071,416.66 150,071,416.66
Borrowings from the
Central Bank
Borrowing funds
Tradable financial
liabilities
Derivative financial
liabilities
Notes payable 29,418,100.00 29,418,100.00
Accounts payable 726,577,306.94 726,577,306.94
Advance from
customers
Contract liabilities 530,188,257.63 530,188,257.63
Monetary assets sold
for repurchase
Deposits from
customers and
interbank
Acting trading
securities
Acting underwriting
securities
Payroll payable 169,957,077.81 169,957,077.81
Taxes payable 444,381,369.49 444,381,369.49
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Other payables 352,543,008.89 352,543,008.89
Including: Interest
payable
Dividends
payable
Fees and commissions
payable
Dividend payable for
reinsurance
Liabilities held for
sales
Non-current liabilities
due within one year
Other current liabilities 23,638,266.47 23,638,266.47
Total current liabilities 2,426,774,803.89 2,426,774,803.89
Non-current liabilities
Reserve fund for
insurance contracts
Long-term loans
Bonds payable
Including: preferred
stock
Perpetual
bond
Lease liabilities 564,334,375.76 564,334,375.76
Long-term payable
Long-term payroll
payable
Estimated liabilities
Deferred income 94,921,260.87 94,921,260.87
Deferred income tax
12,165,608.24 12,165,608.24
liabilities
Other non-current
liabilities
Total non-current liabilities 107,086,869.11 671,421,244.87 564,334,375.76
Total liabilities 2,533,861,673.00 3,098,196,048.76 564,334,375.76
Owner's equity:
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Capital stock 426,492,308.00 426,492,308.00
Other equity
instruments
Including: Preferred
stock
Perpetual
bond
Capital reserve 4,481,709,983.24 4,481,709,983.24
Less: treasury stock
Other comprehensive
(1,111,035.08) (1,111,035.08)
income
Special reserve
Surplus reserve 420,212,778.13 420,212,778.13
General risk reserve
Undistributed profit 5,126,630,011.14 5,066,501,373.11 (60,128,638.03)
Total shareholders’ equity
attributable to the owners of 10,453,934,045.43 10,393,805,407.40 (60,128,638.03)
parent company
Noncontrolling interest 14,456,046.01 14,456,046.01 0.00
Total shareholders’ equity 10,468,390,091.44 10,408,261,453.41 (60,128,638.03)
Total liabilities and equity 13,002,251,764.44 13,506,457,502.17 504,205,737.73
Adjustment description
Balance sheet of parent company
Unit: yuan
Item December 31, 2020 January 1, 2021 Adjusted figure
Current assets:
Cash and cash
3,669,286,043.43 3,669,286,043.43
equivalents
Tradable financial
3,779,510,798.34 3,779,510,798.34
assets
Derivative financial
assets
Notes receivable
Accounts receivable 679,644,839.39 679,644,839.39
Amounts receivable
26,281,743.01 26,281,743.01
financing
Advances to suppliers 1,141,185,179.88 1,141,185,179.88
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Other receivables 361,160,139.37 361,160,139.37
Including: Interest
receivable
Dividends
receivable
Inventory 244,264,320.15 244,264,320.15
Contract assets
Assets held for sales
Non-current assets due
within a year
Other current assets 2,986,600.60 2,986,600.60
Total current assets 9,904,319,664.17 9,904,319,664.17
Non-current assets:
Debt investment
Other debt investments
Long-term receivables
Long-term equity
738,074,914.56 738,074,914.56
investment
Other equity instrument
investments
Other non-current
financial assets
Investment real estates
Fixed assets 47,677,210.41 47,677,210.41
Construction in
625,889.08 625,889.08
progress
Productive biological
assets
Oil and gas assets
Right-of-use assets
Intangible assets 11,093,821.43 11,093,821.43
Development
expenditure
Goodwill
Long-term unamortized
4,270,865.79 4,270,865.79
expenses
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Deferred income tax
18,761,956.53 18,761,956.53
assets
Other non-current
7,420,450.61 7,420,450.61
assets
Total non-current assets 827,925,108.41 827,925,108.41
Total assets 10,732,244,772.58 10,732,244,772.58
Current liabilities
Short-term loans 120,071,416.66 120,071,416.66
Tradable financial
liabilities
Derivative financial
liabilities
Notes payable 8,757,000.00 8,757,000.00
Accounts payable 734,959,933.53 734,959,933.53
Advance from
customers
Contract liabilities 483,370,540.77 483,370,540.77
Payroll payable 57,086,457.61 57,086,457.61
Taxes payable 332,551,933.15 332,551,933.15
Other payables 261,840,719.70 261,840,719.70
Including: Interest
payable
Dividends
payable
Liabilities held for
sales
Non-current liabilities
due within one year
Other current liabilities 14,855,171.12 14,855,171.12
Total current liabilities 2,013,493,172.54 2,013,493,172.54
Non-current liabilities
Long-term loans
Bonds payable
Including: preferred
stock
Perpetual
bond
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Lease liabilities
Long-term payable
Long-term payroll
payable
Estimated liabilities
Deferred income 22,798,583.10 22,798,583.10
Deferred income tax
1,426,619.75 1,426,619.75
liabilities
Other non-current
liabilities
Total non-current liabilities 24,225,202.85 24,225,202.85
Total liabilities 2,037,718,375.39 2,037,718,375.39
Owner's equity:
Capital stock 426,492,308.00 426,492,308.00
Other equity
instruments
Including: preferred
stock
Perpetual
bond
Capital reserve 4,507,116,745.59 4,507,116,745.59
Less: treasury stock
Other comprehensive
income
Special reserve
Surplus reserve 411,397,111.21 411,397,111.21
Undistributed profit 3,349,520,232.39 3,349,520,232.39
Total owners' equities 8,694,526,397.19 8,694,526,397.19
Total liabilities and owners'
10,732,244,772.58 10,732,244,772.58
equities
Adjustment description
(4) Description of retrospective adjustment of the previous comparative data for the first implementation
of the new lease standard from 2021
□ Applicable √ Not applicable
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45. Others
VI. Taxes
1. Main tax categories and tax rates
Tax category Taxation basis Tax rate
Calculate the substituted money on VAT on
the basis of the income from selling goods
and taxable services according to the tax
Added value tax 13%, 9%, 6%, 3%
law. After deduction of the withholdings on
VAT allowed to deduct in current period,
the balance is the VAT payable
Consumption tax N/A N/A
Actual paid value added tax (including the
Urban maintenance and construction tax 7%, 5%
exemption part) and consumption tax
Corporate income tax Levied by income tax payable 25%, 20%, 16.5%, 15%
Actual paid value added tax (including the
Education surcharge 3%
exemption part) and consumption tax
If there are taxpayers with different enterprise income tax rates, the disclosure statement shall present
Name of taxpayer Income tax rate
The Company, Winner Medical (Huanggang) 15%
Winner Medical (Tianmen) 15%
Winner Medical (Jingmen), Winner Medical (Chongyang),
15%
Winner Medical (Jiayu)
Winner Medical Malaysia 25%
Qianhai Purcotton 15%
Winner Medical (Hong Kong) 16.5%
Pure HB (Shanghai) 20%
Other subsidiaries within the scope of consolidation 25%
2. Tax preference
(1) On October 16, 2018, according to the Notice on Publicizing the List of First Batch of High-tech Enterprises
to be Identified in Shenzhen in 2018 issued by the Leading Group Office of National High-tech Enterprise
Accreditation Administration, the Company passed the High-tech Enterprise Qualification Reexamination
(Certificate No. GR201844200237). The prepayment of corporate income tax shall be at a rate of 15% in
2021.
(2) According to the Notice on Publicizing the List of the Second Batch of High-tech Enterprises to be Identified
in Hubei Province in 2019, Winner Medical (Huanggang) was identified as the second batch of high-tech
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enterprises with the certificate number GR201942002414. In 2021, it can pay corporate income tax at the
preferential tax rate of 15.00%. The prepayment of corporate income tax shall be at a rate of 15% in 2021.
(3) Qianhai Purcotton was established on July 21, 2015, with its domicile located in Shenzhen Qianhai
Shenzhen-Hong Kong Cooperation Zone. According to the Notice of Enterprise Income Tax Preferential
Policies and Preferential Directory in Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry
Cooperation Zone of Hengqin New Fujian Pingtan Comprehensive Experimental Area (C.S. [2014] No. 26)
issued by the Ministry of Finance and State Taxation Administration, Qianhai Purcotton pays its enterprise
income tax at the tax rate of 15.00%.
(4) According to the Notice on Publicizing the List of First Batch of High-tech Enterprises to be Identified in
Hubei Province in 2018 issued by the Leading Group Office of National High-tech Enterprise Accreditation
Administration on November 15, 2018, Winner Medical (Jingmen) obtained the High-tech Enterprise
Certificate (Certificate No. GR201842001123) on November 15, 2018. The prepayment of corporate income
tax shall be at a rate of 15% in 2021.
(5) According to the Notice on Publicizing the List of Second Batch of High-tech Enterprises to be Identified in
Hubei Province in 2018 issued by the Leading Group Office of National High-tech Enterprise Accreditation
Administration on November 30, 2018, Winner Medical (Tianmen)obtained the High -tech Enterprise
Certificate (Certificate No. GR201842001959) on November 30, 2018. The prepayment of corporate income
tax shall be at a rate of 15% in 2021. According to the Notice on Publicizing the List of Second Batch of
High-tech Enterprises to be Identified in Hubei Province in 2018 on November 30, 2018, Winner Medical
(Chongyang) and Winner Medical (Jiayu) obtained the High-tech Enterprise Certificates (Certificate No.
GR201842001585, GR201842002393) on November 30, 2018. The prepayment of corporate income tax
shall be at a rate of 15% in 2021.
(6) Pure HB (Shanghai) was established on March 16, 2018 and registered in Pudong New Area, Shanghai City.
According to the Notice on Implementing the Preferential Tax Reduction Policy for Small and Micro-sized
Enterprises (C.S. [2019] No. 13) issued by the Ministry of Finance and State Taxation Administration, the
taxable income of Pure HB (Shanghai) in 2021 shall not exceed 1 million yuan, which shall be reduced by
25% and included into the taxable income, and the corporate income tax shall be paid at the tax rate of 20%.
3. Others
VII. Notes to Items in Consolidated Financial Statements
1. Cash and cash equivalents
Unit: yuan
Item Closing Balance Beginning balance
Cash on hand 77,810.79 49,287.18
Bank deposit 4,663,700,220.18 4,149,685,407.20
Other cash and cash equivalents 36,751,496.88 12,804,551.40
Total 4,700,529,527.85 4,162,539,245.78
Where: total amount deposited abroad 14,925,419.89 95,608,086.45
Total amount of funds with 40,195,765.99 12,804,551.40
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restrictions on use due to mortgage, pledge
or freeze
Other description
The breakdown of monetary funds with restrictions on use due to mortgages, pledges or freezes, as well as those placed outside
China with restrictions on repatriation of funds, is as follows:
Item Ending book value Causes for restriction
L/C deposit 34,512,382.24 It is mainly the deposit made for domestic
Letters of Credit
Performance bond 2,200,068.49 It is mainly the deposit made for transactions
with customers
Other restricted monetary fund balances 3,483,315.26 It refers to the balance of special deposit
accounts for restricted non-budget units
opened by Shenzhen Purcotton in
accordance with the regulations of prepaid
card issuance formulated by the Ministry of
Commerce.
Total 40,195,765.99
2. Tradable financial assets
Unit: yuan
Item Closing Balance Beginning balance
Financial assets measured with fair value
and with the changes included in current 2,707,384,233.24 4,131,178,589.44
profit and loss
Including:
Others 2,207,384,233.24 3,931,178,589.44
Trust products 500,000,000.00 200,000,000.00
Including:
Total 2,707,384,233.24 4,131,178,589.44
Other description: Other components of tradable financial assets include: the invested principal of structural deposit is
2,180,000,000.00 yuan and its fair value change income is 9,852,767.52 yuan, and the fair value change income from future for eign
exchange settlement is 17,531,465.72 yuan.
3. Derivative financial assets
Unit: yuan
Item Closing Balance Beginning balance
Derivative financial assets
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Other description:
4. Notes receivable
(1) Classified presentation of notes receivable
Unit: yuan
Item Closing Balance Beginning balance
Unit: yuan
Closing Balance Beginning balance
Provision for bad
Book balance Book balance Provision for bad debt
debt
Class Book Book
Accruing Accruing
Proportio value Proportio value
Amount Amount proportio Amount Amount proportio
n n
n n
Including:
Including:
Provision for bad debt by single item:
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion Reasons for provision
Provision for bad debt by combination:
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion
Description of the basis for determining the combination:
If the bad debt provision of notes receivable is withdrawn according to the general model of expected credit loss, please refer to the
disclosure method of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
Amount of change in current period
Beginning
Class Recovered or Closing Balance
balance Accrual Write-off Others
reversed
Where the amount of bad debt provision recovered or reversed is important:
□ Applicable √ Not applicable
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(3) Notes receivable pledged by the Company at the end of the period
Unit: yuan
Item Pledged amount at the end of the period
(4) Notes receivable endorsed or discounted by the Company at the end of the period and not expired yet
on the balance sheet date
Unit: yuan
Amount with recognition terminated at the Amount with recognition not terminated at
Item
end of the period the end of the period
(5) Notes transferred to accounts receivable by the Company at the end of the period due to failure of the
drawer to perform
Unit: yuan
Amount transferred to accounts receivable at the end of the
Item
period
Other description
(6) Notes receivable actually written off at the current period
Unit: yuan
Item Amount written off
Write-off of important notes receivable:
Unit: yuan
Whether the
Nature of notes Write-off procedures payments arise from
Unit name Amount written off Reasons for write-off
receivable performed connected
transactions
Description of write-off notes receivable:
5. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
Closing Balance Beginning balance
Provision for bad Provision for bad
Class Book balance Book Book balance
debt debt Book value
value
Amount Proportio Amount Accruing Amount Proportio Amount Accruing
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n proportio n proportio
n n
Including:
Accounts receivable
909,715, 46,048,1 863,667,8 888,816,0 44,498,30 844,317,70
of provision for bad 100.00% 5.06% 100.00% 5.01%
973.83 56.89 16.94 11.14 3.02 8.12
debt by combination
Including:
909,715, 46,048,1 863,667,8 888,816,0 44,498,30 844,317,70
Total 100.00% 5.06% 100.00% 5.01%
973.83 56.89 16.94 11.14 3.02 8.12
Provision for bad debt by single item: There is no accounts receivable of provision for bad debt by single item at the end of this
reporting period.
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion Reasons for provision
Provision for bad debt by single item:
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion Reasons for provision
Provision for bad debt by combination: aging analysis method
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion
Within 1 year (including 1 year) 900,638,842.88 45,031,942.14 5.00%
1~2 years (including 2 years) 8,780,214.88 878,021.49 10.00%
2~3 years (including 3 years) 226,746.87 68,024.06 30.00%
More than 5 years 70,169.20 70,169.20 100.00%
Total 909,715,973.83 46,048,156.89 --
Description of the basis for determining the combination:
Recognition criteria and description of bad debts by combination: On June 30, 2021, the Company reviewed the appropriateness of
the provision for bad debts of receivables in the previous year according to the historical bad debt loss, and believed that the default
probability has a strong correlation with the aging of accounts, and the account age is still a sign of whether the credit risk of the
company's receivables has significantly increased. Therefore, the Company's credit risk loss on June 30, 2021 is estimated ba sed on
the aging of accounts and estimated at the original loss ratio.
Provision for bad debt by combination:
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion
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Description of the basis for determining the combination:
If the bad debt provision of accounts receivable is withdrawn according to the general model of expected credit loss, please refer to
the disclosure method of other receivables to disclose the relevant information of bad debt provision:
√Applicable □ Not applicable
Disclosure by aging
Unit: yuan
Aging Closing Balance
Within 1 year (including 1 year) 900,638,842.88
1~2 years 8,780,214.88
2~3 years 226,746.87
More than 3 years 70,169.20
More than 5 years 70,169.20
Total 909,715,973.83
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
Amount of change in current period
Beginning
Class Recovered or Closing Balance
balance Accrual Write-off Others
reversed
Provision for bad
debt of accounts 44,498,303.02 10,631,457.77 9,081,603.90 46,048,156.89
receivable
Total 44,498,303.02 10,631,457.77 9,081,603.90 46,048,156.89
Where the amount of bad debt provision recovered or reversed is important:
Unit: yuan
Unit name Amount recovered or reversed Recovery way
(3) Accounts receivable actually written off at the current period
Unit: yuan
Item Amount written off
Write-off of important accounts receivable:
Unit: yuan
Whether the
Nature of accounts Write-off procedures
Unit name Amount written off Reasons for write-off payments arise from
receivable performed
connected
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transactions
Description of write-off accounts receivable:
(4) Accounts receivable with Top 5 ending balances by debtor
Unit: yuan
Ending balance of accounts Proportion in total other ending Ending balance of bad debt
Unit name
receivable balance of accounts receivable provision
First 192,013,204.61 21.11% 9,600,660.23
Second 31,273,460.19 3.44% 1,563,673.01
Third 29,435,075.96 3.24% 1,471,753.80
Fourth 26,500,414.91 2.91% 1,350,096.92
Fifth 25,904,708.42 2.85% 1,295,235.42
Total 305,126,864.09 33.55%
(5) Accounts receivable derecognized due to transfer of financial assets
(6) Amount of assets and liabilities formed by transferring accounts receivables and continuing
involvement
Other description:
6. Amounts receivable financing
Unit: yuan
Item Closing Balance Beginning balance
Notes receivable - banker's acceptance bill 9,263,087.17 18,182,662.70
Total 9,263,087.17 18,182,662.70
Changes in the increase and decrease of receivables financing and changes in the fair value in the current period
□ Applicable √ Not applicable
If the impairment provision of receivables financing is withdrawn according to the general model of expected credit loss, ple ase refer
to the disclosure method of other receivables to disclose the relevant information of impairment provision:
□ Applicable √ Not applicable
Other description:
7. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: yuan
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Closing Balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 173,005,830.85 96.59% 124,030,319.05 100.00%
1~2 years 6,101,780.22 3.41% 920.00
Total 179,107,611.07 -- 124,031,239.05 --
Reasons for non-timely settlement of important advances from customers with the aging more than 1 year:
There is no important advances aged for more than one year during this reporting period.
(2) Advances to suppliers with Top 5 ending balances by prepayment object
The amount of advances to suppliers with Top 5 ending balances by prepayment object was 114,979,693.79
yuan, accounting for 64.20% of the total balance of prepayments at the end of the period.
Other description:
8. Other receivables
Unit: yuan
Item Closing Balance Beginning balance
Other receivables 343,344,829.42 458,174,652.72
Total 343,344,829.42 458,174,652.72
(1) Interest receivable
1) Classification of interest receivable
Unit: yuan
Item Closing Balance Beginning balance
2) Important overdue interest
Unit: yuan
Whether there is
Borrower Closing Balance Overdue time Overdue reason impairment and its
judgment basis
Other description:
3) Provision for bad debt
□ Applicable √ Not applicable
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(2) Dividends receivable
1) Classification of dividends receivable
Unit: yuan
Project (or invested unit) Closing Balance Beginning balance
2) Important dividends receivable with the aging more than 1 year
Unit: yuan
Whether there is
Project (or invested unit) Closing Balance Aging Reason for non-recovery impairment and its
judgment basis
3) Provision for bad debt
□ Applicable √ Not applicable
Other description:
(3) Other receivables
1) Other receivables classified by nature
Unit: yuan
Nature of payment Ending book balance Beginning book balance
Compensation for investment and
construction project of Winner Medical 238,655,320.00 387,655,320.00
(Heyuan)
Margin and deposit 106,164,775.32 98,537,244.23
Export drawback 7,809,612.57
Employee pretty cash 3,635,864.16 2,496,966.71
Others 25,865,681.87 6,013,308.92
Total 374,321,641.35 502,512,452.43
2) Provision for bad debt
Unit: yuan
Stage 1 Stage 2 Stage 3
Expected credit Expected credit losses over Expected credit losses over
Provision for bad debt Total
losses over the next the entire duration (no the entire duration (credit
12 months credit impairment occurred) impairment has occurred)
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Balance on January 1,
44,123,702.07 214,097.64 44,337,799.71
2021
Balance on January 1,
2021 in the current —— —— —— ——
period
Accrual in current period 1,678,265.15 1,678,265.15
Reversal in current
15,039,252.93 15,039,252.93
period
Balance on June 30, 2021 30,762,714.29 214,097.64 30,976,811.93
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
Aging Closing Balance
Within 1 year (including 1 year) 135,043,390.01
1~2 years 238,744,293.11
2~3 years 136,679.80
More than 3 years 397,278.43
3~4 years 171,378.43
4~5 years 11,900.00
More than 5 years 214,000.00
Total 374,321,641.35
3) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
Amount of change in current period
Beginning
Class Recovered or Closing Balance
balance Accrual Write-off Others
reversed
Provision for bad
debts of other 44,337,799.71 1,678,265.15 15,039,252.93 30,976,811.93
receivables
Total 44,337,799.71 1,678,265.15 15,039,252.93 30,976,811.93
Where the amount of bad debt provision reversed or recovered is important:
Unit: yuan
Unit name Amount reversed or recovered Recovery way
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4) Other receivable actually written off at the current period
Unit: yuan
Item Amount written off
Write-off of important other receivables:
Unit: yuan
Whether the
Nature of other Write-off procedures payments arise from
Unit name Amount written off Reasons for write-off
receivables performed connected
transactions
Description of write-off of other receivables
5) Other receivables with Top 5 ending balances by debtor
Unit: yuan
Proportion in total
Ending balance of
Unit name Nature of payment Closing Balance Aging other ending balance
bad debt provision
receivable
Compensation for
investment and
First construction project 238,655,320.00 1~2 years 63.76% 23,865,532.00
of Winner Medical
(Heyuan)
Second Margin and deposit 7,669,567.22 Within 1 year 2.05% 383,478.36
Third Margin and deposit 2,746,332.73 Within 1 year 0.73% 137,316.64
Fourth Margin and deposit 1,285,230.90 Within 1 year 0.34% 64,261.55
Fifth Margin and deposit 1,075,384.10 Within 1 year 0.29% 53,769.21
Total -- 251,431,834.95 -- 67.17% 24,504,357.76
6) Accounts receivable involving government subsidies
Unit: yuan
Name of government Estimated collection
Unit name Closing Balance Ending aging
subsidy project time, amount and basis
7) Other receivables derecognized due to transfer of financial assets
8) Amount of assets and liabilities formed by transferring other receivables and continuing involvement
Other description:
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9. Inventory
Does the Company need to follow the disclosure requirements of real estate industry
No
(1) Inventory classification
Unit: yuan
Closing Balance Beginning balance
Inventory falling Inventory falling
price reserves or price reserves or
provision for provision for
Item
Book balance impairment of Book value Book balance impairment of Book value
contract contract
performance performance
costs costs
Raw materials 283,521,540.55 16,713,937.46 266,807,603.09 376,925,094.86 8,304,812.08 368,620,282.78
Work in process 162,384,699.45 3,520,744.28 158,863,955.17 131,194,111.13 4,032,195.26 127,161,915.87
Merchandise
941,129,937.55 124,391,922.47 816,738,015.08 772,693,263.07 136,714,538.94 635,978,724.13
inventory
Semi-finished
products shipped 13,768,628.69 13,768,628.69 76,790,690.31 76,790,690.31
in transit
Low priced and
easily worn 8,549,248.10 261,894.88 8,287,353.22 8,170,543.67 235,216.55 7,935,327.12
articles
Total 1,409,354,054.34 144,888,499.09 1,264,465,555.25 1,365,773,703.04 149,286,762.83 1,216,486,940.21
(2) Inventory falling price reserves and provision for impairment of contract performance costs
Unit: yuan
Amount increased in current period Amount decreased in current period
Beginning
Item Reversal or Closing Balance
balance Accrual Others Others
write-back
Raw materials 8,304,812.08 10,666,869.50 2,257,744.12 16,713,937.46
Work in process 4,032,195.26 2,773,130.67 3,284,581.65 3,520,744.28
Merchandise
136,714,538.94 39,806,770.85 52,129,387.32 124,391,922.47
inventory
Low priced and
235,216.55 26,678.33 261,894.88
easily worn
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articles
Total 149,286,762.83 53,273,449.35 57,671,713.09 144,888,499.09
Note: The Company's provision and reversal of provision for inventory depreciation are mainly calculated based on the princip le that
the net realizable value is lower than the cost. The inventory depreciation provisions for write-offs in the current period are mainly
due to the cost of acquisition or sales carry-over.
(3) Description of ending balance of inventory containing the capitalized amount of borrowing costs
(4) Description of current amortization amount of contract performance cost
10. Contract assets
Unit: yuan
Closing Balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Amount and reason of significant change in the book value of contract assets in current period:
Unit: yuan
Item Amount of change Reason for change
If the bad debt provision of contract assets is accrued according to the general model of expected credit loss, please refer to the
disclosure method of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
Provision for impairment of contract assets in current period
Unit: yuan
Reversal in current Write off/verification in
Item Accrual in current period Reasons
period current period
Other description:
11. Assets held for sales
Unit: yuan
Ending book Provision for Ending book Estimated Estimated
Item Fair value
balance impairment value disposal cost disposal time
Other description:
12. Non-current assets due within a year
Unit: yuan
Item Closing Balance Beginning balance
Important debt investments/other debt investments
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Unit: yuan
Closing Balance Beginning balance
Debt item Maturity Maturity
Book value Coupon rate Actual rate Book value Coupon rate Actual rate
date date
Other description:
13. Other current assets
Unit: yuan
Item Closing Balance Beginning balance
Return cost receivable 2,188,464.68 1,449,440.77
VAT input tax to be deducted / uncertified
70,168,411.24 31,138,563.62
input tax
Prepaid corporate income tax 4,539,423.46
Unamortized expenses 7,097,277.96 2,595,244.40
Others 233,286,872.17 978.30
Total 317,280,449.51 35,184,227.09
Other description:
14. Debt investment
Unit: yuan
Closing Balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Important debt investments
Unit: yuan
Closing Balance Beginning balance
Debt item Maturity Maturity
Book value Coupon rate Actual rate Book value Coupon rate Actual rate
date date
Provision for impairment
Unit: yuan
Stage 1 Stage 2 Stage 3
Expected credit Expected credit losses over Expected credit losses over
Provision for bad debt Total
losses over the next the entire duration (no the entire duration (credit
12 months credit impairment occurred) impairment has occurred)
Balance on January 1,
—— —— —— ——
2021 in the current
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period
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Other description:
NA
15. Other debt investments
Unit: yuan
Accumulated
provision for
Fair value
Accumulated loss
Beginning Accrued change in Closing
Item Cost fair value recognized in Remark
balance interest current Balance
change other
period
comprehensi
ve income
Important other debt investments
Unit: yuan
Closing Balance Beginning balance
Other debt item Maturity Maturity
Book value Coupon rate Actual rate Book value Coupon rate Actual rate
date date
Provision for impairment
Unit: yuan
Stage 1 Stage 2 Stage 3
Expected credit Expected credit losses over Expected credit losses over
Provision for bad debt Total
losses over the next the entire duration (no the entire duration (credit
12 months credit impairment occurred) impairment has occurred)
Balance on January 1,
2021 in the current —— —— —— ——
period
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Other description:
16. Long-term receivables
(1) Long-term receivables
Unit: yuan
Item Closing Balance Beginning balance Discount rate
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Provision for Provision for range
Book balance Book value Book balance Book value
bad debt bad debt
Impairment of provision for bad debt
Unit: yuan
Stage 1 Stage 2 Stage 3
Expected credit Expected credit losses over Expected credit losses over
Provision for bad debt Total
losses over the next the entire duration (no the entire duration (credit
12 months credit impairment occurred) impairment has occurred)
Balance on January 1,
2021 in the current —— —— —— ——
period
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
(2) Long-term receivables derecognized due to transfer of financial assets
(3) Amount of assets and liabilities formed by transferring long-term receivables and continuing
involvement
Other description
17. Long-term equity investment
Unit: yuan
Increase or decrease in current period
Balance
Investme
Adjustme of
Beginnin nt gains Declared Ending
nt of Provision impairme
Invested g balance Further and losses Changes payment balance
Capital other for nt
unit (book investmen recognize in other of cash Others (book
reduction comprehe impairme provision
value) t d by the equity dividends value)
nsive nt at the end
equity or profits
income of period
method
I. Cooperative enterprise
II. Joint venture
Chengdu 13,424,23 1,655,597 15,079,82
Winner 0.41 .53 7.94
13,424,23 1,655,597 15,079,82
Subtotal
0.41 .53 7.94
13,424,23 1,655,597 15,079,82
Total
0.41 .53 7.94
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Other description
18. Other equity instrument investments
Unit: yuan
Item Closing Balance Beginning balance
Itemized disclosure of the current non-trading equity instrument investment
Unit: yuan
Reasons for
designating to be
Amount of other measured at fair Reasons for other
comprehensive value and its comprehensive
Recognized Accumulated Accumulated
Project name income changes are income
dividend income gains losses
transferred into recorded into transferring into
retained income other retained income
comprehensive
income
Other description:
19. Other non-current financial assets
Unit: yuan
Item Closing Balance Beginning balance
Other description:
20. Investment real estates
(1) Investment real estates using cost measurement mode
□ Applicable √ Not applicable
(2) Investment real estates using fair value measurement mode
□ Applicable √ Not applicable
(3) Investment real estates without certificate of title
Unit: yuan
Reasons for not obtaining the certificate of
Item Book value
title
Other description
NA
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21. Fixed assets
Unit: yuan
Item Closing Balance Beginning balance
Fixed assets 1,437,854,645.76 1,400,749,050.00
Total 1,437,854,645.76 1,400,749,050.00
(1) Fixed assets
Unit: yuan
Electronic
Machinery Transportation
Item Houses and building equipment and office Total
equipment equipment
equipment, etc.
I. Original book
value
1. Beginning
926,386,555.07 1,064,281,471.00 20,440,318.74 92,956,202.87 2,104,064,547.68
balance
2. Amount
increased in 55,719,324.57 63,799,256.91 941,251.89 14,660,241.10 135,120,074.47
current period
(1) Purchase 35,542,887.44 29,678,393.33 941,251.89 14,044,175.05 80,206,707.71
(2) Transfer
from
20,176,437.13 34,120,863.58 616,066.05 54,913,366.76
construction in
progress
(3) Increase by
business
combination
3. Amount
decreased in 1,111,741.08 16,033,323.67 47,744.07 334,692.26 17,527,501.08
current period
(1) Disposal or
1,111,741.08 16,033,323.67 47,744.07 334,692.26 17,527,501.08
scrap
4. Closing
980,994,138.56 1,112,047,404.24 21,333,826.56 107,281,751.71 2,221,657,121.07
Balance
II. Accumulated
depreciation
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1. Beginning
196,666,419.77 343,952,942.83 10,785,778.37 45,364,340.26 596,769,481.23
balance
2. Amount
increased in 20,322,693.11 52,018,814.79 895,993.41 6,660,442.11 79,897,943.42
current period
(1) Accrual 20,322,693.11 52,018,814.79 895,993.41 6,660,442.11 79,897,943.42
3. Amount
decreased in 143,063.51 7,024,914.81 12,028.50 254,151.63 7,434,158.45
current period
(1) Disposal or
143,063.51 7,024,914.81 12,028.50 254,151.63 7,434,158.45
scrap
4. Closing
216,846,049.37 388,946,842.81 11,669,743.28 51,770,630.74 669,233,266.20
Balance
III. Provision for
impairment
1. Beginning
47,897,289.81 58,276,333.59 372,393.05 106,546,016.45
balance
2. Amount
increased in 8,368,601.00 42,487.88 8,411,088.88
current period
(1) Accrual 8,368,601.00 42,487.88 8,411,088.88
3. Amount
decreased in 150,809.70 237,086.52 387,896.22
current period
(1) Disposal or
150,809.70 237,086.52 387,896.22
scrap
4. Closing
47,897,289.81 66,494,124.89 177,794.41 114,569,209.11
Balance
IV. Book value
1. Ending book
716,250,799.38 656,606,436.54 9,664,083.28 55,333,326.56 1,437,854,645.76
value
2. Beginning
681,822,845.49 662,052,194.58 9,654,540.37 47,219,469.56 1,400,749,050.00
book value
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(2) Fixed assets that are temporarily idle
Unit: yuan
Accumulated Provision for
Item Original book value Book value Remark
depreciation impairment
Machinery
5,497,962.48 3,327,964.75 390,044.34 1,779,953.39
equipment
(3) Fixed assets leased out by operating lease
Unit: yuan
Item Ending book value
(4) Fixed assets without certificate of title
Unit: yuan
Reasons for not obtaining the certificate of
Item Book value
title
The formalities have not yet been
Winner Medical (Tianmen) Building 15,448,162.59
completed
Winner Medical (Tianmen) Main plant of The formalities have not yet been
16,519,946.51
Phase II completed
Winner Medical (Tianmen) grey cloth The formalities have not yet been
961,131.76
warehouse completed
The formalities have not yet been
Winner Medical (Jingmen) Office Building 5,887,225.60
completed
Winner Medical (Jingmen) Dormitory The formalities have not yet been
10,911,991.40
Building completed
The formalities have not yet been
Winner Medical (Jingmen) New Canteen 1,499,930.10
completed
The formalities have not yet been
Others 830,689.34
completed
Total 52,059,077.30
Other description
(5) Liquidation of fixed assets
Unit: yuan
Item Closing Balance Beginning balance
Other description
195
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22. Construction in progress
Unit: yuan
Item Closing Balance Beginning balance
Construction in progress 104,425,911.11 61,383,340.97
Total 104,425,911.11 61,383,340.97
(1) Construction in progress
Unit: yuan
Closing Balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Winner Medical
(Tianmen)
7,034,138.03 7,034,138.03 3,103,139.22 3,103,139.22
Infrastructure
Construction
Winner Medical
(Chongyang)
4,759,315.92 4,759,315.92 3,920,741.93 3,920,741.93
engineering
project
Winner Medical
(Jiayu)
0.00 0.00 206,839.83 206,839.83
engineering
project
Winner Medical
(Yichang)
1,289,415.85 1,289,415.85 829,816.92 829,816.92
Infrastructure
Construction
Winner Medical
(Jingmen)
3,171,222.24 3,171,222.24 11,748,247.37 11,748,247.37
Infrastructure
Construction
Wuhan Winner
engineering 41,951,961.01 41,951,961.01 25,508,709.25 25,508,709.25
project
Winner Medical
(Huanggang)
576,758.94 576,758.94
Engineering
Project
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Other equipment
to be installed
47,103,506.96 1,460,407.84 45,643,099.12 17,526,254.29 1,460,407.84 16,065,846.45
and sporadic
projects
Total 105,886,318.95 1,460,407.84 104,425,911.11 62,843,748.81 1,460,407.84 61,383,340.97
(2) Current changes in major projects under construction
Unit: yuan
Includin
Amount Proporti Accumul g:
Interest
Amount carried Other on of ated interest
capitaliz
Beginnin increased forward decrease total amount capitaliz
Project Budget Closing Progress ation rate Source
g in to fixed s in project of ation
name number Balance of works in the of funds
balance current assets in current input to interest funds in
current
period current period the capitaliz the
period
period budget ation current
period
Winner
Medical
(Jingmen
21,000,0 11,654,6 7,094,51 18,749,1
) office 0.00 89.28% 100.00% Others
00.00 12.45 3.67 26.12
dormitor
y
building
High-yie
ld
carding
machine,
equipme
17,000,0 15,044,2 15,044,2
nt in 88.50% 90.00% Others
00.00 47.76 47.76
de-dustin
g shop -
Winner
Medical
(Wuhan)
38,000,0 11,654,6 22,138,7 18,749,1 15,044,2
Total -- -- --
00.00 12.45 61.43 26.12 47.76
(3) Provision for impairment of construction in progress in current period
Unit: yuan
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Item Current accrued amount Reason for accrual
Other description
(4) Engineering materials
Unit: yuan
Closing Balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Other description:
23. Productive biological assets
(1) Productive biological assets using cost measurement mode
□ Applicable √ Not applicable
(2) Productive biological assets using fair value measurement mode
□ Applicable √ Not applicable
24. Oil and gas assets
□ Applicable √ Not applicable
25. Right-of-use assets
Unit: yuan
Item House building Total
I. Original book value
1. Beginning balance 836,548,177.77 836,548,177.77
2. Amount increased in current period 151,011,360.09 151,011,360.09
Leased 151,011,360.09 151,011,360.09
3. Amount decreased in current period 8,427,950.01 8,427,950.01
Withdrawal of stores 8,427,950.01 8,427,950.01
4. Closing Balance 979,131,587.85 979,131,587.85
II. Accumulated depreciation
1. Beginning balance 332,342,440.04 332,342,440.04
2. Amount increased in current period 99,318,820.49 99,318,820.49
(1) Accrual 99,318,820.49 99,318,820.49
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3. Amount decreased in current period 3,808,440.97 3,808,440.97
Withdrawal of stores 3,808,440.97 3,808,440.97
4. Closing Balance 427,852,819.56 427,852,819.56
III. Book Value
1. Ending book value 551,278,768.29 551,278,768.29
2. Beginning book value 504,205,737.73 504,205,737.73
Other description:
26. Intangible assets
(1) Intangible assets
Unit: yuan
Nonpatented Trademark Software use Franchised use
Item Land use right Patent right Total
technology right right right
I. Original
book value
1. Beginning
215,498,508.06 1,573,637.86 1,710,590.99 44,776,668.88 10,228,226.53 273,787,632.32
balance
2. Amount
increased in
2,250,672.57 2,250,672.57
current
period
(1) Purchas
2,250,672.57 2,250,672.57
e
(2) Internal
R&D
(3) Increas
e by
business
combinatio
n
3. Amount
decreased in
current
period
(1) Disposa
l
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4. Closing
215,498,508.06 1,573,637.86 1,710,590.99 47,027,341.45 10,228,226.53 276,038,304.89
Balance
II.
Accumulated
amortization
1. Beginning
23,228,466.51 1,126,804.28 1,661,457.66 29,217,573.55 10,228,226.53 65,462,528.53
balance
2. Amount
increased in
2,183,816.53 60,508.54 6,700.00 2,437,430.34 4,688,455.41
current
period
(1) Accrual 2,183,816.53 60,508.54 6,700.00 2,437,430.34 4,688,455.41
3. Amount
decreased in
current
period
(1) Disposa
l
4. Closing
25,412,283.04 1,187,312.82 1,668,157.66 31,655,003.89 10,228,226.53 70,150,983.94
Balance
III. Provision
for impairment
1. Beginning
balance
2. Amount
increased in
current
period
(1) Accrual
3. Amount
decreased in
current
period
(1) Disposa
l
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4. Closing
Balance
IV. Book value
1. Ending
190,086,225.02 386,325.04 42,433.33 15,372,337.56 205,887,320.95
book value
2. Beginning
192,270,041.55 446,833.58 49,133.33 15,559,095.33 208,325,103.79
book value
The proportion of intangible assets formed through internal R & D of the Company in the balance of intangible assets at the end of
current period: 0.00%
(2) Land use right without certificate of title
Unit: yuan
Reasons for not obtaining the certificate of
Item Book value
title
Other description:
27. Development expenditure
Unit: yuan
Amount increased in current period Amount decreased in current period
Beginning Internal Recognized Transfer to Closing
Item
balance development Others as intangible current profit Balance
expenditure assets and loss
Total
Other description
28. Goodwill
(1) Original book value of goodwill
Unit: yuan
Increase in current period Decrease in current period
invested entity
Beginning Formed by
name or goodwill Closing Balance
balance business Disposal
forming matter
combination
Original book
value
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Business
combination not
under common
control - 2,681,232.09 2,681,232.09
Acquisition of
Winner Medical
Malaysia
Total 2,681,232.09 2,681,232.09
(2) Provision for impairment of goodwill
Unit: yuan
invested entity Increase in current period Decrease in current period
Beginning
name or goodwill Closing Balance
balance Accrual Disposal
forming matter
Provision for
impairment
Business
combination not
under common
control - 2,681,232.09 2,681,232.09
Acquisition of
Winner Medical
Malaysia
Total 2,681,232.09 2,681,232.09
Information relating to the asset group or asset group combination of goodwill
Explain the goodwill impairment test process, key parameters (such as forecast period growth rate at the present value of expected
future cash flow, steady period growth rate, profit margin, discount rate, forecast period, etc.) and recognition method of g oodwill
impairment loss:
Impact of goodwill impairment tests
Other description
29. Long-term unamortized expenses
Unit: yuan
Amortization
Amount increased in
Item Beginning balance amount in current Other decreases Closing Balance
current period
period
Decoration cost 121,335,007.33 36,338,974.42 25,521,431.94 2,070,775.86 130,081,773.95
Total 121,335,007.33 36,338,974.42 25,521,431.94 2,070,775.86 130,081,773.95
Other description
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30. Deferred income tax assets and deferred income tax liabilities
(1) Unoffset deferred income tax assets
Unit: yuan
Closing Balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Provision for impairment
339,347,756.10 62,401,248.11 342,367,005.23 65,132,073.97
of assets
Unrealized profit of
218,425,773.62 33,265,658.66 218,425,773.62 33,265,658.66
internal transaction
Deductible loss 56,309,177.73 14,077,294.43 91,373,086.80 20,778,878.65
Deferred income 115,665,393.69 24,027,330.37 94,921,260.87 15,374,283.41
Member points 16,282,017.02 4,070,504.26
Expected return 4,452,940.23 1,113,235.06 1,316,336.08 329,084.02
Advertising expenses in
excess of the tax 256,467.28 64,116.82
deductible limit
Equity incentive fee 95,756,549.42 14,363,482.41 25,132,771.81 3,769,915.77
Dismission welfare 2,318,903.48 347,265.52 2,318,903.48 347,835.52
Total 832,276,494.27 149,595,514.56 792,393,622.19 143,132,351.08
(2) Unoffset deferred income tax liabilities
Unit: yuan
Closing Balance Beginning balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Changes in fair value of
27,384,233.24 4,187,879.82 11,178,589.44 1,754,263.42
tradable financial assets
Depreciation of fixed
52,680,554.61 9,285,580.16 59,458,724.22 10,411,344.82
assets
Total 80,064,787.85 13,473,459.98 70,637,313.66 12,165,608.24
(3) Deferred income tax assets or liabilities presented as net amount after offset
Unit: yuan
Item Ending offset amount of Ending balance of Beginning offset amount Beginning balance of
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deferred income tax deferred income tax of deferred income tax deferred income tax
assets and liabilities assets and liabilities after assets and liabilities assets and liabilities after
offset offset
Deferred income tax
149,595,514.56 143,132,351.08
assets
Deferred income tax
13,473,459.98 12,165,608.24
liabilities
(4) Details of unrecognized deferred income tax assets
Unit: yuan
Item Closing Balance Beginning balance
Deductible loss 160,202,701.39 100,460,644.28
Provision for impairment of assets and
4,067,851.22 5,508,170.07
amortization of depreciation
Total 164,270,552.61 105,968,814.35
(5) Deductible losses on unrecognized deferred income tax assets will expire in the following year
Unit: yuan
Year Closing balance Beginning amount Remark
2021 9,235,145.64
2022 14,402,997.46 305,751.35
2023 28,934,144.08 23,804,062.08
2024 40,569,090.20 31,489,882.74
2025 46,594,868.27 38,128,355.56
No maturity date 20,466,455.74 6,732,592.55
Total 160,202,701.39 100,460,644.28 --
Other description:
31. Other non-current assets
Unit: yuan
Closing Balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Advance project payment / equipment
133,729,374. 133,729,374. 63,807,415.7 63,807,415.7
purchase payment / advance store
90 90 5 5
engineering and decoration payment
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133,729,374. 133,729,374. 63,807,415.7 63,807,415.7
Total
90 90 5 5
Other description:
32. Short-term loans
(1) Classification of short-term loans
Unit: yuan
Item Closing Balance Beginning balance
Guaranteed borrowing 150,000,000.00
Borrowing interest 71,416.66
Total 150,071,416.66
Description of classification of short-term loans:
(2) short-term loans unpaid overdue
The total amount of overdue short-term loans at the end of the period is XXXX yuan, of which the important overdue short-term
borrowings are as follows:
Unit: yuan
Borrower Closing Balance Borrowing interest rate Overdue time Overdue interest rate
Other description:
33. Tradable financial liabilities
Unit: yuan
Item Closing Balance Beginning balance
Including:
Including:
Other description:
34. Derivative financial liabilities
Unit: yuan
Item Closing Balance Beginning balance
Other description:
35. Notes payable
Unit: yuan
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Type Closing Balance Beginning balance
Banker's acceptance bill 69,765,505.06 29,418,100.00
Total 69,765,505.06 29,418,100.00
The total amount of notes payable due and have not been paid at the end of current period is 0.00 yuan.
36. Accounts payable
(1) Presentation of accounts payable
Unit: yuan
Item Closing Balance Beginning balance
Within 1 year (including 1 year) 553,114,018.53 711,659,249.43
1~2 years (including 2 years) 5,901,343.59 10,837,529.41
2~3 years (including 3 years) 5,530,949.79 977,275.13
More than 3 years 4,068,943.38 3,103,252.97
Total 568,615,255.29 726,577,306.94
(2) Important accounts payable with the aging more than 1 year
Unit: yuan
Reasons for failure of payment or
Item Closing Balance
carryover
As of June 30, 2021, there is no important accounts payable with the aging more than 1 year.
37. Advance from customers
(1) Presentation of advance from customers
Unit: yuan
Item Closing Balance Beginning balance
(2) Important advances from customers with the aging more than 1 year
Unit: yuan
Reasons for failure of payment or
Item Closing Balance
carryover
38. Contract liabilities
Unit: yuan
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Item Closing Balance Beginning balance
Customer consideration received 309,372,350.35 513,906,240.61
Member points 19,502,693.09 16,282,017.02
Total 328,875,043.44 530,188,257.63
Amount and reasons for significant changes in book value during the reporting period
Unit: yuan
Item Amount of change Reason for change
39. Payroll payable
(1) Presentation of payroll payable
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
I. Short-term
159,456,636.87 538,498,543.58 582,654,360.12 115,300,820.33
compensation
II. Welfare after
dismission - defined 8,181,537.46 20,901,161.37 21,526,955.79 7,555,743.04
contribution plan
III. Dismission welfare 2,318,903.48 51,781.64 55,581.64 2,315,103.48
IV. Other welfare due
16,320.00 16,320.00
within 1 year
Total 169,957,077.81 559,467,806.59 604,253,217.55 125,171,666.85
(2) Presentation of short-term compensation
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
1. Salary, bonus,
158,773,217.39 513,790,916.09 558,193,150.14 114,370,983.34
allowance and subsidy
2. Welfare expenses for
136,421.00 7,953,130.88 7,823,840.60 265,711.28
employees
3. Social security 392,645.68 12,242,509.55 12,251,727.96 383,427.27
Including: medical
234,119.50 11,014,087.89 11,013,271.89 234,935.50
insurance premium
Industrial
105,246.18 627,532.24 637,566.65 95,211.77
injury
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insurance
premium
Birth
insurance 53,280.00 600,889.42 600,889.42 53,280.00
premium
4. Housing accumulation
6,792.00 4,345,604.02 4,345,604.02 6,792.00
fund
5. Union dues and staff
147,560.80 166,383.04 40,037.40 273,906.44
education fund
Total 159,456,636.87 538,498,543.58 582,654,360.12 115,300,820.33
(3) Presentation of defined contribution plans
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
1. Basic endowment
8,064,367.91 20,078,691.89 20,694,722.66 7,448,337.14
insurance
2. Unemployment
117,169.55 822,469.48 832,233.13 107,405.90
insurance premium
Total 8,181,537.46 20,901,161.37 21,526,955.79 7,555,743.04
Other description:
40. Taxes payable
Unit: yuan
Item Closing Balance Beginning balance
Added value tax 25,562,061.80 18,181,804.05
Corporate income tax 74,123,941.01 415,529,360.40
Individual income tax 1,652,734.14 2,036,312.66
Urban maintenance and construction tax 2,080,194.45 2,884,475.60
Housing property tax 2,063,511.69 2,317,520.34
Education surcharge and local education
1,694,904.72 2,193,371.26
surcharge
Land use tax 1,757,490.00 721,674.83
Environmental protection tax 11,849.82 27,808.56
Stamp duty 257,855.00 489,041.79
Total 109,204,542.63 444,381,369.49
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Other description:
41. Other payables
Unit: yuan
Item Closing Balance Beginning balance
Dividends payable 200,000,000.00
Other payables 415,888,545.12 352,543,008.89
Total 615,888,545.12 352,543,008.89
(1) Interest payable
Unit: yuan
Item Closing Balance Beginning balance
Important overdue and unpaid interest:
Unit: yuan
Borrower Overdue amount Overdue reason
Other description:
(2) Dividends payable
Unit: yuan
Item Closing Balance Beginning balance
Common stock dividends 200,000,000.00
Total 200,000,000.00
Other explanations, including important dividends payable that have not been paid for more than 1 year, shall disclose the re asons for
non-payment: There are no dividends payable outstanding for more than 1 year during the period.
(3) Other payables
1) Other payables listed by nature
Unit: yuan
Item Closing Balance Beginning balance
Freight and other accrued expenses 56,640,695.61 94,068,852.36
Provision of commission 104,148,018.24 68,139,060.51
Margin and deposit 159,311,016.09 154,311,464.02
Intercourse 2,269,784.84 14,357,347.93
Others 93,519,030.34 21,666,284.07
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Total 415,888,545.12 352,543,008.89
2) Important other payable with the aging more than 1 year
Unit: yuan
Reasons for failure of payment or
Item Closing Balance
carryover
Shenzhen Galaxy Real Estate
150,000,000.00 Margin for industrial park renewal project
Development Co., Ltd.
Total 150,000,000.00 --
Other description
42. Liabilities held for sales
Unit: yuan
Item Closing Balance Beginning balance
Other description:
43. Non-current liabilities due within one year
Unit: yuan
Item Closing Balance Beginning balance
Other description:
44. Other current liabilities
Unit: yuan
Item Closing Balance Beginning balance
Refund payable 4,452,940.23 2,765,776.85
Output tax to be transferred 11,817,277.07 20,872,489.62
Total 16,270,217.30 23,638,266.47
Increase/decrease of short-term bonds payable:
Unit: yuan
Amortizat
Accrued
ion of Current
Name of Book Maturity Issue Beginnin Current interest at Closing
Issue date premium repaymen
bond value of bond amount g balance issue book Balance
and t
value
discount
Other description:
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45. Long-term loans
(1) Classification of long-term borrowing
Unit: yuan
Item Closing Balance Beginning balance
Description of classification of long-term borrowing:
Other descriptions, including interest rate range:
46. Bonds payable
(1) Bonds payable
Unit: yuan
Item Closing Balance Beginning balance
(2) Increase and decrease of bonds payable (excluding preferred shares, perpetual bonds and other
financial instruments classified as financial liabilities)
Unit: yuan
Amortizat
Accrued
ion of Current
Name of Book Maturity Issue Beginnin Current interest at Closing
Issue date premium repaymen
bond value of bond amount g balance issue book Balance
and t
value
discount
Total -- -- --
(3) Description of conditions and time of conversion of convertible corporate bonds
(4) Description of other financial instruments classified as financial liabilities
Basic information of the outstanding preferred shares, perpetual bonds and other financial instruments at the end of the period
Table of changes in outstanding financial instruments, such as preferred shares, perpetual bonds at the end of the period
Unit: yuan
Outstanding The beginning of the period Increase in current period Decrease in current period The end of the period
financial
Quantity Book value Quantity Book value Quantity Book value Quantity Book value
instruments
Description of the basis for the classification of other financial instruments into financial liabilities
Other description
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47. Lease liabilities
Unit: yuan
Item Closing Balance Beginning balance
House leasing - lease payments 670,653,903.07 616,144,901.16
House leasing - unrecognized financing
(53,668,617.63) (51,810,525.40)
expenses
Total 616,985,285.44 564,334,375.76
Other description
48. Long-term payable
Unit: yuan
Item Closing Balance Beginning balance
(1) Long-term payables listed by nature
Unit: yuan
Item Closing Balance Beginning balance
Other description:
(2) Special accounts payable
Unit: yuan
Increase in current Decrease in current
Item Beginning balance Closing Balance Causes
period period
Other description:
49. Long-term payroll payable
(1) Table of long-term payroll payable
Unit: yuan
Item Closing Balance Beginning balance
(2) Changes in defined benefit plan
Present value of defined benefit plan obligations:
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Planned assets:
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Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Net liabilities (net assets) of defined benefit plan
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Description of the content of defined benefit plan and its related risks, impact on the Company's future cash flow, time and
uncertainty:
Description of significant actuarial assumptions and sensitivity analysis results of defined benefit plan:
Other description:
50. Estimated liabilities
Unit: yuan
Item Closing Balance Beginning balance Causes
Other descriptions, including relevant important assumptions and estimation descriptions of important estimated liabilities:
51. Deferred income
Unit: yuan
Increase in current Decrease in current
Item Beginning balance Closing Balance Causes
period period
Government
Government
94,921,260.87 36,191,317.92 15,447,185.10 115,665,393.69 subsidies related to
subsidies
assets
Total 94,921,260.87 36,191,317.92 15,447,185.10 115,665,393.69 --
Projects involving government subsidies:
Unit: yuan
Amount of Amount Amount
Amount
additional included in offsetting the
Liability Beginning included in Other Asset/incom
subsidy in other income cost in the Closing Balance
item balance current changes e related
current in current current
non-revenue
period period period
Subsidy of
2012
Provincial
high-tech
277,085.67 29,166.68 247,918.99 Asset related
industry
development
special
project -
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Winner
Medical
(Huanggang)
Subsidy of
2014 Hubei
provincial
science and
technology
support plan
712,500.00 75,000.00 637,500.00 Asset related
project (the
second
batch) -
Winner
Medical
(Huanggang)
Subsidy for
Huanggang
Chibi
Avenue
demolition
company 2,482,664.69 52,822.64 2,429,842.05 Asset related
planning
change -
Winner
Medical
(Huanggang)
Technology
Center R &
D project
1,055,170.73 171,683.60 883,487.13 Asset related
subsidy -
Shenzhen
Winner
new medical
bandage
factory land
acquisition
land use
right grant 629,970.00 10,160.00 619,810.00 Asset related
fee
remission of
Winner
company in
Pailou Town,
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Jingmen -
Winner
Medical
(Jingmen)
Subsidy
funds for
municipal
government
project
infrastructur 9,270,412.50 206,775.00 9,063,637.50 Asset related
e
construction
- Winner
Medical
(Chongyang)
Park
construction
and sewage
treatment
project in 10,209,500.01 203,416.65 10,006,083.36 Asset related
Yuyue Town
- Winner
Medical
(Jiayu)
2015
Huanggang
provincial
budget
investment
plan,
Huanggang
Winner’s
cotton
285,000.00 30,000.00 255,000.00 Asset related
spunlaced
non-woven
(Line 8)
extension
project
subsidy -
Winner
Medical
(Huanggang)
2014 118,750.00 12,500.00 106,250.00 Asset related
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Huanggang
urban
industrial
development
special fund
subsidy -
Winner
Medical
(Huanggang)
2014 Hubei
provincial
budget
industrial
fixed assets
investment
plan, 10
billion gauze 34,615.30 34,615.30 Asset related
pad
expansion
project
subsidy -
Winner
Medical
(Tianmen)
2015
Tianmen
industrial
enterprise
key technical
transformati
on and 262,481.00 25,002.00 237,479.00 Asset related
expansion
project
subsidy -
Winner
Medical
(Tianmen)
2015 urban
industrial
210,000.00 20,000.00 190,000.00 Asset related
development
special fund
Automatic
1,209,000.00 93,000.00 1,116,000.00 Asset related
transformati
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on of
surgical
consumables
production
line -
Shenzhen
Winner
2016
Tianmen
industrial
key technical
transformati
on and
312,485.00 25,002.00 287,483.00 Asset related
expansion
project
reward -
Winner
Medical
(Tianmen)
2017
increase
production
and
expansion
equipment
subsidy for 100,000.00 7,500.00 92,500.00 Asset related
Tianmen
processing &
trade -
Winner
Medical
(Tianmen)
Yichang gas
boiler
subsidy -
100,000.09 7,999.98 92,000.11 Asset related
Winner
Medical
(Yichang)
Second
batch of
traditional 1,307,339.54 104,587.14 1,202,752.40 Asset related
industry
transformati
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on subsidy
in 2017 -
Winner
Medical
(Huanggang)
2017 cotton
spunlaced
non-woven
fabric
project with
the
475,471.79 39,622.62 435,849.17 Asset related
production
of 15,000
tons -
Winner
Medical
(Tianmen)
Key
technical
transformati
702,703.00 54,054.00 648,649.00 Asset related
on and
expansion
projects
Production
line project
with an
annual
output of
120 million
706,442.28 53,653.86 652,788.42 Asset related
bales of
cotton fabric
in 2017 -
Winner
Medical
(Tianmen)
Second
batch of
special funds
for the
181,250.08 12,499.98 168,750.10 Asset related
transformati
on and
upgrading of
traditional
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industries -
Winner
Medical
(Yichang)
Technical
innovation
subsidy for
the
Purcotton
Phase II 4,491,886.85 83,183.10 4,408,703.75 Asset related
Expansion
Project -
Winner
Medical
(Jingmen)
Key
technical
transformati
841,666.71 49,999.98 791,666.73 Asset related
on and
expansion
projects
20180311
Subsidies for
research,
science and
innovation
on the
technology
of
thermo-resp 1,034,412.37 120,849.00 913,563.37 Asset related
onsive
self-curing
wound
regeneration
and repair
materials -
Shenzhen
Winner
2018
provincial
traditional 1,391,904.76 26,428.57 1,365,476.19 Asset related
industry
transformati
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on and
upgrading
special funds
for the
second batch
of
liquidation
block fund
subsidies -
Winner
Medical
(Jiayu)
Subsidies for
first batch of
technologica
l
transformati
on award of
796,532.20 53,078.56 743,453.64 Asset related
industrial
enterprises
in 2018 -
Winner
Medical
(Chongyang)
Provincial
traditional
industry
transformati
on and
upgrading
special funds
for the first
batch of 1,160,689.66 68,275.86 1,092,413.80 Asset related
block funds
allocation
plan in
Tianmen
City in 2019
- Winner
Medical
(Tianmen)
2018 urban
416,666.70 27,777.76 388,888.94 Asset related
technical
220
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transformati
on fund of
Huanggang
City -
Winner
Medical
(Huanggang)
First batch
of traditional
subsidies in
2019 - 1,089,000.00 60,500.00 1,028,500.00 Asset related
Winner
Medical
(Huanggang)
2019 district
technical
improvemen
t subsidy - 378,461.60 14,556.18 363,905.42 Asset related
Winner
Medical
(Jingmen)
2020
technical
transformati
on project of
Shenzhen
COVID-19
epidemic
19,500,000.00 1,000,000.00 18,500,000.00 Asset related
prevention
and control
key material
production
enterprises -
Shenzhen
Winner (1*)
Municipal
Economic
and
Information
1,189,565.22 375,648.00 813,917.22 Asset related
Bureau on
the issuance
of
emergency
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material
support
system
construction
technical
transformati
on special
subsidy -
Winner
Medical
(Huanggang)
Central
government'
s budget
special fund
for
municipal
financial 282,352.94 112,941.18 169,411.76 Asset related
mask
extension
energy -
Winner
Medical
(Huanggang)
Production
subsidy for
COVID-19
epidemic
prevention
materials in 10,260,000.00 3,420,000.00 6,840,000.00 Asset related
2020 -
Winner
Medical
(Huanggang)
(2*)
2019 district
technical
improvemen
t subsidy - 387,636.35 14,909.10 372,727.25 Asset related
Winner
Medical
(Jingmen)
2019 special 723,214.29 13,392.85 709,821.44 Asset related
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fund project
of the
transformati
on and
upgrading of
traditional
industries -
Winner
Medical
(Jiayu)
Surgical
gown
production
line project
subsidy - 3,711,711.71 216,216.22 3,495,495.49 Asset related
Winner
Medical
(Chongyang)
(3*)
Funds
subsidy for
purchasing
epidemic
prevention
equipment in
key
5,543,025.21 281,848.74 5,261,176.47 Asset related
enterprises
of "Three
Batches" -
Winner
Medical
(Chongyang)
(4*)
Project on
implementin
g the
technical
reformation
7,708,855.65 291,144.36 7,417,711.29 Asset related
policy of
“Zero Land”
in Wuhan
and the
municipal
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industrial
investment
and technical
transformati
on special
fund project
of Bureau
for Science,
Technology
and
Economic
Information
Technology
of Xinzhou
District -
Hubei
Winner (5*)
Subsidy of
COVID-19
epidemic
prevention
and control
materials
production
enterprise 3,370,836.97 295,860.18 3,074,976.79 Asset related
for capacity
expansion &
technical
upgrading
project -
Hubei
Winner (6*)
Special
funds for the
high-quality
development
of
manufacturi
3,000,000.00 140,186.92 2,859,813.08 Asset related
ng granted
by
Municipal
Economic
and
Information
224
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Bureau -
Winner
Medical
(Huanggang)
Equipment
purchase
subsidy
funds for
key
enterprise
"Three
Batches” at
provincial
levels 9,370,000.00 5,726,111.11 3,643,888.89 Asset related
granted by
Municipal
Economic
and
Information
Bureau -
Winner
Medical
(Huanggang)
Equipment
subsidies
during the
COVID-19
6,800,000.00 1,700,000.00 5,100,000.00 Asset related
pandemic -
Winner
Medical
(Jingmen)
Equipment
investment
subsidies - 15,000,000.0
15,000,000.00 Asset related
Winner 0
Medical
(Tianmen)
2020
Provincial
special funds
1,000,000.00 43,859.65 956,140.35 Asset related
for the
high-quality
development
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of
manufacturi
ng - Winner
Medical
(Jiayu)
2020
Provincial
special funds
for the
high-quality
development
of
manufacturi
1,000,000.00 41,356.33 958,643.67 Asset related
ng granted
by Economic
and
Information
Bureau -
Winner
Medical
(Wuhan)
Others 21,317.92 0.00 21,317.92 Asset related
36,191,317.9 15,447,185.1
Total 94,921,260.87 115,665,393.69
2 0
Other description:
52. Other non-current liabilities
Unit: yuan
Item Closing Balance Beginning balance
Other description:
53. Capital stock
Unit: yuan
Increase/decrease (+, -)
Beginning Share capital Closing
New issue of
balance Share donation increase from Others Subtotal Balance
shares
reserved funds
Total amount
426,492,308.00 426,492,308.00
of shares
Other description:
226
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54. Other equity instruments
(1) Basic information of the outstanding preferred shares, perpetual bonds and other financial
instruments at the end of the period
(2) Table of changes in outstanding financial instruments, such as preferred shares, perpetual bonds at
the end of the period
Unit: yuan
Outstanding The beginning of the period Increase in current period Decrease in current period The end of the period
financial
Quantity Book value Quantity Book value Quantity Book value Quantity Book value
instruments
The increase and decrease of other equity instruments in current period, the reasons for the change, and the basis of relevan t
accounting treatment:
Other description:
55. Capital reserve
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
Capital premium (capital
4,457,762,555.30 4,457,762,555.30
stock premium)
Other capital surplus 23,947,427.94 142,429,497.69 10,770,858.01 155,606,067.62
Total 4,481,709,983.24 142,429,497.69 10,770,858.01 4,613,368,622.92
Other description, including current increase/decrease and change reasons:
56. Treasury stock
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
Other description, including current increase/decrease and change reasons:
57. Other comprehensive income
Unit: yuan
Amount incurred in current period
Beginning Amount Less: amount Less: Less: Attributabl Attributabl Closing
Item
balance before included in amount Income e to the e to Balance
current other included tax parent minority
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income tax comprehensi in other expenses company shareholde
ve income in comprehe after tax rs after tax
previous nsive
period income in
transferred previous
into profit period
and loss in transferred
current into
period retained
income in
current
period
II. Other comprehensive income (140,119.2
(1,111,035.0 (292,542.9 (152,423.6 (1,251,1
that will be reclassified into profit 4)(140,119
8) 1) 7) 54.32)
and loss .24)
Balance arising from the (140,119.2
(1,111,035.0 (292,542.9 (152,423.6 (1,251,1
translation of foreign currency 4)(140,119
8) 1) 7) 54.32)
financial statements .24)
(140,119.2
(1,111,035.0 (292,542.9 (152,423.6 (1,251,1
Total other comprehensive income 4)(140,119
8) 1) 7) 54.32)
.24)
Other explanations, including the adjustment of the effective part of the cash flow hedging gains and losses transferred to the initial
recognized amount of the hedged item:
58. Special reserve
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
Other description, including current increase/decrease and change reasons:
59. Surplus reserve
Unit: yuan
Decrease in current
Item Beginning balance Increase in current period Closing Balance
period
Statutory surplus
420,212,778.13 420,212,778.13
reserves
Total 420,212,778.13 420,212,778.13
Description of surplus reserves, including current increase/decrease and change reasons:
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60. Undistributed profit
Unit: yuan
Item Current period Prior period
Undistributed profit at the end of previous period
5,126,630,011.14 1,718,075,177.67
before adjustment
Total undistributed profits at the beginning of the
adjustment period (+ for increase and - for (60,128,638.03)
decrease)
Undistributed profits at the beginning of the
5,066,501,373.11 1,718,075,177.67
period after adjustment
Plus: Net profits attributable to the owners of
761,038,730.24 3,810,412,504.40
parent company in the current period
Less: withdrawal legal surplus 303,357,670.93
Common stock dividends payable 767,686,154.39 98,500,000.00
Undistributed profits at the end of the period 5,059,853,948.96 5,126,630,011.14
Details of undistributed profits at the beginning of the adjustment period:
1). Due to retroactive adjustment of Accounting Standards for Business Enterprises and relevant new regulations, 0.00 yuan of the
undistributed profit at the beginning of the period was affected.
2). Due to the change of accounting policy, (60,128,638.03) yuan of the undistributed profit at the beginning of the period was
affected.
3). Due to the correction of major accounting errors, 0.00 yuan of the undistributed profit at the beginning of the period was
affected.
4). Due to the change of consolidation scope caused by the same control, 0.00 yuan of the undistributed profit at the beginning of
the period was affected.
5). 0.00 yuan of the undistributed profit at the beginning of the period was affected by the total amount of other adjustments
61. Revenue and cost
Unit: yuan
Amount incurred in current period Amount incurred in previous period
Item
Income Cost Income Cost
Main business 4,015,254,836.74 1,899,194,820.44 4,146,476,965.99 1,878,803,687.95
Other businesses 44,610,818.18 22,594,882.03 33,301,917.28 21,288,297.05
Total 4,059,865,654.92 1,921,789,702.47 4,179,778,883.27 1,900,091,985.00
Income related information:
Unit: yuan
Contract classification Segment 1 (medical Segment 2 (healthy Segment 3 (pure cotton Total
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consumables) consumer goods) non-woven coil)
Type of goods 2,171,174,605.39 1,790,338,558.90 98,352,490.63 4,059,865,654.92
Including:
Main business 2,126,563,787.21 1,790,338,558.90 98,352,490.63 4,015,254,836.74
Other businesses 44,610,818.18 44,610,818.18
Classified by operating
2,171,174,605.39 1,790,338,558.90 98,352,490.63 4,059,865,654.92
area
Including:
Domestic sales 1,119,409,514.73 1,790,338,558.90 40,800,388.40 2,950,548,462.03
Overseas sales 1,051,765,090.66 57,552,102.23 1,109,317,192.89
Including:
Including:
Including:
Including:
Including:
Information related to performance obligations:
NA
Information related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations signed but not yet performed or completed at the end of this
reporting period is 0.00 yuan.
Other description
62. Taxes and surcharges
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Urban maintenance and construction tax 13,351,264.31 16,497,725.24
Education surcharge 6,083,856.56 7,371,553.72
Housing property tax 4,009,111.81 2,028,629.48
Land use tax 3,601,190.09 710,896.16
Vehicle and vessel use tax 5,699.53 5,446.26
Stamp duty 1,751,155.99 2,185,782.68
Surcharge for local education 4,282,630.01 4,537,550.33
Environmental protection tax 71,770.68 95,680.48
Embankment construction cost 43,611.00
Total 33,156,678.98 33,476,875.35
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Other description:
63. Selling expenses
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Employee compensation 229,922,405.33 218,246,955.67
Travel expenses 5,786,992.03 2,213,199.29
Office communication costs 3,075,901.11 7,111,983.72
Sales commission 98,622,807.60 97,068,184.37
Insurance premiums 2,574,426.91 2,271,675.17
Depreciation and amortization 113,209,102.14 29,276,701.85
Advertising and promotion expenses 233,984,397.50 115,342,907.94
Rent 85,737,804.97 139,580,079.91
Others 52,891,982.98 44,837,216.32
Total 825,805,820.57 655,948,904.24
Other description: (1) According to Accounting Standards for Business Enterprises No.14 -- Revenue (revised 2017), transportation
expenses shall be recognized as an asset and amortized on the same basis as commodity income recognition related to the asset, and
shall be included in current profit and loss, carried forward to cost, and shall not be directly included in selling expenses when
incurred. The transportation expenses in the Semi-annual Report of 2020 therefore are adjusted to costs.
(2) The other fees are mainly maintenance fee, sample fee, credit card large gateway service fee, credit card quick payment s ervice
fee, transaction service fee, etc.
64. Administrative expenses
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Employee compensation 102,543,267.30 94,254,490.88
Equity incentive fee 142,429,497.69
Depreciation and amortization charge 17,278,124.21 19,591,733.89
Office allowance 1,678,360.24 2,109,267.17
Consultant and intermediary service fees 5,420,967.74 2,503,028.59
Water/electricity fee 2,270,363.17 2,389,584.46
Communication and network services,
27,088,830.21 20,593,671.66
cloud service fees, etc.
Maintenance cost 7,113,384.60 4,600,385.17
Material consumption 2,792,481.93 611,189.62
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Others 2,037,274.55 12,012,989.45
Total 310,652,551.64 158,666,340.89
Other description:
65. R&D expenses
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Employee compensation 60,924,410.97 40,799,524.38
Depreciation and amortization 8,456,760.23 9,438,888.51
Material 81,191,111.26 96,722,100.92
Other miscellaneous expenses 39,344,983.01 21,884,674.78
Total 189,917,265.47 168,845,188.59
Other description:
66. Financial expenses
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Interest expenditure 13,939,734.50 1,935,306.63
Less: Interest revenue 35,424,028.29 2,586,023.70
Exchange gain or loss 8,101,623.57 (864,201.47)
Others 766,213.42 1,049,007.21
Total (12,616,456.80) (465,911.33)
67. Other incomes
Unit: yuan
Other sources of income Amount incurred in current period Amount incurred in previous period
Government subsidies 86,754,859.99 19,765,789.73
68. Investment income
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Long-term equity investment gains measured
1,655,597.53 2,288,557.50
by employing the equity method
Investment income from purchasing financial 48,417,662.28 4,869,662.02
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products
Total 50,073,259.81 7,158,219.52
Other description:
69. Net exposure hedging
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Other description:
70. Income from changes in fair value
Unit: yuan
Sources of gains from fair value change Amount incurred in current period Amount incurred in previous period
Tradable financial assets 14,346,000.00
Structured deposit 17,062,220.30
Total 31,408,220.30
Other description:
71. Credit impairment Loss
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Loss on bad debts of other receivables 13,360,426.19 5,788,420.86
Loss on bad debts of accounts receivable (1,552,019.48) (6,576,067.85)
Total 11,808,406.71 (787,646.99)
Other description:
72. Assets impairment losses
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
II. Inventory falling price loss and
impairment loss of contract performance (52,186,443.71) (67,352,614.01)
costs
V. Impairment loss of fixed assets (8,411,088.88) (3,796,063.47)
VII. Impairment loss of construction in
(1,460,407.84)
progress
Total (60,597,532.59) (72,609,085.32)
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Other description:
73. Gains from asset disposal
Unit: yuan
Source of income from disposal of assets Amount incurred in current period Amount incurred in previous period
Gains from disposal of non-current assets 15,447.79
Including: Gains on disposal of fixed
15,447.79
assets
Loss on disposal of non-current assets (37,621.25)
Including: Loss on disposal of fixed assets (37,621.25)
74. Non-revenue
Unit: yuan
Amounts recorded in the
Amount incurred in current Amount incurred in previous
Item non-recurring gains and losses
period period
of the current period
Government subsidies 36,262.29 11,587,864.12 36,262.29
Non-current assets scrap gains 14,489.12 170,491.38 14,489.12
Income from compensation or 498,130.83
498,130.83 188,497.40
fines
Others 1,790,581.70 1,712,282.59 1,790,581.70
Total 2,339,463.94 13,659,135.49 2,339,463.94
Government subsidies recorded in current profit and loss
Unit: yuan
Whether the
subsidy Amount Amount
Special
Subsidized Granting Granting Type of affects the incurred in incurred in Asset/income
subsidy or
project subject reason nature profit and current previous related
not
loss of period period
current year
Other description:
75. Non-operating expenses
Unit: yuan
Amounts recorded in the
Amount incurred in current Amount incurred in previous
Item non-recurring gains and losses
period period
of the current period
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External donations 208,387.94 1,360,772.16 208,387.94
Loss on damage and scrap of 7,968,231.63
7,968,231.63 17,105,877.65
non-current assets
Including: Loss on scrap of 7,968,231.63
7,968,231.63 17,105,877.65
fixed assets
Others 326,184.85 3,520,072.21 326,184.85
Total 8,502,804.42 21,986,722.02 8,502,804.42
Other description:
76. Income tax expenses
(1) Income tax expense table
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Current income tax expenses 152,217,622.09 203,104,000.70
Deferred income tax expenses (15,926,486.89) (29,354,038.07)
Adjustment of the previous annual income
6,995,272.56
tax amount in the current period
Total 143,286,407.76 173,749,962.63
(2) Accounting profit and income tax expense adjustment process
Unit: yuan
Item Amount incurred in current period
Total profit 904,406,345.08
Income tax expenses calculated at the appropriate/applicable tax
135,660,951.76
rate
Impact of different tax rates applied on subsidiaries 2,759,402.34
Impact of income tax before adjustment 6,995,272.56
Impact of non-deductible costs, expenses and losses 331,176.23
Impact of temporary difference or deductible losses on
16,525,962.98
unrecognized deferred income tax assets in the current period
Impact of weighted deduction of R&D costs (18,939,560.94)
The impact of weighted deduction of disability payroll (46,797.17)
Income tax expenses 143,286,407.76
Other description
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77. Other comprehensive income
See Note VII. 57 Other comprehensive income for details.
78. Cash flow statement items
(1) Other cash received related to operating activities
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Deposit, margin and quality guarantee
5,168,682.39 22,023,613.71
deposit received
Interest income received 35,424,028.29 2,375,610.63
Government subsidies received 107,535,255.10 34,521,331.79
Others 2,288,712.53 12,939,198.27
Total 150,416,678.31 71,859,754.40
Explanation on other cash received related to operating activities:
(2) Other cash paid related to operating activities
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Management costs paid in cash 40,188,212.76 64,294,374.94
Selling expenses paid in cash 146,432,180.23 203,939,320.24
Deposit, margin and quality guarantee
36,326,773.36 66,617,571.64
deposit paid
Bank handling charge 766,213.42 1,049,007.21
Others 63,370,409.09 8,783,342.54
Total 287,083,788.86 344,683,616.57
Description of other cash paid related to operating activities
(3) Other cash received related to investment activities
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Received compensation for relocation 100,000,000.00
Total 100,000,000.00
Description of other cash received related to investment activities:
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(4) Other cash paid related to investment activities
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Description of other cash paid related to investment activities:
(5) Other cash received related to financing activities
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Description of other cash received related to financing activities:
(6) Other cash paid related to financing activities
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Listing fees paid 1,802,115.63
Lease payments made 103,492,521.01
Total 103,492,521.01 1,802,115.63
Description of other cash paid related to financing activities:
79. Further information on cash flow statement
(1) Further information on cash flow statement
Unit: yuan
Further information Current amount Last term amount
1. Reconciliation from net profits to cash
-- --
flows from operating activities
Net profit 761,119,937.32 1,034,680,676.10
Plus: Provision for impairment of
48,789,125.89 73,396,732.31
assets
Depreciation of fixed assets, oil and
gas assets and productive biological 79,903,000.47 103,513,593.92
assets
Depreciation of Right-of-use assets 99,318,820.49
Amortization of intangible assets 4,688,455.41 4,459,420.64
Amortization of long-term deferred
25,521,431.94 33,482,757.15
expenses
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Losses on disposal of fixed assets,
intangible assets and other
37,621.25 (15,447.79)
long-term assets (gains expressed
with “-”)
Loss on retirement of fixed assets
7,968,231.63 16,935,386.27
(gains expressed with “-”)
Loss from fair value change (gains
(31,408,220.30)
expressed with “-”)
Financial expenses (gains
13,939,734.50 1,935,306.63
expressed with “-”)
Investment losses (gains expressed
(50,073,259.81) (7,158,219.52)
with “-”)
Decreased in deferred income tax
(6,463,163.49) (39,807,965.92)
assets (increase expressed with “-”)
Increase in deferred income tax
liabilities (decrease expressed with 1,307,851.74 10,453,927.85
“-”)
Decrease in inventories (increase
(100,165,058.76) (369,878,953.78)
expressed with “-”)
Decrease in operating receivables
(202,353,385.01) (340,509,861.01)
(increase expressed with “-”)
Increase in operating payables
(606,929,030.07) 1,951,918,629.40
(decrease expressed with “-”)
Others 152,402,772.57
Net cash flow from operating
197,604,865.77 2,473,405,982.25
activities
2. Significant investment and financing
activities not involving cash deposit and -- --
withdrawal:
Conversion of debt into capital
Convertible bonds due within 1 year
Fixed assets under financing lease
3. Net changes in cash and cash equivalents: -- --
Ending balance of cash 4,660,333,761.86 2,213,598,049.35
Less: Beginning balance of cash 4,149,734,694.38 459,169,719.65
Plus: Ending balance of cash
equivalents
Less: Ending balance of cash
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equivalents
Net increase in cash and cash
510,599,067.48 1,754,428,329.70
equivalents
(2) Net cash paid for obtaining subsidiaries in current period
Unit: yuan
Amount
Including: --
Including: --
Including: --
Other description:
(3) Net cash from disposal of subsidiaries in current period
Unit: yuan
Amount
Including: --
Including: --
Including: --
Other description:
(4) Composition of cash and cash equivalents
Unit: yuan
Item Closing Balance Beginning balance
I. Cash 4,660,333,761.86 4,149,734,694.38
Including: cash on hand 77,810.79 49,287.18
Bank deposit readily available for
4,660,255,951.07 4,149,685,407.20
payment
III. Balance of cash and cash equivalents at
4,660,333,761.86 4,149,734,694.38
end of period
Other description:
80. Notes to items in statement of owner's equity
State the name of "other" items and the amount of adjustment to the ending balance of previous year:
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81. Assets with ownership or use rights restricted
Unit: yuan
Item Ending book value Causes for restriction
Balance of the margin and performance
deposit deposited for handling
international and domestic letters of credit,
Cash and cash equivalents 40,195,765.99
and the special deposit accounts opened
for restricted non-budget units by issuing
prepaid cards
Total 40,195,765.99 --
Other description:
82. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: yuan
Ending balance in foreign Ending balance converted to
Item Conversion exchange rate
currency RMB
Cash and cash equivalents -- -- 136,580,107.23
Including: USD 17,699,067.65 6.4601 114,337,746.93
EUR 481,524.53 7.6862 3,701,093.84
HKD 21,861,406.89 0.83208 18,190,439.45
Yen 3,847,134.00 0.058428 224,780.35
Ringgit 81,006.85 1.5560 126,046.66
Accounts receivable -- -- 175,306,471.03
Including: USD 25,452,596.79 6.4601 164,426,320.52
EUR 297,037.23 7.6862 2,283,087.56
HKD 8,488,333.25 0.83208 7,062,972.33
Ringgit 985,919.42 1.5560 1,534,090.62
Long-term loans -- --
Including: USD
EUR
HKD
Other receivables 386,886.30
HKD 462,832.00 0.83208 385,113.25
Ringgit 1,139.49 1.5560 1,773.05
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Accounts payable 550,596.74
EUR 45,616.00 7.6862 350,613.70
HKD 5,500.00 0.83208 4,576.44
Yen 3,344,400.00 0.058428 195,406.60
Other payables 103,175,622.45
US dollar 14,618,601.79 6.4601 94,437,629.42
EUR 11,475.00 7.6862 88,199.15
HKD 10,392,263.70 0.83208 8,647,194.78
Yen 23,179.00 0.058428 1,354.30
Ringgit 800.00 1.5560 1,244.80
Other description:
(2) Description of overseas operating entities, including for important overseas operating entities, the
main overseas business place, recording currency and selection basis shall be disclosed, and the
reasons for changes in recording currency shall also be disclosed.
□ Applicable √ Not applicable
83. Hedge
Disclose the qualitative and quantitative information of hedging items, related hedging instruments and hedged risks according to the
hedging category:
84. Government subsidies
(1) Basic information of government subsidies
Unit: yuan
Amount recorded in current
Type Amount Presented item
profit and loss
1. Government subsidies related
to assets
Subsidy of 2012 Provincial
high-tech industry development
700,000.00 Deferred income 29,166.68
special project - Winner
Medical (Huanggang)
Subsidy of 2014 Hubei
provincial science and
1,500,000.00 Deferred income 75,000.00
technology support plan project
(the second batch) - Winner
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Medical (Huanggang)
Subsidy for Huanggang Chibi
Avenue demolition company
3,169,400.00 Deferred income 52,822.64
planning change - Winner
Medical (Huanggang)
Technology Center R & D
project subsidy - Shenzhen 12,420,000.00 Deferred income 171,683.60
Winner
New medical bandage factory
land acquisition land use right
grant fee remission of Winner
812,850.00 Deferred income 10,160.00
company in Pailou Town,
Jingmen - Winner Medical
(Jingmen)
Subsidy funds for municipal
government project
12,406,500.00 Deferred income 206,775.00
infrastructure construction -
Winner Medical (Chongyang)
Park construction and sewage
treatment project in Yuyue 11,430,000.00 Deferred income 203,416.67
Town - Winner Medical (Jiayu)
2015 Huanggang provincial
budget investment plan,
Huanggang Winner’s cotton
600,000.00 Deferred income 30,000.00
spunlaced non-woven (Line 8)
extension project subsidy -
Winner Medical (Huanggang)
2014 Huanggang urban
industrial development special
250,000.00 Deferred income 12,500.00
fund subsidy - Winner Medical
(Huanggang)
2014 Hubei provincial budget
industrial fixed assets
investment plan, 10 billion
100,000.00 Deferred income 34,615.28
gauze pad expansion project
subsidy - Winner Medical
(Tianmen)
2015 Tianmen industrial
enterprise key technical
500,000.00 Deferred income 25,002.00
transformation and expansion
project subsidy - Winner
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Medical (Tianmen)
2015 urban industrial
400,000.00 Deferred income 20,000.00
development special fund
Automatic transformation of
surgical consumables
1,860,000.00 Deferred income 93,000.00
production line - Shenzhen
Winner
2016 Tianmen industrial key
technical transformation and
500,000.00 Deferred income 25,002.00
expansion project reward -
Winner Medical (Tianmen)
2017 increase production and
expansion equipment subsidy
150,000.00 Deferred income 7,500.00
for Tianmen processing & trade
- Winner Medical (Tianmen)
Yichang gas boiler subsidy -
160,000.00 Deferred income 7,999.98
Winner Medical (Yichang)
Second batch of traditional
industry transformation subsidy
1,900,000.00 Deferred income 104,587.14
in 2017 - Winner Medical
(Huanggang)
2017 cotton spunlaced
non-woven fabric project with
700,000.00 Deferred income 39,622.62
the production of 15,000 tons -
Winner Medical (Tianmen)
Key technical transformation
1,000,000.00 Deferred income 54,054.00
and expansion projects
Production line project with an
annual output of 120 million
930,000.00 Deferred income 53,653.86
bales of cotton fabric in 2017 -
Winner Medical (Tianmen)
Second batch of special funds
for the transformation and
upgrading of traditional 250,000.00 Deferred income 12,499.98
industries - Winner Medical
(Yichang)
Technical innovation subsidy
for the Purcotton Phase II
4,755,300.00 Deferred income 83,183.10
Expansion Project - Winner
Medical (Jingmen)
Key technical transformation 1,000,000.00 Deferred income 49,999.98
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and expansion projects
20180311 Subsidies for
research, science and
innovation on the technology of
2,000,000.00 Deferred income 120,849.00
thermo-responsive self-curing
wound regeneration and repair
materials - Shenzhen Winner
2018 provincial traditional
industry transformation and
upgrading special funds for the
1,480,000.00 Deferred income 26,428.57
second batch of liquidation
block fund subsidies - Winner
Medical (Jiayu)
Subsidies for first batch of
technological transformation
award of industrial enterprises 1,000,000.00 Deferred income 53,078.56
in 2018 - Winner Medical
(Chongyang)
Provincial traditional industry
transformation and upgrading
special funds for the first batch
1,320,000.00 Deferred income 68,275.86
of block funds allocation plan in
Tianmen City in 2019 - Winner
Medical (Tianmen)
2018 urban technical
transformation fund of
500,000.00 Deferred income 27,777.76
Huanggang City - Winner
Medical (Huanggang)
First batch of traditional
subsidies in 2019 - Winner 1,210,000.00 Deferred income 60,500.00
Medical (Huanggang)
2019 district technical
improvement subsidy - Winner 410,000.00 Deferred income 14,556.18
Medical (Jingmen)
2020 technical transformation
project of Shenzhen COVID-19
epidemic prevention and control
20,000,000.00 Deferred income 1,000,000.00
key material production
enterprises - Shenzhen Winner
(1*)
Municipal Economic and
1,440,000.00 Deferred income 375,648.00
Information Bureau on the
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issuance of emergency material
support system construction
technical transformation special
subsidy - Winner Medical
(Huanggang)
Central government's budget
special fund for municipal
320,000.00 Deferred income 112,941.18
financial mask extension energy
- Winner Medical (Huanggang)
Production subsidy for
COVID-19 epidemic prevention
11,400,000.00 Deferred income 3,420,000.00
materials in 2020 - Winner
Medical (Huanggang) (2*)
2019 district technical
improvement subsidy - Winner 410,000.00 Deferred income 14,909.10
Medical (Jingmen)
2019 special fund project of the
transformation and upgrading of
750,000.00 Deferred income 13,392.85
traditional industries - Winner
Medical (Jiayu)
Surgical gown production line
project subsidy - Winner 4,000,000.00 Deferred income 216,216.22
Medical (Chongyang) (3*)
Funds subsidy for purchasing
epidemic prevention equipment
in key enterprises of "Three 5,590,000.00 Deferred income 281,848.74
Batches" - Winner Medical
(Chongyang) (4*)
Project on implementing the
technical reformation policy of
“Zero Land” in Wuhan and the
municipal industrial investment
and technical transformation
8,000,000.00 Deferred income 291,144.36
special fund project of Bureau
for Science, Technology and
Economic Information
Technology of Xinzhou District
- Hubei Winner (5*)
Subsidy of COVID-19 epidemic
prevention and control materials
3,645,000.00 Deferred income 295,860.18
production enterprise for
capacity expansion & technical
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upgrading project - Hubei
Winner (6*)
Special funds for the
high-quality development of
manufacturing granted by
3,000,000.00 Deferred income 140,186.92
Municipal Economic and
Information Bureau - Winner
Medical (Huanggang)
Equipment purchase subsidy
funds for key enterprise "Three
Batches” at provincial levels
9,370,000.00 Deferred income 5,726,111.11
granted by Municipal Economic
and Information Bureau -
Winner Medical (Huanggang)
Equipment subsidies during the
COVID-19 pandemic - Winner 6,800,000.00 Deferred income 1,700,000.00
Medical (Jingmen)
Equipment investment subsidies
15,000,000.00 Deferred income
- Winner Medical (Tianmen)
2020 Provincial special funds
for the high-quality
1,000,000.00 Deferred income 43,859.65
development of manufacturing -
Winner Medical (Jiayu)
2020 Provincial special funds
for the high-quality
development of manufacturing
1,000,000.00 Deferred income 41,356.33
granted by Economic and
Information Bureau - Winner
Medical (Wuhan)
Others 21,317.91 Deferred income
2. Government subsidies related
to income
Incentives for capacity
28,524,000.00 Other incomes 28,524,000.00
expansion
2020 special funds for stable
industrial growth granted by 20,000,000.00 Other incomes 20,000,000.00
Finance Bureau to ICBC
Subsidies for shipping cotton
5,254,900.00 Other incomes 5,254,900.00
out of Xinjiang
Domestic listing and listing
3,500,000.00 Other incomes 3,500,000.00
subsidies for enterprises
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Special funds for economic
development of remittance
1,400,300.00 Other incomes 1,400,300.00
headquarters of the finance
bureau
Post-recognition subsidy for
financial high-tech enterprises,
1,050,000.00 Other incomes 1,050,000.00
post-innovation platform
subsidy
International market access
1,032,300.00 Other incomes 1,032,300.00
certification project
Special subsidy for structural
adjustment of enterprises in 1,027,029.92 Other incomes 1,027,029.92
Xinzhou District
Foreign trade premium growth
fund of Coomerce Bureau of 1,001,618.00 Other incomes 1,001,618.00
Shenzhen Municipality
Mayor Quality Award 2020 of
1,000,000.00 Other incomes 1,000,000.00
Longhua District
Enterprise-university innovation
1,000,000.00 Other incomes 1,000,000.00
platform subsidy
Electricity subsidies for
COVID-19 pandemic 955,649.75 Other incomes 955,649.75
prevention and control
Incentives for corporate R&D
816,000.00 Other incomes 816,000.00
investment in 2020
2020 research and development
grants for enterprises provided
by Hi-tech Office of Shenzhen 776,000.00 Other incomes 776,000.00
Science and Technology
Innovation Committee
Export credit insurance
premium grants from June to 572,169.00 Other incomes 572,169.00
December 2019
Consumption promotion
500,000.00 Other incomes 500,000.00
support funds in 2021
Electricity subsidy 426,008.80 Other incomes 426,008.80
Post stabilization subsidy 408,945.37 Other incomes 408,945.37
Central foreign trade and
economic development funds in 121,000.00 Other incomes 121,000.00
Fiscal 2020
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Others 1,941,754.05 Other incomes 1,941,754.05
Others 36,262.29 Non-revenue 36,262.29
Total 228,504,305.09 86,791,122.28
(2) Return of government subsidies
□ Applicable √ Not applicable
Other description:
85. Others
VIII. Consolidation scope changes
1. Business combination not under common control
(1) Business combination not under common control occurred in current period
Unit: yuan
Income of the Net profit of
acquiree from the acquiree
Basis for
Time of Cost of Equity Method of the from the
Name of the Acquisition determination
equity equity acquisition equity acquisition acquisition
acquiree date of acquisition
acquisition acquisition ratio acquisition date to the date to the
date
end of the end of the
period period
Other description:
(2) Combination cost and goodwill
Unit: yuan
Combination cost
Determination method of fair value of combination cost, contingent consideration and explanation of its changes:
Main reasons for the formation of large amount of goodwill:
Other description:
(3) Identifiable assets and liabilities of the acquiree on the acquisition date
Unit: yuan
Fair value on the acquisition date Book value on the acquisition date
Determination method of fair value of identifiable assets and liabilities:
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Contingent liabilities of the acquiree incurred in business combination
Other description:
(4) Gains or losses arising from remeasurement of equity held prior to the acquisition date at fair value
Whether there are transactions that realize the business combination step by step through multiple transactions and obtain control
right during the reporting period
□Yes √No
(5) Relevant description of the combination consideration or the fair value of the identifiable assets and
liabilities of the acquiree that cannot be reasonably determined on the acquisition date or at the end of
current period of the combination
(6) Other description
2. Business combination under common control
(1) Business combination under common control occurred in current period
Unit: yuan
Income of the Net profit of
Basis of combined the combined Income of the Net profit of
Proportion of
business Basis for party from party from combined the combined
equity
Name of combination determination the beginning the beginning party during party during
obtained in Merger date
merged party under of merger of current of current the the
business
common date period to the period to the comparison comparison
combination
control date of date of period period
combination combination
Other description:
(2) Combination cost
Unit: yuan
Combination cost
Contingent consideration and explanation of its changes:
Other description:
(3) Book value of assets and liabilities of the combined party on the date of combination
Unit: yuan
Merger date End of previous period
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Contingent liabilities of the combined party incurred in business combination
Other description:
3. Reverse purchase
Basic information of transaction, basis of transaction forming reverse purchase, whether the assets and liabilities retained by the
listed company constitute business and their basis, determination of combination cost, amount and calculation of ad justed equity in
accordance with equity transaction:
4. Disposal of subsidiary
Whether there is a single disposal of investment in subsidiaries, i.e. loss of control right
□Yes √No
Whether there is a situation that the investment in subsidiaries is disposed step by step through multiple transactions and the control
right is lost in current period
□Yes √No
5. Change of merger scope for other reasons
Explain the changes in the scope of combination caused by other reasons (such as the establishment of new subsidia ries, liquidation
of subsidiaries, etc.) and relevant information:
6. Others
IX. Interests in other entities
1. Interests in a subsidiary
(1) Composition of enterprise group
Main operation Shareholding ratio
Subsidiary name Registration place Business nature Way of obtaining
site Direct Indirect
Shenzhen City, Shenzhen City,
Shenzhen Sale of Purcotton
Guangdong Guangdong 100.00% Establishment
Purcotton products
Province Province
Sale of Purcotton
Beijing Purcotton Beijing Beijing 100.00% Establishment
products
Guangzhou City, Guangzhou City,
Guangzhou Sale of Purcotton
Guangdong Guangdong 100.00% Establishment
Purcotton products
Province Province
Shanghai Sale of Purcotton
Shanghai Shanghai 100.00% Establishment
Purcotton products
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Shenzhen City, Shenzhen City,
Sale of Purcotton
Qianhai Purcotton Guangdong Guangdong 100.00% Establishment
products
Province Province
Production and
sales of pure
cotton spunlace Business
Winner Medical Huanggang City, Huanggang City, non-woven combination
100.00%
(Huanggang) Hubei Province Hubei Province fabrics, medical under common
consumables, and control
Purcotton’s
products
Production and
Business
sales of medical
Winner Medical Jingmen City, Jingmen City, combination
consumables and 100.00%
(Jingmen) Hubei Province Hubei Province under common
Purcotton’s
control
products
Business
Chongyang Chongyang Production and
Winner Medical combination
County, Hubei County, Hubei sales of medical 100.00%
(Chongyang) under common
Province Province consumables
control
Production and
Business
sales of medical
Winner Medical Jiayu County, Jiayu County, combination
consumables and 100.00%
(Jiayu) Hubei Province Hubei Province under common
Purcotton’s
control
products
Business
Production and
Winner Medical Zhijiang City, Zhijiang City, combination
sales of medical 100.00%
(Yichang) Hubei Province Hubei Province under common
gray cloth
control
Production and
sales of cotton Business
Winner Medical Tianmen City, Tianmen City, spun laced combination
100.00%
(Tianmen) Hubei Province Hubei Province non-woven fabric under common
and Purcotton control
products
Sales of medical Business
Winner Medical consumables and combination
Hong Kong Hong Kong 60.00%
(Hong Kong) consumer under common
products control
Winner Business
Huanggang City, Huanggang City,
(Huanggang) Cotton trade 100.00% combination
Hubei Province Hubei Province
Cotton under common
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control
Business
There is no actual
Winner Medical combination not
Malaysia Malaysia business 100.00%
Malaysia under common
operation
control
There is no actual
Heyuan City, Heyuan City,
Winner Medical business
Guangdong Guangdong 100.00% Establishment
(Heyuan) operation at
Province Province
present
Production and
sterilization of
Winner Medical Wuhan City, Wuhan City, cotton spun laced
100.00% Establishment
(Wuhan) Hubei Province Hubei Province non-woven fabric
and Purcotton
products
Shenzhen City, Shenzhen City, Sales of personal
PureH2B Guangdong Guangdong care and other 100.00% Establishment
Province Province products
Import and
Pure HB
Shanghai Shanghai domestic sales of 100.00% Establishment
(Shanghai)
cosmetics
Shenzhen City, Shenzhen City,
Sales of Cotton
Purunderwear Guangdong Guangdong 100.00% Establishment
Lining products
Province Province
Huanggang Huanggang City, Huanggang City, Sale of Purcotton
100.00% Establishment
Purcotton Hubei Province Hubei Province products
Difference between the shareholding ratio and the voting right ratio in the subsidiary:
Basis for holding half or less of the voting rights but still controlling the invested entity, and holding more than half of the voting
rights but not controlling the invested entity:
For the important structured entity included in the combination scope, the control basis is as follows:
Basis for determining whether the company is an agent or a principal:
Other description:
(2) Important non-wholly owned subsidiary
Unit: yuan
Current profits and losses Current dividends
Minority shareholding Ending balance of
Subsidiary name attributable to minority declared to minority
ratio minority equity
shareholders shareholders
Difference between the shareholding ratio and the voting right ratio of the minority shareholders of the subsidiary:
Other description:
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(3) Main financial information of important non-wholly owned subsidiaries
Unit: yuan
Closing Balance Beginning balance
Subsidia Non-curr Non-curr Non-curr Non-curr
Current Total Current Total Current Total Current Total
ry name ent ent ent ent
assets assets liabilities liabilities assets assets liabilities liabilities
assets liabilities assets liabilities
Unit: yuan
Amount incurred in current period Amount incurred in previous period
Cash flow Cash flow
Subsidiary Total Total
from from
name Revenue Net profit comprehensi Revenue Net profit comprehensi
financing financing
ve income ve income
activities activities
Other description:
(4) Major restrictions on the use of enterprise group assets and the settlement of enterprise group debts
(5) Financial or other support provided to structured entity included in the consolidated financial
statements
Other description:
2. Transactions in which the share of ownership interest in a subsidiary changes and the subsidiary is
still controlled
(1) Description of changes in the owner's equity share in the subsidiary
(2) Impact of transactions on minority shareholders' equity and owners' equities attributable to the
owners of parent company
Unit: yuan
Other description
3. Equity in joint venture arrangement or joint venture
(1) Important cooperative enterprises or joint ventures
Name of Shareholding ratio Accounting
cooperative Main operation treatment method
Registration place Business nature
enterprise or joint site Direct Indirect of investment in
venture cooperative
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enterprises or
joint ventures
Difference between the shareholding ratio and the voting right ratio in the cooperative enterprise or joint venture:
Basis for holding less than 20% of the voting rights but having a significant impact, or holding 20% or more of the voting rights but
not having a significant impact:
(2) Major Financial Information about Important Cooperative Enterprises
Unit: yuan
Ending balance/amount incurred in current Beginning balance/amount incurred in
period previous period
Other description
(3) Major Financial Information About Important Jointly Operated Enterprises
Unit: yuan
Ending balance/amount incurred in current Beginning balance/amount incurred in
period previous period
Other description
(4) Summary of financial information of unimportant cooperative enterprises and joint ventures
Unit: yuan
Ending balance/amount incurred in Beginning balance/amount incurred in
current period previous period
Cooperative enterprise: -- --
Total number of following items by
-- --
shareholding ratio
- Joint venture: -- --
Total book value of investment 15,079,827.94 13,424,230.41
Total number of following items by
-- --
shareholding ratio
- Net profit 1,655,597.53 4,565,754.26
- Total comprehensive income 1,655,597.53 4,565,754.26
Other description
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(5) Significant restrictions on the ability of cooperative enterprises and joint ventures to transfer funds to
the Company
(6) Excess losses of cooperative enterprise or joint venture
Unit: yuan
Unrecognized loss in current Accumulated unrecognized
Name of cooperative enterprise Accumulated unrecognized
period (or net profit shared in losses at the end of current
or joint venture losses in the previous period
current period) period
Other description
(7) Unconfirmed commitments related to investment in cooperative enterprise
(8) Contingent liabilities related to investment in cooperative enterprise or joint venture
4. Important pooling of interests
Name of joint Shareholding ratio / share enjoyed
Main operation site Registration place Business nature
operation Direct Indirect
Difference between the shareholding ratio or share enjoyed and the voting right ratio in joint operation:
If the joint operation is a separate entity, it shall be classified as the basis of joint operation:
Other description
5. Equity in the structured entity that is not included in the consolidated financial statements
Description of structured entity not included in the consolidated financial statements
6. Others
X. Risks associated with financial instrume nts
The Company faces various financial risks in the process of operation: credit risk, market risk and liquidity risk.
The Board of Directors of the Company is fully responsible for the determination of risk management objectives
and policies and ultimately responsible for the risk management objectives and policies, provided that the Board
of Directors has authorized the Company’s internal audit department to design and implement procedures to
ensure the effective implementation of risk management objectives and policies. The board reviews the
effectiveness of the procedures implemented and the reasonableness of risk management objectives and policies
through monthly reports submitted by the internal audit supervisor.
The overall objective of the Company’s risk management is to develop risk management policies to minimize risk
without overly affecting the Company' s competitiveness and strain capacity.
1. Credit risk
Credit risk refers to the risk of financial loss to the Company due to the failure of the counterparty to fulfill its
contractual obligations.
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The Company is mainly faced with the customer credit risk caused by credit sales. Prior to signing a new contract,
the Company will assess the credit risk of a new customer, including external credit ratings and, in some cases,
bank reference letter (when such information is available). The Company sets a credit sales limit for each
customer, which is the maximum amount that does not require additional approval.
The Company ensures that the overall credit risk of the Company is under control by quarterly monitoring of the
credit rating of existing customers and monthly review of the aging analysis of accounts receivable. When
monitoring the credit risk of customers, they are grouped according to their credit characteristics. Customers rated
as “high risk” are placed on the Restricted Customer List and can only be sold on credit for a future period with
additional approval, or they must be required to pay in advance.
2. Liquidity risk
Liquidity risk refers to the risk of capital shortage when the Company performs the obligation of settlement by
cash payment or other financial assets. The Company’s policy is to ensure that there is sufficient cash to pay the
debt due. Liquidity risk is centrally controlled by the Financial Department of the Company. By monitoring cash
balances, securities that can be turned into cash at any time, and rolling forecasting of cash flows over the next 12
months, the Finance Department ensures that the Company has sufficient funds to repay its debts under all
reasonable projections.
The Company’s various financial liabilities are shown as follows in terms of undiscounted contract cash flows on
maturity dates:
Closing Balance
Item Immediate More than 5
Within 1 year 1-2 years 2-5 years Total
repayment years
Notes payable 69,765,505.06 69,765,505.06
Accounts payable 568,615,255.29 568,615,255.29
Other payables 615,888,545.12 615,888,545.12
Total 1,254,269,305.47 1,254,269,305.47
Beginning balance
Item Immediate More than 5
Within 1 year 1-2 years 2-5 years Total
repayment years
Short-term loans 150,071,416.66 150,071,416.66
Notes payable 29,418,100.00 29,418,100.00
Accounts payable 726,577,306.94 726,577,306.94
Other payables 352,543,008.89 352,543,008.89
Total 1,258,609,832.49 1,258,609,832.49
3. Market risk
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial
instruments fluctuates due to the change of market price, including exchange rate risk, interest rate risk and other
price risk.
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(1)Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due to
the change of market interest rate.
The interest rate risk that the Company faces mainly comes from the bank's long-term borrowing. The Company
has no long-term borrowings for the current period.
(2)Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due
to the change of foreign exchange rate.
The Company matches foreign currency income with foreign currency expenditure as far as possible to reduce
exchange rate risk. In addition, the Company may enter into forward foreign exchange contracts or currency
exchange contracts to achieve the purpose of avoiding the exchange rate risk. The exchange rate risk faced by the
Company mainly come from financial assets and financial liabilities denominated in USD / EUR / HKD / Yen /
Ringgit, etc. The amounts of foreign currency financial assets and foreign currency financial liabilities converted
into RMB are listed as follows:
2021.6.30
Item
US dollar EUR HKD Yen Ringgit Total
Foreign currency
financial assets
Cash and cash
114,337,746.93 3,701,093.84 18,190,439.45 224,780.35 126,046.66 136,580,107.23
equivalents
Accounts
164,426,320.52 2,283,087.56 7,062,972.33 - 1,534,090.62 175,306,471.03
receivable
Other receivables - - 385,113.25 - 1,773.05 386,886.30
Subtotal 278,764,067.45 5,984,181.40 25,638,525.03 224,780.35 1,661,910.33 312,273,464.56
Foreign currency
financial liabilities
Accounts payable 350,613.70 4,576.44 195,406.60 - 550,596.74
Other payables 94,437,629.42 88,199.15 8,647,194.78 1,354.30 1,244.80 103,175,622.45
Subtotal 94,437,629.42 438,812.85 8,651,771.22 196,760.90 1,244.80 103,726,219.19
Net amount 184,326,438.03 5,545,368.55 16,986,753.81 28,019.45 1,660,665.53 208,547,245.37
If the RMB appreciates or depreciates by 5% against USD / EUR / HKD / Yen / Ringgit, all other variables being
held constant, the total comprehensive income of the Company will be reduced or increased by 8,775,340.15 yuan.
Management considers that 5% is a reasonable reflection of the reasonable range of possible changes in RMB
against foreign currencies.
4. Other price risks
The Company does not hold equity investments in other listed companies.
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XI. Fair value disclosure
1. Ending fair value of assets and liabilities measured with fair value
Unit: yuan
Closing fair value
Item Measurement of fair Measurement of fair Measurement of fair
Total
value at first level value at second level value at third level
I. Continuous fair value
-- -- -- --
measurement
1. Financial assets
measured with fair value
and with the changes 2,207,384,233.24 500,000,000.00 2,707,384,233.24
included in current profit
and loss
(1) Debt instruments
2,207,384,233.24 500,000,000.00 2,707,384,233.24
investment
(VI) Others
1. Amounts receivable
9,263,087.17 9,263,087.17
financing
Total assets continuously
2,216,647,320.41 500,000,000.00 2,716,647,320.41
measured at fair value
II. Non-continuous fair
-- -- -- --
value measurement
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2. Continuous and non-continuous measurement items of fair value at first level and recognition basis for
market price
3. Continuous and non-continuous measurement items of fair value at second level, qualitative and
quantitative information on valuation techniques adopted and important parameters
4. Continuous and non-continuous measurement items of fair value at third level, qualitative and
quantitative information on valuation techniques adopted and important parameters
5. Continuous measurement items of fair value at third level, adjustment information between opening
and closing book value and sensitivity analysis of unobservable parameters
6. For continuous measurement items of fair value, if there is a conversion between different levels in
current period, the reasons for the conversion and the policies for determining the conversion time
point
7. Valuation technology change and reason of change in current period
8. Fair value of financial assets and financial liabilities not measured at fair value
9. Others
XII. Related parties and connected transactions
1. Parent company of the Company
Shareholding ratio of Voting right ratio of
Parent company
Registration place Business nature Registered capital the parent company the parent company
name
in the Company in the Company
Equity investment
Winner Group
Cayman Islands and management HKD 1,143,000.00 68.10% 68.10%
Limited
business
Parent company of the Company
Winner Group Limited was incorporated in the Cayman Islands on April 8, 2003 with registration number 124887 and an authorized
share capital of 360,000,000.00 shares with a nominal value of HKD 1 per share. 1,143,000 shares have been issued. The registered
address is Vistra (Cayman) Limited, P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman KY1-1205,
Cayman Islands.
The ultimate controlling party of the Company is Li Jianquan.
Other description:
NA
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2. Subsidiaries of the Company
See Note “IX. Interests in other entities” for information on the subsidiaries of the Company
3. Cooperative enterprises and joint ventures
See the note “IX. Interests in other entities” for important cooperative enterprises or joint ventures of the Company.
Other cooperative enterprises or joint ventures that made related party transactions with the Company in the current period, or formed
the balance of related party transactions with the Company in the previous periods are as follows:
Name of cooperative enterprise or joint venture Relationship with the Company
Chengdu Winner Joint venture
Other description
Summary of financial information of unimportant cooperative enterprises and joint ventures:
Ending balance/amount incurred in Beginning balance/amount incurred in
current period previous period
- Joint venture: -- --
Chengdu Winner
Total book value of investment 15,079,827.94 13,424,230.41
Total number of following items by -- --
shareholding ratio
- Net profit 1,655,597.53 4,565,754.26
- Other comprehensive income
- Total comprehensive income 1,655,597.53 4,565,754.26
4. Situation of other related parties
Name of other related parties Relationship of other related parties with the Company
Shareholder of the Company, holding 9.16% of the Company’s
Sequoia Xinyuan
shares
Shareholder of the Company, holding 5.68% of the Company’s
Kangsheng Investment
shares
Shareholder of the Company, holding 2.66% of the Company’s
Kangxin Investment
shares
Shareholder of the Company, holding 1.99% of the Company’s
SCGC
shares
Shareholder of the Company, holding 1.60% of the Company’s
Kanglong Investment
shares
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Shareholder of the Company, holding 0.82% of the Company’s
Kangli Investment
shares
Wuhan Zhuoling Packaging Co., Ltd. ((hereinafter referred to as A company controlled by close family members of the
“Wuhan Zhuoling”) Company’s key managers
Glory Ray Holdings Limited A company controlled by the actual controller
Shenzhen Breo Technology Co., Ltd. (hereinafter referred to as A company with the Company’s independent director Liang
“Breo”) Wenzhao as an independent director
Shenzhen Ellassay Fashion Co., Ltd. (hereinafter referred to as A company with the Company’s independent director Zhou
“Ellassay”) Xiaoxiong as an independent director
Li Jianquan Actual controller of the company
Shareholder of the Company, holding 13.94% of the Company’s
Xie Ping
shares
Shareholder of the Company, holding 6.32% of the Company’s
Li Xiaoyuan
shares
Fang Xiuyuan Director, deputy general manager, chief financial officer
Xu Xiaodan Director
Guo Zhenwei Director
Liang Wenzhao Independent director
Zhou Xiaoxiong Independent director
Bi Qun Independent director
Liu Weiwei Chairman of the Board of Supervisors
Ye Yangjing Supervisor
Wang Ying Supervisor
Yin Wenling Deputy general manager
Chen Huixuan Deputy general manager, secretary to the Board of Directors
Song Haibo Key technical personnel
Wang Huan Key technical personnel
Other description
5. Connected transaction
(1) Connected transaction of purchases and sales of goods, provision and acceptance of services
Purchase of goods/acceptance of services
Unit: yuan
Whether the
Connected Amount incurred Approved transaction Amount incurred in
Related party transaction quota is
transaction content in current period quota previous period
exceeded
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Wuhan Zhuoling Purchasing goods
10,406,270.74 No 2,721,060.41
Packaging Co., Ltd. or services
Purchasing goods
Chengdu Winner 88,633.66 No 166,451.37
or services
Purchasing goods
Breo 124,234.00 No 31,424.78
or services
Selling commodities/offering labor
Unit: yuan
Amount incurred in current
Related party Connected transaction content Amount incurred in previous period
period
Chengdu Winner Selling goods or services 2,362,509.36 1,940,885.50
SCGC Selling goods or services 28,238.94
Connected transaction of purchases and sales of goods, provision and acceptance of services
(2) Associated fiduciary management/contracting and entrusted management/subcontracting
Entrusted management / contracting of the Company:
Unit: yuan
Fiduciary income
Pricing basis of
Name of Name of Entrusted / Fiduciary / Fiduciary / / contracting
fiduciary income
entrusting party / entrusting party / contracting asset contracting start contracting income
/ contracting
subcontractor contractor type date termination date recognized in
income
current period
Associated fiduciary / contracting
Entrustment management / subcontracting of the Company:
Unit: yuan
Pricing basis of Fiduciary fee /
Name of Name of Entrusted / Entrusted / Entrusted /
fiduciary fee / subcontracting
entrusting party / entrusting party / subcontracting subcontracting subcontracting
subcontracting fee recognized in
subcontractor contractor asset type start date termination date
fee current period
Associated management / subcontracting
(3) Related-party lease
The Company as the lessor:
Unit: yuan
Lease income recognized in the Lease income recognized in the
Name of lessee Type of leased assets
current period previous period
The Company as the lessee:
Unit: yuan
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Lease fee recognized in the Lease fee recognized in the
Name of lessor Type of leased assets
current period previous period
Related-party lease description
(4) Related-party guarantee
The Company as the guarantor
Unit: yuan
Whether the guarantee
Secured party Amount guaranteed Guarantee start date Guarantee maturity date
has been fulfilled
The Company as the secured party
Unit: yuan
Whether the guarantee
Guarantor Amount guaranteed Guarantee start date Guarantee maturity date
has been fulfilled
Qianhai Purcotton,
Shenzhen Purcotton, Li 50,000,000.00 February 5, 2020 February 5, 2021 Yes
Jianquan
Shenzhen Purcotton 200,000,000.00 February 14, 2020 February 14, 2021 Yes
Li Jianquan 20,000,000.00 February 17, 2020 February 17, 2021 Yes
Related-party guarantee
(5) Related party loan at call
Unit: yuan
Related party Borrowing amount Start date Maturity date Description
Borrowing
Lending
(6) Asset transfer and debt restructuring of related party
Unit: yuan
Amount incurred in current Amount incurred in previous
Related party Connected transaction content
period period
(7) Key management personnel remuneration
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Key management personnel remuneration 4,653,199.81 5,627,380.27
Note: The key management personnel include directors, supervisors, senior managers and core personnel.
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(8) Other connected transactions
6. Accounts receivable and payable by related parties
(1) Receivables
Unit: yuan
Closing Balance Beginning balance
Project name Related party Provision for bad Provision for bad
Book balance Book balance
debt debt
Accounts receivable Chengdu Winner 61,942.50 3,097.13 39,800.00 1,990.00
Accounts receivable Ellassay 746,070.00 37,303.50
Advance to supplier Breo 59,198.00
(2) Payables
Unit: yuan
Project name Related party Ending book balance Beginning book balance
Accounts payable Chengdu Winner 55,322.00 67,630.00
Accounts payable Wuhan Zhuoling 1,313,480.16 4,705,258.45
Accounts payable Breo 51,511.50
Contract liabilities Chengdu Winner 1,193,017.20
Contract liabilities SCGC 13,500.00 29,486.73
7. Related party commitment
8. Others
XIII. Share-based payme nt
1. Overall status of share-based payment
√Applicable □ Not applicable
Unit: yuan
Total amount of equity instruments granted by the company during the
508,824,220.00
current period
Total amount of equity instruments exercised by the company during the
0.00
current period
Total amount of equity instruments invalidated by the company during the
0.00
current period
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In case of the audited revenue in 2021 ≥ 12 billion
yuan, the ownership proportion at the Company level is
100%; in case of 10 billion yuan ≤ the audited revenue
in 2021 < 12 billion yuan, the ownership proportion at
the Company level is 80%; in case of the audited
business income in 2021 < 10 billion yuan, the
restricted stock planned to be vested by the incentive
object shall not be vested and become invalid. In case
Range of the exercise price of the Company’s stock options outstanding at of the audited revenue in 2022 ≥ the audited revenue in
the end of the period and the remaining term of the contract 2021 * (1+30%), the ownership proportion at the
Company level is 100%; in case of the audited revenue
in 2021 * (1+20%) ≤ the audited revenue in 2022 < the
audited revenue in 2021 * (1+30%), the ownership
proportion at the Company level is 80%; in case of the
audited business income in 2022 < the audited revenue
in 2021 * (1+20%), the restricted stock planned to be
vested by the incentive object shall not be vested and
become invalid.
Range of the exercise price of the Company’s other equity instruments
None
outstanding at the end of the period and the remaining term of the contract
Other description
2020 Restricted Stock Incentive Plan
1. Number of restricted stock granted
On November 27, 2020, the Company held the 15th meeting of the second Board of Directors and the 9th meeting of the second
Board of Supervisors, deliberated and passed the Proposal on the Company’s 2020 Restricted Stock Incentive Plan (Draft) and I ts
Abstract. On December 15, 2020, the Company held the sixth extraordinary general meeting of shareholders in 2020 to deliberate
and pass the Proposal on the Company’s 2020 Restricted Stock Incentive Plan (Draft) and Its Abstract. According to the above
proposal, the number of restricted stock (Class II restricted stock) to be granted in this incentive plan is 6.5 million, and the
underlying stock involved is A -share common stock, accounting for about 1.52% of the total capital stock of the Company at the
time of announcement of the draft incentive plan. Among them, 5.9 million shares were granted for the first time, accounting for
about 1.38% of the total capital stock o f the Company at the time of announcement of the draft incentive plan, and 90.77% of the
total equity to be granted. 0.6 million shares were reserved to be granted, accounting for about 0.14% of the total capital stock of the
Company at the time of announcement of the draft incentive plan, and 9.23% of the total equity to be granted. No more than 1, 053
incentive objects will be granted at the first time, including directors, senior managers, and other persons deemed to need incentives
by the Board of Directors.
On December 18, 2020, the Company’s 17th meeting of the second Board of Directors and the 11th meeting of the second Board of
Supervisors deliberated and adopted the Proposal on First Granting Restricted Stocks to Incentive Objects. In view of the fac t that 17
incentive objects gave up the restricted stock to be granted by the Company due to resignation or personal re asons, they no longer
qualified for the incentive conditions. According to the 2020 Restricted Stock Incentive P lan (Draft), the Company adjusted the
incentive objects and the number of grants. The number of incentive objects granted for the first time was adjusted from 1,053 to
1,036, and the total number of restricted stock granted for the first time was adjusted from 5.90 million to 5.833 million.
2. Validity, grant date, vesting arrangement and lock-up period of this incentive plan
① The incentive plan shall be valid for no more than 48 months from the date of the first grant of restricted stock to the date when all
the restricted stock granted to the incentive object is vested or invalidated.
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② After the incentive plan is approved by the general meeting of shareholders of the Company, the Board of Directors shall
determine the grant date, and the grant date must be the trading day. The Company shall grant the restricted stock and comple te the
announcement within 60 days after the approval of the general meeting of shareholders. If the Company fails to complete the above
work within 60 days, the implementation of this incentive plan will be terminated, and the restricted stock not granted will become
invalid.
The Company shall, within 12 months after the deliberation and approval of the incentive plan by the general meeting of share
holders, specify the incentive objects reserved for award. If the incentive objects are not specified for more than 12 months , the
restricted stock corresponding to the reserved part shall become invalid.
③ The vesting arrangement for the first grant of restricted stock in this incentive plan is shown in the following table:
Vesting arrangement Vesting period Vesting ratio
First vesting period From the first trading day of 17 months from the date of the first grant to the last 50%
trading day within 29 months from the date of the first grant
Second vesting period From the first trading day of 29 months from the date of the first grant to the last 50%
trading day within 41 months from the date of the first grant
If the restricted stock corresponding to the reserved part is granted within 2020, the vesting arrangement for granting restr icted stocks
reserved in this incentive plan is consistent with the vesting arrangement for the first grant of restricted stock.
If the restricted stock corresponding to the reserved part is granted within 2021, the vesting arrangement for granting restr icted stocks
reserved in this incentive plan is shown in the following table:
Vesting arrangement Vesting period Vesting ratio
First vesting period From the first trading day of 12 months from the date of reserved granting to the last 50%
trading day within 24 months from the date of reserved granting
Second vesting period From the first trading day of 24 months from the date of reserved granting to the last 50%
trading day within 36 months from the date of reserved granting
If the incentive objects are directors and senior management of the Company, the shares transferred each year during their te rm of
office shall not exceed 25% of the total number of the Company’s shares they hold; they shall not transfer the shares they ho ld within
half a year after leaving the Company
2. Equity-settled share-based payments
√Applicable □ Not applicable
Unit: yuan
The fair value of the restricted stocks of directors and senior
management is calculated using the Black-Scholes model
Method for determining the fair value of equity instruments on the option pricing formula; the fair value of other employee
grant date restricted stocks is determined by reference to the stock
closing price on the grant date without taking into account the
liquidity discount.
Basis for the determination of the number of viable equity
None
instruments
Reasons for significant differences between the current and
None
previous estimates
Accumulated amount of equity-settled share-based payments 166,167,747.30
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recorded in capital reserves
Total amount of expenses recognized by equity-settled share-based
142,429,497.69
payments in current period
Other description
NA
3. Cash-settled share-based payments
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
NA
5. Others
NA
XIV. Commitment and contingencies
1. Important commitment issues
Important commitments on balance sheet date
As of June 30, 2021, the outstanding contracts among the large-value contracts signed by the Company and its subsidiaries that are
being or are about to be performed are as follows:
Project name Amount
Winner Medical (Tianmen) - Intelligent 3D e-commerce 43,200,000.00
warehouse for pure cotton business
Winner Medical (Tianmen) - Spunlace Line 7 - De-dusting and 11,200,000.00
carding machines
Winner Medical (Tianmen) - Non-woven carding machine and 26,440,528.00
spunlace machine
Winner Medical (Tianmen) - Automated storage equipment 16,065,000.00
project
Winner Medical (Tianmen) - Winner Medical (Tianmen) 5,320,000.00
Spunlace Phase III Finishing Plant Project
Purcotton - Software development 20,780,000.00
Winner Medical (Jiayu) - The supporting de-dusting and 3,144,000.00
carding machines for raw cotton spunlace production lines
Winner Medical (Chongyang) - Full-servo special (crinkle) 2,800,000.00
non-woven machines
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Winner Medical (Wuhan) - Engineering project 4,772,448.19
Winner Medical (Wuhan) - Equipment procurement 5,863,358.52
Winner Medical (Huanggang) - Full-servo straight pack 31,500,000.00
sanitary pads production equipment
Winner Medical (Jingmen) - North warehouse 4,400,000.00
Total 175,485,334.71
2. Contingencies
(1) Important contingencies on balance sheet date
NA
(2) Explanation is also required if the Company has no important contingencies to be disclosed
The Company has no important contingencies to be disclosed.
3. Others
NA
XV. Post-balance sheet events
1. Important non-adjustment items
Unit: yuan
Influence number of financial Reasons for influence number
Item Description
position and operating results cannot be estimated
2. Profit distribution
Unit: yuan
3. Sales return
4. Other post-balance sheet events
XVI. Other important issues
1. Correction of previous accounting errors
(1) Retrospective restatement
Unit: yuan
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Content of accounting error Report item name of each
Processing procedures Cumulative influence number
correction affected comparison period
(2) Prospective application
Reason for adopting prospective
Content of accounting error correction Approval procedures
application
2. Debt restructuring
3. Assets replacement
(1) Exchange of non-monetary assets
(2) Other asset replacement
4. Pension plan
5. Discontinued operation
Unit: yuan
Profit from
discontinued
Income tax operations
Item Income Cost Total profit Net profit
expenses attributable to the
owners of parent
company
Other description
6. Segment information
(1) Determination basis and accounting policy of reporting segment
According to the Company's internal organizational structure, management requirements and internal reporting system, three
reporting segments have been determined, respectively: medical consumables, health consumer goods, pure cotton spunlace
non-woven fabrics. Reporting segments of the Company offers different products or services or operates in different regions. Since
each segment requires different technologies or marketing strategies, the management of the Company manages the operating
activities of each reporting segment separately and regularly evaluates the operating results of these reporting segments to determine
the allocation of resources to them and evaluate their performance.
The inter-segment transfer price is determined on the basis of the actual transaction price, and the expenses indirectly attributable to
the segments are distributed among the segments in proportion to the income (as determined by the Company). Assets are alloca ted
according to the operations of a segment and the location of the assets. Liabilities of a segment include liabilities attributable to that
segment arising from the operations of a segment. If expenses related to liabilities shared by multiple operating segments ar e
allocated to those operating segments, such shared liabilities are also allocated to those operating segments.
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(2) Financial information of the reporting segment
Unit: yuan
Medical Healthy Cotton
Offset between
Item consumables consumer goods non-woven coil Unallocated Total
segments
(segment 1) (segment 2) (segment 3)
Revenue 2,171,174,605.39 1,790,338,558.90 98,352,490.63 4,059,865,654.92
Costs 1,037,003,764.37 820,820,906.36 63,965,031.74 1,921,789,702.47
Assets
27,617,878.12 20,941,502.91 229,744.86 48,789,125.89
impairment losses
Depreciation
expense and
25,221,906.19 111,264,949.28 2,457,131.11 138,943,986.58
amortization
expense
Operating profit /
556,176,964.77 227,140,101.71 9,127,160.04 118,125,459.04 910,569,685.56
loss
Non-revenue and
(6,163,340.48) (6,163,340.48)
expense
Assets and
liabilities
13,112,976,247.9
Total assets 2,437,871,731.14 2,842,022,338.63 275,572,902.50 7,557,509,275.64
1
Total liabilities 792,002,649.35 1,221,566,227.25 21,636,806.96 544,709,231.24 2,579,914,914.80
(3) If the Company has no reporting segments, or cannot disclose the total assets and total liabilities of
each reporting segment, the reasons shall be explained
(4) Other description
7. Other important transactions and matters affecting the decision-making of investors
(1) Urban Renewal Project of Winner Industrial Park
① Project Overview
On April 6, 2017, the Company and Shenzhen Galaxy Real Estate Development Co., Ltd. (hereinafter referred to as “Galaxy Real
Estate”) signed the Cooperation Agreement on Urban Renewal Project of Winner Industrial Park to apply for and implement the
demolition and reconstruction of urban renewal and reconstruction of Winner Industrial Park in Longhua District, Shenzhen Cit y
(hereinafter referred to as “the Project”). The scope of land to be demolished for the Project is a state-owned land that has been
transferred. The land parcel number is A819-0123. The land area is 29,064.49 m2, and the current use is industrial land. According to
the statutory plan of [Pinus tabulaeformis area] of No.402-19&20&21, Bao’an District, Shenzhen City, the planned use of this land
parcel is a second-class residential land. The land has been registered for title with a construction area of 36,625.89 m2, used for
office, plant and dormitory. The Company shall be the sole subject of rights to the said parcel and all the buildings (structures) and
appendages thereon. At present, the above target land and part of the building are not mortgaged.
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② Cooperation mode
The Company agrees to entrust the target land and building to Galaxy Real Estate for application for approval of the urban renewal
unit plan, and accepts the relocation compensation of Galaxy Real Estate according to the conditions agreed in this agreement.
Galaxy Real Estate is responsible for all the work related to the declaration of renewal unit plan of the target land and building and
implementation of urban renewal, responsible for the relocation compensation and demolition and reconstruction funds, and enjoys
the interest in the renewal project as the single market implementer.
After the renewal and reconstruction of the target land and buildings is approved by the urban renewal unit plan, the specific
transformation and development intensity, planned purpose and indicators, etc. shall be discussed by Galaxy Real Estate with the
Company in advance before the formal application for construction, but the final approval shall be subject to the relevant governme nt
departments.
Galaxy Real Estate shall pay the cooperation consideration to the Company by paying the relocation compensation consideration to
the Company. The Company voluntarily chooses the relocation compensation method that combines monetary compensation and
property right exchange (relocation), including: 1) monetary compensation: 400 million yuan; 2) Property right exchange (relocation):
the area of property right exchange (relocation) obtained by Party B shall be determined at 40% of the gross floor area for s ale based
on the gross floor area for sale determined in the final approval of the special planning of the renewal unit of this Project.
③ Current progress
Up to now, Galaxy Real Estate has paid the first margin of 50 million yuan and the second advance compensation of 100 million
yuan for demolition to the Company according to the agreement. The project was announced in September 2019 and approved in
December 2019. Subsequent progress will be made in accordance with the procedures stipulated by the government, and the specific
progress will be subject to the government's approval.
According to the agreement, if the project fails to obtain the approval of the renewal unit plan due to government policy or force
majeure, either party has the right to terminate the contract, and the amount collected by the Company will be returned to Ga laxy
Real Estate without interest within 30 days after the termination of the contract.
(2) Heyuan investment and construction project
① Problem background
In 2016, under the guidance and promotion of Shenzhen Longhua District Committee and District Government, the Company plans
to transfer part of the production and logistics functions to Heyuan Zijin Linjiang Industrial Park in response to the policy of
supporting Heyuan City as a counterpart of Shenzhen City. In May 2016, the Company and the People’s Government of Zijin Count y
of Heyuan City signed the Agreement on Investment and Construction of Medical Package and Cotton Household Goods Production
Project (hereinafter referred to as the “Investment Agreement”), with the construction land of the project covering 200,000 m2
After the agreement was signed and the Land Use Notice was obtained, the Company submitted the planning plan, project
application and approval form as required, and started the construction. In August 2016, Winner Medical (Heyuan) obtained the
Record Certificate of Enterprise Investment Projects in Guangdong Province issued by the Development and Reform Bureau of Zijin
County. In June 2017, Environmental Protection Bureau of Zijin County issued the Approval on the Environmental Impact Report
Form of the Construction Project of Winner Medical (Heyuan) Co., Ltd. In accordance with the agreement, the Zijin County
Government assisted in obtaining a series of licenses such as state-owned land use right certificate and construction land planning
permit.
After the project was signed and started construction, the government required all construction projects under construction in Zijin
Linjiang Industrial Park to stop due to land conflicts between the project site and the planned Heyuan East Station of
Jiangxi-Shenzhen High-speed Railway and the High-speed Railway New Town. Meanwhile, the relevant land use procedures were
suspended.
② Current progress
In June 2019, the Regulatory Detailed Planning and Constructional Detailed Urban Design of the Core Area of Heyuan High-speed
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Railway New Town was published to the public from June 22, 2019 to July 22, 2019. According to the final publicity content, it is
determined that the square in front of Heyuan East Station of High-speed Railway, National Highway 205 and the High-speed
Railway New Town overlap with the project land of Winner Medical (Heyuan).
In October 2019, the Company signed a tripartite agreement with the People's Government of Zijin County and the Management
Committee of Heyuan Jiangdong New District to clarify the overall disposal plan. The land used for Winner Medical (Heyuan)’s
project and its above-ground buildings will be recovered by the People’s Government of Zijin County, and the three parties agree to
determine the amount of compensation through arbitration. The People’s Government of Zijin County paid 30 million yuan to the
Company as the performance bond.
In November 2019, International Arbitration Court of Ganjiang New District issued the award ((2019) G.G.Z.Zi No.095), which
confirmed the termination of the original Investment Agreement, and the People's Government of Zijin County shall bear the attorney
fees, legal costs and other expenses totaling 2,655,320.00 yuan. The land transfer deposit of 3 million yuan shall be returne d to t he
Company and compensate for the economic loss of 550 million yuan. The People's Government of Zijin County shall pay 50% of the
amount before December 31, 2019 and 50% before February 29, 2020. As of June 30, 2021, the Company has received the land
transfer deposit of 3 million yuan returned by the People's Government of Zijin County and paid the compensation of 314 million
yuan. The Company has also handed over the project land, above-ground buildings, equipment and facilities and relevant supporting
materials to the People's Government of Zijin County.
③ Impact of this matter on the Company's operation
Winner Medical (Heyuan)'s business positioning is mainly the production, logistics and warehousing functions of medical packa ge
and cotton daily necessities. At present, the Company has transferred the production, logistics and warehousing functions of
Purcotton daily necessities to the Company's subsidiary Hubei Winner, and the production of medical package has been transferred to
the Company's subsidiary Winner Medical (Chongyang).
Hubei Winner and Winner Medical (Chongyang) have sufficient capacity to undertake the aforementioned production, logistics and
warehousing business originally intended to be undertaken by Winner Medical (Heyuan). The above matters of Winner Medical
(Heyuan) have not caused significant adverse impact on the normal production and operation of the Company.
8. Others
XVII. Notes on main items of parent company's financial statement
1. Accounts receivable
(1) Classified disclosure of accounts receivable
Unit: yuan
Closing Balance Beginning balance
Provision for bad Provision for bad
Book balance Book balance
debt debt
Class Book
Accruing Accruing Book value
Proportio value Proportio
Amount Amount proportio Amount Amount proportio
n n
n n
Including:
Accounts receivable 596,374, 29,808,8 566,565,3 711,959,3 32,314,54 679,644,83
100.00% 5.00% 100.00% 4.54%
of provision for bad 175.88 64.73 11.15 79.83 0.44 9.39
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debt by combination
Including:
Including: Aging 589,169, 29,808,8 559,360,4 644,741,6 32,314,54 612,427,14
98.79% 5.06% 90.56% 5.01%
analysis 364.38 64.73 99.65 80.92 0.44 0.48
7,204,81 7,204,811 67,217,69 67,217,698.
Other combination 1.21% 9.44%
1.50 .50 8.91 91
596,374, 29,808,8 566,565,3 711,959,3 32,314,54 679,644,83
Total 100.00% 100.00% 4.54%
175.88 64.73 11.15 79.83 0.44 9.39
Provision for bad debt by single item:
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion Reasons for provision
Provision for bad debt by combination: aging analysis combination
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion
Within 1 year (including 1 year) 584,331,467.44 29,216,573.38 5.00%
1~2 years (including 2 years) 4,540,980.86 454,098.09 10.00%
2~3 years (including 3 years) 226,746.88 68,024.06 30.00%
More than 5 years 70,169.20 70,169.20 100.00%
Total 589,169,364.38 29,808,864.73 --
Description of the basis for determining the combination:
On June 30, 2021, the Company reviewed the appropriateness of the provision for bad debts of receivables in the previous year
according to the historical bad debt loss, and believed that the default probability has a strong correlation with the aging of accounts,
and the account age is still a sign of whether the credit risk of the company's receivables has significantly increased. Therefore, the
Company's credit risk loss on June 30, 2021 is estimated based on the aging of accounts and estimated at the original loss ra tio.
Provision for bad debt by combination: other combination - related parties within the group
Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion
Other combination - related
7,204,811.50 0.00%
parties within the group
Total 7,204,811.50 --
Description of the basis for determining the combination:
According to the Company's accounting policy, the related parties within the group do not make provision for bad debts.
Provision for bad debt by combination:
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Unit: yuan
Closing Balance
Name
Book balance Provision for bad debt Accruing proportion
Description of the basis for determining the combination:
If the bad debt provision of accounts receivable is withdrawn according to the general model of expected credit loss, please refer to
the disclosure method of other receivables to disclose the relevant information of bad debt provision:
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
Aging Closing Balance
Within 1 year (including 1 year) 591,536,278.94
1~2 years 4,540,980.86
2~3 years 226,746.88
More than 3 years 70,169.20
More than 5 years 70,169.20
Total 596,374,175.88
(2) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
Amount of change in current period
Beginning
Class Recovered or Closing Balance
balance Accrual Write-off Others
reversed
Provision for bad
debt of accounts 32,314,540.44 5,861,926.64 8,367,602.35 29,808,864.73
receivable
Total 32,314,540.44 5,861,926.64 8,367,602.35 29,808,864.73
Where the amount of bad debt provision recovered or reversed is important:
Unit: yuan
Unit name Amount recovered or reversed Recovery way
(3) Accounts receivable actually written off at the current period
Unit: yuan
Item Amount written off
Write-off of important accounts receivable:
Unit: yuan
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Whether the
Nature of accounts Reasons for Write-off procedures payments arise from
Unit name Amount written off
receivable write-off performed connected
transactions
Description of write-off accounts receivable:
(4) Accounts receivable with Top 5 ending balances by debtor
Unit: yuan
Ending balance of accounts Proportion in total other ending Ending balance of bad debt
Unit name
receivable balance of accounts receivable provision
First 192,013,204.61 32.20% 9,600,660.23
Second 31,273,460.19 5.24% 1,563,673.01
Third 29,435,075.96 4.94% 1,471,753.80
Fourth 21,579,058.19 3.62% 1,078,952.91
Fifth 17,402,885.15 2.92% 870,144.26
Total 291,703,684.10 48.92%
(5) Accounts receivable derecognized due to transfer of financial assets
(6) Amount of assets and liabilities formed by transferring accounts receivables and continuing
involvement
Other description:
2. Other receivables
Unit: yuan
Item Closing Balance Beginning balance
Other receivables 224,254,705.29 361,160,139.37
Total 224,254,705.29 361,160,139.37
(1) Interest receivable
1) Classification of interest receivable
Unit: yuan
Item Closing Balance Beginning balance
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2) Important overdue interest
Whether there is
Borrower Closing Balance Overdue time Overdue reason impairment and its
judgment basis
Other description:
3) Provision for bad debt
□ Applicable √ Not applicable
(2) Dividends receivable
1) Classification of dividends receivable
Unit: yuan
Project (or invested unit) Closing Balance Beginning balance
2) Important dividends receivable with the aging more than 1 year
Unit: yuan
Whether there is
Project (or invested unit) Closing Balance Aging Reason for non-recovery impairment and its
judgment basis
3) Provision for bad debt
□ Applicable √ Not applicable
Other description:
(3) Other receivables
1) Other receivables classified by nature
Unit: yuan
Nature of payment Ending book balance Beginning book balance
Compensation for investment and
construction project of Winner Medical 238,655,320.00 387,655,320.00
(Heyuan)
Export drawback 7,190,798.48
Margin and deposit 7,023,624.55 3,650,806.01
Employee pretty cash 506,583.24 175,183.18
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Others 2,551,682.43 1,528,756.45
Total 248,737,210.22 400,200,864.12
2) Provision for bad debt
Unit: yuan
Stage 1 Stage 2 Stage 3
Expected credit Expected credit losses over Expected credit losses over
Provision for bad debt Total
losses over the next the entire duration (no the entire duration (credit
12 months credit impairment occurred) impairment has occurred)
Balance on January 1,
39,040,724.75 39,040,724.75
2021
Balance on January 1,
2021 in the current —— —— —— ——
period
Accrual in current period 167,011.59 167,011.59
Reversal in current
14,725,231.41 14,725,231.41
period
Balance on June 30, 2021 24,482,504.93 24,482,504.93
Changes in book balance with significant changes in the current period of provision for loss
□ Applicable √ Not applicable
Disclosure by aging
Unit: yuan
Aging Closing Balance
Within 1 year (including 1 year) 9,696,700.82
1~2 years 238,743,793.11
2~3 years 125,337.86
More than 3 years 171,378.43
3~4 years 171,378.43
Total 248,737,210.22
3) Provision, recovery or reversal of bad debt reserves in the current period
Provision for bad debts in current period:
Unit: yuan
Amount of change in current period
Beginning
Class Recovered or Closing Balance
balance Accrual Write-off Others
reversed
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Provision for bad
39,040,724.7
debts of other 167,011.59 14,725,231.41 24,482,504.93
5
receivables
39,040,724.7
Total 167,011.59 14,725,231.41 24,482,504.93
5
Where the amount of bad debt provision reversed or recovered is important:
Unit: yuan
Unit name Amount reversed or recovered Recovery way
4) Other receivable actually written off at the current period
Unit: yuan
Item Amount written off
Write-off of important other receivables:
Unit: yuan
Whether the
Nature of other Reasons for Write-off procedures payments arise from
Unit name Amount written off
receivables write-off performed connected
transactions
Description of write-off of other receivables
5) Other receivables with Top 5 ending balances by debtor
Unit: yuan
Proportion in total
Ending balance of
Unit name Nature of payment Closing Balance Aging other ending balance
bad debt provision
receivable
Receivables related
First 238,655,320.00 1~2 years 95.95% 23,865,532.00
to Heyuan project
Second Margin and deposit 5,125,432.01 Within 1 year 2.06% 256,271.60
Third Margin and deposit 506,269.75 Within 1 year 0.20% 25,313.49
Fourth Others 489,228.01 Within 1 year 0.20% 24,461.40
Fifth Margin and deposit 190,000.00 Within 1 year 0.08% 9,500.00
Total -- 244,966,249.77 -- 98.49% 24,181,078.49
6) Accounts receivable involving government subsidies
Unit: yuan
Unit name Name of government Closing Balance Ending aging Estimated collection time,
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subsidy project amount and basis
7) Other receivables derecognized due to transfer of financial assets
8) Amount of assets and liabilities formed by transferring other receivables and continuing involvement
Other description:
3. Long-term equity investment
Unit: yuan
Closing Balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investment in
908,737,678.63 4,086,994.48 904,650,684.15 728,737,678.63 4,086,994.48 724,650,684.15
subsidiaries
Investment in
associated
15,079,827.94 15,079,827.94 13,424,230.41 13,424,230.41
enterprises and
joint enterprises
Total 923,817,506.57 4,086,994.48 919,730,512.09 742,161,909.04 4,086,994.48 738,074,914.56
(1) Investment in subsidiaries
Unit: yuan
Increase or decrease in current period Balance of
Beginning
Ending balance impairment
Invested unit balance (book Further Capital Provision for
Others (book value) provision at the
value) investment reduction impairment
end of period
Winner Medical
267,491,627.7
(Huanggang) 267,491,627.79
9
Co., Ltd.
Winner Medical
(Jingmen) Co., 27,242,761.31 27,242,761.31
Ltd.
Winner Medical
(Tianmen) Co., 39,697,276.28 39,697,276.28
Ltd.
Winner Medical
(Chongyang) 33,629,806.08 33,629,806.08
Co., Ltd.
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Winner Medical
36,436,595.28 36,436,595.28
(Jiayu) Co., Ltd.
Yichang Winner
Medical Textile 18,595,897.41 18,595,897.41
Co., Ltd.
Winner Medical
100,000,000.0
(Heyuan) Co., 100,000,000.00
0
Ltd.
Winner Medical
100,000,000.0
(Wuhan) Co., 100,000,000.00
0
Ltd.
Winner Medical
(Hong Kong) 1,456,720.00 1,456,720.00
Ltd. (HK)
Winner Medical
Malaysia Sdn. 0.00 4,086,994.48
Bhd. (MY)
Shenzhen
Purcotton
50,000,000.00 80,000,000.00 130,000,000.00
Technology Co.,
Ltd.
Pure HB
(Shanghai) Co., 100,000.00 100,000.00
Ltd.
Shenzhen
PureH2B 100,000,000.0
50,000,000.00 150,000,000.00
Technology Co., 0
Ltd.
724,650,684.1 180,000,000.0
Total 904,650,684.15 4,086,994.48
5 0
(2) Investment in associated enterprises and joint enterprises
Unit: yuan
Increase or decrease in current period Balance
Investme Adjustme of
Beginnin Declared Ending
nt gains nt of Provision impairme
Invested g balance Further Changes payment balance
Capital and losses other for nt
entity (book investmen in other of cash Others (book
reduction recognize comprehe impairme provision
value) t equity dividends value)
d by the nsive nt at the end
or profits
equity income of period
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method
I. Cooperative enterprise
II. Joint venture
Chengdu 13,424,23 1,655,597 15,079,82
Winner 0.41 .53 7.94
13,424,23 1,655,597 15,079,82
Subtotal
0.41 .53 7.94
13,424,23 1,655,597 15,079,82
Total
0.41 .53 7.94
(3) Other description
4. Revenue and cost
Unit: yuan
Amount incurred in current period Amount incurred in previous period
Item
Income Cost Income Cost
Main business 2,129,805,774.91 1,233,799,517.75 2,639,684,107.75 1,503,030,276.12
Other businesses 22,965,185.06 3,550,383.03 24,539,475.08 3,344,800.49
Total 2,152,770,959.97 1,237,349,900.78 2,664,223,582.83 1,506,375,076.61
Income related information:
Unit: yuan
Contract classification Segment 1 Segment 2 Total
Including:
Including:
Including:
Including:
Including:
Including:
Including:
Information related to performance obligations:
None
Information related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations signed but not yet performed or completed at the end of this
reporting period is 0.00 yuan.
Other description:
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5. Investment income
Unit: yuan
Item Amount incurred in current period Amount incurred in previous period
Long-term equity investment gains measured
1,655,597.53 2,288,557.50
by employing the equity method
Investment income from purchasing
43,948,199.51 4,349,191.29
financial products
Total 45,603,797.04 6,637,748.79
6. Others
XVIII. Further information
1. Current non-recurring gain and loss statement
√Applicable □ Not applicable
Unit: yuan
Item Amount Description
Profit and loss on disposal of non-current
(7,991,363.76)
assets
Government subsidies included into the
current profits and losses, except those
government subsidies, which are closely
86,791,122.28
related to the business of a company and
enjoyed in accordance with a certain
standard quota or quantity of the state
In addition to the effective hedging business
related to the company's normal business
operations, the profit and loss from fair value
changes arising from holding tradable
financial assets, derivative financial assets,
tradable financial liabilities, and derivative
79,825,882.59
financial liabilities, as well as the investment
income from disposal of tradable financial
assets and derivative financial assets,
tradable financial liabilities, derivative
financial liabilities, and other debt
investments
Income and expenditure other than those
1,756,948.93
mentioned above
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Less: Amount affected by income tax 26,599,643.40
Amount of minority shareholders' equity
(174.41)
affected
Total 133,783,121.05 --
Explain the non-recurrent profit and loss items defined by the Company according to the Interpretative Announcement No. 1 on
Information Disclosure of Public Securities Issuing Companies - Non-recurrent Profits and Losses and defined from the
non-recurrent profit and loss items enumerated in the Interpretative Announcement No. 1 on Information Disclosure of Public
Securities Issuing Companies - Non-recurrent Profits and Losses.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
Earnings Per Share
Reporting profit Weighted average return on net assets
Basic EPS (yuan/share) Diluted EPS (yuan/share)
Net profit attributable to common
7.06% 1.7844 1.7715
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
5.82% 1.4707 1.4601
deduction of non-recurring profits
and losses
3. Differences in Accounting Data under Domestic and Foreign Accounting Standards
(1) The difference between net profits and net assets in financial statements disclosed according to the
International Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
(2) The difference between net profits and net assets in financial statements disclosed according to the
Overseas Accounting Standards (IAS) and Chinese Accounting Standards simultaneously
□ Applicable √ Not applicable
(3) Causes for differences in accounting data under domestic and foreign accounting standards. If the
difference adjustment has been made to the data audited by the overseas audit institution, the name of
the overseas audit institution shall be indicated
4. Others
In case of a divergence of the interpretation the Chinese version of the annual report shall prevail.
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Winner Medical Co., Ltd.
September 29, 2021
284
