Annual Report 2023
Stock Code: 603605 Stock Abbreviation: Proya
Bond Code: 113634 Bond Abbreviation: Proya Convertible Bond
Proya Cosmetics Co., Ltd.
Annual Report 2023
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Important Notes
I.The Board of Directors, Board of Supervisors, directors, supervisors and senior management
of the Company warrant that the content of the Annual Report is authentic, accurate and
complete, free from false records, misleading statements and major omissions, and shall be
jointly and severally liable therefore.
II.All directors of the Company attended the meeting of the Board of Directors.
III.Pan-China Certified Public Accountants (Special General Partnership) has issued a standard
unqualified audit report to the Company.
IV.HOU Juncheng, chairman of the Company, and WANG Li, CFO (and Head of Accounting
Department) of the Company represent and warrant that the financial report in the Annual
Report is authentic, accurate and complete.
V.The profit distribution plan or capital reserve capitalization plan for the Reporting Period
approved by the Board of Directors
1. Based on the total share capital (excluding the shares in the Company's special securities account for
repurchase) as of the record date on which equity distribution is implemented, the Company proposes to
distribute to all shareholders registered a cash dividend of RMB9.10 (tax inclusive) per 10 shares. Based
on the total share capital of 396,757,184 shares on December 31, 2023, deducting 2,210,825 shares in the
Company's special securities account for repurchase, it is estimated that the cash dividend to be distributed
will amount to RMB359,037,186.69 (tax inclusive) without converting the capital reserve into share
capital or giving any bonus shares. In case of a change in the Company's total share capital due to the
conversion of convertible bonds before the record date for equity distribution, the Company maintains the
said distribution ratios and yet adjusts the total distribution amounts.
2. On October 23, 2023, the Company completed the implementation of the 2023 semi-annual profit
distribution plan. Based on the Company's total share capital of 396,823,346 shares before the
implementation of the plan, a cash dividend of RMB0.38 per share (tax inclusive) was distributed, with a
total of RMB150,792,871.48 cash dividends distributed.
3. According to the Guideline No. 7 for the Self-regulatory Rules of Companies Listed on the Shanghai
Stock Exchange - Share Repurchase and other relevant regulations, for listed companies that repurchase
shares using cash as consideration through centralized bidding or tender offer, the amount of repurchased
shares in the current year shall be treated as the amount of cash dividends and counted in the calculation
of the cash dividend proportion for that year. In 2023, the Company repurchased shares amounting to
RMB39,076,754.20 (excluding transaction expenses) through centralized bidding.
To conclude, the amount of cash dividends for the year 2023 (including the proposed annual dividend for
2023, the semi-annual cash dividend for 2023, and the amount of repurchased shares through centralized
bidding for 2023) accounts for 45.98% of the net profit attributable to the shareholders of the Company in
the consolidated statement of 2023.
VI.Disclosure of risks involved in forward-looking statements
√ Applicable □ Not applicable
The Report contains forward-looking statements which involve the future plans, development strategies,
etc. of the Company, yet do not constitute substantive undertakings of the Company to investors.
Investors should exercise caution prior to making investment decisions.
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VII.Whether there is any non-operating capital occupation by a controlling shareholder and other
related parties
No
VIII.Whether there is any external guarantee provided in violation of specified decision-making
procedures
No
IX.Whether the majority of the directors are unable to warrant the authenticity, accuracy and
completeness of the Annual Report disclosed by the Company
No
X.Disclosure of major risks
The Company has described the existing risks in details in this Report. Refer to "(IV) Possible risks",
"VI. Discussion and Analysis of the Company's Future Development", "Section III Management
Discussion and Analysis".
XI.Other
□ Applicable √ Not applicable
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Contents
Section I Definitions........................................................................................................................... 5
Section II Company Profile and Key Financial Indicators .................................................................. 7
Section III Management Discussion and Analysis .............................................................................. 12
Section IV Corporate Governance ...................................................................................................... 46
Section V Environmental and Social Responsibility ......................................................................... 66
Section VI Important Matters .............................................................................................................. 71
Section VII Shareholders and Changes in Shares............................................................................... 104
Section VIII Information on Preference Shares ................................................................................... 114
Section IX Information on Bonds ..................................................................................................... 115
Section X Financial Report .............................................................................................................. 120
Financial statements signed and sealed by the Legal Representative, CFO of the Company,
Documents and person in charge of Accounting Department.
Available Original copy of the audit report stamped by the accounting firm and signed and sealed by
for certified public accountants.
Inspection Original copies of all documents and announcements of the Company disclosed during the
Reporting Period in newspapers designated by China Securities Regulatory Commission.
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Section I Definitions
I.Definitions
In this Report, unless the context otherwise requires, the following terms have the following meanings:
Definition
Proya Cosmetics,
refers
this Company, or the Proya Cosmetics Co., Ltd.
to
Company
refers
Huzhou Branch Proya Cosmetics Co., Ltd. Huzhou Branch, a branch of the Company
to
refers
Shanghai Branch Proya Cosmetics Co., Ltd. Shanghai Branch, a branch of the Company
to
refers Hangzhou Proya Trade Co., Ltd., a wholly-owned subsidiary of the
Proya Trade
to Company
refers Hanna Cosmetics Co., Ltd., a wholly-owned subsidiary of the
Korea Hanna
to Company
refers Anya (Huzhou) Cosmetics Co., Ltd., a wholly-owned subsidiary of
Anya (Huzhou)
to Korea Hanna
refers Yueqing Laiya Trading Co., Ltd., a wholly-owned subsidiary of the
Yueqing Laiya
to Company
refers Huzhou UZERO Trading Co., Ltd., a wholly-owned subsidiary of the
Huzhou UZERO
to Company
Mijing Siyu refers Mijing Siyu (Hangzhou) Cosmetics Co., Ltd., a wholly-owned
(Hangzhou) to subsidiary of the Company
refers Zhejiang Meiligu Electronic Commerce Co., Ltd., a wholly-owned
Meiligu
to subsidiary of the Company
Chuangdai refers Huzhou Chuangdai E-commerce Co., Ltd., a wholly-owned subsidiary
Electronics to of Meiligu
Hangzhou refers Hangzhou CORRECTORS Trade Co.,Ltd., a wholly-owned subsidiary
CORRECTORS to of Meiligu
refers Huzhou Keyan E-commerce Co., Ltd., a wholly-owned subsidiary of
Huzhou Keyan
to Meiligu
Hapsode refers Hapsode (Hangzhou) Cosmetics Co., Ltd., a wholly-owned subsidiary
(Hangzhou) to of the Company
refers
Korea Hapsode Hapsode Co., Ltd., a wholly-owned subsidiary of Hapsode (Hangzhou)
to
refers Huzhou Hapsode Trading Co., Ltd., a wholly-owned subsidiary of
Huzhou Hapsode
to Hapsode (Hangzhou)
refers Hangzhou Proya Commercial Management Co., Ltd., a wholly-owned
Proya Commercial
to subsidiary of the Company
refers Hangzhou Tielexin Aini Catering Management Co., Ltd., a wholly-
Tielexin Aini
to owned subsidiary of Proya Commercial
refers Hangzhou Luxiaotie Fitness Co., Ltd., a wholly-owned subsidiary of
Luxiaotie
to Proya Commercial
refers Hong Kong Keshi Trading Co., Ltd., a holding subsidiary of the
Hong Kong Keshi
to Company
refers Hong Kong Xinghuo Industry Limited, a wholly-owned subsidiary of
Hong Kong Xinghuo
to the Company
Hong Kong refers Hong Kong Zhongwen Electronic Commerce Co., Limited, a wholly-
Zhongwen to owned subsidiary of Hong Kong Xinghuo
refers Hong Kong Xuchen Trading Limited, a wholly-owned subsidiary of
Hong Kong Xuchen
to Hong Kong Xinghuo
refers Proya Europe SARL, a wholly-owned subsidiary of Hong Kong
Proya Luxembourg
to Xinghuo
Shanghai Zhongwen refers Shanghai Zhongwen Electronic Commerce Co., Ltd., a wholly-owned
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Annual Report 2023
to subsidiary of the Company
refers Huzhou Niuke Technology Co., Ltd., a wholly owned subsidiary of the
Huzhou Niuke
to Company
refers Hangzhou Wanyan Culture Media Co., Ltd., a wholly-owned
Hangzhou Wanyan
to subsidiary of Huzhou Niuke
refers Hong Kong Wanyan Electronic Commerce Co., Limited, a wholly-
Hong Kong Wanyan
to owned subsidiary of Huzhou Niuke
refers Huzhou Younimi Cosmetics Co., Ltd., a wholly-owned subsidiary of
Huzhou Younimi
to the Company
refers Ningbo TIMAGE Cosmetics Co., Ltd., a holding subsidiary of the
Ningbo TIMAGE
to Company
refers Hangzhou TIMAGE Cosmetics Co., Ltd., a wholly-owned subsidiary
Hangzhou TIMAGE
to of Ningbo TIMAGE
refers
Ningbo Keshi Ningbo Keshi Trading Limited, a holding subsidiary of the Company
to
refers Zhejiang Beauty Cosmetics Co., Ltd., a wholly-owned subsidiary of the
Zhejiang Beauty
to Company
refers Ningbo Proya Enterprise Consulting Management Co., Ltd., a wholly-
Ningbo Proya
to owned subsidiary of the Company
refers Zhejiang Qingya Culture Art Communication Co., Ltd., a holding
Zhejiang Qingya
to subsidiary of the Company
refers Boya (Hong Kong) Investment Management Co., Limited, a wholly-
Boya (Hong Kong)
to owned subsidiary of the Company
refers
Japan OR OR Off & Relax, a holding subsidiary of Boya (Hong Kong)
to
refers Ningbo Tangyu Trading Co., Ltd., a wholly-owned subsidiary of Japan
Ningbo Tangyu
to OR
refers Hangzhou Weiluoke Cosmetics Co., Ltd., a wholly-owned subsidiary
Hangzhou Weiluoke
to of the Company
refers Hangzhou Yizhuo Culture Media Co., Ltd., a wholly-owned subsidiary
Hangzhou Yizhuo
to of the Company
refers Hangzhou Oumisi Trading Co., Ltd., a wholly-owned subsidiary of the
Hangzhou Oumisi
to Company
refers Guangzhou Qianxi Network Technology Co., Ltd., a wholly-owned
Guangzhou Qianxi
to subsidiary of the Company
refers Proya (Hainan) Cosmetics Co., Ltd., a wholly-owned subsidiary of the
Proya (Hainan)
to Company
Singuladerm refers Singuladerm (Hangzhou) Cosmetics Co., Ltd., a wholly-owned
(Hangzhou) to subsidiary of the Company
refers Xuzhou Laibo Information Technology Co., Ltd., a wholly-owned
Xuzhou Laibo
to subsidiary of the Company
refers Proya (Zhejiang) Cosmetics Co., Ltd., a wholly-owned subsidiary of
Proya (Zhejiang)
to the Company
refers Hubei Laibo Technology Co., Ltd., a wholly-owned subsidiary of the
Hubei Laibo
to Company
refers
PROYA PTE PROYA PTE. LTD., a wholly-owned subsidiary of the Company
to
PROYA refers PROYA BEAUTY MALAYSIA SDN. BHD., a wholly-owned
MALAYSIA to subsidiary of PROYA PTE
refers
CSRC China Securities Regulatory Commission
to
refers
SSE Shanghai Stock Exchange
to
refers
Pan-China Pan-China Certified Public Accountants (Special General Partnership)
to
CSC refers China Securities Co., Ltd.
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Annual Report 2023
to
refers
Company Law Company Law of the People's Republic of China
to
refers
Securities Law Securities Law of the People's Republic of China
to
Articles of refers
Articles of Association of Proya Cosmetics Co., Ltd.
Association to
refers
RMB/RMB'0,000 RMB/RMB '0,000
to
refers
Reporting Period January 1, 2023 to December 31, 2023
to
Section II Company Profile and Key Financial Indicators
I.Company Information
Chinese name of the Company Proya Cosmetics Co., Ltd.
Short name of the Company in Chinese 珀莱雅
English name of the Company Proya Cosmetics Co.,Ltd.
Abbreviation of English name of the
Proya
Company
Legal representative of the company HOU Juncheng
II.Contact Details
Board Secretary Securities Affairs Representative
Name WANG Li WANG Xiaoyan
10/F, Proya Building, No. 588 Xixi 10/F, Proya Building, No. 588 Xixi
Mailing address Road, Xihu District, Hangzhou City, Road, Xihu District, Hangzhou City,
Zhejiang Province Zhejiang Province
Telephone 0571-87352850 0571-87352850
Fax 0571-87352813 0571-87352813
Email proyazq@proya.com proyazq@proya.com
III.General Information
No. 588, Xixi Road, Liuxia Street, Xihu District, Hangzhou City,
Registered address
Zhejiang Province
For details, please refer to the Announcement on Amending the
Historical changes in the Articles of Association and Applying for Changing Business
Company's registered address Registration (No.2019-008) disclosed by the Company on the
designated media on February 27, 2019.
Proya Building, No. 588 Xixi Road, Xihu District, Hangzhou City,
Office address of the Company
Zhejiang Province
Postal code of the registered
310023
office address
Company website http://www.proya-group.com
Email proyazq@proya.com
IV.Information Disclosure and Place for Obtaining the Report
Shanghai Securities News, Securities Times, China
Media for the Company's information
Securities Journal, Securities Daily, Economic
disclosure
Information Daily, China Daily
CSRC's designated website for the
http://www.sse.com.cn
Company's Annual Report disclosure
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Annual Report 2023
The Company's Annual Report may be Board of Director’s Office, Proya Building, No.588 Xixi
obtained at Road, Xihu District, Hangzhou City, Zhejiang Province
V.Stock Information
Stock Information
Stock class Stock exchange Stock abbreviation Stock code Stock abbreviation
before changes
A share Shanghai Stock Proya 603605 None
Exchange
VI.Other Relevant Information
Name Pan-China Certified Public Accountants (Special
General Partnership)
Auditor of the
Office address Office Tower 2, Run'ao Business Center, Xiaoshan
Company
District, Hangzhou
(domestic)
Name of the signing
YIN Zhibin, WU Shaofang
accountant
Sponsor Name China Securities Co., Ltd.
performing Office address Room 2203, North Tower, Shanghai Securities
continuous Building, No.528, Pudong South Road, Shanghai
supervisory Names of the sponsor's
GE Liang, WANG Zhan
duty during the signing representatives
Reporting Period of continuous
Period January 4, 2022 - December 31, 2023
supervision
VII.Major Accounting Data and Financial Indicators for the Past Three Years
(I) Major accounting data
Unit: Yuan Currency: RMB
Year-on-
Major accounting
2023 2022 year change 2021
data
(%)
Operating revenue 8,904,573,501.39 6,385,451,424.00 39.45 4,633,150,538.43
Net profit
attributable to
1,193,868,141.81 817,400,223.93 46.06 576,119,025.56
shareholders of the
listed company
Net profit
attributable to
shareholders of the
1,174,144,260.32 788,513,237.01 48.91 568,092,480.38
listed company net
of non-recurring
profit or loss
Net cash flow from
1,468,793,814.58 1,111,136,117.23 32.19 829,670,943.82
operating activities
Year-on-
As of the end of As of the end of As of the end of
year change
2023 2022 2021
(%)
Net assets
attributable to
4,349,545,381.60 3,524,488,659.96 23.41 2,876,975,835.98
shareholders of the
listed company
Total assets 7,323,078,222.45 5,778,071,824.19 26.74 4,633,049,783.03
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Annual Report 2023
(II) Key financial indicators
Year-on-year change
Key financial indicators 2023 2022 2021
(%)
Basic earnings per share
3.01 2.07 45.41 2.05
(RMB/share)
Diluted earnings per share
2.97 2.05 44.88 2.01
(RMB/share)
Basic earnings per share net of
non-recurring profit and loss 2.96 2.00 48.00 2.02
(RMB/share)
Up by 3.99
Weighted average ROE (%) 29.94 25.95 22.25
percentage points
Weighted average ROE net of Up by 4.41
29.44 25.03 21.94
non-recurring profit and loss (%) percentage points
Description of the Company's major accounting data and financial indicators for the recent three years as
of the end of the Reporting Period
□ Applicable √ Not applicable
VIII.Differences in Accounting Data under Chinese and International Accounting Standards
1. Difference in net profit and net assets attributable to shareholders of the listed company
in the financial report disclosed in accordance with International accounting standards and
Chinese accounting standards
□ Applicable √ Not applicable
2. Differences in net profit and net assets attributable to shareholders of the listed company
in the financial report disclosed in accordance with International accounting standards and
Chinese accounting standards
□ Applicable √ Not applicable
3. Description of differences between international and Chinese accounting standards:
□ Applicable √ Not applicable
IX.Major Financial Data for 2023 by Quarter
Unit: Yuan Currency: RMB
Q4
Q1 Q2 Q3
(October -
(January - March) (April - June) (July - September)
December)
Operating
1,621,514,039.25 2,005,477,838.97 1,621,577,872.94 3,656,003,750.23
revenue
Net profit
attributable to
shareholders of 208,032,832.00 291,461,165.71 246,469,143.36 447,905,000.74
the listed
company
Net profit
attributable to
shareholders of
the listed 197,980,896.41 280,910,955.86 246,996,239.57 448,256,168.48
company net of
non-recurring
profit and loss
Net cash flow
409,773,960.44 771,494,111.59 -382,251,543.16 669,777,285.71
from operating
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Annual Report 2023
activities
Description of differences between quarterly data and disclosed regular report data
□ Applicable √ Not applicable
X.Non-recurring Profit and Loss Items and Amounts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Notes
Non-recurring profit and Amount for Amount for
Amount for 2023 (if
loss item 2022 2021
applicable)
Gains or losses from
disposal of non-current
assets, including write-offs -703,593.33 60,155.60 -112,183.24
of provision for adjusted
asset impairment
Government grants
recognized in profit or loss
for the current period
(excluding government
grants that are closely
related to the Company’s
business operations, 44,043,618.77 38,463,732.07 15,448,962.01
compliant with national
policies, granted at set
standards, and imposing
sustaining influence on the
Company's gains and
losses)
Gains or losses from
change in fair value
generated by financial
assets and liabilities held
by non-financial businesses
as well as gains or losses
from disposal of financial
assets and liabilities
Capital occupation fees
charged to the non-
financial enterprises and
included in profit or loss
for the current period
Gains or losses from
entrusting others with
investment or asset
management
Gains or losses from
outward entrusted loaning
Asset loss incurred by
force majeure such as
natural disasters
Reversal of impairment
provisions of accounts
receivable that have 289,706.45 2,782,350.76
undergone impairment
testing alone
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Annual Report 2023
Gains when the investment
cost of acquiring a
subsidiary, an associate and
a joint venture is less than
the fair value of the
identifiable net assets of
the invested entity
Current net gains or losses
of subsidiaries established
by business combination
involving enterprises under
common control from the
beginning of the period to
the combination date
Gains or losses from
exchange of non-monetary
assets
Gains or losses from debt
restructuring
One-time expenses
incurred due to the
cessation of relevant
business activities, such as
staffing expenses
One-time impact on current
profit and loss due to the
adjustments of taxes and
accounting laws and
regulations
One-time share-based
payment recognized for
cancellation and
modification of equity
incentive plans
Gains and losses from
changes in the fair values
of employee compensation
payable for share-based
payment in cash after the
exercise date
Gains or losses from
changes in the fair values
of Investment real estate
that are subsequently
measured using the fair
value model
Profits generated from
transactions with
unreasonable transaction
price
Gains or losses on
contingencies that have no
relation with the normal
operation of the Company
Custody fees of entrusted
operation
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Annual Report 2023
Other non-operating
revenue and expenses -7,456,554.85 -2,926,959.81 -3,078,442.83
besides the above items
Other items that conform Investment
to the definition of non- income
recurring profit or loss from
-113,212.70 disposal of
long-term
equity
investment
Less: Effect of income tax 10,105,613.47 3,689,885.55 1,917,310.27
Effect of minority equity
6,230,469.38 5,802,406.15 2,314,480.49
(after tax)
Total 19,723,881.49 28,886,986.92 8,026,545.18
The reasons should be explained for the Company defining the non-recurring gains and losses items not
listed in the Explanatory Announcement on Information Disclosure for Companies Offering Their
Securities to the Public No. 1 – Non-Recurring Gains and Losses as non-recurring gains and losses items
of high value and defining the non-recurring profit and loss items listed in the same document as recurring
gains and losses items.
□ Applicable √ Not applicable
XI.Items Measured at Fair Value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount of
Item Opening balance Ending balance Current change impact on the
current profit
Receivable
7,378,700.06 7,378,700.06
financing
Other equity
instrument 146,402,400.00 107,660,400.00 -38,742,000.00
investments
Total 146,402,400.00 115,039,100.06 -31,363,299.94
XII.Other
□ Applicable √ Not applicable
Section III Management Discussion and Analysis
I.Business Discussion and Analysis
1. Year-on-year growth in operating revenue
Operating revenue - RMB8.905 billion, up by 39.45% YOY
RMB8.89billion prime operating revenue, up by 39.74% YOY
RMB15 million non-operating revenue
Prime operating revenue:
(1) By channel
Change in Change in Change in
2023 over 2022 over 2021 over
Amount 2023 2022 2021
the the the
Channel (RMB100 Percentage Percentage Percentage
previous previous previous
million) (%) (%) (%)
year year year
YOY (%) YOY (%) YOY (%)
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Annual Report 2023
Direct sales 67.48 50.70 59.79 76.16 75.91 70.40 60.66
Online Distribution 15.26 16.49 16.79 8.56 17.16 20.58 24.27
Subtotal 82.74 42.96 47.50 49.54 93.07 90.98 84.93
Household 4.94 11.59
-11.96 -40.52 5.56 6.96 10.88
chemicals
Offline Other 1.22 -6.98 -32.32 -30.50 1.37 2.06 4.19
Subtotal 6.16 7.35 -17.62 -38.03 6.93 9.02 15.07
Total 88.90 39.74 37.69 23.28 100.00 100.00 100.00
Note: The percentage of sales from each channel is the proportion of its sales in the prime operating
revenue.
(2) By brand
Change in
Change in Change in
2021 over
Amount 2023 over 2022 over 2023 2022 2021
the
Brand (RMB100 the previous the previous Percentage Percentage Percentage
previous
million) year year (%) (%) (%)
year
YOY (%) YOY (%)
YOY (%)
Proya 71.77 36.36 37.46 28.25 80.73 82.74 82.87
TIMAGE 10.01 75.06 132.04 103.48 11.26 8.99 5.33
Self- OR 2.15 71.17 509.93 - 2.42 1.98 -
owned Hapsode 3.03 61.82 188.27 - 3.41 2.94 -
brands Other
1.94 18.86 -60.11 -5.96 2.18 2.57 8.85
brands
Subtotal 88.90 40.86 40.74 26.63 100.00 99.22 97.05
Cross-
Agency border
0.00 -100.00 -63.01 -34.04 0.00 0.78 2.95
brands agency
brands
Total 88.90 39.74 37.69 23.28 100.00 100.00 100.00
Note: The percentage of sales of each brand is the proportion of its sales in primary operating revenue.
The sales of OR and Hapsode were incorporated into other brands for 2021 and prior years, but they
have been shown separately since 2022.
(3) By category
Change in Change in Change in
Amount 2023 2022 2021
2023 over the 2022 over the 2021 over the
Category (RMB100 Percentage Percentage Percentage
previous year previous year previous year
million) (%) (%) (%)
YOY (%) YOY (%) YOY (%)
Skincare
(including 75.59 37.85 38.56 22.70 85.03 86.20 86.10
cleansing)
Make-up
11.16 48.28 21.70 32.97 12.55 11.82 13.38
cosmetics
Body & hair 2.15 71.17 509.93 - 2.42 1.98 -
Others 0.00 - -100.00 -41.05 0.00 0.00 0.52
Total 88.90 39.74 37.69 23.28 100.00 100.00 100.00
Note: The "Body & hair" category is included in the "Skin care (including cleansing)" category before
2021, and is separately listed after 2022.
2. YOY growth in net profit
RMB1.194 billion net profit attributable to shareholders of the listed company, up by 46.06% YOY
RMB1.174 billion net profit attributable to shareholders of the listed company net of non-recurring
profit and loss, up by 48.91% YOY
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Annual Report 2023
Indicator 2023 2022 2021 Note
Mainly due to:
1. Increase in gross profit
1. Net profit margin 13.82% 13.02% 12.02% margin;
2. Decrease in income tax
expenses.
Mainly due to increased
2. Gross profit margin 69.93% 69.70% 66.46% percentage of online direct
sales.
Mainly due to the increased
3. Sales expense ratio 44.61% 43.63% 42.98% prepayment for image
promotion expenses.
Of which: Image promotion fee
39.69% 37.90% 36.12%
rate
4. Administrative expense ratio 5.11% 5.13% 5.12%
The parent company's R&D
expense ratio was 4.13% in
5. R&D expense ratio 1.95% 2.00% 1.65% 2023 (compared with 4.31%
for the same period the
previous year).
Mainly due to increased
6. Accounts receivable turnover sales incurred by Beijing
39.87 53.04 21.88
rate (times/year) Jingdong Century Trading
Co., Ltd.
7. Accounts receivable turnover
9.03 6.79 16.45
days (days)
8. Inventory turnover rate
3.65 3.46 3.39
(times/year)
9. Inventory turnover days
98.57 103.91 106.19
(days)
II.The Company's Industry Situation during the Reporting Period
According to the Guidelines for the Industry Classification of Listed Companies by the CSRC, the
Company falls under chemical raw material and chemical product manufacturing (classification code:
C26); according to the Industrial Classification for National Economic Activities (GB/T 4754-2017), the
Company falls under the manufacturing of daily chemical products (C268) and further under the
manufacturing of cosmetics (C2682).
According to statistics from the National Bureau of Statistics, in 2023, the total retail sales of consumer
goods reached RMB47,149.5 billion, up by 7.2% YOY; the total retail sales of cosmetics reached
RMB414.2billion, up by 5.1% YOY (covering consumer goods above designated units).
III.The Company's Business Operations during the Reporting Period
(I) Main business
The Company seeks to build a new domestic cosmetics industry platform, and is primarily engaged in
R&D, production and sales of cosmetic products. Main brands owned by the Company include Proya,
TIMAGE, Off&Relax, Hapsode, CORRECTORS, INSBAHA, UZERO and Anya. The Company's own
brands have covered fields such as popular skincare, make-up, body & hair, and high-efficiency skincare:
1. Popular exquisite skincare brand
(1) Proya, focusing on technology skincare, designed for young white-collar female customers, generally
priced at RMB200 to RMB500, sold both online and offline.
(2) Hapsode, positioned as an “expert in oily skin care”, focusing on college students and other young
female customers, generally priced at RMB50 to RMB200, sold mainly online.
2. Make-up brand
TIMAGE, a professional make-up artist brand customized for Chinese faces, generally priced at RMB150
to RMB300, sold mainly online.
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3. Body & hair brand
Off&Relax, positioned as an “expert in Asian scalp health, generally priced at RMB150 to RMB200, sold
mainly online.
4. High-efficiency skincare brand
CORRECTORS, a high-efficiency skincare brand, generally priced at RMB260 to RMB600, sold online.
(II) Business models
1. Sales models
Mainly online sales, supplemented by offline sales.
Online sales are mainly operated through direct sales and distribution. Direct sales are mainly carried out
through platforms such as Tmall, TikTok, JD, Kwai, and Pinduoduo, and distribution is based on platforms
such as Taobao, JD, and Vipshop.
Offline sales are mainly operated through dealers. Channels include cosmetics franchise stores and
department stores.
2. Production/R&D models
Self-production is the main production model of the Company, supplemented by OEM production. The
skincare products of the Company are self-produced while make-up products are both self-produced and
OEM-produced. The Company has self-built skincare and make-up factories.
Independent R&D is the main R&D model of the Company, supplemented by industry-university-research
cooperation. The Company maintains R&D cooperation with front-end research institutions and high-
quality raw material suppliers including Zhejiang University, Zhejiang University of Technology,
Hangzhou Dianzi University, Jiangnan University, Beijing Technology and Business University, BASF
China, Ashland China, DSM Shanghai, CRODA China, Evonik China, Spanish LIPOTRUE, S.L., and
Shenzhen Siyomicro Bio-tech.
IV.Analysis of Core Competitiveness during the Reporting Period
√ Applicable □ Not applicable
The Company's core competitiveness is mainly embodied by:
Facing the rapidly changing external market, the Company was firmly committed to the leadership and
implementation of the 6*N Strategy. We consolidated and deepened precise operation management system
highlighting "R&D, products, contents, operation". Supplemented by the construction of a self-driven
organization featuring "culture-strategy-mechanism-talents". We flexibly responded to market
development changes, rapidly established our presence and invested in emerging channels. Furthermore,
we explored overseas development opportunities, seized the chance for Chinese brands to expand globally,
and drove business growth with an expanded market scope and enhanced responsiveness.
We continued to make our "hero products" more competitive, and developed and improved the portfolio
of "hero products", strengthened brand appeal, and enhanced brand vitality based on our keen insight into
consumer needs. This was possible because of our strong R&D and our ability to rapidly respond to
internal organizational requirements. A self-driven agile organization was built to serve the second-brand
product pipeline and the brands at the incubation stage, forming a fledgling brand matrix in skincare,
make-up, and personal care products. By building our own MCN team and content marketing team, we
strengthened the internal circular ecology and fostered the external ecosystem of Proya brand.
V.Main Operations during the Reporting Period
1. New product strategy
Proya:
During the Reporting Period, Proya continued to consolidate the hero product strategy and performed all-
around upgrades for the hero products "Double Effect Brightening Series" and "Advanced Firming
Nourishing Series" and used exclusive ingredients. Proya also improved product efficacy and user
experiences and enhanced the sustainability. In the second half of 2023, Proya launched the first patented
new cyclic peptide raw material approved and filed in China's makeup industry, and applied it in Advanced
Firming Nourishing Light Cream 3.0 as a way to further secure our professionalism and technological
capability in peptide, marking Proya's leadership in independent ingredient development.
Meanwhile, Proya launched the first premium product line, the "Energy Series", which marked a brand
new solution to the anti-aging of mature skin by utilizing the unique and advanced skin energy
enhancement and awakening technology Cellergy that helps repair skin wrinkles mildly and efficiently.
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In 2023, Proya maintained 1st in the essence category, ranked 1st in the face cream category, 2nd in the
mask category, and 5th in the eye cream category on Tmall.
TIMAGE:
During the Reporting Period, TIMAGE continued to improve the hero product strategy in the facial make-
up category, with core products ranking top in all categories. The "tri-colored contour palette" ranked 1st
in the highlighter category on Tmall. The "dual-colored highlighter palette" ranked 2nd in the highlighter
category on Tmall. The "face primer" ranked 2nd in the sun block/primer category on Tmall. The "tri-
colored concealer palette" ranked 1st in the concealer category on Tmall.
In the first half of the year, TIMAGE launched the colorful brilliance product. In March, the brand
introduced the brand new "Vigorous and Flowing Jade Series" and launched three new products: the "Tri-
color Blush Palette", the "All-in-one Brow Palette", and the "Matte Lipstick". Among them, the "Tri-color
Blush Palette" ranked 1st in the blush category on Tmall. Additionally, TIMAGE launched the all-new
"Original Skin Cushion Compact" and upgraded the "Soft Mist Powder Compact (For Oily Skin)."
In the second half of the year, TIMAGE launched the "Soft Mist Powder Compact (for dry skin)" to create
hero products in the powder category, gaining momentum for the growth in 2024. The "Porcelain Flawless
Foundation" maintained remarkable growth and skyrocketed in the rankings on Tmall and TikTok.
Off&Relax (OR):
During the Reporting Period, OR continued to increase the market share and word of mouth of the hero
products "OR Refreshing Springs Bouncy Shampoo" and "OR Refreshing Springs Hair Masque."
Meanwhile, OR established and furthered the brand awareness of an "Expert in Asian Scalp Health" by
launching the advanced oil-control and anti-hair loss series. The oil-control hero product "OR Purifying
Scalp Cleanser" ranked 1st in the pre-shampoo category on both Tmall and Little Red Book during the
promotion period. The "OR Medicated Hair Tonic" ranked 9th in the anti-hair loss category on Tmall, as
well as ranked 1st in the Imported Scalp Essence Leaderboard and the Pre-sale Leaderboard on Tmall
during the 11.11 period.
Hapsode:
During the Reporting Period, Hapsode continuously enhanced the brand awareness of an "Expert in Oily
Skin Care" among consumers. In the first half of the year, the brand focused on upgrading "Cleansing
Honey 2.0" and "Multi-Acid Clay Mask 2.0" to strengthen its capability in cleansing product lines. In the
second half of the year, the brand focused on addressing oxidation and dullness on oily skin, and launched
the "Energizing Brightening Facial Mask" and the "Energizing Brightening Serum". Based on the pain
points of users with oily skin, the brand perfected the care process by expanding not only the range of
products, but their efficacy.
2. New marketing strategy
Proya:
During the Reporting Period, Proya brand strategy around two brand keywords: "youthfulness" and
"technological prowess". Embracing the "spirit of exploration", the brand has addressed the multifaceted
factors behind specific skin concerns. The following brand marketing initiatives have been undertaken:
(1) "Thank You for Participation" in January. In this event, Proya expressed the most important "thank
you" to our users through short films posted in user stories and offline user story exhibitions. Proya
expressed its gratitude to them for staying with us throughout 2022.
(2) "It's Gender, Not Border" on Women’s Day in March. In this event, Proya created educational picture
books focusing on gender equality, produced thematic short films adapted from real stories, and
collaborated with law firms to launch the "Proya Public Welfare Labor Legal Consultation Service".
Through concrete efforts, Proya not only encouraged mention and discussion of "gender equality" on
Women's Day, but helped push for the issues to be considered on all other days of the year.
(3) On Mother's Day in May, Proya showed care for mothers and acknowledged both the visible physical
labor and the invisible mental labor they undertake as they support their families. Proya mentioned that
"Mom can take care of family, but every family member can do the same". Through the short film "More
Than Just Moms", Proya called on every family member to not only recognize the goodness of mothers
but also collectively take on family responsibilities.
(4) "Scientific Formulation, the Scientific Choice for Skin" in June. In this event, Proya organized 7
"Daytime Coffee and Evening Alcohol Pop-Up stores" in 6 cities around China. The purpose of these pop-
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up stores was to communicate the brand's concept of "scientific formulas" to consumers. Through offline
interactions between the stores and consumers, participants had the opportunity for in-depth experience of
the products and technological concepts.
(5) "Scientific Formulation, the Scientific Choice for Skin" light&shade technology exhibition in August.
In this event, Proya interpreted the scientific skincare concept of "scientific formula" with a dynamic
experiential installation that utilized digital interaction technologies.
(6) "Glimmering Project" in September. In this event, Proya appealed for action against school bullying
and released the public welfare film "Aftermath of School Bullying", the "School Bullying Evidence"
posters, and the public welfare picture book "It's Not Your Fault: A Healing Guide for the Aftermath of
School Bullying". Proya also worked with the Beijing New Sunshine Charity Foundation to establish the
"Glimmering Project" anti-school-bullying helpline.
(7) "Echo Project" in October. In this event, Proya advocated that "We are not alone in the face of
emotions". By producing healing videos, Proya partnered with Dejavu and nine publishing houses to create
a curated list of emotional healing books and blind boxes of books. It also worked with Tencent Music to
hold public campus concerts at 30 universities in 6 cities across China, teaching people how to cope with
their emotions in multiple ways.
(8) In the "Brand 20th Anniversary" event in late November, Proya produced a microfilm to capture the
real-life experiences of YANG Jianjun, a representative inheritor of the national-level intangible cultural
heritage project "Iron Flower," over the past 30 years. The film showcases the spirit of the brand that has
been dedicated to scientific research in the past 20 years. Also, Proya interpreted the "Stupid Genius" spirit
with six true stories, paying tribute to resilient and hardworking people in all industries. With those "Stupid
Genius" stories, Proya hopes to spark the aspiration in the heart of people.
TIMAGE:
During the Reporting Period, TIMAGE continued to carry out marketing activities by following the
"Chinese make-up, original beauty" brand philosophy. By launching and marketing new products through
e-commerce channels, TIMAGE carried out the following marketing events to enrich the core of Chinese
aesthetics:
(1) In March, the "Vigorous and Flowing Jade Series" products were launched, accompanied by the
unveiling of concept advertisement. Instructor TANG Yi hosted an online master class, collaborating with
beauty bloggers to create the "Vigorous and Flowing Jade Makeup" and sparking a trend of imitation
makeup. On March 2, a new product launch conference was held, with celebrities GAO Ye and MA Sichun
appearing in person to arouse discussions on the Internet. The whole campaign received more than 500
million views and topped the chart on Sina, TikTok, and Kwai, bringing up voices and discussions around
the brand.
(2) "Beyond Love" in May. In this event, TIMAGE produced a video to convey the brand idea of how to
better love our partners, ourselves, and life. The brand also released TIMAGE 520 gift boxes to
communicate brand emotions on holidays through KOLs in love life and female growth.
(3) On the Chinese Valentine's Day in August, TIMAGE established a partnership with the Zibo Ceramic
and Glass Museum by virtue of the cultural heat in Shandong. With the theme "The Unique Love amidst
Myriad Glimmers", TIMAGE extended its Chinese aesthetic legacy via the millennium-old intangible
cultural heritage craftsmanship. Meanwhile, TIMAGE launched limited-edition blush and lipstick for
Chinese Valentine's Day, which included a pair of glass cups to imprint the brand image of "Chinese
culture" and "craftsmanship."
(4) In September, the "Revitalizing Hue" blush of the Vigorous and Flowing Jade Series was launched.
With the theme "Origin of Primitive", the event debuted at the physical pop-up store in Huaihai Center in
Shanghai, bringing primitive nature into the city to create an immersive and original makeup experience.
As for the online platform, the brand worked with the physiological media KnowYourself to jointly launch
the White Paper of Color Emotions, trying to bond colors and emotions. Inspired by autumn landscapes,
Mr. Tang Yi launched the autumn edition of "Mountain Makeup", which has taken social media by storm.
3. New channel strategy
Proya:
Online:
(1) Tmall flagship store
During the Reporting Period, the Company continued to deepen the hero product strategy, optimize the
portfolio, and improve the ranking of core categories and hero products; expanded product offerings across
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various price segments and enhanced customer perception, thereby increasing average customer spending
and market penetration; refined operations, optimized the advertising strategy with decreased costs and
increased efficiency, and deepened collaboration between on-site and off-site audiences. By relying on the
user operation system, the Company increased the purchase frequency of customers to gain a higher
customer retention.
In 2023, the gross merchandise volume (GMV) of Proya Flagship Store ranked 2nd on Tmall Beauty and
1st among all domestic products. During the November 11 campaign, the GMV of Proya Flagship Store
climbed to 1st on Tmall Beauty.
(2) TikTok
During the Reporting Period, the Company strengthened the universal operation of TikTok, completed the
transformation and efficiency enhancement of livestreaming accounts, and divided those accounts by
product lines and target audience. The KOL livestreaming accounts kept a keen sight into market needs,
and expanded the cooperation with more KOLs, while discovering new KOLs with high potential. Based
on the features of KOLs and fans, the Company customized the matchmaking mechanism to maximize
the value of exposure and unique visitors. The e-commerce channel focused on key platforms and gained
more visitor flows from livestreaming accounts to further enhance the sales ratio. Efforts were made to
refine population-based operation, improve the advertising strategy, and enhance efficiency.
In 2023, Proya ranked 3rd on TikTok Beauty and 2nd among all domestic products in terms of the gross
merchandise volume (GMV). During the November 11 campaign, Proya ranked 1st on TikTok Beauty in
terms of GMV.
(3) JD
During the Reporting Period, the Company continued to strengthen the hero product strategy, improved
the ranking of core hero products, optimized the brand layout in the long run, and increased the market
share; refined operations based on target audience, established more targeted promotion strategies, sought
opportunities for collaboration between on-site and off-site audiences, and drew the attention of new
customers with fewer costs and higher efficiency; continuously improved the product portfolios across all
channels and added more value for customers; sensed the bellwether for the industry and channels, and
took swift actions to explode the word of mouth.
In 2023, Proya ranked 7th on JD Beauty and 1st among all domestic products in terms of the gross
merchandise volume (GMV). During the November 11 campaign, Proya ranked 4th on JD Beauty and 1st
among all domestic products in terms of GMV.
Offline:
(1) Department store channel: In 2023, the main goal for the department channel was to optimize the store
structure by phasing out low-performing and low-potential stores, and transitioning flagship stores to a
directly operated model. Meanwhile, the Company continuously strengthened internal management,
further improved the training system for counter consultants, enhanced retail management skills, and
increased the average sales per counter.
(2) Cosmetics store channel: In terms of market positioning, the Company leveraged the potential of the
Proya brand to solidify our existing channels and increase the frequency of cooperation with major clients.
Also, the Company actively sought opportunities for market growth and expanded collaboration with new
store clusters. In the first and second half of 2023, promotional measures were taken for the high-end anti-
aging Capture Totale Series and the mid-end Youth Activating series, helping retail stores increase their
average customer spending and expand the customer base.
4. New organizational strategy
(1) Institutional construction: Based on strategic planning, the Company maintains a sophisticated front,
middle, and back office coordination model, deepens the application of digital technology, and develops
a flexible and efficient organizational operation mechanism. Based on the value return philosophy of "high
investments, performance, and return", the Company has established a multifaceted and effective incentive
system around the existing business strategy.
(2) Talent development: The Company insists on a talent strategy of introducing and cultivating young
talents with international backgrounds to engage in research and development, design, and brand
construction, aiming to build a dynamic, self-driven, and creative team of young talents. The dual-channel
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promotion mechanism provides career opportunities for professional and managerial individuals to
increase the vitality and talent accumulation of the Company.
5. New R&D strategy
During the Reporting Period, the Longwu R&D Center and the Shanghai R&D Center were put into use.
The Company continuously improved the R&D layout of all key stages from raw material to finished
products, including fundamental research, formula development, physical and chemical analysis, raw
material and product efficacy evaluation, etc. The focus was to conduct research on skin texture, design
active substances, verify their efficacy, as well as research and develop new skin care, make-up, and
body&hair products.
(1) Patents: During the Reporting Period, the Company newly applied for 14 national invention patents,
6 utility model patents, and 27 design patents, totaling 47 new patents applied for; obtained 15 nationally
licensed invention patents, 9 utility model patents, and 17 design patents, totaling 41 patents obtained. As
of the end of the Reporting Period, the Company had 122 nationally licensed invention patents, 22 utility
model patents, and 112 design patents, totaling 256 patents obtained.
(2) Standard releasing: During the Reporting Period, the Company released 12 group standards, 3
national standards and 1 light industry standard as a drafter. As of the end of the Reporting Period, the
Company had led or participated in the development of 17 national standards, 4 light industry standards,
and 26 group standards.
(3) Achievements and awards: During the Reporting Period, the Company was granted the Excellence
Participation Award in the “2020-2022 Zhejiang Province Cosmetics Safety Popular Science Week” by
Zhejiang Medical Products Administration, the No.1 of Top 10 Enterprises in the Cosmetics Sector of
China Light Industry (Universal Leaderboard), the Advanced Unit in Cosmetic Standardization of 2023
by the Secretariat of Zhejiang Provincial Cosmetics Standardization Technology Committee. The paper
on the research of the Deep Ocean Energy Series was published in the journal Skin Health and Disease of
the British Association of Dermatologists. The paper Research on Preparation and Properties of
Crystalline Amino Acid Cleaning Cream was published in the journal Detergent & Cosmetics. The paper
Enhancing Sun Protection through Zinc Oxide and Titanium Dioxide Processed by Bead Milling was
published in the journal Frontiers in Materials. Additionally, the Company showcased a number of
scientific research achievements at the IFSCC 2023.
(4) Strategic cooperation: During the Reporting Period, the Company deepened the cooperation with
existing strategic partners, including Zhejiang University and Hangzhou Dianzi University, Beijing
Technology and Business University, and Jiangnan University in areas such as materials, functional active
substances, and skin texture.
6. New supply chain guarantee
(1) During the Reporting Period, the Company realized green, low-carbon, and sustainable development
by following the national "dual carbon" strategy; built a green supply chain system with a focus on
resource conservation and environmental friendliness; promoted upstream and downstream enterprises to
improve resource utilization efficiency; reduced carbon emissions, and take active measures to become an
enterprise featuring green supply chain management.
(2) During the Reporting Period, the Company continuously upgraded the supply chain information
platform to achieve seamless data connectivity, enabling transparency in material procurement, production,
product inspection, equipment operation, and logistics delivery throughout the entire supply chain, thereby
creating a truly modern and intelligent transparent factory in the cosmetics industry. Additionally, with
the three intelligent engines (intelligent procurement platform, intelligent production scheduling, and
intelligent logistics operations), the Company enhanced the efficiency of data transmission and business
collaboration among business units on the supply chain, providing sustained support for brand promotions.
(3) During the Reporting Period, the Huzhou production base added multiple fully automated production
lines and installed several sets of emulsification equipment to ensure the enhancement of future capacity.
The Company also installed fire water monitors and sprinkler systems in the warehouse to safeguard the
security of buildings and property. Additionally, the Company continues to strengthen safety training and
emergency drills, represented by the "Employee Safety Training" that has been conducted for three
consecutive years to ensure that every employee possesses safety awareness, concepts, and capabilities,
thereby improving the capability and responsibility of all staff in safety management. Furthermore, the
Company conducted internal safety compliance assessments, graded the risks, established a control list
for graded risks, and created a spatial color-coded map to prevent safety hazards. Based on the assessment
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result, the Company formulated and implemented improvement plans, identified key risks, and enhanced
intrinsic safety.
(4) During the Reporting Period, the Company was honored with the title "National Green
Supply Chain Management Companies 2023" by the General Office of the Ministry of
Industry and Information Technology of the PRC, and the Huzhou Factory was awarded the
"2023 Zhejiang Provincial Level Green and Low-Carbon Factory" by the Economy and Information
Technology Department of Zhejiang.
(I) Analysis of main business
1. Analysis of changes in accounts in the Income Statement and the Cash Flow Statement
Unit: Yuan Currency: RMB
Account Amount for the Amount for the same
Change ratio (%)
current period period last year
Operating revenue 8,904,573,501.39 6,385,451,424.00 39.45
Operating cost 2,677,445,706.61 1,934,850,203.65 38.38
Selling expenses 3,972,201,152.49 2,785,837,352.95 42.59
General and administrative 455,441,770.70 327,296,749.37 39.15
expenses
Financial expenses -59,079,577.33 -40,996,523.01 Not applicable
Research and development 173,570,127.49 128,009,104.49 35.59
expenses
Net cash flow from operating 1,468,793,814.58 1,111,136,117.23 32.19
activities
Net cash flow from investing -475,831,195.84 -298,215,550.57 Not applicable
activities
Net cash flow from financing -460,280,193.92 -65,251,320.73 Not applicable
activities
Cause for changes in operating revenue: mainly due to increased online sales.
Cause for changes in operating costs: mainly due to increased operating revenue.
Cause for change in sales expenses: In 2023, sales expenses amounted to RMB3.972billion, accounting
for 44.61% of the operating revenue (compared with 43.63% for the same period last year). Sales
expenses increased by RMB1.186 billion or 42.59% YOY, mainly due to an increase of RMB1.114
billion or 46.04% in the image promotion expenses in the current period (used for the incubation of new
brands as well as development of offline channels and overseas channels).
Cause for change in administrative expenses: In 2023, administrative expenses amounted to
RMB455million, accounting for 5.11% of the operating revenue (compared with 5.13% for the same
period last year). General and administrative expenses increased by RMB128 million or 39.15% YOY,
mainly due to increased equity incentive expenses for restricted shares, employee compensation, and
service fees.
Cause for change in financial expenses: mainly due to increased interest income.
Cause for change in R&D expenses: In 2023, R&D expenses amounted to RMB174million, an increase
of RMB45.56million YOY, accounting for 1.95% of the operating revenue (compared with 2.00% for
the same period last year). The parent company's R&D expense ratio was 4.13% in 2023 (compared with
4.31% for the same period the previous year).
Cause for change in net cash flow from operating activities: mainly due to 1. A YOY increase in
operating revenue and the increase in cash received from the sale of goods; 2. The increase in the
payment for goods; 3. The increase in the payment for image promotion expenses.
Cause for change in net cash flow from investment activities: 1. RMB90million was paid for the equity
investment in Gaolang Holdings Co., Ltd. in the previous period. No such event exists in the current period.
2. RMB300million was increased in other cash paid related to investment activities.
Cause for change in net cash flow from financing activities: 1. RMB165million of equity incentive
expense for restricted shares was received in the previous period. The event is not recognized in the
current period. 2. RMB224million was increased in cash paid for distribution of dividends or profits or
settlement of interest expenses.
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A detailed description of major changes in the Company's activities, profit composition or sources of
profit during the current period
□ Applicable √ Not applicable
2. Revenue and cost analysis
√ Applicable □ Not applicable
For details, see the analysis in "1. Analysis of changes in accounts in the Income Statement and the Cash
Flow Statement", "(I) Analysis of main business", "V. Main Operations during the Reporting Period",
"Section III Management Discussion and Analysis" of this Report.
(1). Main business activities by industry, product, region and sales model
Unit: Yuan Currency: RMB
Main business activities by industry
Change in
Gross Change in Change in
gross
profit operating operating
Industry Operating revenue Operating cost profit
margin revenue cost YOY
margin
(%) YOY (%) (%)
YOY (%)
Up by
Household
0.13
chemicals 8,890,227,788.97 2,666,864,872.50 70.00 39.74 39.16
percentage
industry
points
Main business activities by product
Change in
Gross Change in Change in
gross
profit operating operating
Product Operating revenue Operating cost profit
margin revenue cost YOY
margin
(%) YOY (%) (%)
YOY (%)
Decreased
Skincare
by 0.23
(including 7,559,420,109.98 2,246,373,210.16 70.28 37.85 38.92
percentage
cleansing)
points
Up by
Make-up 2.92
1,115,712,421.20 340,597,637.72 69.47 48.28 35.34
cosmetics percentage
points
Up by
Body & 0.81
215,095,257.79 79,894,024.62 62.86 71.17 67.54
hair percentage
points
Up by
0.13
Total 8,890,227,788.97 2,666,864,872.50 70.00 39.74 39.16
percentage
points
Main business activities by region
Change in
Gross Change in Change in
gross
profit operating operating
Region Operating revenue Operating cost profit
margin revenue cost YOY
margin
(%) YOY (%) (%)
YOY (%)
Decreased
Northeast by 0.51
19,623,333.54 7,297,459.08 62.81 18.92 20.56
China percentage
points
North 66,141,324.36 25,601,181.22 61.29 -5.22 -2.97 Decreased
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China by 0.90
percentage
points
Up by
3.10
East China 682,273,015.88 264,640,456.25 61.21 -4.28 -11.36
percentage
points
Up by
South 3.44
52,827,183.21 19,406,138.04 63.26 17.59 7.53
China percentage
points
Decreased
Central by 0.05
127,858,964.46 52,800,759.63 58.70 -14.74 -14.63
China percentage
points
Decreased
Northwest by 1.98
42,799,826.73 15,112,592.49 64.69 22.04 29.28
China percentage
points
Up by
Southwest 0.66
74,752,733.67 27,725,014.63 62.91 -5.64 -7.30
China percentage
points
Up by
Hong
3.43
Kong and 83,159,245.45 32,884,507.37 60.46 24.19 14.28
percentage
overseas
points
Decreased
Others (e- by 1.03
7,740,792,161.67 2,221,396,763.79 71.30 49.25 54.79
commerce) percentage
points
Up by
0.13
Total 8,890,227,788.97 2,666,864,872.50 70.00 39.74 39.16
percentage
points
Main business activities by sales model
Change in
Gross Change in Change in
gross
Sales profit operating operating
Operating revenue Operating cost profit
model margin revenue cost YOY
margin
(%) YOY (%) (%)
YOY (%)
Decreased
by 0.07
Online 8,274,350,956.67 2,413,275,186.30 70.83 42.96 43.29
percentage
points
Decreased
by 0.71
Offline 615,876,832.30 253,589,686.20 58.82 7.35 9.23
percentage
points
Up by
0.13
Total 8,890,227,788.97 2,666,864,872.50 70.00 39.74 39.16
percentage
points
Explanation on main business activities by industry, product, region and sales model
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(1) Description of growth in household chemicals: The growth in prime operating revenue this year was
mainly due to RMB8.274billion online sales (accounting for 93.07% of the online sales revenue), an
increase of RMB2.486billion or 42.96% YOY.
(2) Description of growth in make-up cosmetics: Mainly due to RMB1.001billion sales of TIMAGE that
falls under the make-up cosmetics category during the Reporting Period, an increase of RMB429 million
or 75.06% YOY.
(3) Description of growth in body & hair: Mainly due to RMB215million sales of OR that falls under the
body & hair category during the Reporting Period, an increase of RMB89million or 71.17% YOY.
(4) Description by region: The main reason for the increase in revenue in the Northeast China, South
China, and Northwest China is the growth in offline sales of household chemicals. The decline in
revenue in the North China, East China, Central China, and Southwest China is primarily due to a
decrease in online distribution sales. The growth in revenue in Hong Kong, overseas markets, and e-
commerce is mainly due to the growth in online direct sales.
(2). Analysis table of production and sales
√ Applicable □ Not applicable
Change
Change
Change in in
Major in sales
Unit Production Sales Inventory production inventory
products YOY
YOY (%) YOY
(%)
(%)
Household Piece 355,211,533 336,222,351 109,169,214 13.10 21.81 21.06
chemicals
Description of production and sales
The quantities in the above table include self-produced and OEM products, excluding the quantity of
products produced through cross-border brand agency.
(3). Performance of major purchase contracts and major sales contracts
□ Applicable √ Not applicable
(4). Cost statement analysis
Unit: Yuan
Statement by industry
Proportion % Proportion %
in total cost in total cost
for the Amount for the for the same YOY
Cost Amount for the Description
Industry current same period last period last change
composition current period Note
period year year ratio (%)
（%） （%）
Raw materials 1,675,244,940.56 62.82 1,268,693,580.45 66.20 32.04
Labor and
Household manufacturing 162,684,501.36 6.10 107,432,847.50 5.61 51.43
chemicals cost
industry Outsourcing 444,682,665.46 16.67 302,956,467.34 15.81 46.78
Freight 384,252,765.12 14.41 237,269,640.00 12.38 61.95
Subtotal 2,666,864,872.50 100.00 1,916,352,535.29 100.00 39.16
Statement by product
Proportion % Proportion %
in total cost in total cost
Amount for the YOY
Cost Amount for the for the for the Description
Product current same period last current change
composition current period Note
period year period ratio (%)
（%） （%）
23 / 272
Annual Report 2023
Raw materials 1,633,516,443.19 72.72 1,228,433,567.23 75.97 32.98
Labor and
Skincare manufacturing 153,451,655.40 6.83 101,753,659.87 6.29 50.81
(including cost
cleansing) Outsourcing 151,422,368.92 6.74 92,297,157.26 5.71 64.06
Freight 307,982,742.65 13.71 194,513,686.83 12.03 58.33
Subtotal 2,246,373,210.16 100.00 1,616,998,071.19 100.00 38.92
Raw materials 39,373,413.99 11.56 40,084,933.46 15.93 -1.78
Labor and
manufacturing 8,443,255.33 2.48 5,679,187.63 2.26 48.67
Make-up
cost
cosmetics
Outsourcing 232,107,427.47 68.15 174,194,228.29 69.21 33.25
Freight 60,673,540.93 17.81 31,708,656.87 12.60 91.35
Subtotal 340,597,637.72 100.00 251,667,006.25 100.00 35.34
Raw materials 2,355,083.38 2.95 175,079.76 0.37 1,245.15
Labor and
Not
manufacturing 789,590.63 0.99 0.00 0.00
Body & applicable
cost
hair
Outsourcing 61,152,869.07 76.54 36,465,081.79 76.46 67.70
Freight 15,596,481.54 19.52 11,047,296.30 23.17 41.18
Subtotal 79,894,024.62 100.00 47,687,457.85 100.00 67.54
Other explanations
None
(5). Changes in consolidation due to changes in the equity of major subsidiaries during the
Reporting Period
√ Applicable □ Not applicable
For details, refer to the particulars contained in "IX. Changes in the Consolidation Scope", "Section X
Financial Report" of this Report.
(6). Significant changes or adjustments to the Company's business activities, products or services
during the Reporting Period
□ Applicable √ Not applicable
(7). Major sales customers and major suppliers
A. The Company's major customers
√ Applicable □ Not applicable
The sales of top five customers amounted to RMB1.12billion, accounting for 12.57% of the total annual
sales; the sales of related parties of such top five customers amounted to RMB0, accounting for 0.00%
of the total annual sales.
Circumstances where a single customer contributed to more than 50% of the total sales, top 5 customers
included a new customer, or the Company relied heavily on a small number of customers during the
Reporting Period
□ Applicable √ Not applicable
B. The Company's major suppliers
√ Applicable □ Not applicable
The purchase amount of top 5 suppliers amounted to RMB513.36million, accounting for 22.31% of the
total annual purchase amount; the purchase amount of related parties of such top 5 suppliers amounted to
RMB0, accounting for 0.00% of the total annual purchase amount.
Circumstances where a single supplier accounted for more than 50% of the total procurement, top 5
suppliers included a new supplier, and the Company relied heavily on a small number of suppliers
during the Reporting Period
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Annual Report 2023
□ Applicable √ Not applicable
Other explanations
None
3. Expenses
√ Applicable □ Not applicable
Unit: Yuan
Change for the current Growth rate
Expense item 2023 2022
period (%)
3,972,201,15 2,785,837,35
Selling expenses 1,186,363,799.54 42.59
2.49 2.95
General and administrative 455,441,770. 327,296,749.
128,145,021.33 39.15
expenses 70 37
173,570,127. 128,009,104.
R&D expenses 45,561,023.00 35.59
49 49
- -
Not
Financial expenses 59,079,577.3 40,996,523.0 -18,083,054.32
applicable
3 1
4. R&D investment
(1).Statement of R&D investment
√ Applicable □ Not applicable
Unit: Yuan
Expensed R&D investment for the 173,570,127.49
current period
Capitalized R&D investment for the 0.00
current period
Total R&D investment 173,570,127.49
Total R&D investment in operating 1.95
revenue (%)
Capitalization of R&D investment (%) 0.00
(2).Statement of R&D personnel
√ Applicable □ Not applicable
Number of R&D personnel 322
Percentage of R&D personnel (%) 10.84
Educational background structure
Educational level Number of persons
PhD 8
Master 126
Bachelor 152
Associate 32
High school and below 4
Age structure
Age range Number of persons
Under 30 (exclusive) 154
30-40 (incl. 30 and excl. 40) 131
40-50 (incl. 40 and excl. 50) 34
50-60 (incl. 50 and excl. 60) 3
60 and above 0
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Annual Report 2023
(3).Description
□ Applicable √ Not applicable
(4).Cause for significant changes in the composition of R&D personnel and the impact on the
future development of the Company
□ Applicable √ Not applicable
5. Cash flow
√ Applicable □ Not applicable
Unit: Yuan
Amount for the
Amount for the Growth
Item same period last Description
current period rate (%)
year
Mainly due to:
1. YOY increase in the
operating revenue and the
Net cash
increase in cash received
flow from
1,468,793,814.58 1,111,136,117.23 32.19 from commodity sales;
operating
2. Increased payment for
activities
goods;
3. Increased payment for
image promotion fees.
Mainly due to:
1. A payment of RMB90
million for the equity
investment in Gaolang
Net cash Holdings Co., Ltd. in the
flow from Not previous period. The
-475,831,195.84 -298,215,550.57
investing applicable event is not recognized in
activities the current period.
2. An increase of
RMB300 million in cash
paid related to investment
activities.
Mainly due to:
1. The Company received
RMB165 million of
equity incentive expense
for restricted shares in the
Net cash
previous period. The
flow from Not
-460,280,193.92 -65,251,320.73 event is not recognized in
financing applicable
the current period.
activities
2. The cash paid to
distribute dividends,
profits, or repay interest
was increased by
RMB224 million.
Cash
received
from the Mainly due to the YOY
sale of 9,328,552,717.55 7,088,465,997.21 31.60 increased operating
goods and revenue.
the
rendering of
26 / 272
Annual Report 2023
services
Payments of Mainly due to the
various expanded sales scale and
1,017,756,020.64 660,096,624.31 54.18
types of the improved profitability
taxes of the Company.
Mainly due to the
Other cash
expanded sales scale and
paid related
3,761,423,719.98 2,616,308,090.91 43.77 the increased payment for
to operating
image promotion
activities
expenses.
Net cash
received
from Mainly due to the
disposal of decreased cash receipts
fixed assets, 285,500.00 3,751,463.96 -92.39 from disposals of fixed
intangible assets in the current
assets and period.
other long-
term assets
Mainly due to the new
equity investment of
RMB90 million to
Cash paid
Gaolang Holdings Co.,
for 18,636,363.64 131,003,609.10 -85.77
Ltd. in the previous
investments
period. The event is not
recognized in the current
period.
Other cash Mainly due to the
paid related Not purchase of fixed-term
300,000,000.00
to investing applicable deposits in the current
activities period.
Mainly due to the receipt
of payment for the equity
Cash
incentive expense for
received
restricted shares from
from capital 165,676,000.00 -100.00
employees in the previous
contribution
period. The event is not
s
recognized in the current
period.
Cash paid
for
distribution
Mainly due to the
of dividends
407,092,087.41 182,663,748.85 122.86 increased cash dividends
or profits or
paid in the current period.
settlement
of interest
expenses
(II) Description of significant changes in profit caused by non-primary business activities
□ Applicable √ Not applicable
(III) Analysis of assets and liabilities
√ Applicable □ Not applicable
1. Assets and liabilities
Unit: Yuan
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Annual Report 2023
% in Amount as of the % in YOY
Amount as of the end
Item total end of the total change Explanation
of the current period
assets previous period assets ratio (%)
Mainly due to
the increased
end balance for
the receivables
Accounts
344,570,196.54 4.71 102,157,898.41 1.77 237.29 of Beijing
receivable
Jingdong
Century
Trading Co.,
Ltd.
Mainly due to
the increased
Receivable Not
7,378,700.06 0.10 0.00 0.00 bank
financing applicable
acceptance bills
receivable.
Mainly due the
increased
prepayment for
image
Prepayments 202,870,195.58 2.77 91,483,523.15 1.58 121.76
promotion
expenses as of
the end of the
current period.
Mainly due to
Other current the increased
99,765,073.07 1.36 49,735,996.57 0.86 100.59
assets input VAT to be
deducted.
Mainly due to
the conversion
of completed
works of the
Huzhou
Expansion
Production
Base
Fixed assets 827,350,985.29 11.30 570,376,309.67 9.87 45.05
Construction
Project (Phase
I) and the
Longwu R&D
Center
Construction
Project into
fixed assets.
Mainly due to
the conversion
of completed
works of the
Huzhou
Construction Expansion
52,038,642.94 0.71 207,378,935.86 3.59 -74.91
in progress Production
Base
Construction
Project (Phase
I) and the
Longwu R&D
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Annual Report 2023
Center
Construction
Project into
fixed assets, as
well as long-
term prepaid
expenses.
Mainly due to
the addition of
an office site
Right-of-use
14,104,821.34 0.19 6,410,634.25 0.11 120.02 and the signing
assets
of lease
contracts in the
current period.
Mainly due to
converting the
completed
work of the
Longwu R&D
Long-term Center
prepaid 67,184,328.83 0.92 19,142,604.46 0.33 250.97 Construction
expenses Project from
construction in
progress to
long-term
prepaid
expenses.
Mainly due to
the increased
deductible
temporary
difference
caused by
Deferred
unrealized
income tax 108,494,364.60 1.48 48,305,338.82 0.84 124.60
profit from
assets
internal
transactions
and
unredeemed
gifts for sold
products.
Mainly due to
the increase in
Other non- prepayments
16,974,946.99 0.23 5,554,726.06 0.10 205.59
current assets for long-term
asset purchase
funds.
Mainly due to
the reduced
Notes payable 36,959,074.14 0.50 69,626,352.12 1.21 -46.92 balance of bank
acceptance bills
payable.
Mainly due to
the increased
Accounts
1,018,522,358.60 13.91 475,427,484.23 8.23 114.23 end balance of
payable
payables for
goods and
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Annual Report 2023
expenses
payable.
Mainly due to
(1) an increase
in the number
of members and
the point
Contract conversion
301,014,873.58 4.11 174,602,833.91 3.02 72.40
liabilities rate; (2) the
Company had
not distributed
unredeemed
gifts for sold
products.
Mainly due to
the increased
benefits
payable to
employees at
the end of the
Employee
period because
compensation 166,444,494.43 2.27 124,938,749.36 2.16 33.22
of the expanded
payable
operation scale
and continuous
staffing
adjustment in
the current
period.
Mainly due to
the expanded
sales scale and
Taxes payable 222,765,869.94 3.04 152,918,871.45 2.65 45.68
the improved
profitability of
the Company.
Mainly due to
Non-current
the transfer of
liabilities due
3,970,060.11 0.05 2,549,452.14 0.04 55.72 lease liabilities
within one
due within one
year
year.
The tax on
items to be sold
in advance
receipt was
listed in other
current
Other current
15,022,173.42 0.21 10,820,499.59 0.19 38.83 liabilities due to
liabilities
the expanded
sales and
increased
advance receipt
in the current
period.
Mainly due to
the addition of
Lease
9,970,306.87 0.14 3,718,119.41 0.06 168.15 an office site
liabilities
and the signing
of lease
30 / 272
Annual Report 2023
contracts in the
current period.
Mainly due to
the change in
the amount of
anticipated
Estimated return caused
33,063,299.45 0.45 59,282,928.68 1.03 -44.23
liabilities by the
adjustment of
supermarket
and department
store channels.
Mainly due to
the listing of
Deferred net deferred
income tax 19,019,431.67 0.33 -100.00 income tax
liabilities assets/liabilities
for the same
legal entity.
Mainly due to
that the
Company
implemented
Share capital 396,757,184.00 5.42 283,519,469.00 4.91 39.94
the plan for the
capitalization
of capital
reserves.
Mainly due to
changes in fair
value of other
equity
instrument
investments
Other and changes in
Not
comprehensive -53,847,100.91 -0.74 -1,918,603.07 -0.03 other
applicable
income comprehensive
income that
cannot be
reclassified to
profit or loss
under the
equity method.
Mainly due to
the withdrawal
of statutory
surplus reserve
according to the
net profit of the
parent
Surplus
198,411,582.50 2.71 141,759,734.50 2.45 39.96 company. The
reserve
statutory
surplus reserve
does not need
to be
withdrawn if
the cumulative
amount reaches
31 / 272
Annual Report 2023
fifty percent or
more of the
registered
capital.
Mainly due to
the increased
profit available
for distribution
Undistributed
3,040,145,490.59 41.51 2,300,384,763.19 39.81 32.16 attributable to
profit
shareholders of
the Company in
the current
period.
Mainly due to
the increase in
the profit of the
Company's
subsidiary
Minority Ningbo
50,765,849.41 0.69 12,734,670.33 0.22 298.64
interests TIMAGE as
well as gains or
losses
attributable to
minority
interests.
Other explanations
None
2. Overseas assets
√ Applicable □ Not applicable
(1) Scale of assets
Including RMB23,718.20 (Unit: RMB '0,000 Currency: RMB) of overseas assets, accounting for
3.23% of the total assets.
(2) Description of a high percentage of overseas assets
□ Applicable √ Not applicable
3. Restrictions on prime assets as of the end of the Reporting Period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending book Ending book Type of
Item Cause for restrictions
balance value restrictions
Cannot be
335,288,251.36 335,288,251.36 withdrawn at Fixed-term deposit
any time
Frozen
8,800,000.00 8,800,000.00 L/C deposit
Cash and Frozen
cash 250,000.00 250,000.00 Transformer deposit
equivalents Frozen
70,000.00 70,000.00 Vehicle ETC deposit
Frozen
5,298,890.00 5,298,890.00 Pinduoduo deposit
2,110,704.68 2,110,704.68 Frozen Direct store deposit
32 / 272
Annual Report 2023
Ending book Ending book Type of
Item Cause for restrictions
balance value restrictions
Total 351,817,846.04 351,817,846.04
4. Other explanations
□ Applicable √ Not applicable
(IV) Analysis of industry operational information
√ Applicable □ Not applicable
Refer to the "Analysis of chemical operational information" below
33 / 272
Annual Report 2023
Analysis of chemical operational information
1. Basic industry information
(1). Industry policies and changes
□ Applicable √ Not applicable
(2). Major sub-industries and industrial status of the Company
√ Applicable □ Not applicable
See the description in "(I) Industry pattern and trends", "VI. Discussion and Analysis of the Company's
Future Development", "Section III Management Discussion and Analysis".
Industrial status of the Company:
According to comprehensive industry data analysis, the Company has gained some market share in the
domestic cosmetics market.
2. Products and production
(1). Major business models
√ Applicable □ Not applicable
See the description of business models in "III. Business Activities Carried out by the Company during
the Reporting Period", "Section III Management Discussion and Analysis".
Adjusted business models during the Reporting Period
□ Applicable √ Not applicable
(2). Major products
√ Applicable □ Not applicable
Major upstream raw Major downstream Major price
Products Sub-industry
materials application areas influencing factors
Humectant, active
Personal income,
Skincare substance, grease
skin type, lifestyle
(including Skincare wax, emulsifier, Skincare, cleansing
habits, brand
cleansing) surfactant, essence,
preference
packaging
Grease wax, Personal income,
Make-up Make-up, beauty,
Make-up emulsifier, toner, living habits, brand
cosmetics contour
essence, packaging preference
Personal income,
Surfactant,
skin type, lifestyle
Body & hair Body & hair humectant, essence, Body & hair
habits, brand
packaging
preference
(3). R&D innovation
√ Applicable □ Not applicable
See the description in "5. New R&D strategy", "V. Main Operations during the Reporting Period",
"Section III Management Discussion and Analysis".
(4). Production technologies and process
√ Applicable □ Not applicable
The Company's products are mainly divided into skincare (including cleansing) and make-up cosmetics.
Their production processes are shown as follows:
1. Production process of skincare cosmetics
34 / 272
Annual Report 2023
Skincare raw
Functional
materials
components
Heating to Homogeneous Heat preservation Cooling Filtration and
dissolve emulsification and mixing discharge
Inspection of semi-
finished products
Warehousing Cartoning Packing Filling Storage
Inspection of
finished products
2. Production process of cleansing cosmetics
Cleansing raw
materials
Heating and Heat preservation Cooling Filtration and
mixing and mixing discharge
Inspection of semi-
finished products
Warehousing Cartoning Packing Filling Storage
Inspection of
finished products
3. Production process of make-up cosmetics
(1) Cosmetic powder blocks:
Inspection of semi-
Powder raw materials Functional components finished products
Mixing Toning Crushing and Discharge Powder storage
sieving
Warehousing Cartoning Packing Forming Filling
Aluminum plate
Inspection of Visual
finished products inspection
35 / 272
Annual Report 2023
(2) Lipstick cosmetics
Wax-based raw Functional
materials components
Heating to Toning Defoaming Filtration and
dissolve discharge
Inspection of semi-
finished products
Warehousing Cartoning Packing Molding Storage
Inspection of Visual
finished products inspection
(3) Eyelashes and eyeliners
Basic raw Functional
materials components
Heating to Homogeneous Toning Cooling Discharge
dissolve emulsification
Inspection of semi-
finished products
Warehousing Cartoning Packing Filling Storage
Inspection of
finished products
(5). Production capacity and operation status
√ Applicable □ Not applicable
Unit: RMB '0,000 Currency: RMB
Amount of Estimated
Capacity Capacity investment time of
Main plant or Designed
utilization under in capacity completion of
project capacity
ratio (%) construction under capacity under
construction construction
Huzhou Skincare 380 million pcs 82.20 21.18 4,019.40 December
Factory million pcs 2024
Huzhou Cosmetics 40 million pcs 20.75
Factory
Change in production capacity
□ Applicable √ Not applicable
Adjustment of product line and optimization of capacity structure
□ Applicable √ Not applicable
Unexpected shutdown
□ Applicable √ Not applicable
36 / 272
Annual Report 2023
3. Procurement of raw materials
(1). Basic information on major raw materials
√ Applicable □ Not applicable
YOY price
Major raw Settlement Purchase
Purchase model change ratio Consumption
materials method quantity
(%)
Mainly by
Settle
competitive About About
within the
Packaging procurement, 1,870 1,857.28
payment 2.63
materials except for some million million
period as
strategic pieces pieces
agreed
suppliers
Mainly by
competitive
procurement,
Settle
while
within the
Raw establishing About About 1,878
payment -3.65
material_humectant long-term 1,815 tons tons
period as
strategic
agreed
cooperation with
advantageous
suppliers
Mainly by price
inquiry and
comparison, Settle
Raw while performing within the
About 597 About 634
material_active diversified payment 73.45
tons tons
substance cultivation of period as
suppliers with a agreed
single source of
supply
Mainly by
competitive
procurement,
Settle
while
Raw within the
establishing About 744 About 755
material_grease payment 3.58
long-term tons tons
wax period as
strategic
agreed
cooperation with
advantageous
suppliers
Mainly by
competitive
procurement, Settle
while within the
Raw About 125 About 136
cooperating with payment 1.22
material_emulsifier tons tons
industry-leading period as
suppliers on agreed
some raw
materials
Mainly by Settle
competitive within the
Raw About 29 About 31
procurement, payment -9.84
material_sunscreen tons tons
while period as
establishing agreed
37 / 272
Annual Report 2023
long-term
strategic
cooperation with
advantageous
suppliers
Impact of changes in the prices of major raw materials on the Company's operating costs: Rising prices
of raw materials increase operating costs.
(2). Basic information on major sources of energy
√ Applicable □ Not applicable
YOY price
Major Settlement Purchase
Purchase model change ratio Consumption
energy method quantity
(%)
Prepayment and
monthly
settlement or
Fixed agreement
payment on
Water with the local 0.00 224,917 tons 224,917 tons
demand
water company
according to the
local
requirements
Prepayment and
monthly
Fixed agreement settlement or
with the local payment on
Electricity 0.00 1,450 tons 1,450 tons
power supply demand
company according to the
local
requirements
Prepayment and
monthly
settlement or
Fixed agreement
payment on
Gas with the local gas -11.52 397,114 cbm 397,114 cbm
demand
supply company
according to the
local
requirements
Impact of changes in the prices of major energy sources on the Company's operating costs: Minor impact
on operating costs.
(3). Countermeasures for risks of fluctuations in the prices of raw materials
Major financial products such as derivatives
□ Applicable √ Not applicable
(4). Basic information on other methods adopted such as staged reserves
□ Applicable √ Not applicable
4. Product sales
(1). Basic information on the Company's primary business activities by sub-industry
√ Applicable □ Not applicable
Unit: RMB '0,000 Currency: RMB
Change in
Gross Change in Change in Gross profit
gross
Sub- Operating Operating profit operating operating margin for
profit
industry revenue cost margin revenue cost YOY products in
margin
(%) YOY (%) (%) the same
YOY (%)
38 / 272
Annual Report 2023
industry and
field
Skincare No public
(including 755,942.01 224,637.32 70.28 37.85 38.92 -0.23 information
cleansing) available
No public
Make-up
111,571.24 34,059.76 69.47 48.28 35.34 2.92 information
cosmetics
available
No public
Body & hair 21,509.53 7,989.40 62.86 71.17 67.54 0.81 information
available
(2). Basic information on the Company's primary business activities by sales channel
√ Applicable □ Not applicable
Unit: RMB '0,000 Currency: RMB
Change in operating revenue
Sales channel Operating revenue
YOY (%)
Online 827,435.10 42.96
Offline 61,587.68 7.35
Statement of accounting policies
□ Applicable √ Not applicable
5. Environmental protection and safety
(1). Basic information on major work safety accidents of the Company during the Reporting
Period
□ Applicable √ Not applicable
(2). Major environmental violations
□ Applicable √ Not applicable
39 / 272
Annual Report 2023
(V) Analysis of investment
Overall analysis of external equity investments
√ Applicable □ Not applicable
Unit: RMB
Item Ending amount Beginning amount
Other equity instrument investments 107,660,400.00 146,402,400.00
Investment in joint ventures 3,059,991.91 3,068,948.16
Investment in associates 110,514,166.58 135,464,429.30
Total 221,234,558.49 284,935,777.46
For details, refer to the particulars contained in "17. Description of long-term equity investments", "VII. Notes to the Items of Consolidated Financial Statements",
"Section X Financial Report" of this Report.
1. Significant equity investments
□ Applicable √ Not applicable
2. Significant non-equity investments
□ Applicable √ Not applicable
3. Financial assets measured at fair value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Profit and Amount
loss from of Amount of
Accumulated Impairment
Asset changes in purchase sale/redemption Other
Beginning amount change in fair value accrued for the Ending amount
category fair value for for the for the current changes
included in equities current period
the current current period
period period
Other 146,402,400.00 -38,742,000.00 107,660,400.00
Total 146,402,400.00 -38,742,000.00 107,660,400.00
For details, refer to the particulars contained in "18. Description of other equity instrument investments", "VII. Notes to the Items of Consolidated Financial
Statements", "Section X Financial Report" of this Report.
40 / 272
Annual Report 2023
Description of securities investment
□ Applicable √ Not applicable
Description of securities investment
□ Applicable √ Not applicable
Description of private equity investment
□ Applicable √ Not applicable
Description of derivatives investment
□ Applicable √ Not applicable
41 / 272
Annual Report 2023
4. Progress of major asset restructuring and integration during the Reporting Period
□ Applicable √ Not applicable
(VI) Sale of major assets and equity
□ Applicable √ Not applicable
(VII) Analysis of major holding companies
√ Applicable □ Not applicable
Unit: RMB '0,000
Major
Major Nature of products Registered Total Net Holding or
Net assets
subsidiary business and capital assets profit shareholding
services
Zhejiang
Meiligu
Cosmetics
Electronic Cosmetics 1,000.00 118,374.88 35,491.97 8,436.47 Holding
sales
Commerce
Co., Ltd.
Hangzhou
Proya Cosmetics
Cosmetics 5,000.00 33,320.09 10,823.95 5,182.01 Holding
Trade sales
Co.,Ltd.
(VIII) Structured entities controlled by the Company
□ Applicable √ Not applicable
VI.Discussion and Analysis of the Company's Future Development
(I) Industry pattern and trends
√ Applicable □ Not applicable
According to statistics from the National Bureau of Statistics, in 2023, the total retail sales of consumer
goods reached RMB47,149.5 billion, up by 7.2% YOY; the total retail sales of cosmetics reached
RMB414.2billion, up by 5.1% YOY (covering consumer goods above designated units).
(II) Development strategy of the Company
√ Applicable □ Not applicable
"6" refers to new consumption, new marketing, new organization, new mechanism, new technology and
new intelligent manufacturing; "N" refers to creating N brands
(1) New consumption: Refers to innovative services to meet more consumer needs and consumer value.
It involves catering to consumers‘ diverse preferences in consumption channels and establishing a
presence in emerging channels, such as the development of the Tiktok platform. Furthermore, it involves
adapting to the overseas market environment and embracing new challenges;
(2) New marketing: Refers to digital marketing, fine omni-channel operation, and accurate and advanced
consumer insight, focusing on improving the overall efficiency of the marketing process. It also involves
paying attention to future marketing possibilities in new areas and making preparations;
(3) New organization: Refers to an efficient organization that is flat, platform-based, self-driven and
collaborative, taking into account both supporting the efficient operation of mature brands and
empowering the rapid growth of incubated brands;
(4) New mechanism: Refers to a flexible, diversified, business-oriented incentive mechanism to be
established to enhance strategy execution (with a flexible project mechanism to promote business
communication efficiency and integrated synergies between various departments and business units);
(5) New technology: Refers to focusing on basic scientific research, establishing the presence of
independent development of new raw materials and foreign innovative raw materials reserve, jointly
developing innovative technologies, seeking more R&D partners and resources in different fields,
building internal and external cooperation platforms, actively exploring R&D resources worldwide to
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form a global R&D landscape, provide technological guarantee for targeted product enhancement, and
create a sustainable and unique R&D technological competitiveness; Additionally, measures are taken to
further improve the intelligent operation management system and carry out targeted transformation
toward digital intelligence and informatization to improve operational refinement and management
efficiency in business and organization and achieve process transparency and accurate decision-making.
By comprehensively planning and further enhancing the digital management system, we explore the
application possibilities of new technological developments (such as artificial intelligence) at the
consumer end, catering to the demands of large-scale and rapidly evolving businesses;
(6) New intelligent manufacturing: Refers to the creation of an agile and flexible supply chain to serve
the hero product matrix and the application of the digital management system to improve production
quality, strengthen the supply chain supervision, and guarantee product quality. In addition, we actively
assume social responsibilities and contribute to sustainable development by establishing green
production bases and introducing green raw materials and operational models.
—— The core connotation of "6*N" is to enable or incubate different brands that meet different needs of
different consumers based on the above six capabilities.
(III) Business plan
√ Applicable □ Not applicable
I. Construction of a multi-category and multi-brand matrix
1 Skincare products - Proya, Hapsode
Proya:
(1) Brand: Continuously upgrade the brand. Shape the brand with a new image, new products, and new
technologies. Further consolidate the brand mindset of "A Scientific Choice for Skin" with better product
portfolios. Meanwhile, better improve the service and logistics systems, and refine operations in all
dimensions related to consumers. Better communicate with consumers regarding our dedication to
products and scientific formulas, making Proya the preferred choice of skincare for Chinese women.
(2) Product: Further study the cause of skin problems for female Chinese consumers and expand the
product portfolio to meet more requirements. Strengthen more formulas for mature product lines, upgrade
the formulas and efficacy of various products, and provide better solutions for consumers. Establish and
improve a large product portfolio with extensive efficacy, build up the word of mouth for products, and
improve user loyalty and brand reputation.
(3) Marketing: Continue to center the brand strategy around two brand keywords: "youthfulness" and
"technological prowess." Embrace the "spirit of exploration," and address the multifaceted factors behind
specific skin concerns. In addition to carrying out promotional campaigns around key social topics such
as gender equality, family responsibility, intimate relationships, young people's growth, and mental health,
the brand also plans to extend its philosophy "Not Just Today" and expand the impact of brand long-
termism beyond brand incidents: 1) Based on the all-year-round brand marketing philosophy, Proya has
established its own online public welfare platform to accommodate long-lasting public welfare activities
under the brand tenet. The platform debuted in March 2023 and added the "Glimmering Project" anti-
school-bullying helpline in September 2023. 2) The brand's TikTok account "Second Life in Proya" was
created to convey brand attitudes with life-oriented and scenario-based plays.
(4) Channel:
1) Tmall: Better refine operations on Tmall and improve the operating strategy. In terms of products,
continuously improve the product portfolio, enhance the market share of mature hero products, and
create opportunities for new categories while deepening the product layout to seize the market. In terms
of consumer attraction, draw the attention of visitors from touch points, take more advantages of content,
and strengthen cooperation with IPs on the platform to increase the quantity and quality of attractive
content and continuously increase the precise traffic of stores. Value the creation of customer perception,
enrich forms of gifts for key products, and launch coordinative marketing activities to cover more core
consumers of the brand. In terms of membership, secure the traditional member attraction channels with
sample distribution while expanding presence to more channels. Better draw the attention of users and
increase the frequency of repeated purchases with a point mechanism. In terms of livestreaming,
organically combine key and secondary KOLs as well as store-owned livestreaming accounts to create a
network of abundant portfolios including new products, exclusive products, and brand benefits, thus
boosting the surge of attention from livestreaming platforms.
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2) TikTok: Establish a comprehensive presence that locates the right people for the right products,
expands to new consumers, and breaks the circle with KOLs. Establish a presence in 6 major account
matrices and sort out the connection between target audience in the livestreaming room and products
sold to break through the popularity barriers of hero products. Reach intensive cooperation with KOLs
and match them with corresponding products. Refine the operation of the e-commerce platform, attract
consumers through search, activities, and paid functions to promote the conversion ratio and further
improve the sales proportion. Improve the advertising quality and efficiency and increase the use of
selected materials.
3) JD: Seize industrial consumers from the perspectives of people, products, and venues to link up
business modes inside out. Improve the hero product strategy, deepen product combos, and try scenario-
based sales. Reach deeper cooperation with platforms, continuously improve the advertising efficiency,
and increase the sales at key promotional nodes.
4) Offline: Cosmetics store channel: Continuously explore sales opportunities through the channel and
find more opportunities to cooperate with different industries and business sectors to expand the sales
network. Optimize the product portfolio and increase the "dynamic sales" efficiency at the point of sale to
satisfy the needs of consumers at different ages. Help clients to complete sales with online tools and
intensify the image building of management at the point of sale. Department store channel: Focus on
influential business districts and large department store chains, make plans to open brick-and-mortar stores
in multiple shopping centers nationwide, enhance the brand image design, and provide consumers with a
completely new shopping experience. Furthermore, continue to upgrade and optimize offline pop-up
stores, maintain brand theme of "scientific formula" and enhance in-store sample distribution to attract
more consumers to participate.
Hapsode:
(1) Brand: Continue to upgrade the brand, enhance the scientific efficacy of products to create cost-
efficient options that are suitable for oily skin, with noticeable effectiveness. Try a "less is more"
marketing approach and convey the core user keyword "companionship" by collaborating on product IPs
and optimizing brand-consumer touchpoints.
(2) Product: 1) Continuously monitor the health of oily skin types and develop a more comprehensive
and targeted solution for the health of oily skin. Committed to a visually delicate state of oily skin, deeply
protecting the health of oily skin. 2) Streamlined product lines and provide solutions for oily and acne-
prone skin.
(3) Marketing: Continue to collaborate with popular IPs and engage in cross-industry projects to connect
with the younger generation and have direct conversations with them. Collaborate with the most popular
female celebrity, Loopy, a zoomer, to create a limited edition product packaging, thereby breaking into
the market by leveraging the popularity of the trendiest celebrity among young people.
(4) Channel: Utilize TikTok as the primary channel for growth and simultaneously enhance the refined
operations of other online channels such as Tmall.
2. Make-up - TIMAGE
(1) Brand: Continue to express the brand theme of "Chinese make-up, original beauty", and strive to
collaborate with various partners to break boundaries and constantly enhance brand awareness. 1)
Officially announce the appointment of actress CHEN Duling as the brand ambassador to attract fans from
different circles. 2) Launch limited edition products by cooperating with popular IPs and continue to
explore TIMAGE's "Chinese aesthetics".
(2) Product: Continue to strengthen the hero product strategy, maintain the leading position in the facial
makeup category, build up reputation in the large makeup base category, and make breakthroughs in the
foundation makeup, compact, and pressed powder categories, so as to complete the makeup base portfolio.
(3) Marketing: Transform the brand into "a professional makeup artist brand customized for Chinese
faces", build a professional brand image, and form an impression in the mind of consumers. 1)
Communicate with consumers on "professional makeup techniques and product features", while providing
professional makeup solutions. 2) Utilize a professional service team and expert tutorials to advance the
customized service system established by TIMAGE to the forefront. 3) Concentrate on leveraging
TIMAGE's "professional endorsements" and "expertise" at brand milestones for impactful marketing
output.
(4) Channel: Establish the brand image on Tmall, TikTok, JD, and other core channels and earn top
ranking positions.
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3. Body & Hair - Off&Relax (OR):
(1) Brand: Persist in the long-term goal of "becoming an enabler of a healthy and caring lifestyle for
Asian scalps," establish and deepen the mindset of being an "expert in Asian scalp health."
(2) Product: 1) Position the brand as an "expert in Asian scalp health," apply the product development
concept of "prevention through nurturing, gradual improvement, and an inside-out approach."
Continuously upgrade hero products while expanding the range of supplementary products to achieve
comprehensive benefits to scalp health. 2) Enhance the efficacy and clinical validation of products for
the Chinese market by synchronizing with third-party testing agencies to improve the efficacy validation
and collaborating with the Hair Disease Medical Consortium of the China-Japan Friendship Hospital to
achieve clinical validation.
(3) Marketing: 1) Implement an aggressive breakout strategy for hero products, create the core hero
product "OR Refreshing Springs Bouncy Shampoo", enhance the layout of the shampoo category, and
increase the market penetration of the repair, anti-hair loss, and nourishing series. 2) Continue to
increase the market share of the "anti-hair loss" hero product by emphasizing professionalism and strong
endorsement. 3) Improve the product layout and create a second-tier "Hair Care Series" (hair mask and
hair care essence oil) bestsellers, continue to improve the market penetration of the oil control series
(Purifying Scalp Cleanser).
(4) Channel: Focus on further enhancing the brand ranking on Tmall, JD, and TikTok to increase brand
visibility and market position.
II. R&D construction
In 2024, the Company will continue to improve and upgrade the R&D system based on the
internationalization strategy.
(1) Fundamental research: Continue to plan for and apply the development pipeline of new technologies
and new raw materials, and continue to develop advanced enabling technologies in computational biology,
genomics, and proteomics.
(2) Applied research: Guided by market demand, develop skincare and makeup products of various
levels with obvious efficacy, great skin feel and favorable costs, and complete the technological layout
for future iterations of all hero products.
(3) Clinical research: Continue with the clinical research and verification of products, and explore new
methods to verify the efficacy of raw materials and products. Develop new efficacy testing methods by
using advanced instruments and statistics.
(4) External cooperation: Stabilize existing cooperation channels while expanding and deepening the
cooperation with universities and research institutions. Leverage their advanced equipment and cutting-
edge technologies to empower and facilitate research work.
(IV) Possible risks
√ Applicable □ Not applicable
1. Industry competition risks
(1) The Company's brand strategy and channel strategy fail to come up to expectations due to intensified
competition from various brands in the industry;
(2) The control of digital and precise delivery costs fails to come up to expectations due to intensified
competition in marketing and ads delivery.
2. Project incubation risks
(1) New brand incubation risk: Performance fails to come up to expectations despite big investment in
marketing;
(2) New category cultivation risk: Performance fails to come up to expectations due to different
operation modes for different categories and the incompetent team.
(V) Other
□ Applicable √ Not applicable
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VII.Circumstances Where the Company Fails to Disclose Due to Non-applicability or Special
Reasons Such as State Secrets and Trade Secrets and Statement of Reasons
□ Applicable √ Not applicable
Section IV Corporate Governance
I.Description of Corporate Governance
√ Applicable □ Not applicable
During the Reporting Period, the Company continuously improved its standard operation and corporate
governance structure based on the actual situation pursuant to applicable laws and regulations, including
the Company Law, the Securities Law, the Listing Rules of the Shanghai Stock Exchange and the Code
of Corporate Governance of Listed Companies as well as the Articles of Association. The Company has
set up the general meeting of shareholders, Board of Directors, Board of Supervisors and special
committees under the Board of Directors as required and developed corresponding rules of procedure.
Such rules define the duties, powers, procedures and obligations of organizations at all levels in terms of
decision-making, supervision and implementation. They form a scientific and effective governance
structure featuring clear rights and responsibilities, mutual checks and balances, and mutual
coordination. During the Reporting Period, the Company consciously fulfilled the obligation for
information disclosure, managed investor relationships, and promoted the Company to continuously
improve its standard operation. The corporate governance status complies with the requirements of the
normative documents on the governance of listed companies issued by the CSRC.
Whether there are significant differences between the Company's corporate governance and the
requirements of laws, administrative regulations and CSRC's regulations on the governance of listed
companies; if so, explain the reasons.
□ Applicable √ Not applicable
II.Specific measures taken by the Company's controlling shareholders and actual controllers to
ensure the Company's independence in assets, personnel, finance, organization and business
activities as well as solutions, work progress and subsequent work plans taken due to influence
on the Company's independence
□ Applicable √ Not applicable
Circumstances where any controlling shareholders, actual controllers and other entities under their
control engage in the same or similar business activities, as well as the impact of horizontal competition
or major changes in horizontal competition on the Company, resolutions taken, progress and follow-up
resolutions
□ Applicable √ Not applicable
III.Meetings of the General Meeting of Shareholders during the Reporting Period
Date of
Session Date Reference Resolution
release
2022 Annual May 11, Announcement No. May 12, The meeting approved proposals
General 2023 2023-026 on SSE 2023 including the Company's Annual
Meeting of website Report 2022 and its Summary,
Shareholders (www.sse.com.cn) and the Plan for Annual Profit
Distribution and Capitalization
of Capital Reserves for 2022.
For details, see the
Announcement on Resolutions of
the 2022 Annual General
Meeting of Shareholders (No.:
2023-026) released on the SSE
website on May 12, 2023
(http://www.sse.com.cn) and
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relevant media.
1st September Announcement No. September The meeting approved the
Extraordinary 14, 2023 2023-056 on SSE 15, 2023 Company's 2023 Semi-Annual
General website Profit Distribution Plan, the
Meeting of (www.sse.com.cn) Proposal on Changing the
Shareholders Company's Registered Capital,
in 2023 Revising the Articles of
Association, and Applying for
Business Change Registration,
the Proposal on Revising the
External Investment and
Operation Decision-Making
System, and other proposals. For
details, see the Announcement
on Resolutions of the 1st
Extraordinary General Meeting
of Shareholders in 2023 (No.:
2023-056) released on the SSE
website on September 15, 2023
(http://www.sse.com.cn) and
relevant media.
2nd November Announcement No. November The meeting approved the
Extraordinary 9, 2023 2023-076 on SSE 10, 2023 Proposal on Revising the
General website Articles of Association and
Meeting of (www.sse.com.cn) Applying for Business Change
Shareholders Registration. For details, see the
in 2023 Announcement on Resolutions of
the 2nd Extraordinary General
Meeting of Shareholders in 2023
(No.: 2023-076) released on the
SSE website on November 10,
2023 (http://www.sse.com.cn)
and relevant media.
3rd December Announcement No. December The meeting approved the
Extraordinary 29, 2023 2023-092 on SSE 30, 2023 Proposal on revising the Rules
General website of Procedures, the Proposal on
Meeting of (www.sse.com.cn) revising the Working Policies for
Shareholders Independent Directors, the
in 2023 Proposal on Revising the
Accounting Firm Selection
System, and other proposals. For
details, see the Announcement
on Resolutions of the 3rd
Extraordinary General Meeting
of Shareholders in 2023 (No.:
2023-092) released on the SSE
website on December 30, 2023
(http://www.sse.com.cn) and
relevant media.
Request of preferred shareholders with restored voting rights for convening an extraordinary general
meeting
□ Applicable √ Not applicable
Description of the General Meeting of Shareholders
□ Applicable √ Not applicable
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IV.Directors, Supervisors and Senior Management
(I) Changes in shareholding and remuneration of current and resigned directors, supervisors and senior management during the Reporting Period
√ Applicable □ Not applicable
Unit: Share
Any
Total pre-tax
remune
remuneration
Number of ration
Number of Change in received from
shares held from
Gend Term start Term end shares held at shares Cause for the Company
Name Position Age at the the
er date date the end of the during the change during the
beginning Compa
year year Reporting
of the year ny's
Period
related
(RMB'0,000)
parties
HOU Chairman of Male 60 7/30/2015 9/8/2024 97,670,741 136,739,037 39,068,296 Shares 331.59 No
Junche the Board of converted
ng Directors from capital
reserve
FANG Director, Male 55 7/30/2015 9/8/2024 45,772,470 59,625,258 13,852,788 Shares 329.45 No
Yuyou General converted
Manager from capital
reserve and
shares
reduced for
personal
capital need
HOU Director Male 36 9/9/2021 9/8/2024 0 0 0 82.63 No
Yamen
g
HOU Deputy Male 36 9/15/2021 9/8/2024 0 0 0 0.00 No
Yamen General
g Manager
MA Independent Male 54 5/13/2021 9/8/2024 0 0 0 15.00 No
Dongm Director
ing
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GE Independent Male 49 9/9/2021 9/8/2024 0 0 0 15.00 No
Weijun Director
HOU Supervisor Fema 35 5/2/2018 9/8/2024 0 0 0 29.09 No
Luting le
FANG Supervisor Fema 34 5/8/2018 9/8/2024 0 0 0 36.88 No
Qin le
HU Supervisor Fema 36 9/9/2021 9/8/2024 0 0 0 19.25 No
Lina le
JIN Deputy Male 62 4/16/2018 9/14/2024 216,973 303,762 86,789 Shares 255.61 No
Yanhu General converted
a Manager from capital
reserve
WAN CFO Fema 46 9/3/2018 9/14/2024 225,251 315,491 90,240 Capital 252.57 No
G Li le reserve
conversion to
share capital
and increase
in
shareholding
by personal
centralized
bidding
trading
WAN Deputy Fema 46 9/15/2021 9/14/2024 0 0 0 0.00 No
G Li General le
Manager,
Secretary of
the Board of
Directors
Total / / / / / 143,885,435 196,983,548 53,098,113 / 1,367.05 /
Note: Main reasons for the change in the total pre-tax remuneration received by Company inside directors HOU Juncheng, FANG Yuyou, HOU Yameng and senior
management employees JIN Yanhua and WANG Li during the Reporting Period are as follows:
(1) The total pre-tax remuneration of 2023 includes the annual overperformance incentives of 2022 and quarterly overperformance bonuses of 2023 (the Company
exceeded its sales target in 2022, resulting in the first overperformance incentive payout for that year; the Company exceeded its sales targets for the 6.18 and 11.11
promotion campaigns in 2023).
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(2) The Company paid cash bonuses to core management employees at the 20th anniversary in November 2023.
Name Working experience
HOU He once worked in Yiwu Liaoyuan Daily Chemical Co., Ltd., Hangzhou Proya Cosmetics Co., Ltd., and Hangzhou Proya Holding Co., Ltd. Since
Juncheng 2007, he has been working in the Company and its predecessor. From September 2007, he has been serving as Executive Director of the Company.
From August 2012, he been serving as Chairman of the Company and its predecessor. As of the disclosure date of the Reporting Period, he
concurrently served as Executive Director and General Manager of Proya Trade, Executive Director of Meiligu, Executive Director of Chuangdai
Electronics, Executive Director of Yueqing Laiya, Inside Director and Representative Director of Korea Hanna, Executive Director and General
Manager of Hapsode (Hangzhou), Executive Director and General Manager of Huzhou Hapsode, Executive Director and General Manager of
Mijing Siyu (Hangzhou), Executive Director of Proya (Hainan), Executive Director of Proya (Zhejiang), Chairman of CBI (Cosmetics Industry
(Huzhou) Investment Development Co., Ltd., Executive Director and General Manager of Huzhou Beauty Town Technology Incubation Park Co.,
Ltd., Director of Yongxinou (Ningbo) International Trading Co., Ltd., and Executive Director of Zhejiang Zhujin Enterprise Management Co., Ltd.
FANG He once worked in Shijiazhuang Liaoyuan Cosmetics Co., Ltd., Hangzhou Proya Cosmetics Co., Ltd., and Hangzhou Proya Holdings Co., Ltd.
Yuyou Since 2007, he has been working in the Company and its predecessor. Since August 2012, he has served as Director and General Manager of the
Company and its predecessor. As of the disclosure date of the Reporting Period, he concurrently served as General Manager of Meiligu, General
Manager of Yueqing Laiya, Inside Director of Korea Hanna, Director of Hong Kong Xinghuo, Executive Director and General Manager of
Hangzhou Fangxiake Investment Co., Ltd., Director of Hangzhou Tairentang Biotechnology Co., Ltd., Supervisor of Zhejiang Boweihui Grapevine
Technology Co., Ltd., and Director of Jiangsu Lenong Weimei Agricultural Technology Development Co., Ltd.
HOU He once worked in the E-commerce Department of Proya Cosmetics Co., Ltd., and has been serving as Director and Deputy General Manager of
Yameng the Company since September 2021. As of the disclosure date of the Reporting Period, he concurrently served as Executive Director and General
Manager of Hainan Mengya Enterprise Consulting Co., Ltd. and Executive Director and General Manager of Hangzhou TIMAGE, Director of
PROYA MALAYSIA, and Executive Partner of Sanya WaveDash Technology Partnership (Limited Partnership).
MA He used to be Deputy Director and Director of CSRC Zhejiang Branch, Director of the Commissioner's Office of CSRC Shanghai Branch, and
Dongming Deputy General Manager and Secretary of the Board of Directors of Yongan Futures Co., Ltd. Since May 2021, he has been serving as Independent
Director of the Company. As of the end of the Reporting Period, he concurrently served as Independent Director of Transwarp Technology
(Shanghai) Co., Ltd. and Independent Director of Merit Interactive Co., Ltd.
GE Weijun He once worked in Zhejiang Xingyun Law Firm and Xingyun Law Firm Shanghai Branch. From February 2006 to December 2021, he served as
Professor, Doctoral Supervisor, and Legal Adviser at Shanghai University of Finance and Economics. Since January 2022, he has been serving as
a full-time teacher (professor) at the Law School of Fudan University. Since September 2021, he has been serving as Independent Director of the
Company. He also serves as Arbitrator at the China International Economic and Trade Arbitration Commission, Arbitrator at the Shanghai
International Economic and Trade Arbitration Commission, Arbitrator at the Shanghai Arbitration Commission, Arbitrator at the Shenzhen Court
of International Arbitration, Executive Officer of the China Commercial Law Society, Vice President of the Commercial Research Branch of
Shanghai Judicial Think Tank Institution, Vice President of the Commercial Law Research Association of the Shanghai Law Society, Vice President
of the Cultural Law Law Research Association of the Shanghai Law Society, Independent Director of Shanghai Huace Navigation Technology
Ltd., Independent Director of Changzhou ECTEK Automotive Electronics System Co., Ltd. (Non-Listed Company), Independent Director of
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Hangzhou EZVIZ Network Co., Ltd. and Supervisor of Shanghai Fudan Asset Management Co., Ltd.
HOU Luting From July 2013 to January 2014, she served as an expatriate financial specialist at Zhonghui Accounting Firm. From February 2014 to June 2017,
she served as a packaging material procurement specialist at the Purchasing Department of the Company. From June 2017 to April 2019, she served
as a raw material procurement specialist at the Purchasing Department of the Company. From April 2019 to March 2021, she served as a raw
material evaluation engineer. From March 2021 to December 2022, she served as a deputy price review manager. From December 2022 to present,
she has been serving as a price review manager. Since May 2018, she has served as Supervisor of the Company.
FANG Qin From November 2008 to January 2018, she served as Director of the Planning Department of the Company and its predecessor. From January 2018
to July 2022, she served as Planning Strategy Manager of the Company. Since July 2022, she has served as Senior Planning Strategy Manager of
the Company. Since May 2018, she has been serving as Supervisor of the Company.
HU Lina She once worked in Pan-China Certified Public Accountants (Special General Partnership), and has served as Strategy Supervisor at the Company
since 2013, and has been serving as Supervisor of the Company since September 2021.
JIN Yanhua He once worked in Zhejiang Sanmen Fertilizer Factory, Zhejiang InBev Yandangshan Beer Co., Ltd., Zhejiang InBev Jinhua Beer Co., Ltd.,
Hangzhou Proya Cosmetics Co., Ltd., and Hangzhou Proya Holding Co., Ltd. From 2007 to August 2012, he served as General Manager of the
Huzhou Factory under the Company and its predecessor. Since August 2012, he has served as General Manager of the Company's Supply Chain
Management Center; since April 2018, he has been serving as Deputy General Manager of the Company. As of the disclosure date of the Reporting
Period, he concurrently served as Executive Director of Hanya (Huzhou), Executive Director of Huzhou UZERO, Manager of Chuangdai
Electronics, Executive Director and General Manager of Proya Commercial, Executive Director and General Manager of Huzhou Niuke, Executive
Director and General Manager of Hangzhou Wanyan, Executive Director and General Manager of Zhejiang Beute, Executive Director of Shanghai
Zhongwen, Executive Director and General Manager of Ningbo Proya, Chairman of Ningbo Keshi, Chairman of Ningbo TIMAGE, Director of
Hong Kong Keshi, Director of Hong Kong Wanyan, Director of Hong Kong Zhongwen, Executive Director of Zhejiang Qingya, Executive Director
and Manager of Luxiaotie, Executive Director and General Manager of Hangzhou Yizhuo, Executive Director and General Manager of Hangzhou
Weiluoke, Executive Director and General Manager of Hangzhou OOMS, Director of Japan OR, Executive Director and Manager of Guangzhou
Qianxi, Director of Ningbo Xiyou Interactive Entertainment Culture Media Co., Ltd., General Manager of Proya (Hainan), Director of Korea
Hapsode, Executive Director and General Manager of Xuzhou Laibo, Executive Director and General Manager of Singuladerm (Hangzhou),
Chairman and General Manager of Ningbo Tangyu, Manager of Proya (Zhejiang), Executive Director and General Manager of Hangzhou
CORRECTORS, Executive Director and General Manager of Huzhou Keyan, Executive Director and General Manager of Hubei Laibo, Executive
Director and General Manager of Ningbo JIngzhe Cosmetics Co., Ltd., and Executive Director and General Manager of Hangzhou Gloris Trading
Co., Ltd.
WANG Li She once served as CFO of Guangzhou Yingtai Digital Power Technology Co., Ltd., Financial Representative of US CELLSTAR (Phonest Star),
Financial Manager of Shanghai Ruili Sports Co., Ltd., Financial Director of Vgrass Fashion Co., Ltd., Financial Director of Zhuoshang Clothing
(Hangzhou) Co., Ltd., and Financial Director of Nanjing Sunport Photovoltaics Co., Ltd. Since April 2023, she has been serving as Independent
Director of Zhejiang Wazam New Materials Co., Ltd. She is currently Deputy General Manager, Secretary of the Board of Directors, and CFO of
Proya Cosmetics Co., Ltd.
Other explanations
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□ Applicable √ Not applicable
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(II) Positions of current and resigned directors, supervisors and senior management during the
Reporting Period
1. Positions held in shareholder entities
□ Applicable √ Not applicable
2. Positions held in other entities
□ Applicable □ Not applicable
Name of
Name of another entity Position held Term start date Term end date
employee
HOU Executive Director and
Proya Trade June 2011
Juncheng General Manager
November
Meiligu Executive Director
2012
December
Chuangdai Electronics Executive Director
2016
September
Yueqing Laiya Executive Director
2015
Inside Director and November
Korea Hanna
Representative Director 2011
Executive Director and
Hapsode (Hangzhou) February 2018
General Manager
Executive Director and
Huzhou Hapsode May 2016
General Manager
Executive Director and December
Danyang Hapsode December 2023
General Manager 2016
Mijing Siyu Executive Director and
February 2018
(Hangzhou) General Manager
Executive Director and November
Huzhou Younimi January 2024
General Manager 2022
Proya (Hainan) Executive Director January 2021
Proya (Zhejiang) Executive Director May 2022
Hangzhou Kunyi Chairman and General
April 2014 February 2024
Industrial Co., Ltd. Manager
Cosmetics Industry
Chairman of the Board of December
(Huzhou) Investment
Directors 2018
Development Co., Ltd.
Huzhou Beauty Town
Executive Director and
Technology Incubation January 2019
General Manager
Park Co., Ltd.
Xinjiang Huanyu New
Silk Road Investment Director March 2021 March 2024
Development Co., Ltd.
Yongxinou (Ningbo)
International Trade Co., Director May 2022
Ltd.
Zhejiang Zhujin
September
Enterprise Executive Director
2022
Management Co., Ltd.
FANG November
Meiligu General Manager
Yuyou 2012
September
Yueqing Laiya General Manager
2015
November
Korea Hanna Inside Director
2011
Hong Kong Xinghuo Director March 2019
53 / 272
Annual Report 2023
Hangzhou Fangxiake Executive Director and
May 2018
Investment Co., Ltd. General Manager
Hangzhou Kunyi
Director April 2014 February 2024
Industrial Co., Ltd.
Hangzhou Tairentang
December
Biotechnology Co., Director
2014
Ltd.
Zhejiang Poweihui
November
Grapevine Technology Supervisor
2021
Co., Ltd.
Jiangsu Lenong
Weimei Agricultural
Director May 2022
Technology
Development Co., Ltd.
HOU Hainan Mengya
Executive Director and November
Yameng Enterprise Consulting
General Manager 2021
Co., Ltd.
Executive Director and
Hangzhou TIMAGE March 2022
General Manager
November
PROYA MALAYSIA Director
2023
Sanya WaveDash
Technology
Executive Partner March 2024
Partnership (Limited
Partnership)
MA Transwarp Technology December
Independent Director
Dongming （Shanghai）Co., Ltd. 2020
Zhejiang Shuangyuan
December
Science & Technology Independent Director December 2023
2020
Development Co., Ltd.
Merit Interactive Co.,
Independent Director May 2022
Ltd.
GE Weijun Shanghai Huace
December
Navigation Technology Independent Director
2020
Ltd.
Changzhou ECTEK
Automotive Electronics September
Independent Director
System Co., Ltd. (Non- 2021
Listed Company)
Hangzhou EZVIZ
Independent Director March 2022
Network Co., Ltd.
Zheshang Development
Independent Director May 2022 December 2023
Group Co., Ltd.
Shanghai Fudan Asset
Supervisor August 2022
Management Co., Ltd.
JIN December
Anya (Huzhou) Executive Director
Yanhua 2016
Huzhou UZERO Executive Director January 2018
Chuangdai Electronics Manager February 2018
Executive Director and September
Proya Commercial
General Manager 2018
Executive Director and December
Huzhou Niuke
General Manager 2018
Executive Director and
Hangzhou Wanyan January 2019
General Manager
Zhejiang Beauty Executive Director and March 2019
54 / 272
Annual Report 2023
General Manager
Shanghai Zhongwen Executive Director April 2019
Executive Director and December
Ningbo Proya
General Manager 2019
September
Ningbo Keshi Director
2019
Ningbo TIMAGE Director July 2019
Hong Kong Keshi Director March 2019
Hong Kong Wanyan Director October 2019
Hong Kong Zhongwen Director July 2019
Zhejiang Qingya Executive Director May 2020
Luxiaotie Executive Director August 2020
Luxiaotie Manager March 2023
Executive Director and
Hangzhou Yizhuo July 2020
General Manager
Executive Director and
Hangzhou Weiluoke July 2020
General Manager
Executive Director and
Hangzhou Oumisi August 2020
General Manager
Japan OR Director August 2020
Executive Director and
Guangzhou Qianxi October 2020
Manager
Ningbo Xiyou
Interactive September
Director
Entertainment Culture 2020
Media Co., Ltd.
Proya (Hainan) General Manager January 2021
Korea Hapsode Director of the Company June 2021
Executive Director and
Xuzhou Laibo January 2022
General Manager
Singuladerm Executive Director and
October 2021
(Hangzhou) General Manager
Chairman and General
Ningbo Tangyu October 2021
Manager
Proya (Zhejiang) Manager May 2022
Hangzhou Executive Director and December
CORRECTORS General Manager 2022
Executive Director and
Huzhou Keyan March 2023
General Manager
Executive Director and
Hubei Laibo July 2023
General Manager
Ningbo Jingzhe Executive Director and
January 2024
Cosmetics Co., Ltd. General Manager
Hangzhou Gloris Executive Director and
March 2024
Trading Co., Ltd. General Manager
WANG Li Zhejiang Wazam New
Independent Director April 2023
Materials Co., Ltd.
Description None
of position
held in
other
entities
(III) Remuneration of directors, supervisors and senior management
√ Applicable □ Not applicable
55 / 272
Annual Report 2023
Decision-making procedures The remuneration of directors and supervisors of the Company shall
for remuneration of directors, be approved by the Remuneration and Appraisal Committee, the
supervisors and senior Board of Directors and the Board of Supervisors respectively. Then,
management the remuneration plan shall be submitted to the general meeting of
shareholders for deliberation. The remuneration of senior
management shall be deliberated by the Remuneration and Appraisal
Committee and the Board of Directors.
Whether the director recuses
himself/herself when the board
Yes
of directors is discussing his/her
compensation
Specific recommendations
made by the Remuneration and
Appraisal Committee or a
The remuneration of directors, supervisors, and senior management
special meeting of independent
shall be determined based on industry benchmarks and regional
directors regarding the
standards, as well as the Company's specific circumstances.
remuneration of directors,
supervisors, and senior
management.
Basis for determination of
The annual remuneration of the Company's directors, supervisors
remuneration of directors,
and senior management shall be paid based on basic pay and
supervisors and senior
performance appraisal results.
management
Actual payment of
remuneration of directors,
Paid.
supervisors and senior
management
Total remuneration actually
received by all directors, During the Reporting Period, the Company's directors, supervisors
supervisors and senior and senior management actually received a total remuneration of
management as of the end of the RMB13.67million from the Company.
Reporting Period
(IV) Changes in the Company's directors, supervisors and senior management
□ Applicable √ Not applicable
(V) Description of punishments by the CSRC in the past three years
□ Applicable √ Not applicable
(VI) Other
□ Applicable √ Not applicable
V.Meetings of the Board of Directors held during the Reporting Period
Session Date Resolution
10th meeting of March 8, The meeting approved the Proposal on No Early Redemption of
the 3rd session of 2023 "Proya Convertible Bonds". For details, see the Announcement on
Board of Directors No Early Redemption of "Proya Convertible Bonds" (No.: 2023-
005) released on the SSE website on March 9, 2023
(http://www.sse.com.cn) and relevant media.
11th meeting of April 19, The meeting approved the Company's Annual Report 2022 and
the 3rd session of 2023 its Summary, the Company's Sustainable Development &
Board of Directors Environmental, Social, and Governance (ESG) Report 2022, the
Company's Plan for Profit Distribution and Capitalization of
Capital Reserves for 2022, and other proposals. For details, see
the Announcement on Resolutions of the 11th Meeting of the 3rd
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Annual Report 2023
Session of Board of Directors (No.: 2023-010) released on the
SSE website on April 21, 2023 (http://www.sse.com.cn) and
relevant media.
12th meeting of June 20, The meeting approved the Proposal on Adjusting the Price and
the 3rd session of 2023 Quantity of Restricted Shares Repurchased under the 2022
Board of Directors Restricted Shares Incentive Plan, the Proposal on Repurchasing
and De-registering Part of Restricted Incentive Shares, and the
Proposal on the Adjustment of the Conversion Price of "Proya
Convertible Bond". For details, see the Announcement on
Resolutions of the 12th Meeting of the 3rd Session of Board of
Directors (No.: 2023-034) released on the SSE website on June
21, 2023 (http://www.sse.com.cn) and relevant media.
13th meeting of August 28, The meeting approved the Company's 2023 Semi-annual Report
the 3rd session of 2023 and its Summary, the 2023 Special Report on the Semi-annual
Board of Directors Storage and Actual Use of Raised Fund, the Company's 2023
Semi-Annual Profit Distribution Plan, and other proposals. For
details, see the Announcement on Resolutions of the 13th Meeting
of the 3rd Session of Board of Directors (No.: 2023-046) released
on the SSE website on August 30, 2023 (http://www.sse.com.cn)
and relevant media.
14th meeting of September The meeting approved the Proposal on Satisfying the Conditions
the 3rd session of 8, 2023 for Release from Sales Restrictions in the First Release Period
Board of Directors under the 2022 Restricted Shares Incentive Plan. For details, see
the Announcement on Satisfying the Conditions for Release from
Sales Restrictions in the First Release Period under the 2022
Restricted Shares Incentive Plan (No.: 2023-055) released on the
SSE website on September 12, 2023 (http://www.sse.com.cn) and
relevant media.
15th meeting of September The meeting approved the Proposal on Repurchasing and De-
the 3rd session of 14, 2023 registering Part of Restricted Incentive Shares. For details, see
Board of Directors the Announcement on Repurchasing and De-registering Part of
Restricted Incentive Shares (No.: 2023-058) released on the SSE
website on September 15, 2023 (http://www.sse.com.cn) and
relevant media.
16th meeting of October 23, The meeting approved the Company's 2023 Q3 Report, the
the 3rd session of 2023 Proposal on Adjusting the Repurchase Price under the 2022
Board of Directors Restricted Shares Incentive Plan, and other proposals. For details,
see the Announcement on Resolutions of the 16th Meeting of the
3rd Session of Board of Directors (No.: 2022-067) released on the
SSE website on October 24, 2023 (http://www.sse.com.cn) and
relevant media.
17th meeting of December The meeting approved the Proposal on Revising the Articles of
the 3rd session of 13, 2023 Association and Applying for Business Change Registration, the
Board of Directors Proposal on Revising the Rules of Procedures, the Proposal on
Revising the Working Policies for Independent Directors, and
other proposals. For details, see the Announcement on Resolutions
of the 17th Meeting of the 3rd Session of Board of Directors (No.:
2022-082) released on the SSE website on December 14, 2023
(http://www.sse.com.cn) and relevant media.
VI.Performance of Duties by Directors
(I) Directors attending meetings of the Board of Directors and general meetings of
shareholders
Independent Attendance
Director
director or Attendance at meetings of the Board of Directors at general
Name
not meetings of
57 / 272
Annual Report 2023
shareholders
Number Number
Number Number Fail to
of of
of Number of of attend two
meetings meetings Number of
meetings meetings of the meetings consecutive
of the of the general
of the Board of of the meetings of
Board of Board of meetings of
Board of Directors Board of the Board
Directors Directors shareholders
Directors attended by Directors of
to be absent attended
attended communication attended Directors
attended from
in person by proxy or not
this year
HOU No 8 8 0 0 0 No 4
Juncheng
FANG No 8 8 0 0 0 No 4
Yuyou
HOU No 8 8 1 0 0 No 4
Yameng
MA Yes 8 8 4 0 0 No 4
Dongming
GE Yes 8 8 5 0 0 No 4
Weijun
Description of absence from two consecutive meetings of the Board of Directors
□ Applicable √ Not applicable
Number of meetings of the Board of Directors held 8
during the year
Including: number of on-site meetings 3
Number of meetings held by communication 0
Number of meetings held both on site and by 5
communication
(II) Circumstances where directors object to the Company's relevant matters
□ Applicable √ Not applicable
(III) Other
□ Applicable √ Not applicable
VII.Special Committees under the Board of Directors
√ Applicable □ Not applicable
(I) Members of special committees under the Board of Directors
Category of special
Name of member
committee
Audit Committee HOU Yameng, MA Dongming, GE Weijun
Nomination Committee HOU Juncheng, MA Dongming, GE Weijun
Remuneration and
FANG Yuyou, MA Dongming, GE Weijun
Appraisal Committee
Strategy Committee HOU Juncheng, MA Dongming, GE Weijun
(II) Six meetings held by the Audit Committee during the Reporting Period
Important Other
Date Description comments and performance
suggestions of duties
58 / 272
Annual Report 2023
April 19, The 7th meeting of the 3rd session of the Audit Approve these None
2023 Committee was held to deliberate on and approve proposals and
the Company's Annual Report 2022 and its agree to submit
Summary, the Company's 2023 Q1 Report, the them to the Board
Company's Annual Financial Final Report 2022, of Directors for
the Performance Report 2022 of the Audit deliberation
Committee under the Company's Board of
Directors, the Company's Internal Control
Evaluation Report 2022, the 2022 Special Report
on the Annual Storage and Actual Use of Raised
Fund, the Company's Plan for Profit Distribution
and Capitalization of Capital Reserves for 2022,
the Proposal on Payment of Audit Fees for 2022
and Further Employment of the Accounting Firm
for 2023, the Proposal on the Accrual of Asset
Impairment Provision for 2022, the Proposal on the
Adjustment of the Conversion Price of "Proya
Convertible Bond", the Proposal on the Partial
Delay of Raising Funds for Investment Projects,
and the Company's Annual Internal Audit Work
Report 2022.
June 20, The 8th meeting of the 3rd session of the Audit Approve these None
2023 Committee was held to deliberate on and approve proposals and
the Proposal on Adjusting the Price and Quantity of agree to submit
Restricted Shares Repurchased under the 2022 them to the Board
Restricted Shares Incentive Plan, the Proposal on of Directors for
Repurchasing and De-registering Part of Restricted deliberation
Incentive Shares, and the Proposal on the
Adjustment of the Conversion Price of "Proya
Convertible Bond".
August The 9th meeting of the 3rd session of the Audit Approve these None
28, 2023 Committee was held to deliberate on and approve proposals and
the Company's 2023 Semi-annual Report and its agree to submit
Summary, the 2023 Special Report on the Semi- them to the Board
annual Storage and Actual Use of Raised Fund, the of Directors for
Company's 2023 Semi-Annual Profit Distribution deliberation
Plan, the Proposal on the Adjustment of the
Conversion Price of "Proya Convertible Bond", and
the Proposal on Revising the Internal Audit
Management Policies.
September The 10th meeting of the 3rd session of the Audit Approve these None
14, 2023 Committee was held to deliberate on and approve proposals and
the Proposal on Repurchasing and De-registering agree to submit
Part of Restricted Incentive Shares. them to the Board
of Directors for
deliberation
October The 11th meeting of the 3rd session of the Audit Approve these None
23, 2023 Committee was held to deliberate on and approve proposals and
the Company's 2023 Q3 Report, the Proposal on agree to submit
Adjusting the Repurchase Price under the 2022 them to the Board
Restricted Shares Incentive Plan, the Proposal on of Directors for
the Adjustment of the Conversion Price of "Proya deliberation
Convertible Bond", and the Proposal on the
Accrual of Asset Impairment Provision for the First
Three Quarters of 2022.
December The 12th meeting of the 3rd session of the Audit Approve these None
13, 2023 Committee was held to deliberate on and approve proposals and
59 / 272
Annual Report 2023
the Proposal on Revising the Work Rules for the agree to submit
Audit Committee of the Board of Directors, the them to the Board
Proposal on Developing the Accounting Firm of Directors for
Selection System, and the Proposal on the Plan for deliberation
Repurchasing the Company's Shares Through
Centralized Bidding.
(III) Two meetings held by the Remuneration and Appraisal Committee during the Reporting
Period
Important Other
Date Description comments and performance
suggestions of duties
April 19, The 4th meeting of the 3rd session of Remuneration Approve these None
2023 and Appraisal Committee was held to deliberate on proposals and
and approve the Proposal on Confirming the agree to submit
Remuneration of Directors for 2022 and the them to the Board
Proposal on Confirming the Remuneration of Senior of Directors for
Management for 2022. deliberation
September The 5th meeting of the 3rd session of Remuneration Approve these None
8, 2023 and Appraisal Committee was held to deliberate on proposals and
and approve the Proposal on Satisfying the agree to submit
Conditions for Release from Sales Restrictions in them to the Board
the First Release Period under the 2022 Restricted of Directors for
Shares Incentive Plan. deliberation
(IV) One meeting held by the Strategy Committee during the Reporting Period
Important Other
Date Description comments and performance
suggestions of duties
April 19, The 3rd meeting of the 3rd session of Strategy Approve these None
2023 Committee was held to deliberate on and approve proposals and
the Proposal on the Company's Strategic Business agree to submit
Plan 2023. them to the Board
of Directors for
deliberation
(V) Dissenting matters
□ Applicable √ Not applicable
VIII.Description of the Company's Risks Identified by the Board of Supervisors
□ Applicable √ Not applicable
The Board of Supervisors had no objection to matters supervised during the Reporting Period.
IX.Employees of the Parent Company and Major Subsidiaries as of the End of the Reporting
Period
(I) Employees
Number of current employees of the parent 1,477
company
Number of current employees of major 1,494
subsidiaries
Total number of employees 2,971
Number of retired employees to be supported by 4
the parent company and major subsidiaries
Specialty distribution
60 / 272
Annual Report 2023
Category Number of employees
Production workers 310
Sales specialists 1,996
Management 343
R&D personnel 322
Total 2,971
Educational background
Education level Number (persons)
Bachelor and above 1,584
Associate 740
High school and below 647
Total 2,971
(II) Remuneration policy
√ Applicable □ Not applicable
Value creation is the Company's basis for salary distribution. Performance is an intuitive reflection of
value. By establishing a comprehensive and objective performance evaluation system, the Company
combines salary distribution and performance evaluation of employees with an aim to fully guide and
motivate employees to create value.
(III) Training program
√ Applicable □ Not applicable
The Company adheres to the goal of gathering and training outstanding professionals by always
considering staff learning and growth as a primary task, and continuously innovating in and optimizing
training research, training topics, training forms, training implementation, training evaluation and
improvement, and trainer management. In terms of the form of learning, the Company combines internal
and external learning and fully improves the engagement of employees in training, thus making the
training more effective.
(IV) Labor outsourcing
√ Applicable □ Not applicable
Total man-hours for labor outsourcing
Total remuneration paid for labor outsourcing RMB76,520,604.14
(1) Huzhou Branch and Zhejiang Beauty signed the Service Project Contracting Agreement with Puji
Labor Service Co., Ltd. to outsource auxiliary services including canteen, greening, cleaning, and goods
handling, loading and unloading, and packaging to the latter and pay consideration for the agreed
quantities.
(2) Huzhou Branch signed the Service Project Contracting Agreement with Yancheng Dafeng
Xinxinyuan Enterprise Management Co., Ltd. to outsource services such as partial goods handling,
loading and unloading, combined packaging, and mask folding to the latter, and pay consideration for
the agreed quantities.
(3) Huzhou Branch signed the Service Project Contracting Agreement with Zhejiang Hongfu Supply
Chain Management Co., Ltd. to outsource services such as partial goods handling, loading and
unloading, combined packaging, and mask folding to the latter, and pay consideration for the agreed
quantities.
X.Profit Distribution or Capital Reserve Conversion Plan
(I) Development, implementation or adjustment of the cash dividend distribution policy
√ Applicable □ Not applicable
The Company held the 16th meeting of the second session of Board of Directors and the 3rd extraordinary
General Meeting of Shareholders on October 12, 2020 and October 28, 2020 respectively and approved
the Proposal on the Company's Planning for Dividends to Shareholders for the Next Three Years (2020-
2022), as detailed below:
I. Factors considered in developing the planning for dividend distribution to shareholders
61 / 272
Annual Report 2023
To promote the long-term and sustainable development, based on a comprehensive analysis of the
corporate development strategy, shareholder requirements and expectations, social capital costs, and
external financing environment, the Company has solicited and listened to the requirements and
expectations of shareholders, especially small and medium shareholders, fully considered the Company's
current and future profitability, cash flow, development stage, project investment capital needs, and bank
credit, balanced the short-term and long-term interests of shareholders, and made institutional
arrangements for profit distribution, so as to establish a sustainable and stable mechanism for dividend
distribution to investors to ensure the continuity and stability of the Company's profit distribution policy.
Ⅱ. Principles for planning for dividend distribution to shareholders
The Company implements a continuous and stable profit distribution policy, attaches importance to
reasonable investment returns to investors while considering sustainable development, and has established
a continuous and stable mechanism for returns to investors in combination with the Company's
profitability and actual needs for the future development strategy. The Company shall make a profit
distribution plan in accordance with the Articles of Association. The Company's Board of Directors, Board
of Supervisors and General Meeting of Shareholders shall fully consider the opinions of independent
directors, supervisors and public investors in deciding and demonstrating the profit distribution policy.
III. Planning for dividend distribution to shareholders (2020-2022)
1. The Company shall implement a continuous and stable profit distribution policy, and consider
reasonable investment returns to investors as well as the Company's actual operating conditions and
sustainable development for the current year in profit distribution.
2. The Company may distribute profits in the form of cash or shares or both, or other methods permitted
by laws and regulations. The distribution shall not exceed the accumulated distributable profits, and shall
not undermine the Company's ability to continue as a going concern. When eligible for cash dividends,
the Company shall distribute profits first in cash.
When eligible for cash dividends under the Company's Articles of Association, the Company shall, in
principle, distribute profits in cash on a yearly basis. The Company's Board of Directors may propose that
the Company should distribute interim cash dividends according to the Company's profitability and capital
needs. The Company shall maintain the continuity and stability of the profit distribution policy, and
distribute every year at least 20% of the distributable profits achieved for the current year. The Company's
Board of Directors shall propose a differentiated cash dividend policy in line with the procedure under the
Company's Articles of Association after a comprehensive analysis of factors such as industry
characteristics, development stage, its own business mode, profitability, and major spending arrangements.
3. Adjustment of the profit distribution plan and related decision-making mechanism
(1) The Company shall evaluate the implemented plan for dividend distribution to shareholders once every
three years. According to applicable laws and regulations, the Company's operating conditions, and the
opinions of shareholders (especially small and medium investors) and independent directors, the Company
may modify its current profit distribution policy when necessary and make a new plan for dividend
distribution to shareholders. Upon adjustment, the plan for dividend distribution to shareholders shall be
approved by voting at the General Meeting of Shareholders.
(2) The Company's Board of Directors shall make an appropriate annual distribution plan or an interim
profit distribution plan as necessary for development after fully considering the Company's profitability,
cash flow, development capital needs, financing costs, and the external financing environment, and
implement them upon the approval by the Company's General Meeting of Shareholders.
During the Reporting Period, the Company's 2022 Annual General Meeting of Shareholders deliberated
on and approved the profit distribution plan of 2022: Based on the Company's total share capital of
283,520,339 shares before the implementation of the plan, a cash dividend of RMB0.87 per share (tax
inclusive) was distributed, with a total of RMB246,662,694.93 cash dividends distributed. The said
dividend distribution was completed on May 29, 2023.
During the Reporting Period, the Company's 2023 Annual General Meeting of Shareholders deliberated
on and approved the 2023 semi-annual profit distribution plan: Based on the Company's total share
capital of 396,823,346 shares before the implementation of the plan, a cash dividend of RMB0.38 per
share (tax inclusive) was distributed, with a total of RMB150,792,871.48 cash dividends distributed. The
said dividend distribution was completed on October 23, 2023.
(II) Special description of the cash dividend policy
√ Applicable □ Not applicable
62 / 272
Annual Report 2023
Is the cash dividend policy acceptable under the Company's Articles of
Association or as required by resolutions at the General Meeting of √Yes □No
Shareholders?
Are dividend distribution standard and ratio clearly defined? √Yes □No
Are decision-making procedures and mechanisms complete? √Yes □No
Do independent directors fulfill their duties and play their roles diligently? √Yes □No
Do minority shareholders have the opportunity to fully express their opinions
√Yes □No
and demands, and are their legitimate rights and interests fully protected?
(III) Where the Company made profits and the parent company could provide positive profits
available to shareholders for distribution but did not propose a cash profit distribution plan
during the Reporting Period, the Company shall disclose the reasons in details and the purpose
and use of undistributed profits.
□ Applicable √ Not applicable
(IV) Profit distribution and capitalization of capital reserves during the Reporting Period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Number of bonus shares distributed per 10 shares
0
(shares)
Dividends per 10 shares (RMB) (tax included) 9.10
Conversions per 10 shares (shares) 0
Amount of cash dividends (tax included) 359,037,186.69
Net profit attributable to ordinary shareholders of
the Company in the annual consolidated 1,193,868,141.81
statement of dividends
Proportion in the net profit attributable to
ordinary shareholders of the Company in the 30.07
consolidated statement (%)
Amount of shares repurchased in cash included
39,076,754.20
in cash dividends
Total dividend amount (tax included) 398,113,940.89
Proportion of the dividend amount in the net
profit attributable to ordinary shareholders of the 33.35
Company in the consolidated statement (%)
Note: 1. The Company held the 18th meeting of the 3rd session of Board of Directors on April 17, 2024,
during which the Company deliberated on and approved the 2023 Annual Profit Distribution Plan. Based
on the total share capital (excluding the shares in the Company's special securities account for repurchase)
as of the record date on which equity distribution is implemented, the Company proposes to distribute to
all shareholders registered a cash dividend of RMB9.10 (tax inclusive) per 10 shares. Based on the total
share capital of 396,757,184 shares on December 31, 2023, deducting 2,210,825 shares in the Company's
special securities account for repurchase, it is estimated that the cash dividend to be distributed will amount
to RMB359,037,186.69 (tax inclusive) without converting the capital reserve into share capital or giving
any bonus shares. In case of a change in the Company's total share capital due to the conversion of
convertible bonds before the record date for equity distribution, the Company maintains the said
distribution ratios and yet adjusts the total distribution amounts.
2. On October 23, 2023, the Company completed the implementation of the 2023 semi-annual profit
distribution plan. Based on the Company's total share capital of 396,823,346 shares before the
implementation of the plan, a cash dividend of RMB0.38 per share (tax inclusive) was distributed, with a
total of RMB150,792,871.48 cash dividends distributed.
3. According to the Guideline No. 7 for the Self-regulatory Rules of Companies Listed on the Shanghai
Stock Exchange - Share Repurchase and other relevant regulations, for listed companies that repurchase
shares using cash as consideration through centralized bidding or tender offer, the amount of repurchased
shares in the current year shall be treated as the amount of cash dividends and counted in the calculation
63 / 272
Annual Report 2023
of the cash dividend proportion for that year. In 2023, the Company repurchased shares amounting to
RMB39,076,754.20 (excluding transaction expenses) through centralized bidding.
To conclude, the amount of cash dividends for the year 2023 (including the proposed annual dividend
for 2023, the semi-annual cash dividend for 2023, and the amount of repurchased shares through
centralized bidding for 2023) accounts for 45.98% of the net profit attributable to the shareholders of the
Company in the consolidated statement of 2023.
XI.The Company's Equity Incentive Plans, Employee Stock Ownership Plans or Other Employee
Incentives and Their Impact
(I) Relevant incentive matters disclosed in the temporary announcement and with no progress
or changes in subsequent implementation
√ Applicable □ Not applicable
Matter Reference
Announcement on Adjusting the
No. 2023-036 announcement published on the SSE website,
Price and Quantity of Restricted
Shanghai Securities News, and Securities Times on June 21,
Shares Repurchased under the 2022
2023
Restricted Shares Incentive Plan
Announcement on the Repurchase No. 2023-037 announcement published on the SSE website,
and Cancellation of Some Equity Shanghai Securities News, and Securities Times on June 21,
Incentive Restricted Shares 2023
Announcement on the
Implementation of the Repurchase No. 2023-044 announcement published on the SSE website,
and Cancellation of Some Shanghai Securities News, and Securities Times on August
Restricted Shares under the 2022 22, 2023
Restricted Shares Incentive Plan
No. 2023-058 announcement published on the SSE website,
Announcement on the Repurchase
Shanghai Securities News, Securities Times, China Securities
and Cancellation of Some Equity
Journal, Securities Daily, Economic Information Daily, and
Incentive Restricted Shares
China Daily on September 15, 2023
Announcement on the Satisfaction
of Conditions for Release from No. 2023-061 announcement published on the SSE website,
Sales Restrictions in the First Shanghai Securities News, Securities Times, China Securities
Release Period under the 2022 Journal, Securities Daily, Economic Information Daily, and
Restricted Shares Incentive Plan China Daily on September 20, 2023
and Listing
No. 2023-069 announcement published on the SSE website,
Announcement on Adjusting the
Shanghai Securities News, Securities Times, China Securities
Repurchase Price of the 2022
Journal, Securities Daily, Economic Information Daily, and
Restricted Shares Incentive Plan
China Daily on October 24, 2023
Announcement on the
No. 2023-080 announcement published on the SSE website,
Implementation of the Repurchase
Shanghai Securities News, Securities Times, China Securities
and Cancellation of Some
Journal, Securities Daily, Economic Information Daily, and
Restricted Shares under the 2022
China Daily on December 11, 2023
Restricted Shares Incentive Plan
(II) Incentives not disclosed in the interim announcement or with subsequent progress
Equity incentives
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
Employee stock ownership plans
□ Applicable √ Not applicable
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Other incentives
□ Applicable √ Not applicable
(III) Equity incentives granted to directors and senior management during the Reporting
Period
□ Applicable √ Not applicable
√ Applicable □ Not applicable
Unit: Share
Number Number Number
of of newly of Market
restricted granted Price of restricted price as
shares restricted restricted shares of the end
Unlocked Locked
Name Position held at shares shares held at of the
shares shares
the during granted the end of Reporting
beginning the (RMB) the Period
of the Reporting Reporting (RMB)
year Period Period
Deputy
JIN
General 140,000 0 78.56 58,800 137,200 137,200 99.40
Yanhua
Manager
Deputy
General
Manager,
WANG Secretary
180,000 0 78.56 75,600 176,400 176,400 99.40
Li of the
Board of
Directors,
CFO
Total / 320,000 0 / 134,400 313,600 313,600 /
Note: The Company implemented the 2022 Equity Distribution Plan on May 29, 2023, in which the
Company distributed to all shareholders a cash dividend of RMB8.70 (tax inclusive) per 10 shares based
on the total share capital as of the record date on which equity distribution is implemented and issued 4
shares for every 10 shares to all shareholders through capitalization of the capital reserve. The "locked
shares", "unlocked shares" and "number of restricted shares held at the end of the period" mentioned in
the table above include the shared converted through the capitalization of the capital reserve in 2022.
(IV) Evaluation mechanism for senior management as well as the establishment and
implementation of the incentive mechanism during the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company's General Manager and other senior management were
evaluated based on performance indicators and their annual performance remuneration was submitted by
the Remuneration and Appraisal Committee to the Board of Directors for deliberation.
XII.Construction and Implementation of the Internal Control System during the Reporting Period
√ Applicable □ Not applicable
The Company has developed relevant systems including the Internal Audit Management Policies, the
External Guarantee Decision-making Management System, the Related Transaction Decision-Making
Policies, the Raised Funds Management System, and the Information Disclosure Management System,
and established processes for company establishment/investment/change applications, entrusted wealth
management application, and guarantee application. The Company continuously improves the internal
control system and related processes, regulates the implementation of the internal control system,
strengthens the supervision and inspection of internal control, and promotes the healthy and sustainable
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development of the Company.
Description of material deficiencies in internal control during the Reporting Period
□ Applicable √ Not applicable
XIII.Management and Control of Subsidiaries during the Reporting Period
√ Applicable □ Not applicable
The Company has developed systems including the External Investment and Operation Decision-
Making System and the Subsidiary Management System to implement centralized control over
subsidiaries. The Company HQ is responsible for its finance, asset operation and overall strategic
planning while all subsidiaries develop their strategic plans based on the Company's overall strategic
planning.
XIV.Description of the Internal Control Audit Report
√ Applicable □ Not applicable
During the Reporting Period, Pan-China Certified Public Accountants (Special General Partnership), the
Company's internal control auditing firm, issued the Internal Control Audit Report (T.J.S.[2024]
No.[2241]),in which opinion the Company had maintained effective internal control over financial
reporting in all material aspects as of December 31, 2023 pursuant to the Basic Rules for Internal
Control and other applicable provisions.
Whether to disclose the internal control audit report:Yes
Type of opinion in the internal control audit report: Standard unqualified opinion
XV.Correction of Problems Identified in the Special Campaign for Governance of Listed
Companies
None
XVI.Other
□ Applicable √ Not applicable
Section V Environmental and Social Responsibility
I.Environmental Information
Whether to establish the environmental protection Yes
mechanism
Investment in environmental protection during the 402.44
Reporting Period (Unit: RMB '0,000)
(I) Description of environmental issues of the Company and major subsidiaries included in
the list of primary pollutant discharge entities announced by the environmental authority
□ Applicable √ Not applicable
(II) Description of environmental issues of the Company not included in the list of primary
pollutant discharge entities
√ Applicable □ Not applicable
1. Administrative penalties due to environmental issues
□ Applicable √ Not applicable
2. Disclosure of other environmental information with reference to primary pollutant
discharge entities
√ Applicable □ Not applicable
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The Company strictly complies with environmental laws and regulations, including the Environmental
Protection Law of the People’s Republic of China, the Law of the People's Republic of China on the
Prevention and Control of Environmental Pollution by Solid Wastes, and the Regulations on the Safety
Management of Hazardous Chemicals. We follow an environmental management policy to save energy,
reduce consumption and emissions, and increase efficiency. The Company continuously strengthens its
environmental risk management to ensure that its production and operations comply with relevant laws,
regulations, and standards. The Company has established management documentation covering all
environmental impact factors. Additionally, the Company implements various management policies in
its production and operations to ensure effective control of environment-related risks. During the
Reporting Period, the Company's resource use had no significant impact on the environment. In addition,
the Company paid environmental protection taxes and fees in full, and no violations of environmental
protection laws or regulations occurred. The Company passed the ISO14001:2015 Environmental
Management System certification (valid until February 14, 2025).
The Company's Huzhou Factory was designed and built in accordance with GMP standards. All
production workshops meet the environmental control standards for cosmetic clean areas. The intelligent
warehousing center has fully optimized the data and the robot-driven automation system, maximizing
the sustainability of healthy and ecological production and achieving our strategic goals of cost
reduction and efficiency enhancement.
In September 2023, the Company's Huzhou Factory was awarded the title "Green and Low-Carbon
Factory of Zhejiang 2023". During the Reporting Period, the Company's Huzhou factory was honored as
a water-saving enterprise for the year 2023.
In 2023, the Company submitted the Climate Change Questionnaire to the Carbon Disclosure Project
(CDP) and achieved grade "B", reflecting its effective management in sustainability and climate action.
The discharge of industrial wastewater, waste gas, and residues mainly occur from product production.
Main administrative measures taken during the Reporting Period include:
(1) Wastewater:
① Constructed a wastewater treatment system to ensure that the treated wastewater is highly purified
and recycled.
② Installed the Multi Vision COD online automatic monitoring instrument to monitor the COD content
in treated water 24 hours a day.
③ Installed a new sludge pressing device at the Huzhou factory to ensure class-A sewage discharge.
④ Excavated, replaced, repaired and retested some damaged rain and sewage pipes in the factory area
in accordance with the result reported by the underground pipeline CCTV detection system (CCTV
detection).
(2) Waste gas:
① Added a waste gas treatment facility for the cream production line to reduce the emission of dust and
organic waste gas. After being used, the facility can collect 99% dust and remove 75% organic waste
gas.
② Installed a highly-precise volatile organic chemical (VOC) gas collection device to effectively
reduce unorganized gas emissions.
(3) Solid waste:
The Company properly disposed of solid waste generated in production and operations. The Company
managed solid waste in a macroscopical manner and the factories can track the whole process data on
solid waste and prevent risks by requesting to report the amount of generated hazardous waste on the
Zhejiang Information System Platform for the Supervision of Solid Wastes every year, selecting
hazardous waste treatment service providers through open bidding on the platform, and requesting for
the treatment of hazardous waste on the platform.
During the Reporting Period, the sludge pressing device at the Huzhou factory reduced the sludge
production by 75%, resulting in an annual reduction of approximately 540 tons of sludge.
3. Reasons for non-disclosure of other environmental information
□ Applicable √ Not applicable
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(III)The Company's performance in helping protect the environment, prevent pollution and
fulfill environmental responsibilities
√ Applicable □ Not applicable
The Company's emissions of greenhouse gasesare generated throughout the product lifecycle, with a small
percentage arising from office operations. Based on identified sources of greenhouse gas emissions, we
set greenhouse gas emission reduction goals in the Proya Sustainable Development Strategic Plan and
collect greenhouse gas emission data every year to assess our performance in climate change management.
In the sales process, all the Company's stores choose the best energy-saving solutions during renovation
to reduce carbon emissions during operation. The Company's extensive sales are also engaged in carbon
reduction initiatives. For example, a photovoltaic power generation facility has been installed at Haining
Intime Department Store to partially replace traditional energy sources.
During the Reporting Period, the Company reached a consensus with top ten strategic partners on the
Proya Sustainable Development Strategic Plan and released the "Together for A Zero Carbon Future,
Beauty in Harmony" carbon reduction manifesto, committing to reduce carbon emissions by 2025.
During the Reporting Period, the Company carried out energy-saving and technology upgrade in an
orderly manner, resulting in a reduction of 177.21 tons of carbon dioxide emissions.Additionally, the
Company's initiatives such as purchasing green electricity and implementing photovoltaic power
generation led to a reduction of 4,744.30 tons of carbon dioxide emissions, and the Company's reduction
of packaging and use of replacement packaging led to a further reduction of 650.42 tons of carbon dioxide
emissions.
The Company actively communicates and collaborates with original equipment manufacturers (OEMs)
and original design manufacturers (ODMs) to seek carbon reduction opportunities in production. During
the Reporting Period, an OEM factory reduced its electricity consumption by using automated products,
saving approximately 28 mWh of electricity per year.
The Company promotes carbon reduction policies to its raw material suppliers and plans for the
establishment of a system for collecting and evaluating suppliers’ carbon emission data. The Company
prioritizes suppliers with lower carbon emissions. During the Reporting Period, the range of carbon data
collection covered 156 suppliers, accounting for 90% (cooperation amount) of raw material suppliers.
Additionally, during the Reporting Period, the Company's e-commerce delivery boxes (May 1, 2023 -
December 31, 2023) had achieved carbon neutrality by suppliers through carbon offset, reducing the
carbon footprint of products in the distribution and transportation processes.
(IV) Measures taken to reduce carbon emissions during the Reporting Period and their effects
Whether to take carbon emission
Yes
reduction measures
Carbon dioxide emission equivalent
5,571.93
reduced (unit: tons)
1. Implement energy-saving and technology upgrades:
Carried out clean production as well as energy-saving and
technology upgrades in an orderly manner. Reduced carbon
dioxide emissions by 177.21 tons.
2. Use clean energy:
(1) Used 6,121.42 megawatt-hours of green electricity.
Type of carbon emission reduction (2) Installed a photovoltaic system on the roof of the new
measures (such as electricity generation warehouse, with an installation area of 38,197 square
with clean energy, carbon reduction meters and a capacity of 2,000 kilowatts. The annual
technologies used in production, or the electricity output reached around 2,000 mWh. During the
development and production of new Reporting Period, the photovoltaic system generated
products that help reduce carbon 2,197.53 mWh of electricity.
emissions) (3) All forklifts at the factory were replaced with new
energy forklifts. The Company reduced carbon dioxide
emissions by 4,744.30 tons.
3. Carbon reduction in packaging:
(1) PROYA Advanced Firming Nourishing Light Cream
3.0 simplified packaging design compared with PROYA
Advanced Firming Nourishing Light Cream 2.0, reducing
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the use of plastic by about 100.49 tons during the Reporting
Period;
(2) PROYA Double Effect Brightening Essence was
changed to a replacement design, reducing the use of
plastic by about 107.97 tons during the Reporting Period;
The Company reduced carbon dioxide emissions by 650.42
tons.
Specific description
□ Applicable √ Not applicable
II.Social Responsibility
(I) Whether to independently disclose social responsibility reports, sustainable development
reports, or ESG reports
√ Applicable □ Not applicable
For details, see the Proya Sustainability & Environmental, Social, and Governance (ESG) Report 2023
disclosed by the Company on the SSE website (www.sse.com.cn) disclosed on the same day.
(II) Description of social responsibilities
√ Applicable □ Not applicable
External donation and charity
Quantity/content Description
projects
Include funds and materials donated by
Total investment (RMB'0,000) 866.12 the Company to various community
philanthropy and charitable activities
1. The Company donated RMB300,000
to Shanghai Adream Foundation for
charitable purposes.
2. The Company donated RNB100,000
to the Yunhe County Charity
Association for the rural revitalization
project in Yunhe, Huzhou.
3. The Company donated
RMB494,593.80 to the Beijing New
Sunshine Charity Foundation for the
Glimmering Project and RMB404,525
Including: fund (RMB'0,000) 850.14
for the Echo Project.
4. The Company donated RMB800,000
to the Wuxing Charity Federation.
5. The Company donated
RMB6,402,271.85 to the Zhejiang Proya
Public Welfare Foundation. The fund
will be used for promoting educational
development, facilitating social
innovation, providing emergency relief
assistance, and supporting employee
volunteerism.
The Company donated personal care
Cash value of materials items (such as coral fleece towels and
15.98
(RMB'0,000) skincare products) to the Zhejiang Proya
Public Welfare Foundation.
Number of beneficiaries
92,319
(person)
Specific description
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□ Applicable √ Not applicable
III.Poverty Alleviation and Rural Revitalization Progress
√ Applicable □ Not applicable
Poverty alleviation and rural
Quantity/content Description
revitalization project
1. The Company donated RNB100,000 to the
Yunhe County Charity Association for the rural
revitalization project in Yunhe, Huzhou.
2. The Company donated RMB402,271.85 to the
Total investment (RMB'0,000) 69.43
Zhejiang Proya Public Welfare Foundation for
the Proya Hope Primary School project.
3. The Company purchased agricultural products
worth RMB192,000.
Including: fund (RMB'0,000) 69.43
Cash value of materials
0
(RMB'0,000)
The number of beneficiaries cannot be calculated
Number of beneficiaries
38 for the donation of agricultural products to the
(person)
Yunhe County Charity Association.
Rural
Form of support (such as
revitalization,
industrial support, employment
education
support, education support, etc)
support
Specific description
□ Applicable √ Not applicable
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Section VI Important Matters
I.Fulfillment of Commitments
(I) Commitments made by the Company's actual controllers, shareholders, related parties, acquirers and the Company and other relevant parties
during the Reporting Period or continuing to the Reporting Period
√ Applicable □ Not applicable
The next
Whether the Cause for step in
Any commitment any the event
Promise Promise
Background Promisor Date deadline for Duration is timely failure to of failure
Type Description
performance and strictly perform to
performed in time perform
in time
Restrictions Directors, (1) During their terms as the November No From Yes Not Not
on sales senior Company's director/senior 15, 2017 November applicable applicable
management management, they shall not 15, 2017
HOU transfer more than 25% of their onwards
Juncheng, total shares directly or indirectly
FANG held in the Company each year.
Yuyou and Within six months after leaving
CAO office, they shall not transfer
Liangguo their shares directly or indirectly
IPO-related held in the Company. (2) If their
commitments shares in the Company are sold
within two years upon
expiration of the lock-up period,
the selling price shall not be
lower than the offering price. If
the closing price of the
Company's shares is lower than
the offering price for 20
consecutive trading days within
6 months after the Company's
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IPO, or the closing price as of
the end of the 6-month period
after the Company's IPO is
lower than the offering price, the
lock-up period for their shares in
the Company will be
automatically extended for 6
months. Their commitments
above shall survive job change
and resignation. (3) Should any
of them/their partnership violate
the said share lock-up
commitments, the lock-up
period for their/their
partnership's shares in the
Company will be automatically
extended for 6 months.
Restrictions Senior (1) Within 12 months from the April 16, No From Yes Not Not
on sales management date of the Company's IPO, they 2018 April 16, applicable applicable
JIN Yanhua shall not transfer or authorize 2018
any other to manage their shares onwards
directly or indirectly held in the
Company or have the Company
repurchase such shares. (2)
During their terms as the
Company's senior management,
they shall not transfer more than
25% of their total shares directly
or indirectly held in the
Company each year. Within six
months after leaving office, they
shall not transfer their shares
directly or indirectly held in the
Company. (3) If their shares in
the Company are sold within
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two years upon expiration of the
lock-up period, the selling price
shall not be lower than the
offering price. If the closing
price of the Company's shares is
lower than the offering price for
20 consecutive trading days
within 6 months after the
Company's IPO, or the closing
price as of the end of the 6-
month period after the
Company's IPO is lower than
the offering price, the lock-up
period for their shares in the
Company will be automatically
extended for 6 months. Their
commitments above shall
survive job change and
resignation. (4) Should any of
them or their partnership violate
the said share lock-up
commitments, the lock-up
period for their or their
partnership's shares in the
Company will be automatically
extended for 6 months.
Restrictions Senior (1) Within 12 months from the September No From Yes Not Not
on sales management date of the Company's IPO, they 3, 2018 September applicable applicable
WANG Li shall not transfer or authorize 3, 2018
any other to manage their shares onwards
directly or indirectly held in the
Company or have the Company
repurchase such shares. (2)
During their terms as the
Company's senior management,
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they shall not transfer more than
25% of their total shares directly
or indirectly held in the
Company each year. Within six
months after leaving office, they
shall not transfer their shares
directly or indirectly held in the
Company. (3) If their shares in
the Company are sold within
two years upon expiration of the
lock-up period, the selling price
shall not be lower than the
offering price. If the closing
price of the Company's shares is
lower than the offering price for
20 consecutive trading days
within 6 months after the
Company's IPO, or the closing
price as of the end of the 6-
month period after the
Company's IPO is lower than
the offering price, the lock-up
period for their shares in the
Company will be automatically
extended for 6 months. Their
commitments above shall
survive job change and
resignation. (4) Should any of
them or their partnership violate
the said share lock-up
commitments, the lock-up
period for their or their
partnership's shares in the
Company will be automatically
extended for 6 months.
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Restrictions Controlling (1) Within 24 months upon November No From Yes Not Not
on sales shareholder expiration of the lock-up period, 15, 2017 November applicable applicable
and actual they shall not directly or 15, 2017
controller indirectly reduce their shares in onwards
HOU the Issuer by more than 6% of
Juncheng the total number of shares of the
and FANG Issuer before such IPO. (2) They
Aiqin must sell shares in the Company
through methods including but
not limited to collective trading
through bidding, block trading,
and transfer by agreement and
transfer by agreement in line
with applicable laws,
regulations and rules. (3) Before
selling the Company's shares,
they shall announce the same
three trading days in advance,
discharge the obligation to
disclose information in a timely
and accurate manner as per the
rules of the securities exchange,
except to the extent that their
shares in the Company are less
than 5%. (4) Should they fail to
perform the said intent of share
reduction, they must explain the
cause for failing to do so in the
Company's General Meeting of
Shareholders and the media
designated by the CSRC and
publicly apologize to the
Company's shareholders and
public investors.
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Restrictions Shareholders (1) If they intend to reduce November No From Yes Not Not
on sales FANG shares after the lock-up period 15, 2017 November applicable applicable
Yuyou and expires, they will prudently 15, 2017
LI Xiaolin make a share reduction plan as onwards
directly necessary for the Company to
holding stabilize the share price and
more than conduct operations and capital
5% shares in operations as required by the
the CSRC and the exchange on
Company shareholders for share reduction,
whereby reducing shares
gradually upon expiration of the
lock-up period. (2) They must
sell shares in the Company with
methods including but not
limited to collective trading
through bidding, block trading,
and transfer by agreement in
line with applicable laws,
regulations and rules. (3) Before
selling the Company's shares,
they shall announce the same
three trading days in advance,
discharge the obligation to
disclose information in a timely
and accurate manner as per the
rules of the securities exchange
except to the extent that their
shares in the Company are less
than 5%. (4) Should they fail to
perform the said intent of share
reduction, they must explain the
cause for failing to do so in the
Company's General Meeting of
Shareholders and the media
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designated by the CSRC and
publicly apologize to the
Company's shareholders and
public investors.
Other The When the preconditions for November No From Yes Not Not
Company enabling the share price 15, 2017 November applicable applicable
stabilization plan are met, if the 15, 2017
Company fails to take specific onwards
measures to stabilize the share
price, the Company must
explain the cause for failing to
do so in the Company's General
Meeting of Shareholders and the
media designated by the CSRC
and publicly apologize to the
Company's shareholders and
public investors. In the event of
losses to investors not as a result
of force majeure, the Company
will be liable for compensation
to investors by law, and be
liable otherwise as required by
laws, regulations and competent
regulators; if the losses are
caused due to force majeure, the
Company shall work out a plan
in the shortest possible time to
minimize losses to investors and
submit it to the General Meeting
of Shareholders for deliberation,
so as to protect the interests of
the Company's investors as
much as possible. Within three
years from the date of the
Company's IPO, if the Company
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appoints new directors and
senior management, the
Company will require such new
directors and senior
management to fulfill the
commitments made by the
directors and senior
management at the time of the
Company's IPO.
Other The When the preconditions for November No From Yes Not Not
Company's enabling the share price 15, 2017 November applicable applicable
controlling stabilization plan are met, if 15, 2017
shareholders failing to take specific measures onwards
and actual to stabilize the share price, they
controllers must explain the cause for
failing to do so at the Issuer's
General Meeting of
Shareholders and the media
designated by the CSRC and
publicly apologize to the Issuer's
shareholders and public
investors. Where the
commitment is not fulfilled,
they will not receive shareholder
dividends from the Issuer within
5 working days from the date
when the said incident occurs,
and they will not be able to
transfer their shares until they
take measures to stabilize the
share price as per the said plan
and achieve results.
Other The When the preconditions for November No From Yes Not Not
Company's enabling the share price 15, 2017 November applicable applicable
directors stabilization plan are met, if
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(excluding failing to take specific measures 15, 2017
independent to stabilize the share price as per onwards
directors) the plan to stabilize the share
and senior price, they must explain the
management cause for failing to do so at the
Issuer's General Meeting of
Shareholders and the media
designated by the CSRC and
publicly apologize to the Issuer's
shareholders and public
investors. Where the
commitment is not fulfilled,
they will not receive
remuneration and shareholder
dividends (if any) from the
Issuer within 5 working days
from the date when the said
incident occurs, and they will
not be able to transfer their
shares until they take measures
to stabilize the share price as per
the said plan and achieve
results.
Other The If the Company's prospectus November No From Yes Not Not
Company contains false records, 15, 2017 November applicable applicable
misleading statements or major 15, 2017
omissions, which causes onwards
investors to suffer losses in
securities transactions, the
Company will compensate
investors for such losses by law.
After the illegal facts mentioned
above are identified by the
CSRC or the stock exchange or
the judicial authority where the
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Company is located, the
Company will actively
compensate investors for direct
economic losses incurred
therefrom by settling with
investors with respect to
measurable economic losses
directly incurred to investors,
mediating with investors
through a third party and
establishing an investor
compensation fund based on the
principles of procedure
simplification, active
negotiation, compensation in
advance, and effective
protection of investors' interests,
especially small and medium
investors. If found to have
violated the said commitments,
the Company will publicly
apologize to shareholders and
public investors for failing to
perform the said compensation
measures at the General Meeting
of Shareholders and the media
designated by the CSRC and
compensate investors for the
actual losses identified by the
CSRC and the judicial authority.
Other The Issuer's If the Issuer's prospectus November No From Yes Not Not
controlling contains false records, 15, 2017 November applicable applicable
shareholders misleading statements or major 15, 2017
and actual omissions, which causes onwards
controllers investors to suffer losses in
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securities transactions, they will
compensate investors for such
losses by law. After the illegal
facts mentioned above are
identified by the CSRC or the
stock exchange or the judicial
authority where the Company is
located, the Company will
actively compensate investors
for direct economic losses
incurred therefrom by settling
with investors with respect to
measurable economic losses
directly incurred to investors,
mediating with investors
through a third party and
establishing an investor
compensation fund based on the
principles of procedure
simplification, active
negotiation, compensation in
advance, and effective
protection of investors' interests,
especially small and medium
investors. If found to have
violated the said commitments,
the Company's controlling
shareholders and actual
controllers will publicly
apologize to the Issuer's
shareholders and public
investors for failing to perform
the said compensation measures
at the Issuer's General Meeting
of Shareholders and the media
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designated by the CSRC and
will not receive shareholder
dividends from the Issuer within
5 working days from the date
when the said commitments are
violated, and their shares in the
Issuer will not be transferred
until they take compensation
measures as per the said
commitments and achieve
results.
Other Directors, If the Issuer's prospectus November No From Yes Not Not
supervisors contains false records, 15, 2017 November applicable applicable
and senior misleading statements or major 15, 2017
management omissions, which causes onwards
investors to suffer losses in
securities transactions, they will
compensate investors for such
losses by law. After the illegal
facts mentioned above are
identified by the CSRC or the
stock exchange or the judicial
authority where the Company is
located, the Company will
actively compensate investors
for direct economic losses
incurred therefrom by settling
with investors with respect to
measurable economic losses
directly incurred to investors,
mediating with investors
through a third party and
establishing an investor
compensation fund based on the
principles of procedure
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simplification, active
negotiation, compensation in
advance, and effective
protection of investors' interests,
especially small and medium
investors. If found to have
violated the said commitments,
the Company's directors,
supervisors and senior
management will publicly
apologize to the Issuer's
shareholders and public
investors for failing to perform
the said compensation measures
at the Issuer's General Meeting
of Shareholders and the media
designated by the CSRC and
will not receive remuneration
(or allowances) and shareholder
dividends (if any) from the
Issuer within 5 working days
from the date when the said
commitments are violated, and
their shares in the Issuer will not
be transferred until they take
compensation measures as per
the said commitments and
achieve results.
Other The In order to ensure the effective November No From Yes Not Not
Company use of the proceeds from the 15, 2017 November applicable applicable
IPO, effectively prevent the risk 15, 2017
of diluting immediate returns onwards
and improve future returns, the
Company intends to take
measures including tightening
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operation management and
internal control, accelerating the
progress of fundraising projects,
and strengthening the investor
return mechanism, so as to
improve asset quality, increase
operation revenue, raise future
earnings, and achieve
sustainable development to fill
the diluted immediate returns.
The Company promises to
continuously improve various
measures to fill the diluted spot
returns in accordance with the
implementation rules issued by
the CSRC and Shanghai Stock
Exchange. If found to have
violated the said commitments,
the Company will promptly
announce the facts and cause of
such violation, except for force
majeure or other reasons not
attributable to the Company,
apologize to the Company's
shareholders and public
investors, make supplementary
commitments or substitute
commitments to investors to
protect the interests of investors
as much as possible, and
implement such supplementary
commitments or substitute
commitments subject to the
approval by the Company's
84 / 272
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General Meeting of
Shareholders.
Other Controlling In order to ensure that the November No From Yes Not Not
shareholder Company's measures to fill the 15, 2017 November applicable applicable
and actual diluted immediate returns can be 15, 2017
controller effectively performed, they, as onwards
HOU the Company's controlling
Juncheng shareholder and actual
and FANG controller, promise that: (1)
Aiqin Under no circumstances will
they abuse the position as the
controlling shareholder and
actual controller by ultra vires
interfering with the Company's
operation and management
activities or encroaching on the
Company's interests; (2) After
the CSRC and Shanghai Stock
Exchange have otherwise
released opinions and
implementation rules on
measures to fill the diluted
immediate returns and relevant
commitments, if the Company's
relevant provisions and their
commitments contradict such
rules, they will immediately
make supplementary
commitments in line with such
rules of the CSRC and Shanghai
Stock Exchange, and actively
promote the Company to issue
new commitments or measures
up to the requirements of the
CSRC and Shanghai Stock
85 / 272
Annual Report 2023
Exchange; (3) They will fully,
completely and timely perform
the Company's measures to fill
the diluted immediate returns
and their commitments
regarding the measures to fill
the diluted immediate returns. If
found to have violated such
commitments, which causes
losses to the Company or
shareholders, they are willing to:
① state the cause and apologize
at the General Meeting of
Shareholders and the media
designated by the CSRC; ② be
liable for compensation to the
Company and/or shareholders
by law; ③ unconditionally
accept the penalties or
regulatory measures taken by
the CSRC and/or Shanghai
Stock Exchange and other
securities regulators as per their
current rules. The said measures
to fill the diluted immediate
returns shall not be deemed to
constitute a guarantee for the
Company's future profits.
Other Directors, In order to ensure that the November No From Yes Not Not
senior Company's measures to fill the 15, 2017 November applicable applicable
management diluted immediate returns can be 15, 2017
effectively performed, they, as onwards
the Company's directors and
senior management, promise
that: (1) They will not offer
86 / 272
Annual Report 2023
benefits to other entities or
individuals for free or on unfair
terms, or otherwise harm the
Company's interests; (2) They
will strictly follow the
Company's budget management
by limiting their duty-related
consumption to the extent
required, subject to the
Company's supervision, and free
from waste or extravagance; (3)
They will not use the Company's
assets to engage in investment
and consumption activities
unrelated to their duties; (4)
They will actively promote the
improvement of the Company's
compensation system to better
meet the requirements for filling
the diluted immediate returns;
support the Company's Board of
Directors or Remuneration
Committee to link the
development, revision, and
supplementation of the
Company's compensation
system with the implementation
of the measures to fill the
diluted immediate returns;
promise that the vesting
conditions for the Company's
equity incentives will be linked
to the implementation of the
Company's measures to fill the
diluted immediate returns; (5)
87 / 272
Annual Report 2023
After the CSRC and Shanghai
Stock Exchange have otherwise
released the opinions and
implementation rules on the
measures to fill the diluted
immediate returns and relevant
commitments, if the Company's
relevant provisions and their
commitments contradict such
rules, they will immediately
make supplementary
commitments in line with such
rules of the CSRC and Shanghai
Stock Exchange, and actively
promote the Company to issue
new commitments or measures
up to the requirements of the
CSRC and Shanghai Stock
Exchange; (6) They will fully,
completely and timely perform
the Company's measures to fill
the diluted immediate returns
and their commitments
regarding the measures to fill
the diluted immediate returns. If
found to have violated such
commitments, which causes
losses to the Company or
shareholders, they are willing to:
① state the cause and apologize
at the General Meeting of
Shareholders and the media
designated by the CSRC; ② be
liable for compensation to the
Company and/or shareholders
88 / 272
Annual Report 2023
by law; ③ unconditionally
accept the penalties or
regulatory measures taken by
the CSRC and/or Shanghai
Stock Exchange and other
securities regulators as per their
current rules. The said measures
to fill the diluted immediate
returns shall not be deemed to
constitute a guarantee for the
Issuer's future profits.
Avoiding Controlling 1. They do not and will not November No From Yes Not Not
horizontal shareholder directly or indirectly engage in 15, 2017 November applicable applicable
competition and actual any activities constituting 15, 2017
controller horizontal competition with the onwards
HOU existing and future businesses of
Juncheng the Company and its holding
and FANG subsidiaries, including but not
Aiqin limited to the R&D, production
and sale of any products same as
or similar to those of the
Company and its holding
subsidiaries. They shall be liable
for the economic losses to the
Company caused by violation of
the above commitments. 2. For
the enterprises under their
control, They will perform their
obligations under such
commitments by assigning
agencies and personnel
(including but not limited to
directors and managers), and
They shall be liable for the
economic losses to the
89 / 272
Annual Report 2023
Company caused by violation of
the above commitments. 3.
From the date of signing this
letter of commitment, if the
Company further expands its
product and business scope, the
enterprises under their control
shall not compete with the
Company within the expanded
product or business scope, or
will, in case of any possible
competition with the Company
within the expanded product or
business scope, withdraw from
the competition by: (1) stopping
the production of competing or
potentially competing products;
(2) stopping the operation of
competing or potentially
competing business; (3)
transferring the competing
business to the Company; or (4)
transferring the competing
business to an unrelated third
party. 4. Their shareholding
companies, including Hangzhou
Huazhuang Industrial
Investment Co., Ltd., Huzhou
Mogan Wangshu Cosmetics
Industry Phase I Venture Capital
Partnership (Limited
Partnership), and companies that
they invest in, engage in no
cosmetics business or related
upstream and downstream
90 / 272
Annual Report 2023
business. If they engage in such
businesses in the future, They
commit that they will withdraw
their investment in those
business through equity transfer
and other means, and that the
Company will be given priority
to invest in the said enterprises
according to legal provisions
and the consent of other
shareholders of those
enterprises.
Other Controlling Commitments on the effective April 21, No From Yes Not Not
shareholder fulfillment of the Company's 2021 April 21, applicable applicable
and actual measures to fill the diluted 2021
controller immediate returns: 1. Under no onwards
HOU circumstances will they interfere
Juncheng with the Company's operation
and FANG and management activities or
Aiqin encroach on the company's
interests by ultra vires; 2. From
the date of the issuance of these
Commitments commitments to the date of the
on Company's public issuance of
refinancing A-share convertible corporate
bonds, if the CSRC releases new
regulatory rules on the measures
to fill the diluted immediate
returns and relevant
commitments and the above-
mentioned commitments can no
longer satisfy the new
regulatory rules, they will make
supplementary commitments in
line with the latest rules of the
91 / 272
Annual Report 2023
CSRC; 3. They will practically
fulfill the Company's measures
for filling the diluted immediate
returns and their commitments
regarding the measures to fill
the diluted immediate returns.
Where they violate those
commitments, causing losses to
the Company or investors, they
will assume the compensation
liability to the Company or
investors according to law. As
one of the parties responsible for
the measures to fill the
immediate returns, should they
violate or refuse to fulfill the
above commitments, they shall
be subject to the punishment or
relevant regulatory measures
imposed on them by the
securities regulatory authorities
such as the CSRC and the SSE
in accordance with the relevant
regulations and rules.
Other Directors, Commitments on the effective April 21, No From Yes Not Not
senior fulfillment of the Company's 2021 April 21, applicable applicable
management measures to fill the diluted 2021
immediate returns: 1. They will onwards
not offer benefits to other
entities or individuals for free or
on unfair terms, or otherwise
harm the Company's interests; 2.
They will limit their duty-
related consumption; 3. They
will not use the Company's
92 / 272
Annual Report 2023
assets to engage in investment
and consumption activities
unrelated to their duties; 4. The
compensation system developed
by the Board of Directors and
the Remuneration and Appraisal
Committee will be linked to the
implementation of the measures
for filling the diluted immediate
returns; 5. If the Company
issues equity incentives in the
future, the vesting conditions for
the Company's equity incentives
will be linked to the
implementation of the
Company's measures to fill the
diluted immediate returns; 6.
From the date of the issuance of
these commitments to the date
of the Company's public
issuance of A-share convertible
corporate bonds, if the CSRC
releases new regulatory rules on
the measures to fill the diluted
immediate returns and relevant
commitments and the above-
mentioned commitments can no
longer satisfy the new
regulatory rules, they will make
supplementary commitments in
line with the latest rules of the
CSRC. As one of the parties
responsible for the measures to
fill the immediate returns,
should they violate or refuse to
93 / 272
Annual Report 2023
fulfill the above commitments,
they shall be subject to the
punishment or relevant
regulatory measures imposed on
them by the securities regulatory
authorities such as the CSRC
and the SSE in accordance with
the relevant regulations and
rules.
94 / 272
Annual Report 2023
(II) Statement of whether the Company's assets or projects fulfilled the original profit forecast
and its reason where the Company had profit forecasts on assets or projects and the Reporting
Period fell within the term of profit forecasts
Whether the original profit forecast is reached and the description of reasons
□ Fulfilled □ Unfulfilled √ Not applicable
(III) Execution of the performance undertakings and their impact on the goodwill impairment
testing
□ Applicable √ Not applicable
95 / 272
Annual Report 2023
II.Non-operating Occupation of Funds by the Controlling Shareholders and Other Related Parties during the Reporting Period
□ Applicable √ Not applicable
III.Illegal Guarantee
□ Applicable √ Not applicable
96 / 272
Annual Report 2023
IV.Description of the Company's Board of Directors on the "Non-standard Audit Report" from
the Accounting Firm
□ Applicable √ Not applicable
V.Analysis and Explanation from the Company on the Reasons and Impact of Changes in
Accounting Policies, Accounting Estimates or Correction on Significant Accounting Errors
(I) Analysis and explanation from the Company on the reasons and impact of changes in
accounting policies or accounting estimates
□ Applicable √ Not applicable
(II) Analysis and explanation from the Company on the reasons and impact of the correction
on significant accounting errors
□ Applicable √ Not applicable
(III) Communication with the previous accounting firm
□ Applicable √ Not applicable
(IV) Approval process and other explanations
□ Applicable √ Not applicable
VI.Appointment and Dismissal of the Accounting Firm
Unit: Yuan Currency: RMB
Current accounting firm
Name of the domestic accounting firm Pan-China Certified Public Accountants (Special
General Partnership)
Remuneration of the domestic accounting firm 1,400,000
Term of office of the domestic accounting firm 13
Names of CPAs from the domestic accounting
YIN Zhibin, WU Shaofang
firm
Continual term of audit service provided by the YIN Zhibin: 4 years of continual term of audit
CPAs from the domestic accounting firm service
WU Shaofang: 1 year of continual term of audit
service
Name Remuneration
Accounting firm for internal Pan-China Certified Public Accountants 200,000
control and audit (Special General Partnership)
Description of appointment and dismissal of the accounting firm
□ Applicable √ Not applicable
Description of the change of accounting firm during the Auditing Period
□ Applicable √ Not applicable
Description of the decrease in audit fees by more than 20% (inclusive) compared to the previous year.
□ Applicable √ Not applicable
VII.Particulars on Risk of Delisting
(I) Reasons for the delisting risk warning
□ Applicable √ Not applicable
97 / 272
Annual Report 2023
(II) Measures to be taken by the Company
□ Applicable √ Not applicable
(III) Situation and causes for termination of listing
□ Applicable √ Not applicable
VIII.Matters Related to Bankruptcy and Reorganization
□ Applicable √ Not applicable
IX.Material Litigations and Arbitrations
□ The Company had material litigations and arbitrations during the year √The Company had no
material litigations and arbitrations during the year
X.Suspected Violations, Penalties and Rectifications of the Company and Its Directors,
Supervisors, Senior Management, Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XI.Description of the Integrity of the Company and Its Controlling Shareholders and Actual
Controllers During the Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the Company and its controlling shareholders and actual controllers were
in good faith.
XII.Significant Related-party Transactions
(I) Related-party transactions pertaining to daily operation
1. Matters that have been disclosed in the interim announcement without progress or change
in the follow-up implementation
□ Applicable √ Not applicable
2. Matters that have been disclosed in the interim announcement with progress or changes
in the follow-up implementation
□ Applicable √ Not applicable
3. Matters not disclosed in the interim announcement
□ Applicable √ Not applicable
(II) Related-party transactions arising from acquisition and disposal of assets or equity
1. Matters that have been disclosed in the interim announcement without progress or change
in the follow-up implementation
□ Applicable √ Not applicable
2. Matters that have been disclosed in the interim announcement with progress or changes
in the follow-up implementation
□ Applicable √ Not applicable
3. Matters not disclosed in the interim announcement
□ Applicable √ Not applicable
98 / 272
Annual Report 2023
4. Disclosable performance achievements during the Reporting Period involving agreed-
upon performance
□ Applicable √ Not applicable
(III) Significant related-party transactions pertaining to joint external investment
1. Matters that have been disclosed in the interim announcement without progress or change
in the follow-up implementation
□ Applicable √ Not applicable
2. Matters that have been disclosed in the interim announcement with progress or changes
in the follow-up implementation
□ Applicable √ Not applicable
3. Matters not disclosed in the interim announcement
□ Applicable √ Not applicable
(IV) Credits and debits with related parties
1. Matters that have been disclosed in the interim announcement without progress or change
in the follow-up implementation
□ Applicable √ Not applicable
2. Matters that have been disclosed in the interim announcement with progress or changes
in the follow-up implementation
□ Applicable √ Not applicable
3. Matters not disclosed in the interim announcement
□ Applicable √ Not applicable
(V) Financial business between the Company and related financial companies, holding
financial companies and related parties
□ Applicable √ Not applicable
(VI) Other
1. □ Applicable √ Not applicable
XIII.Significant Contracts and Their Performance
(I) Trusteeship, contracting and leasing
1、 Trusteeship
□ Applicable √ Not applicable
2、 Contracting
□ Applicable √ Not applicable
3、 Leasing
□ Applicable √ Not applicable
99 / 272
Annual Report 2023
(II) Guarantee
□ Applicable √ Not applicable
(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(2) Individual entrusted wealth management
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(3) Impairment provisions of entrusted wealth management
□ Applicable √ Not applicable
2. Entrusted loans
(1) Overall condition of entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
(2) Individual entrusted loans
□ Applicable √ Not applicable
Others
□ Applicable √ Not applicable
100 / 272
Annual Report 2023
(3) Impairment provisions of entrusted loans
□ Applicable √ Not applicable
3. Others
□ Applicable √ Not applicable
(IV) Other material contracts
□ Applicable √ Not applicable
XIV.Progress on the Use of Raised Funds
√ Applicable □ Not applicable
(I) Overall use of raised funds
√ Applicable □ Not applicable
Unit: RMB '0,000
Progress
Net
Amount of of fund Percentage Amount
amount of
Including: Adjusted raised raising as of amount of fund
raised Amount
Source of Amount of Amount of Amount of amount of fund as of of the end invested in raising
Time of funds after invested in
raised raised over- fund raising fund raising the end of of the the current whose
paying in deduction the current
funds funds raised commitment commitment the Reporting year (%) purpose
of year (4)
funds (1) Reporting Period (%) (5) = (4) / is
issuance
Period (2) (3) = (2) / (1) changed
expenses
(1)
Issuance
of December
75,171.30 74,450.87 75,171.30 74,450.87 58,165.74 78.13 25,828.34 34.69 0.00
convertible 14, 2021
bonds
(II) Details of fund raising projects
√ Applicable □ Not applicable
Unit: RMB '0,000
101 / 272
Annual Report 2023
Whether
Progress
there is a
Amount of fund Benefit
significant
of raised raising as or
Amount Whether Reason change in
Whether Whether Adjusted Amount fund as of the Date Benefit research
of fund investment for the
investme Source of over- amount invested of the end of when the achieved achievem Amount
Time of raising Settled progress in failure to feasibility
Item Project nt subject raised raised of fund in the end of the project in the ent that of
paying in commitm or not line with the keep up of the
is funds funds are raising current the Reportin becomes current has been balance
ent in the planned with the project. If
changed used (1) year Reportin g Period available year realized
project schedule schedule so, please
g Period (%) in this
provide
(2) (3) = (2) / project
specific
(1)
details
Huzhou
Productio Issuance
Not Not
n Base Construct of December 33,850.0 33,850.0 23,435.6 Decembe 22,255.4 11,190.8
No No 6,634.05 69.23 No Yes applicabl applicabl No
Expansio ion convertib 14, 2021 0 0 9 r 2024 0 3
e e
n Project le bonds
(Phase I)
Longwu
R&D Research Issuance
Not Not
Center and of December 19,450.0 19,450.0 19,053.4 June
No No 7,370.18 97.96 No Yes applicabl applicabl No 646.59
Construct developm convertib 14, 2021 0 0 5 2024
e e
ion ent le bonds
Project
Informati
Operatio Issuance
on Not Not
n of December Decembe
System No No 9,050.00 8,801.27 2,265.11 3,143.45 35.72 No Yes applicabl applicabl No 5,929.55
managem convertib 14, 2021 r 2024
Upgrade e e
ent le bonds
Project
Supplem
enting
Addition Issuance
working Not Not
al of December 12,821.3 12,349.6 12,533.1
capital No No 9,559.00 101.49 applicabl applicabl No 34.13
working convertib 14, 2021 0 0 5
and e e
capital le bonds
repaying
debts
[Note] The adjusted amount of fund raising is RMB744.51million, while the amount of fund raising commitment is RMB751.71million yuan, which differs by
RMB7.20million. Due to underwriting and sponsorship fees, lawyer fees, accountant fees, credit rating fees, and issuance handling charges incurred in the issuance
of raised funds, the actual net amount of raised funds is RMB744.51million. For the difference, the Company adjusted the amount of fund raising for the
Information System Upgrade Project and the additional working capital.
As of the end of the period, the amount invested in additional working capital exceeded the adjusted amount of fund raising, and the progress at the end of the period
exceeded 100.00%. This was due to the use of interest income generated from idle funds in the fundraising account for additional working capital.
(III)Change or termination of fund raising during the Reporting Period
□ Applicable √ Not applicable
102 / 272
Annual Report 2023
(IV) Other uses of funds raised during the Reporting Period
1. Advance investment and replacement in the project invested by the raised fund
√ Applicable □ Not applicable
During the Reporting Period, the Company did not have any advance investment or replacement in the project invested by the raised fund.
2. Use of idle raised fund to temporarily refill working capital
□ Applicable √ Not applicable
3. Management of idled raised fund through investment
√ Applicable □ Not applicable
Unit: RMB '0,000 Currency: RMB
Balance of cash
Effective quota of raised Whether the peak balance exceeds
Review data by the management as of
fund approved for cash Start date End date the authorized quota during the
board meeting the end of the
management Reporting Period
Reporting Period
April 19, 2023 20,000 April 19, 2023 April 18, 2024 0 No
Other explanations
None
4. Use of over-raised fund to permanent refill working capital or repay bank loans
□ Applicable √ Not applicable
5. Other
□ Applicable √ Not applicable
XV.Description of Other Major Matters That Have A Significant Impact on Investors' Value Judgments and Investment Decisions
□ Applicable √ Not applicable
103 / 272
Annual Report 2023
Section VII Shareholders and Changes in Shares
I.Changes in Share Capital
(I) Table of changes in shares
1. Table of changes in shares
Unit: '0,000 shares
Before this After this
Increase or decrease (+ or -) due to this change
change change
Shares
Issuan
Perce converted Perce
ce of Bonus Numbe
Number ntage from Other Subtotal ntage
new shares r
(%) capital (%)
shares
reserve
I. Restricted -
0.740 195.70 0.493
shares 210 84 98.29 -14.2940
7 60 3
40
1. Shares
held by the
state
2. Shares
held by
state-owned
legal
persons
3. Shares
held by -
0.740 195.70 0.493
other 210 84 98.29 -14.2940
7 60 3
domestic 40
funds
Including:
Shares held
by domestic
non-state-
owned legal
persons
Shares held
-
by domestic 0.740 195.70 0.493
210 84 98.29 -14.2940
natural 7 60 3
40
persons
4. Shares
held by
foreign
funds
Wherein:
Shares held
by foreign
legal
persons
Shares held
by foreign
natural
persons
104 / 272
Annual Report 2023
II.
Unrestricted 28,141.9 99.25 11,256.81 81.25 11,338.0 39,480. 99.50
outstanding 469 93 36 19 655 0124 67
shares
1. RMB
28,141.9 99.25 11,256.81 81.25 11,338.0 39,480. 99.50
Ordinary
469 93 36 19 655 0124 67
Shares
2. Foreign-
funded
shares listed
domesticall
y
3. Foreign-
funded
shares listed
overseas
4. Others
III. Total -
28,351.9 100.0 11,340.81 11,323.7 39,675. 100.0
shares 17.04
469 0 36 715 7184 0
21
2. Description of changes in shares
√ Applicable □ Not applicable
On May 11, 2023, the 2022 annual General Meeting of Shareholders was held to deliberate on and approve
the Company's Plan for Profit Distribution and Capitalization of Capital Reserves for 2022, in which the
Company distributed to all shareholders a cash dividend of RMB8.70 (tax inclusive) per 10 shares based
on the total share capital as of the record date on which equity distribution is implemented and issued 4
shares for every 10 shares to all shareholders through capitalization of the capital reserve, totaling
113,408,136 shares converted. Wherein, the number of restricted circulating shares is increased by
840,000, from 2,100,000 to 2,940,000. The number of unrestricted circulating shares is increased by
112,568,136, from 281,419,469 to 393,987,605.
On June 20, 2023, the 12th meeting of the 3rd session of Board of Directors and the 11th meeting of the
3rd session of Board of Supervisors were held to deliberate on and approve the Proposal on Repurchasing
and De-registering Part of Restricted Incentive Shares. Considering that the 6 incentive recipients who
were eligible for the 2022 Restricted Shares Incentive Plan had left the Company and no longer meet the
incentive conditions, it was agreed to repurchase and cancel 78,008 restricted shares that have been granted
but not yet released from restriction. Additionally, as 3 incentive recipients did not meet the performance
criteria for 2022, they do not qualify for the full release of restricted shares. Therefore, it was agreed to
repurchase and cancel 27,342 restricted shares that have been granted but not yet released from restriction.
The total number of restricted shares repurchased and canceled in this transaction amounted to 105,350
shares. On August 24, 2023, the Company completed the repurchase and cancellation of 105,350 incentive
restricted shares under the 2022 Restricted Shares Incentive Plan. As a result, the number of restricted
circulating shares decreased from 2,940,000 to 2,834,650.
On September 8, 2023, the 14th meeting of the 3rd session of Board of Directors and the 13th meeting of
the 3rd session of Board of Supervisors were held to deliberate on and approve the Proposal on Satisfying
the Conditions for Release from Sales Restrictions in the First Release Period under the 2022 Restricted
Shares Incentive Plan. It was agreed that the conditions for release from sales restrictions in the first
release period under the 2022 Restricted Shares Incentive Plan were satisfied and the sales restrictions on
89 eligible incentive recipients were lifted, amounting to 811,398 restricted shares. The circulation date
of released shares is September 26, 2023. The number of the unrestricted circulating shares of the
Company increased from 393,987,605 before the listing to 394,799,003, while the number of the restricted
circulating shares decreased from 2,834,650 before the listing to 2,023,252.
On September 14, 2023, the 15th meeting of the 3rd session of Board of Directors and the 14th meeting
of the 3rd session of Board of Supervisors were held to deliberate on and approve the Proposal on
Repurchasing and De-registering Part of Restricted Incentive Shares. Considering that the 8 eligible
incentive recipients had left the Company and no longer meet the incentive conditions, it was agreed to
105 / 272
Annual Report 2023
repurchase and cancel 66,192 restricted shares that have been granted but not yet released from restriction.
On December 13, 2023, the Company completed the repurchase and cancellation of 66,192 incentive
restricted shares under the 2022 Restricted Shares Incentive Plan. As a result, the number of restricted
circulating shares decreased from 2,023,252 to 1,957,060.
With the Approval of the CSRC, namely, the Reply on Approving Proya Cosmetics Co., Ltd.'s Public
Issuance of Convertible Corporate Bonds (CSRC Approval [2021] No. 3408), on December 8, 2021, the
Company publicly issued 7,517,130 convertible bonds with a face value of RMB100 per share and a total
face value of RMB751,713,000, with a term of 6 years. With the approval of the SSE's Self-Regulatory
Supervision Decision Letter [2021] No. 503, the convertible corporate bonds issued by the Company
amounting to RMB751,713,000 would be listed and traded on the Shanghai Stock Exchange from January
4, 2022, with the short name of "Proya Convertible Bond" and the bond code of "113634". Proya
Convertible Bonds began to be converted into shares on June 14, 2022. During the Reporting Period,
RMB148,000 of Proya Convertible Bond had been converted to A-share stocks of the Company,
generating 1,121 shares. The number of the unrestricted circulating shares of the Company increased by
1,121.
3. Impact of changes in shares on the earnings per share, net asset value per share and other
financial indicators in the last year and period (if any)
√ Applicable □ Not applicable
Implementation of the 2022 plan for capitalization of capital reserves: calculated based on the diluted
total share capital after the capitalization of capital reserves.
Changes in other shares: no material impact.
4. Disclosure of other content that the Company deems necessary or the securities regulatory
authority requires
□ Applicable √ Not applicable
(II) Changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
Number of Number of
Number of Number of
restricted restricted Date of
restricted restricted Reason for
Name of shares shares releasing
shares at the shares at the sales
shareholder released increased the sales
beginning end of the restriction
during the during the restriction
of the year year
year year
JIN Yanhua 140,000 58,800 56,000 137,200 2022 September
Restricted 26, 2023
Shares
Incentive
Plan
WANG Li 180,000 75,600 72,000 176,400 2022 September
Restricted 26, 2023
Shares
Incentive
Plan
99 persons 1,780,000 676,998 540,458 1,643,460 2022 September
granted for Restricted 26, 2023
the first time Shares
under 2022 Incentive
Restricted Plan
Shares
Incentive
Plan
Total 2,100,000 811,398 668,458 1,957,060 / /
106 / 272
Annual Report 2023
II.Issuance and Listing of Securities
(I) Issuance of securities as of the Reporting Period
□ Applicable √ Not applicable
Description of the issuance of securities in the Reporting Period (provide separate description of bonds
with different interest rates in their duration):
□ Applicable √ Not applicable
(II) Changes in the total number of shares and shareholder structure of the Company and
changes in the structure of assets and liabilities of the Company
√ Applicable □ Not applicable
The total number of the Company's ordinary shares at the beginning and end of the Reporting Period
was 283,519,469 and 396,757,184 respectively.
The Company's total assets and total liabilities at the beginning of the Reporting Period amounted to
RMB5,778,071,824.19 and RMB2,240,848,493.90 respectively, with the asset-liability ratio of 38.78%.
The Company's total assets and total liabilities at the end of the Reporting Period amounted to
RMB7,323,078,222.45 and RMB2,922,766,991.44 respectively, with the asset-liability ratio of 39.91%.
(III) Existing internal employee shares
□ Applicable √ Not applicable
III.Shareholders and Actual Controllers
(I) Total number of shareholders
Total number of shareholders of ordinary shares as
19,133
of the end of the Reporting Period
Total number of shareholders of ordinary shares at
the end of last month prior to the disclosure date 23,713
of the Annual Report
Total number of shareholders of preferred shares
whose voting rights have been restored as of the 0
end of the Reporting Period
Total number of shareholders of preferred shares
whose voting rights have been restored at the end
0
of last month prior to the disclosure date of the
Annual Report
(II) Table of shareholdings of the top ten shareholders and the top ten shareholders of
circulating shares (or unrestricted shareholders) as of the end of the Reporting Period
Unit: Share
Shareholdings of the top ten shareholders (excluding securities lending and refinancing)
Number Pledged,
Change Number of Nature
Name of Perce of marked or
during the shares held at of
shareholder ntage restricte frozen
Reporting the end of the shareho
(full name) (%) d shares Share Num
Period period lder
held status ber
Domest
ic
HOU Juncheng 39,068,296 136,739,037 34.46 0 None
natural
person
Hong Kong
Securities Clearing 14,836,428 79,309,897 19.99 0 None Other
Company Limited
107 / 272
Annual Report 2023
Domest
17,04 ic
FANG Yuyou 13,852,788 59,625,258 15.03 0 Frozen
1,269 natural
person
Aberdeen Standard
Investment
Management (Asia)
Co., Ltd. -
2,514,120 5,066,413 1.28 0 None Other
Aberdeen Fund -
China A-share
Sustainable Equity
Fund
China Construction
Bank Co., Ltd. -
CUAM Consumer
1,250,045 4,350,058 1.10 0 None Other
Industry Hybrid
Securities
Investment Fund
Industrial and
Commercial Bank
of China Limited -
Jingshun
952,000 3,332,000 0.84 0 None Other
Changcheng
Emerging Growth
Hybrid Securities
Investment Fund
TEMASEK
FULLERTON 2,855,734 3,014,734 0.76 0 None Other
ALPHA PTE LTD
National Social
Security Fund 109 3,010,974 3,010,974 0.76 0 None Other
Portfolio
GIC PRIVATE
2,890,269 2,890,269 0.73 0 None Other
LIMITED
Abu Dhabi
Investment 1,530,571 2,376,168 0.60 0 None Other
Authority (ADIA)
Shareholdings of the top ten unrestricted shareholders
Type and number of
Number of unrestricted circulating
Name of shareholder shares
shares held
Type Number
RMB
136,739,03
HOU Juncheng 136,739,037 ordinary
7
shares
RMB
Hong Kong Securities Clearing
79,309,897 ordinary 79,309,897
Company Limited
shares
RMB
FANG Yuyou 59,625,258 ordinary 59,625,258
shares
Aberdeen Standard Investment
RMB
Management (Asia) Co., Ltd. -
5,066,413 ordinary 5,066,413
Aberdeen Fund - China A-share
shares
Sustainable Equity Fund
108 / 272
Annual Report 2023
China Construction Bank Co., Ltd. RMB
- CUAM Consumer Industry 4,350,058 ordinary 4,350,058
Hybrid Securities Investment Fund shares
Industrial and Commercial Bank of
RMB
China Limited - Jingshun
3,332,000 ordinary 3,332,000
Changcheng Emerging Growth
shares
Hybrid Securities Investment Fund
RMB
TEMASEK FULLERTON ALPHA
3,014,734 ordinary 3,014,734
PTE LTD
shares
RMB
National Social Security Fund 109
3,010,974 ordinary 3,010,974
Portfolio
shares
RMB
GIC PRIVATE LIMITED 2,890,269 ordinary 2,890,269
shares
RMB
Abu Dhabi Investment Authority
2,376,168 ordinary 2,376,168
(ADIA)
shares
Description of the special account N/A. The Company opened a special securities account for the
for repurchase among the top ten repurchase of shares for Proya Cosmetics Co., Ltd. during the
shareholders Reporting Period. Securities account No.: B882678426.
Description of the above-
mentioned shareholders' entrusting
voting rights, entrusted voting None
rights and abstention from voting
rights
Description of the related
FANG Yuyou is the younger brother of HOU Juncheng's
relationship or parties acting in
spouse FANG Aiqin, so HOU Juncheng and FANG Yuyou are
concert among the above
related.
shareholders
Description of the shareholders of
preferred shares with voting rights None
restored and their shareholdings
Securities lending and refinancing involved by top ten shareholders
√ Applicable □ Not applicable
Unit: Share
Securities lending and refinancing involved by top ten shareholders
Shareholdings in
Shares lent but not Shareholdings in the
regular and credit Shares lent but not
returned at the regular and credit
Name of accounts at the returned at the end of
beginning of the accounts at the end
sharehol beginning of the the period
period of the period
der (full period
name) Percent Percent Percent
Total Total Total Total Percent
age age age
number number number number age (%)
(%) (%) (%)
National
Social
Security 3,010,9
0 0.00 0 0.00 0.76 88,800 0.02
Fund 74
109
Portfolio
Note: Shareholdings in the regular and credit accounts of the National Social Security Fund 109
Portfolio at the beginning of the period are not included in the top 200 shareholders.
109 / 272
Annual Report 2023
Changes in the top ten shareholders over the previous period
√ Applicable □ Not applicable
Unit: Share
Changes in the top ten shareholders over the end of the previous period
Number of shares held in the
Number of shares lent but regular and credit accounts
Name of Addition/exit in not returned at the end of the and shares lent but not
shareholder (full the Reporting period returned at the end of the
name) Period period
Percentage Percentage
Total number Total number
(%) (%)
TEMASEK
FULLERTON Addition 0 0.00 3,014,734 0.76
ALPHA PTE LTD
National Social
Security Fund 109 Addition 88,800 0.02 3,010,974 0.76
Portfolio
GIC PRIVATE
Addition 0 0.00 2,890,269 0.73
LIMITED
Abu Dhabi
Investment Addition 0 0.00 2,376,168 0.60
Authority (ADIA)
China
Construction Bank
Co., Ltd. - Yinhua
Exit 0 0.00 - -
Fuyu Theme
Hybrid Securities
Investment Fund
CAO Liangguo Exit 0 0.00 1,528,702 0.39
Industrial and
Commercial Bank
of China Limited -
CUAM
Exit 0 0.00 1,350,006 0.34
Consumption
Upgrade Hybrid
Securities
Investment Fund
J. P. Morgan
Securities PLC -
Exit 0 0.00 1,142,425 0.29
Self-owned
Capital
Note: Shareholdings in the regular and credit accounts of China Construction Bank Co., Ltd. - Yinhua
Fuyu Theme Hybrid Securities Investment Fund at the end of the period are not included in the top 200
shareholders.
Shareholdings and sales restrictions of the top ten restricted shareholders
√ Applicable □ Not applicable
Unit: Share
Number of Availability of restricted Sales
Num Name of shareholder of restricted
restricted shares shares for circulation restrictio
ber shares
held and trading ns
110 / 272
Annual Report 2023
Number of
Time of new shares
availability available
for for
circulation circulation
and trading and
trading
1 See the
note
Equity incentive recipient 1,957,060 below
for
details
Explanation on the related relationship or None
parties acting in concert among the above
shareholders
Note: The restricted shares held by equity incentive recipients are those granted under the 2022
Restricted Shares Incentive Plan. The restricted period was 12 months, 24 months, and 36 months from
the completion of their registration with CSDC Shanghai Branch (September 6, 2022).
(III) Strategic investors or general legal persons becoming the top ten shareholders because of
placing of new shares
□ Applicable √ Not applicable
IV.Controlling Shareholders and Actual Controllers
(I) Controlling shareholders
1. Legal person
□ Applicable √ Not applicable
2. Natural person
√ Applicable □ Not applicable
Name HOU Juncheng and Fang Aiqin
Nationality Chinese
Acquire residence permits in other countries or
No
regions or not
HOU Juncheng and Fang Aiqin are husband and
wife. HOU Juncheng serves as the Chairman of the
Main job and title
Company, and Fang Aiqin serves as the Senior
Purchasing Consultant of the Company.
3. Special description of the situation that the Company has no controlling shareholders
□ Applicable √ Not applicable
4. Description of changes in controlling shareholders during the Reporting Period
□ Applicable √ Not applicable
5. Diagram of the ownership and controlling relationship between the Company and its
controlling shareholders
√ Applicable □ Not applicable
111 / 272
Annual Report 2023
(II) Actual controllers
1. Legal person
□ Applicable √ Not applicable
2. Natural person
√ Applicable □ Not applicable
Name HOU Juncheng and Fang Aiqin
Nationality Chinese
Acquire residence permits in other countries or
No
regions or not
HOU Juncheng and Fang Aiqin are husband and
wife. HOU Juncheng serves as the Chairman of the
Main job and title
Company, and Fang Aiqin serves as the Senior
Purchasing Consultant of the Company.
Shareholdings in other domestic or overseas listed
None
companies over the past 10 years
3. Special description of the situation that the Company has no actual controllers
□ Applicable √ Not applicable
4. Description of changes in the control of the Company during the Reporting Period
□ Applicable √ Not applicable
5. Diagram of the ownership and controlling relationship between the Company and its
actual controllers
√ Applicable □ Not applicable
112 / 272
Annual Report 2023
6. Control of the Company by actual controllers by way of trust or other means of asset
management
□ Applicable √ Not applicable
(III) Other explanations on controlling shareholders and actual controllers
□ Applicable √ Not applicable
V.The accumulative number of pledged shares of the Company's controlling shareholders or the
largest shareholder and its persons acting in concert accounted for more than 80% of the
Company's shares held by them
□ Applicable √ Not applicable
VI.Other Legal Person Shareholders with More Than 10% Shareholdings
□ Applicable √ Not applicable
VII.Description of Limitation on Reduction of Shareholding
□ Applicable √ Not applicable
VIII.Specific Implementation of Share Repurchase During the Reporting Period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Name of the share repurchase plan Plan for Repurchase of Company Shares Through
Centralized Bidding
Disclosure time of the share repurchase plan December 14, 2023
Number of shares to be repurchased and its Based on the minimum amount of RMB100 million
percentage in total share capital (%) and the maximum amount of RMB 200 million for
the repurchase, and the maximum repurchase price
of RMB130 per share, the estimated number of
repurchased shares ranges from approximately
769,200 to 1,538,400, accounting for approximately
0.19% to 0.39% of the Company's total share capital.
Amount of proposed repurchase Not less than RMB100 million (inclusive), and not
more than RMB200 million (inclusive)
Period of proposed repurchase Within 12 months from the date when the share
repurchase plan is deliberated on and approved by
the 17th meeting of the 3rd session of Board of
Directors
Purpose of repurchase Equity incentives or employee stock ownership plans
Number of shares repurchased (share) 395,980
Percentage of repurchased shares in the Not applicable
underlying stocks involved in the equity
incentive plan, if applicable
Progress of reducing repurchased shares held Not applicable
by the Company by means of centralized
bidding
Note: 1. In the above table, the "total share capital" in the "number of shares to be repurchased and its
percentage in total share capital" refers to the total share capital of the Company as of December 12,
2023, which is 396,823,366 shares.
2. As of January 31, 2024, the Company has completed the share repurchase plan, repurchasing a total of
2,210,825 shares of the Company. For details, see the Announcement on the Implementation Results of
113 / 272
Annual Report 2023
Share Repurchase and Changes in Shareholding (No.: 2024-004) released on the SSE website on
February 1, 2024 (www.sse.com.cn).
Section VIII Information on Preference Shares
□ Applicable √ Not applicable
114 / 272
Annual Report 2023
Section IX Information on Bonds
I.Enterprise Bonds, Corporate Bonds and Non-financial Corporate Debt Financing Instruments
□ Applicable √ Not applicable
II.Information on Convertible Corporate Bonds
√ Applicable □ Not applicable
(I) Information on issuance of convertible bonds
√ Applicable □ Not applicable
With the Approval of the CSRC, namely, the Reply on Approving Proya Cosmetics Co., Ltd.'s Public
Issuance of Convertible Corporate Bonds (Zheng Jian Xu Ke [2021] No. 3408), on December 8, 2021,
the Company publicly issued 7,517,130 convertible bonds with a face value of RMB100 per share and a
total face value of RMB751,713,000. These convertible bonds were issued at face value with a term of 6
years.
With the approval of the SSE's Self-Regulatory Supervision Decision Letter [2021] No. 503, the
convertible corporate bonds issued by the Company amounting to RMB751,713,000 would be listed and
traded on the Shanghai Stock Exchange from January 4, 2022, with the short name of "Proya Convertible
Bond" and the bond code of "113634". The nominal interest rate of the convertible corporate bonds issued
this time was as follows: 0.30% in the first year, 0.50% in the second year, 1.00% in the third year, 1.50%
in the fourth year, 1.80% in the fifth year, and 2.00% in the sixth year. The duration of the convertible
corporate bonds runs from December 8, 2021 to December 7, 2027.
According to relevant regulations and the Prospectus of Proya Cosmetics Co., Ltd. for the Public Offering
of A-Share Convertible Corporate Bonds, this Proya Convertible Bond issued by the Company can be
converted to the Company's shares from June 14, 2022. The convertible period is from June 14, 2022 to
December 7, 2027. The initial conversion price is RMB195.98/share. The latest conversion price is
RMB98.25/share. The historical adjustments to the conversion price are as follows:
1. Since the 2021 Equity Distribution Plan was implemented by the Company, the conversion price of the
Proya Convertible Bond was adjusted to RMB139.37/share on May 30, 2022. For details, see the
Announcement of Proya Cosmetics Co., Ltd. on Adjustment of Conversion Price due to 2021 Equity
Distribution Plan (No.: 2022-029) released by the Company on the SSE website on May 24, 2022
(www.sse.com.cn).
2. Since the registration of restricted shares involved in the grant under the 2022 Restricted Shares
Incentive Plan was completed, the conversion price of the Proya Convertible Bond has been adjusted to
RMB138.92/share since September 9, 2022. For details, see the Announcement of Proya Cosmetics Co.,
Ltd. on Adjustment of Conversion Price due to Additional Issuance from Granting of Restricted Shares
(No.: 2022-052) released by the Company on the SSE website on September 8, 2022 (www.sse.com.cn).
3. Since the 2022 Equity Distribution Plan was implemented by the Company, the conversion price of the
Proya Convertible Bond was adjusted to RMB98.61/share on May 29, 2023. For details, see the
Announcement of Proya Cosmetics Co., Ltd. on Adjustment of Conversion Price due to 2022 Equity
Distribution Plan (No.: 2023-030) released by the Company on the SSE website on May 23, 2023
(www.sse.com.cn).
4. Since the Company completed the repurchase and cancellation of 105,350 incentive restricted shares
under the 2022 Restricted Shares Incentive Plan, the conversion price of the Proya Convertible Bond was
adjusted to RMB98.62/share on August 29, 2023. For details, see the Announcement of Proya Cosmetics
Co., Ltd. on Completion of Repurchase and Cancellation of Some Incentive Restricted Shares and
Adjustment of Conversion Price (No.: 2023-045) released by the Company on the SSE website on August
28, 2023 (www.sse.com.cn).
5. Since the 2023 Semi-Annual Equity Distribution Plan was implemented by the Company, the
conversion price of the Proya Convertible Bond was adjusted to RMB98.24/share on October 23, 2023.
For details, see the Announcement of Proya Cosmetics Co., Ltd. on Adjustment of Conversion Price due
to 2023 Semi-Annual Equity Distribution Plan (No.: 2023-065) released by the Company on the SSE
website on October 17, 2023 (www.sse.com.cn).
Since the Company completed the repurchase and cancellation of 66,192 incentive restricted shares under
the 2022 Restricted Shares Incentive Plan, the conversion price of the Proya Convertible Bond was
adjusted to RMB98.25/share on December 18, 2023. For details, see the Announcement of Proya
115 / 272
Annual Report 2023
Cosmetics Co., Ltd. on Adjustment of Conversion Price and Trading Suspension for Conversion (No.:
2023-086) released by the Company on the SSE website on December 15, 2023 (www.sse.com.cn).
(II) Holders and guarantors of convertible bonds during the Reporting Period
√ Applicable □ Not applicable
Name of the convertible corporate bond Proya Convertible Bond
Number of holders of the convertible corporate bond
8,553
at the end of the Reporting Period
Guarantors of the convertible bond of the Company None
The top ten holders of the convertible bond are as follows:
Number of bonds held
at the end of the
Name of holders of the convertible corporate bond Holding ratio (%)
Reporting Period
(RMB)
Dajia Assets - China CITIC Bank - Dajia Assets 39,960,000 5.32
Houkun No.40 Collective Asset Management
Product
Agricultural Bank of China Co., Ltd. - South Xiyuan 26,790,000 3.57
Convertible Bond Securities Investment Fund
Industrial and Commercial Bank of China Limited - 24,664,000 3.29
Southern Profitable Return Bond Securities
Investment Fund
Bank of China Co., Ltd. - South Changyuan 23,567,000 3.14
Convertible Bond Securities Investment Fund
Dajia Assets - Minsheng Bank - Dajia Assets - 23,173,000 3.09
Selected Conservative Portfolio No.3 (Issue 5)
Collective Asset Management Product
China Southern Asset Management Ningkang 21,311,000 2.84
Convertible Bonds Fixed-benefit Pension Products -
Bank of China Co., Ltd.
Industrial and Commercial Bank of China Limited - 20,000,000 2.66
GF Convertible Bond Issuing Securities Investment
Fund
Dajia Assets - Postal Savings Bank of China - Dajia 17,462,000 2.33
Assets - Selected Conservative Portfolio No.6 (Issue
2) Collective Asset Management Product
National Social Security Fund 201 Portfolio 17,298,000 2.30
Taikang Pension Insurance Co., Ltd. - Self-Owned 16,246,000 2.16
Funds
(III) Changes in convertible bonds during the Reporting Period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Name of the Increase or decrease due to this change
convertible Before this After this
Share
corporate change Redemption Sell-back change
conversion
bond
Proya 750,937,000 148,000 750,789,000
Convertible
Bond
Cumulative conversion of convertible bonds during the Reporting Period
√ Applicable □ Not applicable
116 / 272
Annual Report 2023
Name of the convertible corporate bond Proya Convertible Bond
Amount of shares converted from bonds in the 148,000
Reporting Period (RMB)
Number of shares converted from bonds in the 1,121
Reporting Period (share)
Accumulated number of shares converted from 6,638
bonds (share)
Proportion of the accumulated number of 0.0024
converted shares in the total number of issued
shares of the Company before conversion (%)
Amount of bonds not converted into shares (RMB) 750,789,000
Proportion of unconverted convertible bonds in 99.8771
the total amount of convertible bonds issued (%)
(IV) Historical adjustments to the conversion price
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Name of the convertible
Proya Convertible Bond
corporate bond
Description of
Date of Adjusted Time of adjustments to the
Media of disclosure
adjustment conversion price disclosure conversion price
Note
May 30, RMB139.37/share May 24, SSE website Since the 2021 Equity
2022 2022 (http://www.sse.com.cn), Distribution Plan was
Shanghai Securities implemented by the
News, Securities Times Company, the conversion
price of the Proya
Convertible Bond was
adjusted to
RMB139.37/share on
May 30, 2022. For
details, see the
Announcement of Proya
Cosmetics Co., Ltd. on
Adjustment of Conversion
Price due to 2021 Equity
Distribution Plan (No.:
2022-029) released by the
Company on the SSE
website on May 24, 2022
(www.sse.com.cn).
September RMB138.92/share September SSE website Since the registration of
9, 2022 8, 2022 (http://www.sse.com.cn), restricted shares involved
Shanghai Securities in the grant under the
News, Securities Times 2022 Restricted Shares
Incentive Plan was
completed, the
conversion price of the
Proya Convertible Bond
has been adjusted to
RMB138.92/share since
September 9, 2022. For
details, see the
Announcement of Proya
117 / 272
Annual Report 2023
Cosmetics Co., Ltd. on
Adjustment of Conversion
Price due to Additional
Issuance from Granting
of Restricted Shares (No.:
2022-052) released by the
Company on the SSE
website on September 8,
2022 (www.sse.com.cn).
May 29, RMB98.61/share May 23, SSE website Since the 2022 Equity
2023 2023 (http://www.sse.com.cn), Distribution Plan was
Shanghai Securities implemented by the
News, Securities Times Company, the conversion
price of the Proya
Convertible Bond was
adjusted to
RMB98.61/share on May
29, 2023. For details, see
the Announcement of
Proya Cosmetics Co.,
Ltd. on Adjustment of
Conversion Price due to
2022 Equity Distribution
Plan (No.: 2023-030)
released by the Company
on the SSE website on
May 23, 2023
(www.sse.com.cn).
August 29, RMB98.62/share August 28, SSE website Since the Company
2023 2023 (http://www.sse.com.cn), completed the repurchase
Shanghai Securities and cancellation of
News, Securities Times 105,350 incentive
restricted shares under the
2022 Restricted Shares
Incentive Plan, the
conversion price of the
Proya Convertible Bond
was adjusted to
RMB98.62/share on
August 29, 2023. For
details, see the
Announcement of Proya
Cosmetics Co., Ltd. on
Completion of
Repurchase and
Cancellation of Some
Incentive Restricted
Shares and Adjustment of
Conversion Price (No.:
2023-045) released by the
Company on the SSE
website on August 28,
2023 (www.sse.com.cn).
October RMB98.24/share October SSE website Since the 2023 Semi-
23, 2023 17, 2023 (www.sse.com.cn), Annual Equity
Shanghai Securities Distribution Plan was
News, Securities Times, implemented by the
118 / 272
Annual Report 2023
China Securities Journal, Company, the conversion
Securities Daily, price of the Proya
Economic Information Convertible Bond was
Daily, China Daily adjusted to
RMB98.24/share on
October 23, 2023. For
details, see the
Announcement of Proya
Cosmetics Co., Ltd. on
Adjustment of Conversion
Price due to 2023 Semi-
Annual Equity
Distribution Plan (No.:
2023-065) released by the
Company on the SSE
website on October 17,
2023 (www.sse.com.cn).
December RMB98.25/share December SSE website Since the Company
18, 2023 15, 2023 (www.sse.com.cn), completed the repurchase
Shanghai Securities and cancellation of
News, Securities Times, 66,192 incentive
China Securities Journal, restricted shares under the
Securities Daily, 2022 Restricted Shares
Economic Information Incentive Plan, the
Daily, China Daily conversion price of the
Proya Convertible Bond
was adjusted to
RMB98.25/share on
December 18, 2023. For
details, see the
Announcement of Proya
Cosmetics Co., Ltd. on
Adjustment of Conversion
Price and Trading
Suspension for
Conversion (No.: 2023-
086) released by the
Company on the SSE
website on December 15,
2023 (www.sse.com.cn).
Latest conversion price as of the RMB98.25/share
end of the Reporting Period
(V) The Company's liabilities, changes in credit, and cash arrangements for debt repayment
in future years
□ Applicable √ Not applicable
(VI) Other explanations on convertible bonds
□ Applicable √ Not applicable
119 / 272
Annual Report 2023
Section X Financial Report
I.Audit Report
√ Applicable □ Not applicable
Audit Report
T.J.S. [2024] No.2241
To all shareholders of Proya Cosmetics Co., Ltd.:
I. Audit Opinion
We have audited the financial statements of Proya Cosmetics Co., Ltd. (hereinafter referred to as
"Proya"), which comprise the consolidated and parent company's balance sheets as of December 31,
2023, the consolidated and parent company's income statements, the consolidated and parent company's
cash flow statements, and the consolidated and parent company's statements of changes in shareholders'
equity for the year of 2023, as well as notes to financial statements.
In our opinion, the accompanying financial statements were prepared in accordance with the Accounting
Standards for Business Enterprises in all material aspects and give a true and fair view of the
consolidated and parent company's financial position of Proya as at December 31, 2023 and of its
consolidated and parent company's operating results and cash flows for the year of 2023.
II. Basis of Audit Opinion
We have conducted our audit in accordance with the Chinese Auditing Standards for Certified Public
Accountants. The "Responsibilities of CPAs for the Audit of the Financial Statements" herein further
illustrate our responsibilities under those standards. In accordance with the Code of Professional Ethics
of Chinese Certified Public Accountants, we are independent of Proya and have performed other
responsibilities in respect of professional ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are, in our professional judgment, most significant in our audit of the financial
statements for the current period. These matters were addressed in the context of our audit of the
financial statements as a whole and, in forming our opinion thereon, we do not provide a separate
opinion on these matters.
(I) Recognition of revenue
1. Description of matters
For relevant information disclosure, refer to "34. Revenue" in "V. Significant Accounting Policies and
Estimates", "61. Operating income and cost" in "VII. Notes to the Items of Consolidated Financial
Statements", and "6. Segment information" in "XVIII. Other Important Matters" of "Section X
Financial Report" herein.
The operating revenue of Proya primarily comes from the sale of cosmetics. The operating revenue for
2023 shown in Proya's financial statements was RMB8.90billion.
Since operating revenue is one of the key performance indicators of Proya, there is an inherent risk that
the management of Proya (hereinafter referred to as the "management") achieves specific goals or
expectations through inappropriate recognition of revenue. Therefore, we identify the recognition of
revenue as a key audit matter.
2. Audit response
For recognition of revenue, we primarily implemented the following audit procedures:
(1) Understood the key internal controls related to the recognition of revenue, evaluated the design of
these controls, determined whether these controls were implemented, and tested the operational
effectiveness of these controls.
(2) Issued letters to the main customers to confirm the sales amount in 2023 and the balance of accounts
receivable as at the end of 2023;
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(3) Tested details and performed a spot-check on supporting documents for recognition of revenue
(including sales contracts, delivery documents, receipts, agency sales lists, and sales invoices),
understood major contract terms or conditions, and evaluated the appropriateness of the method for
recognition of revenue;
(4) Implemented analysis procedures, including analysis on fluctuations in revenue of each month of
2023 and analysis on changes in sales revenue of major customers;
(5) Obtained the rebate and subsidy policies, rebate and subsidy calculation sheets and other
information, and checked whether the withholding amount of rebate and subsidy as at the end of 2023
was sufficient; analyzed whether the amount of rebate and subsidy and the withholding amount were
reasonable based on the rebate and subsidy policy as well as the revenue in 2023 and checked the
settlement after the rebate and subsidy withholding period as at the end of 2023;
(6) Obtained the return and exchange policy, calculation sheet of estimated liabilities and other
information, and checked whether the estimated future return and exchange rate was reasonable;
checked the subsequent return and exchange situation and compared it with the estimated return and
exchange data;
(7) Learned about the inventory and stock age of each major dealer as of the end of 2023 and checked
whether the inventory amounts and structures of dealers were reasonable;
(8) Analyzed the sales data of main online chain stores by calculating the consumption per capita,
consumption per time, purchase times and repurchase information of customers of online chain stores
and comparing them with the selling prices and normal use days of Proya products, so as to judge the
rationality of the above data in combination with normal consumption habits and analyze the
authenticity and rationality of the income of online chain stores;
(9) Compared the background transaction data, receipt data of capital accounts such as Alipay, and sales
revenue data on financial accounts of online chain stores, and analyzed the consistency of data, so as to
check the authenticity of sales from the online chain stores;
(10) Checked whether the information related to the operating revenue was properly presented in the
financial statements.
(II) Net realizable value of inventories
1. Description of matters
For relevant information disclosure, refer to "16. Inventories" in "V. Significant Accounting Policies and
Estimates" and "10. Inventories" in "VII. Notes to the Items of Consolidated Financial Statements" of
"Section X Financial Report" herein.
As at December 31, 2023, the book balance of inventories of Proya amounted to RMB901.11million, the
provision for devaluation of inventories amounted to RMB103.89million, and the carrying value of
inventories amounted to RMB797.22million.
Inventories are measured at the lower of cost and net realizable value. The management determines the
estimated selling price based on the historical selling price, actual selling price, and future market trends,
and also determines the net realizable value based on the amount after deducting the estimated cost of
completion, estimated sale expense and relevant taxes from the estimated sale price of inventories.
Since the amount of inventories is significant and the determination of the net realizable value of
inventories involves significant judgment by the management, we identified the net realizable value of
inventories as a key audit matter.
2. Audit response
For net realizable value of inventories, we primarily implemented the following audit procedures:
(1) Obtained an understanding of key internal controls related to the net realizable value of inventories,
evaluated the design of these controls, determined whether these controls were implemented, and tested
the operational effectiveness of these controls;
(2) Obtained the calculation process of the net realizable value of inventories of Proya, and re-checked
the calculation process;
(3) Obtained the list of products that are no longer sold, counted the products rolling off the production
lines in the inventories and the corresponding raw material inventories, and verified whether the
provision for devaluation of inventories was accrued for the raw material inventories;
(4) Checked whether the inventories as at the end of the period had long stock ages, outdated models and
changes in market demand in combination with the inventory monitoring, and evaluated whether the
management reasonably estimated the net realizable value;
(5) Checked whether the information related to the net realizable value of inventories was properly
presented in the financial statements.
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IV. Other Information
The management is responsible for the other information, which comprises all the information covered
in the Annual Report other than the financial statements and this audit report.
Our audit opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged With Governance for the Financial
Statements
The management is responsible for the preparation of financial statements that give a true and fair view
in accordance with the Accounting Standards for Business Enterprises, and for the design,
implementation and maintenance of necessary internal control to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing Proya's ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
The governance of Proya (hereinafter referred to as "governance") is responsible for overseeing the
financial reporting process of Proya.
VI. Responsibilities of CPAs for the Audit of the Financial Statements
Our objective is to obtain reasonable assurance of whether there is a material misstatement in the
financial statements as a whole due to fraud or error and to issue an audit report containing audit
opinion. Reasonable assurance is a highly reliable assurance, but is not a guarantee that an audit
conducted in accordance with China Standards on Auditing will always identify a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with the auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not identifying a material
misstatement resulting from fraud is higher than that of failing to detect one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(II) Obtain an understanding of internal control related to the audit to design the appropriate audit
procedures.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(IV) Conclude on the appropriateness of the management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may significantly affect Proya's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our audit report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our audit report. However, future
events or conditions may cause Proya to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and determine
whether the financial statements reflect the related transactions and events fairly.
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(VI) Obtain sufficient and appropriate audit evidence of the financial information of the entity or
business activity of Proya in order to express an opinion on the financial statements. We are responsible
for directing, supervising and performing group audits. We take full responsibility for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during the audit.
We also provide a statement to management on compliance with ethical requirements related to
independence, and communicate with governing bodies about all relationships and other matters that
may be reasonably considered to affect our independence, as well as related precautions (if applicable).
From the matters we discuss with the governing bodies, we confirmed which matters are most important
to the audit of the financial statements for the current period and thus constitute the key audit matters.
We describe these matters in the audit report unless laws or regulations preclude public disclosure about
these matters or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our audit report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Pan-China Certified Public Accountants LLP Chinese CPA: YIN Zhibin
(Project Partner)
Hangzhou, China Chinese CPA: WU Shaofang
April 17, 2024
II.Financial Statements
Consolidated Balance Sheet
As of December 31, 2023
Prepared by: Proya Cosmetics Co., Ltd.
Unit: Yuan Currency: RMB
As of December 31,
Item Notes As of December 31, 2023
2022
Current assets:
Cash and cash equivalents VII. 1 4,011,085,558.07 3,161,003,085.05
Clearing settlement funds
Loans to banks and other
financial institutions
Held-for-trading financial
assets
Derivative financial assets
Notes receivable
Accounts receivable VII. 5 344,570,196.54 102,157,898.41
Receivable financing VII. 7 7,378,700.06
Prepayments VII. 8 202,870,195.58 91,483,523.15
Premiums receivable
Reinsurance premium
receivable
Reserves for reinsurance
contract receivable
Other receivables VII. 9 81,966,213.90 73,564,083.63
Including: Interest receivable
Dividend receivable
Financial assets purchased
under resale agreements
Inventories VII. 10 797,215,155.68 669,051,326.73
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Contract assets
Held-for-sale assets
Non-current assets due within
one year
Other current assets VII. 13 99,765,073.07 49,735,996.57
Total current assets 5,544,851,092.90 4,146,995,913.54
Non-current assets:
Loans and advances to
customers
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments VII. 17 113,574,158.49 138,533,377.46
Other equity instrument 146,402,400.00
VII. 18 107,660,400.00
investments
Other non-current financial
assets
Investment real estate VII. 20 66,156,471.91 68,654,700.81
Fixed assets VII. 21 827,350,985.29 570,376,309.67
Construction in progress VII. 22 52,038,642.94 207,378,935.86
Productive biological assets
Oil and gas assets
Right-of-use assets VII. 25 14,104,821.34 6,410,634.25
Intangible assets VII. 26 404,688,009.16 420,316,883.26
Development expenditure
Goodwill
Long-term prepaid expenses VII. 28 67,184,328.83 19,142,604.46
Deferred income tax assets VII. 29 108,494,364.60 48,305,338.82
Other non-current assets VII. 30 16,974,946.99 5,554,726.06
Total non-current assets 1,778,227,129.55 1,631,075,910.65
Total assets 7,323,078,222.45 5,778,071,824.19
Current liabilities:
Short-term borrowings VII. 32 200,155,555.56 200,195,890.41
Loans from the central bank
Loans from banks and other
financial institutions
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable VII. 35 36,959,074.14 69,626,352.12
Accounts payable VII. 36 1,018,522,358.60 475,427,484.23
Receipts in advance VII. 37 30,514.45 464,328.26
Contract liabilities VII. 38 301,014,873.58 174,602,833.91
Financial assets sold under
repurchase agreements
Customer deposits and
deposits from banks and other
financial institutions
Funds from securities trading
agencies
Funds from underwriting
securities agencies
Employee compensation 166,444,494.43 124,938,749.36
VII. 39
payable
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Taxes payable VII. 40 222,765,869.94 152,918,871.45
Other payables VII. 41 155,345,148.68 216,392,183.41
Including: Interest payable
Dividends payable
Fees and commissions payable
Amounts payable under
reinsurance contracts
Held-for-sale liabilities
Non-current liabilities due 3,970,060.11 2,549,452.14
VII. 43
within one year
Other current liabilities VII. 44 15,022,173.42 10,820,499.59
Total current liabilities 2,120,230,122.91 1,427,936,644.88
Non-current liabilities:
Insurance contract reserves
Long-term borrowings
Bonds payable VII. 46 753,119,902.88 724,491,557.93
Including: Preference shares
Perpetual bonds
Lease liabilities VII. 47 9,970,306.87 3,718,119.41
Long-term payables
Long-term employee
compensation payable
Estimated liabilities VII. 50 33,063,299.45 59,282,928.68
Deferred income VII. 51 6,383,359.33 6,399,811.33
Deferred income tax liabilities VII. 29 19,019,431.67
Other non-current liabilities
Total non-current liabilities 802,536,868.53 812,911,849.02
Total liabilities 2,922,766,991.44 2,240,848,493.90
Owners' equity (or shareholders' equity):
Paid-in capital (or share 396,757,184.00 283,519,469.00
VII. 53
capital)
Other equity instruments VII. 54 50,893,986.60 50,903,510.12
Including: Preference shares
Perpetual bonds
Capital reserve VII. 55 864,150,974.43 914,815,786.22
Less: Treasury stock VII. 56 146,966,735.61 164,976,000.00
Other comprehensive income VII. 57 -53,847,100.91 -1,918,603.07
Special reserve
Surplus reserve VII. 59 198,411,582.50 141,759,734.50
General risk reserve
Retained profits VII. 60 3,040,145,490.59 2,300,384,763.19
Total owners' equity (or 3,524,488,659.96
shareholders' equity)
4,349,545,381.60
attributable to equity holders of
the parent company
Minority interests 50,765,849.41 12,734,670.33
Total owners' equity (or 3,537,223,330.29
4,400,311,231.01
shareholders' equity)
Total liabilities and owners' 5,778,071,824.19
7,323,078,222.45
equity (or shareholders' equity)
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li
Person in charge of Accounting Department: WANG Li
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Annual Report 2023
Parent Company's Balance Sheet
As of December 31, 2023
Prepared by: Proya Cosmetics Co., Ltd.
Unit: Yuan Currency: RMB
As of December 31,
Item Notes As of December 31, 2023
2022
Current assets:
Cash and cash equivalents 2,816,366,399.45 2,169,179,716.12
Held-for-trading financial
assets
Derivative financial assets
Notes receivable
Accounts receivable XIX. 1 586,728,691.35 289,883,063.24
Receivable financing 4,732,700.06
Prepayments 66,223,228.82 34,908,418.05
Other receivables XIX. 2 80,702,024.60 141,574,549.59
Including: Interest receivable
Dividend receivable
Inventories 516,042,533.80 458,341,886.37
Contract assets
Held-for-sale assets
Non-current assets due within
one year
Other current assets 38,762,926.06 32,667,616.71
Total current assets 4,109,558,504.14 3,126,555,250.08
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments XIX. 3 418,748,241.23 394,321,950.41
Other equity instrument 110,580,000.00
71,838,000.00
investments
Other non-current financial
assets
Investment real estate 95,815,110.34 348,408,309.83
Fixed assets 783,893,280.52 278,011,361.35
Construction in progress 51,841,256.80 206,756,324.14
Productive biological assets
Oil and gas assets
Right-of-use assets 13,640,458.38 5,707,540.03
Intangible assets 371,083,311.38 382,584,698.57
Development expenditure
Goodwill
Long-term prepaid expenses 62,969,904.19 13,494,337.73
Deferred income tax assets 8,256,631.70 11,372,733.52
Other non-current assets 17,197,966.38 4,916,417.58
Total non-current assets 1,895,284,160.92 1,756,153,673.16
Total assets 6,004,842,665.06 4,882,708,923.24
Current liabilities:
Short-term borrowings 200,155,555.56 200,195,890.41
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 36,959,074.14 69,626,352.12
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Annual Report 2023
Accounts payable 603,314,221.56 217,330,371.42
Receipts in advance
Contract liabilities 220,349,629.19 68,099,041.17
Employee compensation 88,243,004.64 58,246,111.22
payable
Taxes payable 161,141,517.93 69,952,710.78
Other payables 113,223,667.48 167,125,433.78
Including: Interest receivable
Dividends payable
Held-for-sale liabilities
Non-current liabilities due 3,488,575.66 2,210,449.03
within one year
Other current liabilities 28,645,451.80
Total current liabilities 1,455,520,697.96 852,786,359.93
Non-current liabilities:
Long-term borrowings
Bonds payable 753,119,902.88 724,491,557.93
Including: Preference shares
Perpetual bonds
Lease liabilities 9,970,306.87 3,354,028.30
Long-term payables
Long-term employee
compensation payable
Estimated liabilities
Deferred income 6,383,359.33 6,399,811.33
Deferred income tax liabilities 18,758,960.23
Other non-current liabilities
Total non-current liabilities 769,473,569.08 753,004,357.79
Total liabilities 2,224,994,267.04 1,605,790,717.72
Owners' equity (or shareholders' equity):
Paid-in capital (or share 396,757,184.00 283,519,469.00
capital)
Other equity instruments 50,893,986.60 50,903,510.12
Including: Preference shares
Perpetual bonds
Capital reserve 917,524,533.21 964,613,342.84
Less: Treasury stock 146,966,735.61 164,976,000.00
Other comprehensive income -53,180,700.00
Special reserve
Surplus reserve 198,411,582.50 141,759,734.50
Retained profits 2,416,408,547.32 2,001,098,149.06
Total owners' equity (or
3,779,848,398.02 3,276,918,205.52
shareholders' equity)
Total liabilities and owners'
6,004,842,665.06 4,882,708,923.24
equity (or shareholders' equity)
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li
Person in charge of Accounting Department: WANG Li
Consolidated Income Statement
January - December 2023
Unit: Yuan Currency: RMB
Item Notes 2023 2022
I. Total operating revenue VII. 61 8,904,573,501.39 6,385,451,424.00
Including: Operating revenue VII. 61 8,904,573,501.39 6,385,451,424.00
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Annual Report 2023
Interest income
Premiums earned
Fee and commission income
II. Total operating costs 7,310,234,937.16 5,191,391,396.39
Including: Operating cost VII. 61 2,677,445,706.61 1,934,850,203.65
Interest expenses
Fee and commission expenses
Surrenders
Claims and policyholder benefits (net
of amounts recoverable from
reinsurers)
Net provision for insurance liability
reserves
Insurance policyholder dividends
Expenses for reinsurance accepted
Taxes and surcharges 90,655,757.20 56,394,508.94
Selling expenses VII. 63 3,972,201,152.49 2,785,837,352.95
General and administrative expenses VII. 64 455,441,770.70 327,296,749.37
R&D expenses VII. 65 173,570,127.49 128,009,104.49
Financial expenses VII. 66 -59,079,577.33 -40,996,523.01
Including: Interest expenses 18,355,694.64 13,019,503.91
Interest income 75,347,198.04 51,707,124.62
Add: Other income VII. 67 45,026,299.74 39,065,105.62
Investment income ("-" refers to -17,392,371.65 -5,658,023.28
VII. 68
losses)
Including: Income from investments -17,279,158.95 -5,658,023.28
in associates and joint ventures
Income from derecognition of
financial assets measured at
amortized cost
Foreign exchange gains ("-" refers to
losses)
Net gains on exposure hedging ("-"
refers to losses)
Gains on changes in fair value ("-"
refers to losses)
Credit impairment losses ("-" refers -10,397,224.17 -5,057,425.43
VII. 71
to losses)
Asset impairment losses ("-" refers to -108,095,314.38 -164,884,555.28
VII. 72
losses)
Gains from disposal of assets ("-" -703,593.33 60,155.60
VII. 73
refers to losses)
III. Operating profits ("-" refers to 1,502,776,360.44 1,057,585,284.84
losses)
Add: Non-operating revenue VII. 74 4,166,661.77 1,178,886.33
Less: Non-operating expenses VII. 75 11,623,216.62 4,613,645.24
IV. Total profits ("-" refers to total 1,495,319,805.59 1,054,150,525.93
losses)
Less: Income tax expenses VII. 76 264,515,655.25 222,866,719.56
V. Net profits ("-" refers to net 1,230,804,150.34 831,283,806.37
losses)
(I) Classified by the nature of continuing operations
1. Net profits from continuing 1,230,804,150.34 831,283,806.37
operations ("-" refers to net losses)
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Annual Report 2023
2. Net profits from discontinued
operations ("-" refers to net losses)
(II) Classified by ownership
1. Net profits attributable to 1,193,868,141.81 817,400,223.93
shareholders of the parent company
("-" refers to net losses)
2. Profits or losses attributable to 36,936,008.53 13,883,582.44
minority interests ("-" refers to net
losses)
VI. Other comprehensive income, net VII. 77 -670,928.97
-51,928,497.84
of tax
(I) Other comprehensive income -670,928.97
attributable to owners of the parent -51,928,497.84
company, net of tax
1. Other comprehensive income that
-53,180,700.00
cannot be reclassified to profit or loss
(1) Changes arising from re-
measurement of defined benefit plans
(2) Other comprehensive income that
cannot be reclassified to profit or loss -20,250,000.00
under the equity method
(3) Changes in fair value of other
-32,930,700.00
equity instrument investments
(4) Changes in fair value of
enterprises' own credit risks
2. Other comprehensive income that 1,252,202.16 -670,928.97
will be reclassified into profit or loss
(1) Other comprehensive income that
will be reclassified to profit or loss
under the equity method
(2) Changes in fair value of other
debt investments
(3) Amounts of financial assets
reclassified into other comprehensive
income
(4) Provision for credit impairment of
other debt investments
(5) Reserve for cash flow hedges
(6) Translation differences of 1,252,202.16 -670,928.97
financial statements denominated in
foreign currencies
(7) Others
(II) Other comprehensive income
attributable to minority interests, net
of tax
VII. Total comprehensive income 1,178,875,652.50 830,612,877.40
(I) Total comprehensive income 1,141,939,643.97 816,729,294.96
attributable to owners of the parent
company
(II) Total comprehensive income 36,936,008.53 13,883,582.44
attributable to minority interests
VIII. Earnings per share
(I) Basic earnings per share 3.01
2.07
(RMB/share)
(II) Diluted earnings per share 2.97
2.05
(RMB/share)
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Annual Report 2023
In case of business combination under common control, net profit realized by the combined before the
combination in the current period was RMB0.00; net profit realized by the combined in the previous
period was RMB0.00.
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li
Person in charge of Accounting Department: WANG Li
Parent Company's Income Statement
January - December 2023
Unit: Yuan Currency: RMB
Item Notes 2023 2022
I. Operating revenue XIX. 4 4,244,455,041.32 3,081,136,936.75
Less: Operating cost XIX. 4 1,966,981,451.80 1,424,725,111.00
Taxes and surcharges 44,411,104.27 24,372,917.75
Selling expenses 597,090,222.91 472,193,858.89
General and administrative expenses 318,149,093.59 218,455,156.75
R&D expenses 175,400,671.99 132,656,295.93
Financial expenses -46,265,107.81 -41,965,768.21
Including: Interest expenses 18,219,770.96 13,019,503.91
Interest income 59,296,736.20 42,503,905.91
Add: Other income 11,113,880.99 15,650,274.95
Investment income ("-" refers to -19,824,288.29 -4,161,437.71
XIX. 5
losses)
Including: Income from investments -17,279,158.95 -5,149,438.13
in associates and joint ventures
Income from derecognition of
financial assets measured at
amortized cost
Net gains on exposure hedging ("-"
refers to losses)
Gains on changes in fair value ("-"
refers to losses)
Credit impairment losses ("-" refers -82,262,296.44 53,589,117.29
to losses)
Asset impairment losses ("-" refers to -71,022,124.11 -126,987,703.77
losses)
Gains from disposal of assets ("-" -603,420.52 60,155.60
refers to losses)
II. Operating profits ("-" refers to 1,026,089,356.20 788,849,771.00
losses)
Add: Non-operating revenue 681,685.66 22,010.99
Less: Non-operating expenses 10,162,782.71 1,516,181.13
III. Total profits ("-" refers to total 1,016,608,259.15 787,355,600.86
losses)
Less: Income tax expenses 147,190,446.48 116,008,968.02
IV. Net profits ("-" refers to net 869,417,812.67 671,346,632.84
losses)
(I) Net profits from continuing 869,417,812.67 671,346,632.84
activities ("-" refers to net losses)
(II) Net profits from discontinuing
activities ("-" refers to net losses)
V. Net amount of other
-53,180,700.00
comprehensive income after tax
(I) Other comprehensive income that
cannot be reclassified into profit or -53,180,700.00
loss
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Annual Report 2023
1. Changes arising from re-
measurement of defined benefit plans
2. Other comprehensive income that
cannot be reclassified to profit or loss -20,250,000.00
under the equity method
3. Changes in the fair value of other
-32,930,700.00
equity instrument investments
4. Changes in the fair value of the
enterprise's own credit risk
(II) Other comprehensive income to
be reclassified into profit or loss
1. Other comprehensive income that
may be reclassified to profit or loss
under equity method
2. Changes in the fair value of other
debt investments
3. Amount included in other
comprehensive income on
reclassification of financial assets
4. Credit impairment provisions of
other debt investments
5. Cash flow hedging reserve
6. Exchange differences from
translation of financial statements
7. Others
VI. Total comprehensive income 816,237,112.67 671,346,632.84
VII. Earnings per share:
(I) Basic earnings per share
(RMB/share)
(II) Diluted earnings per share
(RMB/share)
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li
Person in charge of Accounting Department: WANG Li
Consolidated Cash Flow Statement
January - December 2023
Unit: Yuan Currency: RMB
Item Notes 2023 2022
I. Cash flows from operating activities:
Cash received from the sale of 9,328,552,717.55 7,088,465,997.21
goods and the rendering of
services
Net increase in customer deposits
and deposits from banks and
other financial institutions
Net increase in loans from the
central bank
Net increase in taking from other
financial institutions
Cash received from premiums
under original insurance
contracts
Net cash received from
reinsurance business
131 / 272
Annual Report 2023
Net cash received from
policyholders' deposits and
investment contract liabilities
Cash received from interest, fees
and commissions
Net increase in taking from banks
and other financial institutions
Net increase in financial assets
sold under repurchase
arrangements
Net cash received from securities
trading agencies
Receipts of tax refunds 3,525,948.82
Other cash received related to 125,413,607.47 99,500,140.40
VII. 78（1）
operating activities
Sub-total of cash inflows from 9,457,492,273.84 7,187,966,137.61
operating activities
Cash paid for goods purchased 2,509,354,309.80 2,241,842,834.78
and services received
Net increase in loans and
advances to customers
Net increase in balance with the
central bank and due from banks
and other financial institutions
Cash paid for compensation
payments under original
insurance contracts
Net increase in loans to banks
and other financial institutions
Cash paid for interest, fees and
commissions
Cash paid for insurance
policyholder dividends
Cash payments to and on behalf 700,164,408.84 558,582,470.38
of employees
Payments of various types of 1,017,756,020.64 660,096,624.31
taxes
Other cash paid related to 3,761,423,719.98 2,616,308,090.91
VII. 78（1）
operating activities
Sub-total of cash outflows from 7,988,698,459.26 6,076,830,020.38
operating activities
Net cash flow from operating 1,468,793,814.58 1,111,136,117.23
activities
II. Cash flows from investing activities:
Cash received from disposal and 5,500,000.00
recovery of investments
Cash received from investment 466,821.72
income
Net cash received from disposal 285,500.00 3,751,463.96
of fixed assets, intangible assets
and other long-term assets
Net cash received from disposal 3,018,142.61
of subsidiaries and other business
entities
Other cash received related to 13,193,392.00
VII.78 (2)
investing activities
132 / 272
Annual Report 2023
Sub-total of cash inflows from 22,463,856.33 3,751,463.96
investing activities
Cash paid for acquisition or 179,658,688.53 170,963,405.43
construction of fixed assets,
VII.78 (2)
intangible assets and other long-
term assets
Cash paid for investments VII.78 (2) 18,636,363.64 131,003,609.10
Net increase in pledged loans
receivables
Net cash paid for acquiring
subsidiaries and other operating
entities
Other cash paid related to 300,000,000.00
VII.78 (2)
investing activities
Sub-total of cash outflows from 498,295,052.17 301,967,014.53
investing activities
Net cash flow from investing -475,831,195.84 -298,215,550.57
activities
III. Cash flows from financing activities:
Cash received from capital 165,676,000.00
contributions
Including: Cash received from 700,000.00
capital contributions from
minority shareholders of
subsidiaries
Cash received from borrowings 300,000,000.00 300,000,000.00
Other cash received related to
financing activities
Sub-total of cash inflows from 300,000,000.00 465,676,000.00
financing activities
Cash repayments of borrowings 300,000,000.00 300,000,000.00
Cash paid for distribution of 407,092,087.41 182,663,748.85
dividends or profits or settlement
of interest expenses
Including: Payments for
distribution of dividends or
profits to minority owners of
subsidiaries
Other cash paid related to VII.78 (3) 53,188,106.51 48,263,571.88
financing activities
Sub-total of cash outflows from 760,280,193.92 530,927,320.73
financing activities
Net cash flow from financing -460,280,193.92 -65,251,320.73
activities
IV. Impact of foreign exchange 1,252,202.16 -670,928.97
rate changes on cash and cash
equivalents
V. Net increase in cash and 533,934,626.98 746,998,316.96
cash equivalents
Add: Opening balance of cash 3,125,333,085.05 2,378,334,768.09
and cash equivalents
VI. Closing balance of cash and 3,659,267,712.03 3,125,333,085.05
cash equivalents
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li
Person in charge of Accounting Department: WANG Li
133 / 272
Annual Report 2023
Parent Company's Cash Flow Statement
January - December 2023
Unit: Yuan Currency: RMB
Item Notes 2023 2022
I. Cash flows from operating activities:
Cash received from the sale of 4,644,368,388.33 3,625,216,143.38
goods and the rendering of
services
Receipts of tax refunds 3,525,948.82
Other cash received related to 96,881,632.24 1,133,863,796.96
operating activities
Sub-total of cash inflows from 4,744,775,969.39 4,759,079,940.34
operating activities
Cash paid for goods purchased 1,945,629,515.66 1,830,694,703.17
and services received
Cash payments to and on behalf 373,444,752.18 265,940,955.35
of employees
Payments of various types of 375,674,085.29 276,743,971.90
taxes
Other cash paid related to 772,902,793.66 595,570,988.89
operating activities
Sub-total of cash outflows from 3,467,651,146.79 2,968,950,619.31
operating activities
Net cash flow from operating 1,277,124,822.60 1,790,129,321.03
activities
II. Cash flows from investing activities:
Cash received from disposal and 1,700,000.00
recovery of investments
Cash received from investment
income
Net cash received from disposal 1,946,534.67 1,057,300.53
of fixed assets, intangible assets
and other long-term assets
Net cash received from disposal 2,501,326.27
of subsidiaries and other business
entities
Other cash received related to 22,272,596.52 1,271,529,576.13
investing activities
Sub-total of cash inflows from 26,720,457.46 1,274,286,876.66
investing activities
Cash paid for acquisition or 173,025,274.68 163,990,474.83
construction of fixed assets,
intangible assets and other long-
term assets
Cash paid for investments 23,236,363.64 179,238,922.10
Net cash paid for acquiring
subsidiaries and other operating
entities
Other cash paid related to 315,549,000.00 2,248,367,720.97
investing activities
Sub-total of cash outflows from 511,810,638.32 2,591,597,117.90
investing activities
Net cash flow from investing -485,090,180.86 -1,317,310,241.24
activities
III. Cash flows from financing activities:
134 / 272
Annual Report 2023
Cash received from capital 164,976,000.00
contributions
Cash received from borrowings 300,000,000.00 300,000,000.00
Other cash received related to
financing activities
Sub-total of cash inflows from 300,000,000.00 464,976,000.00
financing activities
Cash repayments of borrowings 300,000,000.00 300,000,000.00
Cash paid for distribution of 407,092,087.41 182,663,957.72
dividends or profits or settlement
of interest expenses
Other cash paid related to 51,844,122.36 766,654.65
financing activities
Sub-total of cash outflows from 758,936,209.77 483,430,612.37
financing activities
Net cash flow from financing -458,936,209.77 -18,454,612.37
activities
IV. Impact of foreign exchange
rate changes on cash and cash
equivalents
V. Net increase in cash and 333,098,431.97 454,364,467.42
cash equivalents
Add: Opening balance of cash 2,138,929,716.12 1,684,565,248.70
and cash equivalents
VI. Closing balance of cash and 2,472,028,148.09 2,138,929,716.12
cash equivalents
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li
Person in charge of Accounting Department: WANG Li
135 / 272
Annual Report 2023
Consolidated Statements of Changes in Owners' Equity
January - December 2023
Unit: Yuan Currency: RMB
2023
Equity attributable to owners of the parent company
Total
Item Other equity instruments Gene Minority equity
Paid-in Other Spec
Less: ral interests attributable
capital (or Prefer Perpe Capital comprehe ial Surplus Retained Oth
Treasury risk Subtotal to owners
share reserve nsive reser reserve profits er
ence tual Other stock reser
capital) shares bonds income ve
ve
I. Balance 283,519,4 50,903,5 914,815,7 164,976,0 - 141,759,7 2,300,384, 3,524,488, 12,734,6 3,537,223,
at the end 69.00 10.12 86.22 00.00 1,918,603 34.50 763.19 659.96 70.33 330.29
of the .07
previous
year
Add:
Changes
in
accountin
g policies
Correctio
n for
previous
errors
Other
II. 283,519,4 50,903,5 914,815,7 164,976,0 - 141,759,7 2,300,384, 3,524,488, 12,734,6 3,537,223,
Balance 69.00 10.12 86.22 00.00 1,918,603 34.50 763.19 659.96 70.33 330.29
at the .07
beginning
of the
current
year
III. 113,237,7 -9,523.52 - -
Increase 15.00 50,664,81 18,009,26 -
56,651,84 739,760,72 825,056,72 38,031,1 863,087,90
of the 1.79 4.39 51,928,49
8.00 7.40 1.64 79.08 0.72
current 7.84
period ("-
136 / 272
Annual Report 2023
" refers to
decrease)
(I) Total
-
comprehe 1,193,868, 1,141,939, 36,936,0 1,178,875,
51,928,49
nsive 141.81 643.97 08.53 652.50
7.84
income
(II) - -9,523.52 66,340,89 29,588,21 36,572,735 36,572,735
Owners' 170,421.0 2.08 1.71 .85 .85
contributi 0
on and
capital
reduction
1. - - -
Ordinary 171,542.0 9,322,685 9,494,227
shares 0 .24 .24
contribute
d by the
owners
2. Capital
contributi
ons by
other
equity
instrumen
t holders
3. 75,515,05 75,515,052 75,515,052
Amount 2.71 .71 .71
of share-
based
payments
credited
to
owners'
equity
4. Other 1,121.00 -9,523.52 148,524.6 39,082,43 - -
1 8.95 38,942,316 38,942,316
.86 .86
(III) - -
-
Profit 56,651,84 397,455,56 397,455,56
454,107,41
distributi 8.00 6.41 6.41
4.41
on
137 / 272
Annual Report 2023
1.
Withdraw -
56,651,84
al of 56,651,848
8.00
surplus .00
reserve
2.
Withdraw
al of
general
risk
provision
3. - - -
Distributi 397,455,56 397,455,56 397,455,56
on to 6.41 6.41 6.41
owners
(or
sharehold
ers)
4. Other
(IV) 113,408,1 -
Internal 36.00 113,408,1
carry- 36.00
forward
of
owners'
equity
1. 113,408,1 -
Transfer 36.00 113,408,1
of capital 36.00
reserve to
capital
(or share
capital)
2.
Transfer
of surplus
reserve to
capital
(or share
capital)
138 / 272
Annual Report 2023
3. Surplus
reserve to
cover loss
4.
Changes
in defined
benefit
scheme
carried
forward
to
retained
earnings
5. Carry-
forward
of other
comprehe
nsive
income to
retained
earnings
6. Other
(V)
Special
reserve
1.
Withdraw
al for the
period
2.
Utilizatio
n for the
period
(VI) - - 43,999,908 1,095,17 45,095,078
Others 3,597,567 47,597,47 .23 0.55 .78
.87 6.10
IV. 396,757,1 50,893,9 864,150,9 146,966,7
Balance 84.00 86.60 74.43 35.61 -
198,411,5 3,040,145, 4,349,545, 50,765,8 4,400,311,
at the end 53,847,10
82.50 490.59 381.60 49.41 231.01
of the 0.91
period
139 / 272
Annual Report 2023
2022
Equity attributable to owners of the parent company
Gene Total
Item Paid-in Other equity instruments Other Spec Minority equity
Less: ral interests attributable
capital (or Capital comprehe ial Surplus Retained Oth
Prefer Perpe Treasury risk Subtotal to owners
share reserve nsive reser reserve profits er
ence tual Other stock reser
capital) shares bonds income ve
ve
I. Balance 201,009,9 50,956,6 834,272,2 5,628,128 - 100,634,7 1,696,978, 2,876,975, 9,864,59 2,886,840,
at the end 66.00 22.11 05.66 .21 1,247,674 80.00 064.52 835.98 1.09 427.07
of the .10
previous
year
Add:
Changes
in
accountin
g policies
Correctio
n for
previous
errors
Other
II. 201,009,9 50,956,6 834,272,2 5,628,128 - 100,634,7 1,696,978, 2,876,975, 9,864,59 2,886,840,
Balance 66.00 22.11 05.66 .21 1,247,674 80.00 064.52 835.98 1.09 427.07
at the .10
beginning
of the
current
year
III. 82,509,50 - 80,543,58 159,347,8 - 41,124,95 603,406,69 647,512,82 2,870,07 650,382,90
Increase 3.00 53,111.9 0.56 71.79 670,928.9 4.50 8.67 3.98 9.24 3.22
of the 9 7
current
period ("-
" refers to
decrease)
140 / 272
Annual Report 2023
(I) Total - 817,400,22 816,729,29 13,883,5 830,612,87
comprehe 670,928.9 3.93 4.96 82.44 7.40
nsive 7
income
(II) 2,105,517 - 210,987,9 159,347,8 53,692,467 700,000. 54,392,467
Owners' .00 53,111.9 34.74 71.79 .96 00 .96
contributi 9
on and
capital
reduction
1. 2,100,000 162,876,0 159,347,8 5,628,128. 700,000. 6,328,128.
Ordinary .00 00.00 71.79 21 00 21
shares
contribute
d by the
owners
2. Capital
contributi
ons by
other
equity
instrumen
t holders
3. 47,357,12 47,357,121 47,357,121
Amount 1.24 .24 .24
of share-
based
payments
credited
to
owners'
equity
4. Other 5,517.00 - 754,813.5 707,218.51 707,218.51
53,111.9 0
9
(III) 41,124,95 - - -
Profit 4.50 213,993,52 172,868,57 172,868,57
distributi 5.26 0.76 0.76
on
1. 41,124,95 -
Withdraw 4.50 41,124,954
al of .50
141 / 272
Annual Report 2023
surplus
reserve
2.
Withdraw
al of
general
risk
provision
3. - - -
Distributi 172,868,57 172,868,57 172,868,57
on to 0.76 0.76 0.76
owners
(or
sharehold
ers)
4. Other
(IV) 80,403,98 -
Internal 6.00 80,403,98
carry- 6.00
forward
of
owners'
equity
1. 80,403,98 -
Transfer 6.00 80,403,98
of capital 6.00
reserve to
capital
(or share
capital)
2.
Transfer
of surplus
reserve to
capital
(or share
capital)
3. Surplus
reserve to
cover loss
4.
Changes
142 / 272
Annual Report 2023
in defined
benefit
scheme
carried
forward
to
retained
earnings
5. Carry-
forward
of other
comprehe
nsive
income to
retained
earnings
6. Other
(V)
Special
reserve
1.
Withdraw
al for the
period
2.
Utilizatio
n for the
period
(VI) - - - -
Others 50,040,36 50,040,368 11,713,5 61,753,871
8.18 .18 03.20 .38
IV. 283,519,4 50,903,5 914,815,7 164,976,0 - 141,759,7 2,300,384, 3,524,488, 12,734,6 3,537,223,
Balance 69.00 10.12 86.22 00.00 1,918,603 34.50 763.19 659.96 70.33 330.29
at the end .07
of the
period
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li Person in charge of Accounting Department: WANG Li
Parent Company's Statement of Changes in Owners' Equity
January - December 2023
143 / 272
Annual Report 2023
Unit: Yuan Currency: RMB
2023
Other equity instruments Total
Paid-in Other
Less: equity
Item capital (or Capital comprehen Special Surplus Retained
Preference Perpetual Treasury attributabl
share Other reserve sive reserve reserve profits
shares bonds stock e to
capital) income
owners
I. Balance at the end of the 283,519,46 50,903,510. 964,613,34 164,976,00 141,759,7 2,001,098, 3,276,918,
previous year 9.00 12 2.84 0.00 34.50 149.06 205.52
Add: Changes in accounting
policies
Correction for previous errors
Other
II. Balance at the beginning of 283,519,46 50,903,510. 964,613,34 164,976,00 141,759,7 2,001,098, 3,276,918,
the current year 9.00 12 2.84 0.00 34.50 149.06 205.52
III. Increase of the current 113,237,71 -9,523.52 - - -
56,651,84 415,310,3 502,930,19
period ("-" refers to decrease) 5.00 47,088,809 18,009,264 53,180,70
8.00 98.26 2.50
.63 .39 0.00
(I) Total comprehensive -
869,417,8 816,237,11
income 53,180,70
12.67 2.67
0.00
(II) Owners' contribution and - -9,523.52 66,340,892 29,588,211 36,572,735
capital reduction 170,421.00 .08 .71 .85
1. Ordinary shares contributed - - -
by the owners 171,542.00 9,322,685. 9,494,227.
24 24
2. Capital contributions by
other equity instrument
holders
3. Amount of share-based 75,515,052 75,515,052
payments credited to owners' .71 .71
equity
4. Other 1,121.00 -9,523.52 148,524.61 39,082,438 -
.95 38,942,316
.86
(III) Profit distribution - -
56,651,84
454,107,4 397,455,56
8.00
14.41 6.41
1. Withdrawal of surplus -
56,651,84
reserve 56,651,84
8.00
8.00
144 / 272
Annual Report 2023
2. Distribution to owners (or - -
shareholders) 397,455,5 397,455,56
66.41 6.41
3. Other
(IV) Internal carry-forward of 113,408,13 -
owners' equity 6.00 113,408,13
6.00
1. Transfer of capital reserve 113,408,13 -
to capital (or share capital) 6.00 113,408,13
6.00
2. Transfer of surplus reserve
to capital (or share capital)
3. Surplus reserve to cover
loss
4. Changes in defined benefit
scheme carried forward to
retained earnings
5. Carry-forward of other
comprehensive income to
retained earnings
6. Other
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others -21,565.71 - 47,575,910
47,597,476 .39
.10
IV. Balance at the end of the 396,757,18 50,893,986. 917,524,53 146,966,73 -
198,411,5 2,416,408, 3,779,848,
period 4.00 60 3.21 5.61 53,180,70
82.50 547.32 398.02
0.00
2022
Other equity instruments Total
Paid-in Other
Less: equity
Item capital (or Capital comprehen Special Surplus Retained
Preference Perpetual Treasury attributabl
share Other reserve sive reserve reserve profits
shares bonds stock e to
capital) income
owners
I. Balance at the end of the 201,009,96 50,956,622. 834,563,92 5,628,128. 100,634,7 1,543,745, 2,725,282,
previous year 6.00 11 0.32 21 80.00 041.48 201.70
145 / 272
Annual Report 2023
Add: Changes in accounting
policies
Correction for previous errors
Other
II. Balance at the beginning 201,009,96 50,956,622. 834,563,92 5,628,128. 100,634,7 1,543,745, 2,725,282,
of the current year 6.00 11 0.32 21 80.00 041.48 201.70
III. Increase of the current 82,509,503. -53,111.99 130,049,42 159,347,87 41,124,95 457,353,1 551,636,00
period ("-" refers to decrease) 00 2.52 1.79 4.50 07.58 3.82
(I) Total comprehensive 671,346,6 671,346,63
income 32.84 2.84
(II) Owners' contribution and 2,105,517.0 -53,111.99 210,987,93 159,347,87 53,692,467
capital reduction 0 4.74 1.79 .96
1. Ordinary shares 2,100,000.0 162,876,00 159,347,87 5,628,128.
contributed by the owners 0 0.00 1.79 21
2. Capital contributions by
other equity instrument
holders
3. Amount of share-based 47,357,121 47,357,121
payments credited to owners' .24 .24
equity
4. Other 5,517.00 -53,111.99 754,813.50 707,218.51
(III) Profit distribution 41,124,95 - -
4.50 213,993,5 172,868,57
25.26 0.76
1. Withdrawal of surplus 41,124,95 -
reserve 4.50 41,124,95
4.50
2. Distribution to owners (or - -
shareholders) 172,868,5 172,868,57
70.76 0.76
3. Other
(IV) Internal carry-forward of 80,403,986. -
owners' equity 00 80,403,986
.00
1. Transfer of capital reserve 80,403,986. -
to capital (or share capital) 00 80,403,986
.00
2. Transfer of surplus reserve
to capital (or share capital)
3. Surplus reserve to cover
loss
146 / 272
Annual Report 2023
4. Changes in defined benefit
scheme carried forward to
retained earnings
5. Carry-forward of other
comprehensive income to
retained earnings
6. Other
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others - -
534,526.22 534,526.22
IV. Balance at the end of the 283,519,46 50,903,510. 964,613,34 164,976,00 141,759,7 2,001,098, 3,276,918,
period 9.00 12 2.84 0.00 34.50 149.06 205.52
The chairman of the Company: HOU Juncheng CFO of the Company: WANG Li Person in charge of Accounting Department: WANG Li
147 / 272
Annual Report 2023
III.General Information about the Company
1. Company profile
√ Applicable □ Not applicable
Proya Cosmetics Co., Ltd. (hereinafter referred to as "Company" or the "Company"), formerly known as
Proya (Huzhou) Cosmetics Co., Ltd., was registered in the Huzhou Municipal Administration for
Industry and Commerce on May 24, 2006. Headquartered in Hangzhou, Zhejiang, the Company now
holds the business license with the unified social credit code of 91330100789665033F. The Company's
registered capital is RMB396,823,165.00, and the paid-in capital is RMB396,757,184.00 (the paid-in
capital is RMB65,981.00 less than the registered capital due to the conversion of convertible bonds and
the repurchasing and de-registering of the granted but unreleased restricted shares without industrial and
commercial change registration). The Company has 1,957,060 restricted circulating A shares and
394,800,124 unrestricted circulating A shares. The Company’s shares were listed for trading on SSE on
November 15, 2017.
The Company is a beauty and personal care company mainly engaged in cosmetics R&D, production,
and sales.
The financial statements were approved for external disclosure by the 18th meeting of the 3rd session of
Board of Directors of the Company on April 17, 2024.
IV.Preparation Basis of Financial Statements
1. Preparation basis
The financial statements of the Company are prepared based on going concern.
2. Going concern
√ Applicable □ Not applicable
There are no matters or situations that may substantially affect the Company's ability to continue as a
going concern within 12 months since the end of the Reporting Period.
V.Significant Accounting Policies and Estimates
Notes to specific accounting policies and accounting estimates:
√ Applicable □ Not applicable
Important notes: The Company has formulated specific accounting policies and estimates for
transactions or events related to impairment of financial instruments, inventories, depreciation of fixed
assets, construction in progress, intangible assets, and revenue recognition based on the actual
production and operation characteristics.
1. Statement of compliance with accounting standards for business enterprises
The financial statements have been prepared by the Company in compliance with the China Accounting
Standards for Business Enterprises, and give an accurate and complete view of the Company's financial
position, operating results, changes in shareholders' equity, cash flow and other related information.
2. Accounting period
The accounting period of the Company is from January 1 to December 31 of each calendar year.
3. Operating cycle
√ Applicable □ Not applicable
The operating cycle of the Company's businesses is short; the Company adopts 12 months as the
liquidity classification criteria for assets and liabilities.
4. Functional currency
The Company and our domestic subsidiaries use RMB as the functional currency, while our overseas
subsidiaries, such as Hapsode Co., Ltd., Hanna Cosmetics Co., Ltd., and OR Off&Relax choose the
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currency of the main economic environment in which they operate as the functional currency since they
engage in overseas operations.
5. Determination method and selection basis of importance criteria
√ Applicable □ Not applicable
Item Importance criteria
Accounts receivable The Company recognizes accounts receivable that
individually exceed 0.3% of the total assets as
important accounts receivable.
Receivable financing The Company recognizes receivable financing
that individually exceed 0.3% of the total assets as
important receivable financing.
Other receivables The Company recognizes other receivables that
individually exceed 0.3% of the total assets as
important other receivables.
Important prepayments with an account age of The Company recognizes prepayments that
more than one year individually exceed 0.3% of the total assets as
important prepayments.
Important construction in progress The Company recognizes construction in progress
that individually exceeds 0.3% of the total assets
as important construction in progress.
Important accounts payable with an account age of The Company recognizes accounts payable that
more than one year individually exceed 0.3% of the total assets as
important accounts payable.
Important receipts in advance with an account age The Company recognizes receipts in advance that
of more than one year or overdue individually exceeds 0.3% of the total assets as
important Receipts in advance.
Important contract liabilities with an account age The Company recognizes contract liabilities that
of more than one year individually exceed 0.3% of the total assets as
important contract liabilities.
Important other payables with an account age of The Company recognizes other payables that
more than one year individually exceed 0.3% of the total assets as
important other payables.
Important estimated liabilities The Company recognizes estimated liabilities that
individually exceed 0.3% of the total assets as
important estimated liabilities.
Important cash flows from investing activities The Company recognizes cash flows from
investing activities that individually exceed 5% of
the total assets as important cash flows from
investing activities.
Important subsidiaries and non wholly-owned The Company recognizes subsidiaries with
subsidiaries absolute value of contribution to total profits that
exceeds 5% of the absolute value of consolidated
profits as important subsidiaries or important non-
wholly-owned subsidiaries.
Important joint ventures, affiliates and joint The Company recognizes joint ventures, affiliates
operations and joint operations with absolute value of
contribution to total profits that exceeds 5% of the
absolute value of consolidated profits as important
joint ventures, affiliates and joint operations.
Important contingencies The Company recognizes contingencies that have
an impact on balance sheet items exceeding 1% of
total assets or an impact on income statement
items exceeding 5% of total profits as important
contingencies.
Important commitments The Company recognizes commitments that have
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an impact on balance sheet items exceeding 1% of
total assets or an impact on income statement
items exceeding 5% of total profits as important
commitments.
Important events after the balance sheet date The Company recognizes events after the balance
sheet date that have an impact on balance sheet
items exceeding 1% of total assets or an impact on
income statement items exceeding 5% of total
profits as important events after the balance sheet
date.
6. Accounting treatment of business combination under or not under common control
√ Applicable □ Not applicable
1. Accounting treatment of business combination under common control
The assets and liabilities acquired by the Company through business combination are measured at the
carrying value of the combined party in the consolidated financial statements of the ultimate controlling
party at the combination date. The Company adjusts the capital reserve in accordance with the difference
between the carrying value share of the owner’s equity of the combined party in the consolidated
financial statements of the ultimate controlling party and the carrying value of the consideration paid for
the business combination or the total nominal value of the issued shares. If the capital reserve is not
sufficient to offset the difference, the retained earnings will be adjusted.
2. Accounting treatment of business combination not under common control
The difference by which the cost of combination is greater than the fair value of the net identifiable
assets of the acquiree is recognized by the Company as goodwill on the acquisition date; the difference
by which the combination cost is less than the fair value share of the net identifiable assets of the
acquiree is recorded into the profit or loss after the re-check of the measurement of the fair value of
identifiable assets, liabilities or contingent liabilities acquired from the acquiree, and the combination
cost.
7. Criteria for judgment of control and preparation of consolidated financial statements
√ Applicable □ Not applicable
1. Judgment of control
Control is having the power over the invested party, enjoying variable returns through participating in
related activities of the invested party, and having the ability to use the power over the invested party to
influence its variable return amount.
2. Preparation of consolidated financial statements
(1) The parent company incorporates all subsidiaries under its control into the consolidation scope of the
consolidated financial statements. The consolidated financial statements are based on the financial
statements of the parent company and its subsidiaries, and prepared by the parent company in
accordance with the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial
Statements.
(2) Accounting treatment of buying and then selling, or selling and then buying the equity of the same
subsidiary in two consecutive fiscal years: the acquisition of the equity of the acquiree is to control its
operating and financial policies and to obtain long-term benefits from its operating activities. When the
right to control the acquiree is acquired, it is included in the consolidation scope of the consolidated
financial statements. Due to changes in the Company's business plans and arrangements, if the equity of
the acquiree is disposed of in the second fiscal year to the point of losing control over it, the acquiree
will be excluded from the consolidation scope of the consolidated financial statements when the control
is lost.
8. Classification of joint arrangement and accounting treatment of joint operation
√ Applicable □ Not applicable
1. Joint arrangement can be divided into joint operation and joint venture.
2. When the Company is a joint party of a joint operation, the Company recognizes the following items
related to the share of interests in the joint operation:
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(1) Assets solely held, and assets jointly held on proportion;
(2) Liabilities solely undertaken, and liabilities jointly undertaken on proportion;
(3) Income generated from selling the Company's output share of the joint operation;
(4) Income of the joint operation generated from selling assets according to the Company's holding
share;
(5) Cost incurred alone, and cost incurred from the joint operation on proportion.
9. Determination of cash and cash equivalents
Cash presented in the cash flow statement refers to cash on hand and deposits that can be used for
payment at any time. Cash equivalents refer to the short-term and highly liquid investments that are
readily convertible to known amounts of cash and subject to an insignificant risk of change in value.
10. Foreign currency transactions and translation of foreign-currency statements
√ Applicable □ Not applicable
1. Translation of foreign currency transactions
Foreign currency transactions are translated into RMB at the approximate rate of spot rate on the
transaction date during initial recognition. At the balance sheet date, the foreign currency monetary
items are translated based on the spot rate at the balance sheet date. The exchange difference arising
from the different exchange rate is included in the current profit or loss, except the exchange difference
between the principal and interest of the foreign currency borrowed for meeting the capitalization
requirements. The foreign currency non-monetary items measured at historical cost are also translated
based on the approximate rate of the spot rate on the transaction date, and the RMB amount is not
changed. The foreign currency non-monetary items measured at fair value are translated based on the
spot rate on the determination date of the fair value, and the difference is included in the current profit or
loss or other comprehensive income.
2. Translation of foreign-currency financial statements
Assets and liabilities items in the balance sheet are translated at the spot rates prevailing at the balance
sheet date. Owners' equity items other than "undistributed profits" are translated at the spot rates on the
transaction dates. Income and expense items in the income statement are translated at the approximate
rates of the spot rates on the transaction dates. Any balance incurred from the translation of foreign-
currency financial statements by the above method is included in other comprehensive income.
11. Financial instruments
√ Applicable □ Not applicable
1. Classification of financial assets and liabilities
Financial assets are classified into the following three categories at initial recognition: (1) financial
assets measured at amortized cost; (2) financial assets measured at fair value through other
comprehensive income; (3) financial assets measured at fair value through profit or loss.
Financial liabilities are classified into the following four categories at initial recognition: (1) financial
liabilities measured at fair value through profit or loss; (2) financial liabilities that arise when a transfer
of a financial asset does not qualify for derecognition or that are accounted for using the continuing-
involvement method; (3) loan commitments not belonging to the financial guarantee contracts
mentioned in item (1) or (2) above and those not belonging to item (1) above and given at a rate lower
than the market interest rate; (4) financial liabilities measured at amortized cost.
2. Recognition basis, measurement method and derecognition conditions for financial assets and
liabilities
(1) Recognition basis and initial measurement method for financial assets and financial liabilities
A financial asset or liability is recognized when the Company becomes a party to a financial instrument
contract. Financial assets and liabilities are measured at the fair value at initial recognition. For financial
assets and liabilities measured at fair value through profit or loss, relevant transaction expenses are
directly included in the current profit or loss; for other categories of financial assets or liabilities,
relevant transaction costs are recognized as expenses at initial recognition. However, where the accounts
receivable initially recognized by the Company do not contain a significant financing component or the
Company does not consider the financing component in the contract of less than one year, the initial
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measurement is made according to the transaction price defined in the Accounting Standards for
Business Enterprises No. 14 – Revenue.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
Such financial assets are subsequently measured at amortized cost using the effective interest method.
The gains and losses incurred by the financial assets measured at amortized cost but not belonging to
any hedging relationship are included in the current profit or loss during derecognition, reclassification,
amortization according to the effective interest method or impairment recognition.
2) Debt instrument investments measured at fair value through other comprehensive income
They are subsequently measured at fair value. The interest, impairment losses or gains and exchange
gains or losses calculated with the effective interest method are included in the current profit or loss, and
other gains or losses are included in other comprehensive income. At derecognition, the gains or losses
accumulated previously through comprehensive income are transferred from other comprehensive
income and included into the current profit or loss.
3) Equity instrument investments measured at fair value through other comprehensive income
They are subsequently measured at fair value. The dividends obtained (except for the part from
investment cost recovery) are included in the current profit or loss, and other gains or losses are included
in other comprehensive income. At derecognition, the gains or losses accumulated previously through
other comprehensive income are transferred from other comprehensive income and included into
retained earnings.
4) Financial assets measured at fair value with changes included in the current profit or loss
They are subsequently measured at fair value. The generated gains or losses (including interest and
dividend income) are included in the current profit or loss, unless the financial assets belong to part of
the hedging relationship.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities measured at fair value through profit or loss
Such financial liabilities include held-for-trading financial liabilities (including derivative instruments
belonging to financial liabilities) and those designated as financial liabilities measured at fair value
through profit or loss. Such financial liabilities are subsequently measured at fair value. Changes in the
fair value of financial liabilities measured at fair value through profit or loss due to changes in the
Company's own credit risk are included in other comprehensive income, unless the treatment will cause
or enlarge the accounting mismatch in the profit or loss. Other gains or losses generated from such
financial liabilities (including interest expenses, except the changes in the fair value arising from the
credit risk change of the Company) are included in the current profit or loss, unless the financial
liabilities belong to part of the hedging relationship. At derecognition, the gains or losses accumulated
previously through other comprehensive income are transferred from other comprehensive income and
included into retained earnings.
2) Financial liabilities from failure of transfer of financial assets to meet the derecognition conditions or
continued involvement in transferred financial assets
They are measured in accordance with the Accounting Standards for Business Enterprises No. 23 -
Transfer of Financial Assets.
3) Loan commitments not belonging to the financial guarantee contracts mentioned in item 1) or 2)
above and those not belonging to item 1) above and given at a rate lower than market interest rate
They are subsequently measured at the higher one of the following two amounts, after initial
recognition: ① loss provisions determined according to regulations on impairment of financial
instruments; ② balance of the initially recognized amount after deducting cumulative amortization
recognized in accordance with the regulations set out in the Accounting Standards for Business
Enterprises No. 14 – Revenue.
4) Financial liabilities measured at amortized cost
They are measured at amortized cost using the effective interest method. The gains and losses incurred
by the financial liabilities measured at amortized cost but not belonging to any hedging relationship are
included in the current profit or loss during derecognition or amortization according to the effective
interest method.
(4) Derecognition of financial assets and liabilities
1) Financial assets satisfying one of the following conditions are derecognized:
① the contract right to collect cash flow from the financial assets has terminated;
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② the financial assets have been transferred and such transfer satisfies the provisions for derecognition
of financial assets in the Accounting Standards for Business Enterprises No. 23 - Transfer of Financial
Assets.
2) When the present obligations under the financial liabilities (or part thereof) are released, such
financial liabilities (or that part thereof) are derecognized.
3. Recognition basis and measurement of transfer of financial assets
If the Company has transferred almost all the risks and rewards related to the ownership of financial
assets, the financial assets are derecognized, and the rights and obligations resulting from or retained in
the transfer are separately recognized as assets or liabilities. In case that almost all the risks and rewards
related to the ownership of the financial assets are retained, the recognition of the transferred financial
assets is continued. In case that almost all the risks and rewards related to the ownership of the financial
assets are neither transferred nor retained, disposal applies depending on the following circumstances:
(1) if the control over the financial assets is not retained, the financial assets are derecognized, and the
rights and obligations resulting from or retained in the transfer are separately recognized as assets or
liabilities; (2) if the control over the financial assets is retained, the relevant financial assets are
recognized according to the degree of continued involvement in the transferred financial assets, and the
relevant liabilities are recognized accordingly.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference
between the two amounts below are included in the current profit or loss: (1) the carrying value of the
transferred financial assets at the date of derecognition; (2) the sum of consideration received for the
transfer of the financial asset, plus the corresponding derecognized portion of accumulated change in fair
value previously included in other comprehensive income (in cases where the transferred financial asset
is a debt instrument investment measured at fair value with changes included in other comprehensive
income). If part of the financial assets is transferred and the transfer satisfies the conditions for
derecognition, the overall carrying value before the transfer of financial assets is apportioned according
to their respective relative fair value at the transfer date between the portion of derecognized part and the
remaining part, and the difference between the two amounts below is included in the current profit or
loss: If part of the financial assets is transferred and the transfer satisfies the conditions for
derecognition, the overall carrying value before the transfer of financial assets is apportioned according
to their respective relative fair value at the transfer date between the portion of derecognized part and the
remaining part, and the difference between the two amounts below is included in the current profit or
loss:
4. Determination of the fair value of financial assets and liabilities
The Company adopts valuation techniques appropriate to the prevailing circumstances with the support
of sufficient data and other information available to determine the fair value of relevant financial assets
and liabilities. The Company divides the inputs for the estimation technique into the following levels and
uses them in turn:
(1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
the Company can access at the measurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable, either
directly or indirectly, including: the quotation of similar assets or liabilities in an active market; the
quotation of identical or similar assets or liabilities in an inactive market; other observable inputs other
than the quotation, such as the interest rate and yield curves that can be observed during the normal
quotation intervals; and the market validation inputs;
(3) Level 3 inputs are unobservable inputs of related assets or liabilities, including the interest rate, stock
volatility, future cash flow of retirement obligations borne during the business combination, and
financial forecasts made based on its own data, which cannot be observed directly or cannot be verified
according to observable market data.
5. Impairment of financial instruments
Based on the expected credit loss, the Company carries out accounting treatment for impairment and
recognizes the loss provision for the financial assets measured at amortized cost, the debt instrument
investment measured at fair value through other comprehensive income, contract assets, lease
receivables, loan commitments other than financial liabilities measured at fair value through profit or
loss, and financial guarantee contracts of financial liabilities not measured at fair value through profit or
loss or financial liabilities not from failure of transfer of financial assets to meet the derecognition
conditions or continued involvement in transferred financial assets.
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Expected credit loss refers to the weighted average of credit losses of financial instruments weighted by
the risk of default. Credit loss refers to the balance between all contractual cash flows discounted
according to the original effective interest rate and receivable under contracts by the Company and all
cash flows as expected, i.e. the present value of all cash shortages. The purchased or underlying financial
assets of the Company with credit impairment incurred are discounted according to their effective
interest rates upon credit adjustment.
For purchased or underlying financial assets with credit impairment incurred, only accumulative changes
in the expected credit loss in the whole duration after initial recognition are recognized by the Company
as loss provisions at the balance sheet date.
For lease receivables, and receivables and contract assets from transactions in accordance with the
Accounting Standards for Business Enterprises No. 14 – Revenue, excluding significant financing
components or without consideration, by the Company, to the financing components in the contract of
no more than one year, the Company measures the loss provision according to the amount equal to the
expected credit loss in the whole duration by applying the simplified measurement method.
For financial assets other than those applicable to the above measurement methods, the Company assess
on each balance sheet date whether their credit risk has increased significantly since initial recognition.
If the credit risk has increased significantly since the initial recognition, the Company will measure the
loss provision based on the amount of expected credit loss in the whole duration; if the credit risk has
not significantly increased since the initial recognition, the Company will measure the loss provision
based on the amount of expected credit loss for the financial instruments in the next 12 months.
The Company determines whether the credit risk of financial instruments has increased significantly
since initial recognition by utilizing the available, reasonable and well-grounded information, including
forward-looking information, and comparing the default risks of the financial instruments at the balance
sheet date and on the initial recognition date.
If the Company determines that the financial instruments bear a low credit risk at the balance sheet date,
we assume that the credit risk of the financial instruments has not increased significantly since initial
recognition.
The Company evaluates the expected credit risk and measures the expected credit loss based on single
financial instrument or portfolio of financial instruments. When the portfolio of financial instruments is
used as the basis, the Company divides financial instruments into different portfolios on the basis of the
common risk characteristics.
The Company re-measures the expected credit loss on each balance sheet date, and the increased or
reversed amount of the loss provision arising therefrom, as losses or gains from impairment, are
included in the current profit or loss. For financial assets measured at amortized cost, the carrying value
of the financial assets listed in the balance sheet is deducted from the loss provision; for the debt
investment measured at fair value with changes included in other comprehensive income, the Company
recognizes its loss provision in other comprehensive income without deducting the carrying value of the
financial assets.
6. Offset of financial assets and liabilities
Financial assets and liabilities are presented in the balance sheet respectively without offsetting.
However, when the following conditions are met simultaneously, the financial assets and liabilities are
presented at the net amount after mutual offset in the balance sheet: (1) the Company has the legal right
of offsetting the recognized amount and such legal right is currently executable; (2) the Company plans
to settle by net amount or simultaneously realize the financial assets and clear off the financial liabilities.
When the financial assets that do not meet the derecognition conditions are transferred, the Company
does not offset the transferred financial assets with the relevant liabilities.
12. Notes receivable
□ Applicable √ Not applicable
13. Accounts receivable
√ Applicable □ Not applicable
Determination and accounting treatment of the expected credit loss of accounts receivable
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
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Classification and determination basis of portfolios with bad debt provisions accrued by portfolio
of credit risk characteristics
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Calculation of account ages of portfolios of credit risk characteristics recognized on the account
age basis
√ Applicable □ Not applicable
The expected credit loss is calculated through a table that compares the account age of accounts
receivable and expected credit loss rate by referring to historical experience in credit loss and according
to the current situation and the forecast on future economic conditions.
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Criteria for judgment of recognized bad debt provisions accrued individually
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
14. Receivable financing
√ Applicable □ Not applicable
Determination and accounting treatment of the expected credit loss of receivable financing
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Classification and determination basis of portfolios with bad debt provisions accrued by portfolio
of credit risk characteristics
√ Applicable □ Not applicable
The expected credit loss is calculated through the default risk exposure and the expected credit loss rate
in the whole duration by referring to historical experience in credit loss and according to the current
situation and the forecast on future economic conditions.
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Calculation of account ages of portfolios of credit risk characteristics recognized on the account
age basis
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Criteria for judgment of provision for bad debts accrued individually
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
15. Other receivables
√ Applicable □ Not applicable
Determination and accounting treatment of the expected credit loss of other receivables
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
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Classification and determination basis of portfolios with bad debt provisions accrued by portfolio
of credit risk characteristics
√ Applicable □ Not applicable
The expected credit loss is calculated through a table that compares the account age of other receivables
and expected credit loss rate by referring to historical experience in credit loss and according to the
current situation and the forecast on future economic conditions.
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Calculation of account ages of portfolios of credit risk characteristics recognized on the account
age basis
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
Criteria for judgment of provision for bad debts accrued individually
√ Applicable □ Not applicable
Refer to "11. Financial instruments" in "V. Significant Accounting Policies and Estimates" of "Section X
Financial Report" in this Report.
16. Inventories
√ Applicable □ Not applicable
Classification of inventories, valuation method for delivered inventories, inventory system, and
amortization of low-value consumables and packaging
√ Applicable □ Not applicable
1. Classification of inventories
Inventories include finished goods or commodities for sale in daily operations, work in process,
materials consumed during production or rendering of service.
2. Valuation method for delivered inventories
The moving weighted average is adopted for delivered inventories.
3. Inventory system
The Company adopts a perpetual inventory system.
4. Amortization of low-value consumables and packaging
(1) Low-value consumables
Amortization is performed via the immediate write-off method.
(2) Packaging
Amortization is performed via the immediate write-off method.
Recognition and accrual of provision for devaluation of inventories
√ Applicable □ Not applicable
At the balance sheet date, inventories are measured at the lower of cost and net realizable value, and
provision for devaluation of inventories is accrued based on the positive difference between cost and net
realizable value. The net realizable value of inventories directly for sale is determined by the amount of
the estimated selling price after subtracting the estimated selling expenses and relevant taxes during the
normal production and operation; the net realizable value of inventories required to be processed is
determined by the amount of the estimated selling price of the finished products after subtracting the
estimated cost by the end of processing, the estimated selling expenses and relevant taxes during the
normal production and operation. At the balance sheet date, the net realizable value is determined
separately for the two parts of the same inventory with or without contract price, and is compared with
the relevant costs to separately determine the amount withdrawn or reversed for provision for
devaluation of inventories.
Classification and determination basis of portfolios with provision for devaluation of inventories
accrued by portfolio and determination basis of net realizable value of different categories of
inventories
□ Applicable √ Not applicable
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Calculation method and determination basis of net realizable value of each stock age portfolio for
inventories with net realizable value recognized based on stock age
□ Applicable √ Not applicable
17. Contract assets
√ Applicable □ Not applicable
Recognition methods and standards of contract assets
√ Applicable □ Not applicable
The rights of the Company to collect consideration from the customer unconditionally (i.e. only
depending on time) are presented as receivables; the rights (dependent on factors other than time) to
collect consideration for transferring goods to the customer are presented as contract assets.
Determination and accounting treatment of the expected credit loss of contract assets
□ Applicable √ Not applicable
Classification and determination basis of portfolios with bad debt provisions accrued by portfolio
of credit risk characteristics
□ Applicable √ Not applicable
Calculation of account ages of portfolios of credit risk characteristics recognized on the account
age basis
□ Applicable √ Not applicable
Criteria for judgment of recognized bad debt provisions accrued individually
□ Applicable √ Not applicable
18. Held-for-sale non-current assets or disposal groups
□ Applicable √ Not applicable
Recognition and accounting treatment of non-current assets or disposal groups classified as held-
for-sale
□ Applicable √ Not applicable
Recognition and presentation of termination of operation
□ Applicable √ Not applicable
19. Long-term equity investments
√ Applicable □ Not applicable
1. Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement. It exists only when
decisions about the relevant activities of the arrangement require the unanimous consent of the parties
sharing control. Significant influence refers to the power to participate in the decision-making process
on the financial and operating policies of the investee, but not to control or impose joint control together
with other parties over the formulation of these policies.
2. Determination of investment cost
(1) For a long-term equity investment obtained from a business combination under common control:
where the combining party pays cash, transfers non-cash assets, bears debts or issues equity securities as
combination consideration, the initial investment cost is the share with reference to the carrying value of
the owners’ equity of the combined party in the consolidated financial statements of the ultimate
controlling party on the combination date. The difference between the initial investment cost of the long-
term equity investment and the carrying value of the consideration paid for the business combination or
the total nominal value of the issued shares is adjusted to capital reserve. If the capital reserve is not
sufficient to offset the difference, the retained earnings are adjusted.
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For a long-term equity investment obtained from a business combination under common control through
multiple transactions by step, the Company judges whether the transactions are a "package deal". If yes,
the transactions are subject to accounting treatment as one deal that has acquired control right. If no, the
initial investment cost is determined on the basis of the share with reference to the carrying value of the
net asset of the combined party in the consolidated financial statements of the ultimate controlling party
on the combination date. The difference between the initial investment cost of long-term equity
investment at the combination date and the sum of the carrying amount of long-term equity investment
before business combination and the carrying value of newly paid consideration for additional shares
acquired on the combination date is adjusted to the capital reserve. If the capital reserve is not sufficient
to be offset, the retained earnings are adjusted.
(2) For a long-term equity investment obtained from a business combination not under common control,
the fair value of consideration paid for business combination is regarded as the initial investment cost on
the acquisition date.
For the long-term equity investment achieved by the Company via a business combination not under
common control through multiple transactions by step, the relevant accounting treatment is based on
individual financial statements or consolidated financial statements:
1) In the individual financial statements, the initial investment cost calculated with the cost method is the
sum of the carrying value of the equity investment originally held and the newly increased investment
cost.
2) In the consolidated financial statements, the item is determined based on whether the transactions are
a "package deal". If yes, the transactions are subject to accounting treatment as one deal that has
acquired control right. If no, the equity of the acquiree held before the acquisition date is re-measured at
the fair value of the equity on the acquisition date, and the difference between the fair value and its
carrying value is included in the current investment income. If the equity of the acquiree held before the
acquisition date is related to other comprehensive income under the equity method, the other related
comprehensive income is converted into the current income on the acquisition date, excluding the other
comprehensive income derived from changes in net liabilities or assets due to re-measurement on
defined benefit plans by the investee.
(3) For a long-term equity investment obtained by means other than business combination: If it is
obtained by cash, the initial investment cost is the actual payment; if it is obtained through issuing equity
securities, the initial investment cost is the fair value of the issued equity securities. If it is obtained
through debt restructuring, the initial investment cost is determined based on the Accounting Standards
for Business Enterprises No. 12 - Debt Restructuring. If it is obtained through the exchange of non-
monetary assets, the initial investment cost is determined based on the Accounting Standards for
Business Enterprises No. 7 - Exchange of Non-Monetary Assets.
3. Subsequent measurement and recognition of profit or loss
For a long-term equity investment controlled by the investee, the cost method is adopted for accounting.
For a long-term equity investment in associates and joint ventures, the equity method is adopted for
accounting.
4. Treatment methods for loss of control upon a stepwise disposal of investment to subsidiaries through
multiple transactions
(1) Judgment of whether transactions are a "package deal"
In case of loss of control upon stepwise disposal of investment to subsidiaries through multiple
transactions, the Company judges whether such transactions are a "package deal" based on the terms of
the transaction agreement of each step of stepwise transactions, the disposal consideration obtained
respectively, the target of equity sale, the disposal method, the disposal time and other information.
When the terms, conditions and economic impact of each transaction meet one or more of the following
circumstances, it usually indicates that the multiple transactions are a "package deal":
1) these transactions were entered into simultaneously or after considering the effects of each other;
2) these transactions constituted a complete commercial result as a whole;
3) one transaction was conditional upon at least one of the other transaction;
4) one transaction was not economical on its own but was economical when considering other
transactions.
(2) Accounting treatment of transactions which are not a "package deal"
1) Individual financial statements
For disposal of equity, the difference between the carrying value and the consideration actually received
is included in the current profit or loss. The accounting of remaining equity is completed via the equity
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method in case of significant influence on the investee or implementation of joint control with other
parties. However, in case of no control, joint control or significant influence on the investee, the
accounting of remaining equity must comply with the relevant provisions of the Accounting Standards
for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
2) Consolidated financial statements
Before the loss of control, the difference between the price of disposal and the subsidiary's net assets
entitled from the disposal of long-term equity investment cumulatively calculated from the acquisition
date or the combination date, is adjusted to capital reserve (capital premium). If the capital premium is
insufficient to offset the difference, the retained earnings are adjusted.
When the control over the original subsidiary is lost, the remaining equity is re-measured at fair value as
of the date on which the control is lost. The difference between the sum of the consideration received
from equity disposal and the fair value of the remaining equity and the net assets of the original
subsidiary proportionate to the original shareholding accumulated from the date of acquisition or
business combination is included in investment gains of the period during which the control is lost, and
meanwhile, the goodwill is offset. Other comprehensive income related to the equity investment in the
original subsidiary is transferred to investment gains of the period during which the control is lost.
(3) Accounting treatment of transactions which are a "package deal"
1) Individual financial statements
All transactions are regarded as one transaction disposing the subsidiary and losing the control right for
accounting treatment. However, the difference between the amount received each time for disposal
before the control is lost and the carrying value of long-term equity investments corresponding to the
disposal of investment is recognized as other comprehensive income in the individual financial
statements, and is transferred to profit or loss of the period during which the control is lost upon loss of
control.
2) Consolidated financial statements
All transactions are regarded as one transaction disposing the subsidiary and losing the control right for
accounting treatment. However, the difference between the amount received each time for disposal
before the control is lost and the net assets of such subsidiary corresponding to the disposal of
investment is recognized as other comprehensive income in the consolidated financial statements, and is
transferred to profit or loss of the period during which the control is lost upon loss of control.
20. Investment real estate
(1). In case of applying a cost measurement model:
Depreciation or amortization method
1. Investment real estate includes leased land use rights, land use rights held for transfer upon
appreciation, and leased buildings.
2. Investment real estate is initially measured at cost and subsequently measured with the cost model,
and depreciated or amortized with the same method as that for fixed assets and intangible assets.
21. Fixed assets
(1). Conditions for recognition
√ Applicable □ Not applicable
Fixed assets are tangible assets that are held for use in the production or rendering of goods or services,
for rental to others, or for administrative purposes, and have a service life of more than one accounting
year. The fixed assets are recognized when the following conditions are satisfied simultaneously: the
economic benefits are likely to inflow to the Company and the costs of such fixed assets can be
measured reliably.
(2). Depreciation method
√ Applicable □ Not applicable
Depreciation Depreciation life Annual
Category Residual value
method (year) depreciation rate
Houses and Straight-line 10 or 30 5% 9.50% or 3.17%
buildings method
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General Straight-line 3-10 5% 31.67%-9.50%
equipment method
Dedicated Straight-line 5-10 5% 19.00%-9.50%
equipment method
Means of Straight-line 5 5% 19.00%
transportation method
22. Construction in progress
√ Applicable □ Not applicable
1. Construction in progress is recognized when the following conditions are satisfied simultaneously: the
economic benefits are likely to inflow to the Company and the costs of such construction in progress can
be measured reliably. Construction in progress is measured at the actual cost incurred to prepare the
assets for their intended use.
2. Construction in progress is transferred to fixed assets at the actual cost when it reaches the expected
conditions for service. When construction in progress has achieved serviceable conditions but final
settlement has not been finished, it is first transferred to fixed assets as per estimated value. After final
settlement is finished, the estimated value is adjusted based on actual cost, but the depreciated amount is
not adjusted.
Category Criteria and timing for the transfer of construction in progress to fixed assets
Dedicated After installation and commissioning, the construction meets the design
equipment requirements or the standards stipulated in the contract
Houses and When the physical construction has been fully or substantially completed and can
buildings be put into use
23. Borrowing costs
√ Applicable □ Not applicable
1. Criteria for recognition of capitalized borrowing costs
Borrowing costs incurred by the Company, which are directly attributable to the purchase and
construction of assets eligible for capitalization, are capitalized and included in the costs of the related
assets. Other borrowing costs are recognized as expenses in the period in which they are incurred and are
included in the current profit or loss.
2. Capitalization period of borrowing costs
(1) The capitalization of borrowing costs begins when the following three conditions are fully satisfied:
1) expenditures for the assets have been incurred; 2) borrowing costs have been incurred; 3) acquisition
and construction or production that are necessary to enable the assets to reach the intended usable or
salable conditions have commenced.
(2) Where abnormal interruption of assets eligible for capitalization occurs during the acquisition and
construction or production process and such interruption has lasted for more than three consecutive
months, the capitalization of borrowing costs is suspended; the borrowing costs during the interruption
are recognized as current expenses till resumption of purchasing or production of the assets.
(3) Capitalization of borrowing costs is suspended during periods in which the qualifying asset under
acquisition and construction or production is ready for the intended use or sale.
3. Capitalization rate and amount of borrowing costs
In case of special borrowing for the acquisition and construction or production of assets meeting the
capitalization conditions, interest amount to be capitalized is recognized after deducting the bank
interests for the unused portion or the investment income for temporary investment from the interest
costs (including recognized depreciation or amortization of premium under the effective interest method)
actually incurred in the current period of specific borrowing; for general borrowing occupied for the
acquisition and construction or production of assets meeting the capitalization conditions, the interest
amount to be capitalized is determined via the result obtained by multiplying the capitalization rate of
occupied general borrowing with the weighted average value of the asset expenditure for the
accumulated expenditure exceeding the specific borrowing portion.
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24. Biological assets
□ Applicable √ Not applicable
25. Oil and gas assets
□ Applicable √ Not applicable
26. Intangible assets
(1). Service life and its determination basis, estimation, amortization method or review
procedure
√ Applicable □ Not applicable
1. Intangible assets, including land use rights, patent rights and non-patented technologies, are initially
measured at cost.
2. Intangible assets with limited service life are amortized systematically and reasonably over their service
life in accordance with the expected realization method of the economic benefits related to the intangible
assets. If the expected realization method cannot be reliably determined, the straight-line method is used
for amortization. The specific information is shown as below:
Service life Amortization
Item Determination basis of service life
(year) method
Straight-line
Land use rights 40 or 50 Estimated service life
method
Non-patented Straight-line
5 Estimated service life
technologies method
Straight-line
Office software 3-10 Estimated service life
method
Straight-line
Patent right 5 Estimated service life
method
Straight-line
Customer resources 3 Estimated earning life
method
Straight-line
Trademark rights 10 Estimated service life
method
(2). Collection scope of R&D expenditures and related accounting treatment methods
√ Applicable □ Not applicable
1. Collection scope of R&D expenditures
(1) Labor costs
Labor costs include salaries, basic endowment insurance premiums, basic medical insurance premiums,
unemployment insurance premiums, work-related injury insurance premiums, maternity insurance
premiums and housing provident funds of the Company's R&D personnel, as well as labor costs of
external R&D personnel.
If R&D personnel serve multiple R&D projects at the same time, the labor costs are allocated
proportionally among different R&D projects based on the working hour records of R&D personnel of
various R&D projects provided by the management department of the Company.
If the personnel directly engaged in R&D activities and external R&D personnel are also engaged in
non-R&D activities, the Company will allocate the actual labor costs between R&D expenses and
production & operation expenses by adopting reasonable methods such as the proportion of actual
working hours based on the working hour records of R&D personnel at different positions.
(2) Direct input costs
Direct input costs refer to the relevant expenses actually incurred by the Company for the
implementation of R&D activities, Including: 1) costs of directly consumed materials, fuel and power; 2)
development and manufacturing expenses of molds and process equipment used for intermediate tests
and product trial production, purchase expenses of samples, prototypes and general testing means which
do not constitute fixed assets, and inspection expenses of trial production products; 3) expenses for
operation, maintenance, adjustment, inspection, testing and maintenance of instruments and equipment
used for R&D activities.
(3) Depreciation expenses and long-term prepaid expenses
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Depreciation expenses refer to the depreciation expenses of instruments, equipment and buildings in use
for R&D activities.
If the instruments, equipment and buildings in use for R&D activities are also used for non-R&D
activities, the use of such instruments, equipment and buildings in use are recorded as necessary, and the
depreciation expenses actually incurred are allocated between R&D expenses and production &
operation expenses in a reasonable way based on the actual working hours, usable area and other factors.
Long-term prepaid expenses refer to the long-term prepaid expenses incurred in the process of
reconstruction, modification, decoration and repair of R&D facilities, which are collected according to
the actual expenditures and amortized evenly by stages within the prescribed period.
(4) Amortization expenses of intangible assets
Amortization expenses of intangible assets refer to the amortization expenses of software, intellectual
property rights and non-patented technologies (including proprietary technology, licenses, designs and
calculation methods) used for R&D activities.
(5) Entrusted external R&D expenses
Entrusted external R&D expenses refer to the expenses incurred by the Company in entrusting other
institutions or individuals at home and abroad to carry out R&D activities (the results of R&D activities
are owned by the Company and closely related to the Company's main operations).
(6) Others expenses
Other expenses refer to other expenses directly related to R&D activities other than the above expenses,
including costs of technical books and materials, data translation fees, expert consultation fees, high-tech
R&D insurance premiums, retrieval, demonstration, evaluation, appraisal and acceptance fees of R&D
results, intellectual property application fees, registration fees, agency fees, conference fees, travel
expenses, and communication fees.
2. Expenditure incurred during the research phase of internal R&D projects is included in the current
profit or loss when actually incurred. Expenditure incurred during the development phase is recognized
as expenditure on an intangible asset when all of the following conditions are satisfied simultaneously:
(1) Completing the intangible asset so that it will be available for use or sale is technically feasible; (2)
The intention to complete the intangible asset so that it will be available for use or sale exists; (3) The
intangible asset will generate probable future economic benefits. Amongst other things, the Company
can demonstrate the existence of a market for the output of the intangible asset or the intangible asset
itself or, if it is used internally, the usefulness of the intangible asset; (4) Adequate technical, financial
and other resources to complete the development and to use or sell the intangible asset are available; (5)
The expenditure attributable to the intangible asset during its development can be reliably measured.
27. Impairment of long-term assets
√ Applicable □ Not applicable
For long-term assets such as long-term equity investments, investment real estate measured with the cost
model, fixed assets, construction in progress, right-of-use assets and intangible assets with limited
service life, in case that there are signs indicating impairment at the balance sheet date, the recoverable
amount should be estimated. Whether there is a sign of impairment or not, the goodwill acquired through
the business combination and intangible assets with indefinite service life is tested for impairment each
year. The impairment test on goodwill is carried out in combination with its related asset group or asset
group portfolio.
In case the recoverable amount of the above long-term assets is less than its carrying value, the provision
for asset impairment is recognized according to its differences and included in the current profit or loss.
28. Long-term prepaid expenses
√ Applicable □ Not applicable
For long-term assets such as long-term equity investments, investment real estate measured with the cost
model, fixed assets, construction in progress, right-of-use assets and intangible assets with limited
service life, in case that there are signs indicating impairment at the balance sheet date, the recoverable
amount should be estimated. Whether there is a sign of impairment or not, the goodwill acquired through
the business combination and intangible assets with indefinite service life is tested for impairment each
year. The impairment test on goodwill is carried out in combination with its related asset group or asset
group portfolio.
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In case the recoverable amount of the above long-term assets is less than its carrying value, the provision
for asset impairment is recognized according to its differences and included in the current profit or loss.
29. Contract liabilities
√ Applicable □ Not applicable
The Company recognizes the obligation to transfer goods to customers for the consideration received or
receivable from the customers as contract liabilities.
30. Employee compensation
(1). Accounting treatment of short-term compensation
√ Applicable □ Not applicable
During the accounting period when employees render services for the Company, the short-term
compensation actually incurred is recognized as liabilities and included in the current profit or loss or the
costs of the related assets.
(2). Accounting treatment of post-employment benefits
√ Applicable □ Not applicable
Post-employment benefits are divided into the defined contribution plan and the defined benefit plan.
(1) During the accounting period when employees render services for the Company, the amount to be
deposited as calculated according to the defined contribution plan is recognized as a liability and
included in the current profit or loss or the costs of the related assets.
(2) The accounting treatment for the defined benefit plan generally comprises the following steps:
1) According to the expected cumulative benefit unit method, the demographic variables, financial
variables, and other variables are estimated through unbiased and mutually consistent actuarial
assumption, so as to measure the obligations arising from the defined benefit plan and determine the
period of relevant obligations. In addition, the obligation generated from the defined benefit plan is
discounted, so as to determine the present value of defined benefit plan obligation and current service
cost;
2) In case assets exist in the defined benefit plan, the deficit or surplus generated from the present value
of obligations of the defined benefit plan minus the fair value of the assets of the defined benefit plan is
recognized as a net liability or net asset in the defined benefit plan. When the defined benefit plan has
surplus, the net assets of the defined benefit plan are measured at the lower of the surplus of the defined
benefit plan and the upper limit of the assets;
3) At the end of the period, the employee compensation costs generated by the defined benefit plan are
recognized as three parts, i.e., service costs, net interest of the net liabilities or net assets of the defined
benefit plan, and the changes generated by re-measurement of the net liabilities or net assets of the
defined benefit plan, in which the service costs and the net interest of the net liabilities or net assets of
the defined benefit plan are included in the current profit or loss or the costs of the related assets, and the
changes generated by re-measurement of the net liabilities or net assets of the defined benefit plan are
included in other comprehensive income, and cannot be reversed to profit or loss in the subsequent
accounting period. However, the amount recognized in other comprehensive income can be transferred
within the equity scope.
(3). Accounting treatment of termination benefits
√ Applicable □ Not applicable
If termination benefits are provided to employees, the employee compensation liabilities arising from the
termination benefits are recognized on the earlier date of the following and included in the current profit
or loss: (1) when the Company cannot unilaterally withdraw the termination benefits provided due to
termination of labor relation plan or layoff proposal; (2) when the Company recognizes the cost or
expenses related to the restructuring involving payment of termination benefits.
(4). Accounting treatment of other long-term employee benefits
√ Applicable □ Not applicable
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Other long-term employee benefits satisfying the conditions in the defined contribution plan are treated
in accounting as stipulated in the defined contribution plan; other long-term benefits beyond those are
treated in accounting as stipulated in the defined benefit plan. In order to simplify the related accounting
treatment, the generated employee compensation cost is recognized as the service cost. The total net
amount of items, including the net interest of net liabilities or assets of other long-term employee
compensation and the changes generated from re-measuring net liabilities or assets of other long-term
employee compensation, is included in the current profit or loss or the costs of the related assets.
31. Estimated liabilities
√ Applicable □ Not applicable
1. The obligations imposed by contingencies, such as providing external guarantees, lawsuits, product
quality assurance and onerous contracts, become the current obligations assumed by the Company,
which are determined by the Company as provisions when their performance is very likely to result in
economic benefit outflow from the Company and their amount can be measured as estimated liabilities.
2. The estimated liabilities are initially measured by the Company based on the optimal estimate to be
paid for performing relevant current obligations and their carrying value is reviewed at the balance sheet
date.
32. Share-based Payments
√ Applicable □ Not applicable
1. Types of share-based payments
There are equity-settled and cash-settled share-based payments.
2. Relevant accounting treatment of implementing, modifying and terminating the share-based payment
schedule
(1) Equity-settled share-based payments
These equity-settled share-based payments vested immediately after the grant date and exchanged for
employee services are included in relevant costs or expenses as per the fair value of the equity
instruments on the grant date, and the capital reserve is adjusted accordingly. For the equity-settled
share-based payments that are vested only after the services within the waiting period are completed or
the specified performance conditions are satisfied and that are exchanged for employee services, the
services acquired in the current period are included in relevant costs or expenses as per the fair value of
the equity instruments on the grant date based on the optimal estimate of the number of vesting equity
instruments on each balance sheet date within the waiting period, and the capital reserve is adjusted
accordingly.
The equity-settled share-based payments exchanged for services of other parties are measured as per the
fair value of the services of other parties on the date of acquiring if its reliable measurement is possible.
If the reliable measurement of the fair value of other parties services is impossible, but the reliable
measurement of the fair value of the equity instruments is possible, they are measured as per the fair
value of the equity instruments on the date of acquiring the services and included in relevant costs or
expenses, with the owners' equity is increased accordingly.
(2) Cash-settled share-based payments
Cash-settled share-based payments vested immediately after the grant date and exchanged for employee
services are included in relevant costs or expenses as per the fair value of the liabilities assumed by the
Company on the grant date, and the liabilities are increased accordingly. For cash-settled share-based
payments that are vested only after the services within the waiting period are completed or the specified
performance conditions are satisfied and that are exchanged for employee services, the services acquired
in the current period are included in relevant costs or expenses and corresponding liabilities as per the
fair value of the liabilities assumed by the Company based on the optimal estimate of the vesting
conditions on each balance sheet date within the waiting period.
(3) Modifying and terminating the share-based payment schedule
If the fair value of the granted equity instruments is increased, the Company recognizes the increase of
the acquired services according to the fair value of the equity instruments. If the number of the granted
equity instruments is increased, the Company recognizes the increased fair value of the equity
instruments as the increase of the acquired services accordingly. If the Company modifies the vesting
conditions in a way favorable to employees, the Company considers the modified vesting conditions
when dealing with the vesting conditions.
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If the fair value of the granted equity instruments is decreased, the Company continues to recognize the
amount of the acquired services according to the fair value of the equity instruments on the grant date,
without taking into account the decrease of the fair value of the equity instruments. If the number of the
granted equity instruments is decreased, the Company treats the decreased part as cancellation of the
granted equity instruments. If the Company modifies the vesting conditions in a way unfavorable to
employees, the Company will not consider the modified vesting conditions when dealing with the
vesting conditions.
If the Company cancels or settles the granted equity instruments within the waiting period (other than
the cancellation arising from failure to meet the vesting conditions), the cancellation or settlement is
regarded as accelerated vesting treatment to immediately recognize the amount that should be
recognized within the remaining waiting period.
33. Preferred shares, perpetual bonds and other financial instruments
√ Applicable □ Not applicable
According to the relevant standards for financial instruments and the Regulations on the Provisions on
Accounting Treatment of Perpetual Bonds (C.C. [2019] No. 2), for financial instruments such as
convertible corporate bonds issued, the Company classifies these financial instruments or their
components as financial assets, financial liabilities or equity instruments during initial recognition, based
on the contractual terms of the financial instruments issued and the economic substance they reflect, not
only in legal form, but in combination with the definitions of financial assets, financial liabilities and
equity instruments.
At the balance sheet date, for financial instruments classified as equity instruments, interest expenses or
dividend distributions are treated by the Company as profit distribution. Repurchases, cancellations, and
similar transactions are treated as changes in equity. For financial instruments classified as financial
liabilities, their interest expense or dividend distribution are treated as borrowing costs, and the gains or
losses from repurchase or redemption are included in the current profit or loss.
34. Revenue
(1). Accounting policy applied for recognition and measurement of revenues disclosed by
business type
√ Applicable □ Not applicable
1. Revenue recognition principle
On the commencement date of the contract, the Company evaluates the contract, identifies the individual
performance obligations provided in the contract and determines whether to perform them within a
period or at a time point.
The performance obligations are deemed to be performed within a period if one of the following
conditions is satisfied, otherwise, at a time point: (1) The customer acquires and consumes the economic
benefits brought by the Company's performance while the Company is performing its obligations; (2) the
customer is capable to control the commodities under creation during the Company's performance; (3)
the commodities produced during the Company's performance have an irreplaceable purpose and the
Company has the right to collect the amounts for the performance part already completed to date within
the whole contract term.
For the obligations performed within a period, the Company recognizes the revenue according to the
performance progress in that period. If the performance progress cannot be determined in a reasonable
way, but the incurred costs are expected to be reimbursed, the revenue is recognized according to the
incurred amount of costs until the performance progress can be determined in a reasonable way. For the
obligations performed at a time point, the revenue is recognized at the time of the customer's acquiring
the control of related commodities or services. The Company takes into account the following when
judging whether the customer has acquired the control over a commodity: (1) The Company has the
current right for collection, namely the customer has the current obligation for payment with respect to
the commodity; (2) the Company has transferred the legal title of the commodity to the customer,
namely the customer has possessed the legal title of the commodity; (3) the Company has transferred the
physical commodity to the customer, namely the customer has physical possession of the commodity;
(4) the Company has transferred the main risks and returns on the commodity’s title to the customer,
namely the customer has acquired the same; (5) the customer has accepted the commodity; and (6) there
are other signs indicating that the customer has acquired control over the commodity.
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2. Revenue measurement principle
(1) The Company measures the revenue according to the transaction price apportioned to the individual
performance obligations. Transaction price refers to the consideration amount of which the Company is
expected to have right for collection due to transfer of commodities or services to the customer,
excluding the amounts charged on behalf of a third party and expected to refund to the customer.
(2) In case of a variable consideration in the contract, the Company determines the optimal estimate of
the variable consideration according to the expected value or the amount most likely to incur, while the
transaction price including the variable consideration cannot exceed the amount under the circumstance
where the accumulatively recognized revenue will be highly unlikely to suffer major reversal when
relevant uncertainties are eliminated.
(3) In case of a major financing composition in the contract, the Company determines the transaction
price according to the payable amount assumed to be paid by the customer in cash immediately after it
acquires the control over the commodities or services. The difference between the transaction price and
the contract consideration is amortized with the effective interest method within the contract term. If the
Company expects, on the commencement date of the contract, that the interval between the customer's
acquisition of the control of the commodities or services and its payment is not more than one year, the
major financing composition in the contract is not taken into account.
(4) In case of two or more performance obligations in the contract, the Company apportions the
transaction price to the individual performance obligations according to the relative proportion of the
individual sales price of the commodities undertaken as per the individual performance obligations on
the commencement date of the contract.
(2). Difference in accounting policies for revenue recognition and measurement resulting
from different business models for similar businesses
√ Applicable □ Not applicable
The Company mainly sells cosmetics. We have different sales models classified as distribution, direct
selling and sales on commission.
(1) Distribution
The sales revenue is recognized after the Company delivers the products to the buyer according to the
provisions of the contract and the buyer accepts the same.
(2) Direct selling
The sales revenue is recognized after the Company delivers the commodities to the consumer and the
consumer confirms receipt and makes payment.
(3) Sales on commission
The sales revenue is recognized after the Company delivers the products to the commissioned party
according to the provisions of the contract and the commissioned party provides the list of sales on
commission to the Company upon selling the products to others.
35. Contract cost
□ Applicable √ Not applicable
36. Government subsidies
√ Applicable □ Not applicable
1. Government subsidies are recognized when all of the following conditions are satisfied: (1) the
Company is able to meet the conditions attached to the Government subsidies; (2) the Company is able
to receive the government subsidies. In case of government subsidies as monetary assets, they are
measured at the amount received or receivable. In case of government subsidies as non-monetary assets,
they are measured at the fair value; in case that the fair value cannot be acquired in a reliable way, they
are measured at the nominal amount.
2. Determination and accounting treatment method for government subsidies related to assets
Government subsidies that are used for purchasing and construction or otherwise forming long-term
assets as specified in government documents are classified as government subsidies related to assets. In
case of no provision in government documents, the government subsidies are determined on the basis of
the essential condition required for obtaining the subsidies, and considered as related to assets if the
essential condition is purchasing and construction or otherwise forming long-term assets. Government
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subsidies related to assets offset the carrying value of relevant assets or are recognized as deferred
income. If the government subsidies related to assets are recognized as deferred income, they are
included in the profit and loss in a reasonable and systematic way within the service life of relevant
assets. Government subsidies measured at nominal amount are directly included in the current profit or
loss. If related assets are sold, transferred, scrapped or damaged before the end of their service life,
related deferred income balance unallocated is transferred into the profit and loss for the period of asset
disposal.
3. Determination and accounting treatment of government subsidies related to income
Government subsidies other than those related to assets are classified as government subsidies related to
income. If it is difficult to distinguish whether the government subsidies containing both the part related
to assets and the part related to income are related to assets or income, the government subsidies are
entirely classified as government subsidies related to income. Government subsidies related to income
that are used for compensation for relevant costs or losses in subsequent periods are recognized as
deferred income, and included in the current profit or loss or offset relevant costs in the period in which
relevant costs or losses are recognized; those used for compensation for relevant costs or losses that have
incurred are directly included in the current profit or loss or offset relevant costs.
4. Government subsidies related to daily business activities of the Company are included in other income
or offset relevant costs according to the nature of the economic business. Government subsidies
unrelated to the daily business activities of the Company are included in non-operating revenue or
expenses.
37. Deferred income tax assets/liabilities
√ Applicable □ Not applicable
1. Based on the difference between the carrying value of the assets or liabilities and their tax basis (if the
tax basis of the items not recognized as assets or liabilities can be determined according to the provisions
of the tax law, the difference between that tax basis and their physical count quantity), the deferred
income tax assets or liabilities are calculated and recognized according to the tax rate applicable in the
period where it is expected to recover the assets or liquidate the liabilities.
2. Deferred income tax assets are recognized to the extent that it is very likely to obtain the taxable
income to deduct the deductible temporary differences. If at the balance sheet date, there is conclusive
evidence proving that it is very likely that sufficient taxable income will be obtained in future periods to
deduct the deductible temporary differences, the deferred income tax assets not recognized in previous
accounting periods is recognized.
3. At the balance sheet date, the carrying value of the deferred income tax assets is reviewed. When it is
very likely that sufficient taxable income will not be obtained in future periods to deduct their benefits,
the carrying value of the deferred income tax assets is written down. When it is very likely that sufficient
taxable income will be obtained, the amount written down is reversed.
4. The current income tax and deferred income tax of the Company are included in the current profit or
loss as income tax expense or income, except for the income tax arising from the following
circumstances: (1) business combination; (2) transaction or matters recognized directly in the owners'
equity.
5. Where the following conditions are met simultaneously, the Company will present the deferred
income tax assets and deferred income tax liabilities at the net amount after offset: (1) the Company has
a legal right to settle the current income tax assets and liabilities; (2) the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity,
or different taxable entities. However, in the future, for each significant period of deferred income tax
assets and liabilities being reversed, the involved taxable entity intends to either settle current tax
liabilities and assets on a net basis, or to acquire the assets and settle the liabilities simultaneously.
38. Lease
√ Applicable □ Not applicable
Judgment and accounting treatment of the Company as the lessee for short-term leases and low-
value asset leases subject to simplified treatment
√ Applicable □ Not applicable
On the start date of the lease term, the Company recognizes leases with a lease term not exceeding 12
months and no purchase option as short-term leases; leases with low value when individual leased assets
167 / 272
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are brand-new assets are recognized as leases of low-value assets. If the Company subleases or is
expected to sublease the leased assets, the original lease is not recognized as a lease of low-value assets.
For all short-term leases and leases of low-value assets, the Company records the lease payments in the
cost of related assets or the current profit or loss by applying the straight-line method over each period of
the lease term.
Except for the above-mentioned short-term leases and leases of low-value assets that adopt simplified
treatment, the Company recognizes leases as right-of-use assets and lease liabilities, on the start date of
the lease term.
(1) Right-of-use assets
Right-of-use assets are initially measured at cost which includes: 1) the initial measurement amount of
lease liabilities; 2) the lease payments made on or before the start date of the lease term, deducting the
amounts related to the lease incentive given if a lease incentive exists; 3) the initial direct costs incurred
by the lessee; 4) the estimated costs to be incurred by the lessee to dismantle and remove leased assets,
restore the site where the leased assets are located, or restore the leased assets to the condition agreed
upon in the lease terms.
The Company depreciates right-of-use assets with the straight-line method. If it can be reasonably
determined that the Company will acquire ownership of the leased assets at the expiration of the lease
term, the Company accrues depreciation over the remaining service life of the leased assets. If it cannot
be reasonably determined that the Company will acquire ownership of the leased assets at the expiration
of the lease term, the Company accrues depreciation over the lease term or the remaining service life of
the leased assets, whichever is shorter.
(2) Lease liabilities
On the start date of the lease term, the Company recognizes the present value of the outstanding lease
payments as lease liabilities. When calculating the present value of lease payments, the interest rate
implicit in the lease is used as the discount rate. If the interest rate implicit in the lease cannot be
determined, the Company’s incremental borrowing rate is used as the discount rate. The difference
between the lease payment and its present value is regarded as the unrecognized financing expense, and
the interest expense is recognized in each period of the lease term according to the discount rate of the
present value of the recognized lease payment, and is included in the current profit or loss. Variable
lease payments that are not included in the measurement of lease liabilities are included in the current
profit or loss when actually incurred.
After the start date of the lease term, when there is a change in the actual amount of fixed payment, a
change in the estimated payable amount of the guaranteed residual value, a change in the index or ratio
used to determine the lease payment amount, or a change in the evaluation results or actual exercise of
the purchase option, renewal option or termination option, the Company re-measures the lease liabilities
according to the present value of the changed lease payments, and adjusts the carrying value of the right-
of-use assets accordingly. If the carrying value of the right-of-use assets has been reduced to zero, but
the lease liabilities still need to be further reduced, the remaining amount is included in the current profit
or loss.
Classification and accounting treatment of the Company as the lessor for leases
√ Applicable □ Not applicable
On the start date of the lease term, the Company classifies the leases that have almost all the risks and
rewards related to the ownership of the leased assets substantially transferred as financial leases, and
other leases as operating leases.
(1) Operating leases
During each period of the lease term, the Company recognizes the lease receipts as rental income by
applying the straight-line method, capitalizes the initial direct expenses incurred and amortizes the
expenses on the same basis as for rental income recognition, to be included in the current profit or loss in
installments. The variable lease payments obtained by the Company related to operating leases but not
included in the lease receipts are included in the current profit or loss when actually incurred.
(2) Financial leases
On the start date of the lease term, the Company recognizes the financial lease receivables based on the
net lease investment (the sum of the unguaranteed residual value and the present value of the lease
receipts that have not been received on the start date of the lease term discounted at the interest rate
implicit in lease), and derecognizes financial lease assets. During each period of the lease term, the
Company calculates and recognizes interest income based on the interest rate implicit in the lease.
168 / 272
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The variable lease payments obtained by the Company that are not included in the measurement of net
lease investment are included in the current profit or loss when actually incurred.
39. Other significant accounting policies and estimates
√ Applicable □ Not applicable
Accounting treatment related to repurchasing the Company’s shares
If the Company’s shares are acquired due to reasons such as reducing registered capital or rewarding
employees, the actual amount paid is treated as treasury shares and recorded for future reference. Where
the repurchased shares are canceled, the difference between the total face value of the shares calculated
based on the face value and number of canceled shares and the actual amount paid for the repurchase
will be offset against the capital reserve. If the capital reserve is insufficient to be offset, the retained
earnings will be offset. Where the repurchased shares are rewarded to employees of the Company as
equity-settled share-based payments, the cost of treasury shares delivered to employees and the
cumulative amount of capital reserves (other capital reserves) during the waiting period is charged off
when employees exercise their rights to purchase shares of the Company and relevant payments are
received, and the capital reserves (share premium) are also adjusted according to the difference.
40. Changes in significant accounting policies and estimates
(1). Changes in significant accounting policies
□ Applicable √ Not applicable
(2). Changes in significant accounting estimates
□ Applicable √ Not applicable
(3). Financial statements at the beginning of the year of the first implementation which are
adjusted due to the first implementation of new accounting standards or relevant
interpretations from 2023
□ Applicable √ Not applicable
41. Other
□ Applicable √ Not applicable
VI.Taxes
1. Major tax types and tax rates
Particulars on major tax types and tax rates
√ Applicable □ Not applicable
Tax type Taxing basis Tax rate
The output tax is calculated on the basis of the income from sales of
products and taxable income from rendering of services calculated 13%,
Value-added tax
according to the provisions of the tax law. The difference between the 9%, 6%,
(VAT)
output tax and the amount after deducting the input tax which is 1%
allowed to be deductible in the current period is the payable VAT.
Consumption tax Taxable sales (volume) 15%
In case of ad valorem taxation, it is calculated and paid as per 1.2% of
the remaining value after 30% of the original value of the property is 12%,
Property tax
deducted in a lump sum; in case of taxation according to lease, it is 1.2%
calculated and paid as per 12% of the rental income.
Urban
maintenance and Actual turnover tax paid 7%, 5%
construction tax
Education
Actual turnover tax paid 3%
surcharge
169 / 272
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Surcharge for
Actual turnover tax paid 2%
local education
Enterprise income
Taxable income [Note]
tax
[Note]: Descriptions on tax payers with different enterprise income tax rates
If there are taxpayers with different enterprise income tax rates, details will be disclosed
√ Applicable □ Not applicable
Name of taxpayer Income tax rate (%)
The Company 15
Huzhou Niuke Technology Co., Ltd. 20
Xuzhou Laibo Information Technology Co., Ltd. 20
Hangzhou CORRECTORS Trade Co., Ltd. 20
Hangzhou Weiluoke Cosmetics Co., Ltd. 20
Relevant taxes are calculated and paid according
Hanna Cosmetics Co., Ltd.
to local tax regulations in South Korea
Relevant taxes are calculated and paid according
Hapsode Co., Ltd.
to local tax regulations in South Korea
Relevant taxes are calculated and paid according
Hong Kong Keshi Trading Co., Ltd.
to local tax regulations in Hong Kong, China
Relevant taxes are calculated and paid according
Hong Kong Xinghuo Industry Limited
to local tax regulations in Hong Kong, China
Hong Kong Wanyan Electronic Commerce Co., Relevant taxes are calculated and paid according
Limited to local tax regulations in Hong Kong, China
Hong Kong Zhongwen Electronic Commerce Co., Relevant taxes are calculated and paid according
Limited to local tax regulations in Hong Kong, China
Relevant taxes are calculated and paid according
Hong Kong Xuchen Trading Limited
to local tax regulations in Hong Kong, China
Boya (Hong Kong) Investment Management Co., Relevant taxes are calculated and paid according
Limited. to local tax regulations in Hong Kong, China
Relevant taxes are calculated and paid according
Proya Europe SARL
to local tax regulations in Luxembourg
Relevant taxes are calculated and paid according
PROYA PTE. LTD
to local tax regulations in Singapore
Relevant taxes are calculated and paid according
PROYA BEAUTY MALAYSIA SDN. BHD
to local tax regulations in Malaysia
Relevant taxes are calculated and paid according
OR Off&Relax
to local tax regulations in Japan
Tax payers other than the above 25
2. Tax preference
√ Applicable □ Not applicable
The Company passed the high-tech enterprise review on December 8, 2023 and obtained the high-tech
enterprise certificate, which is valid for 3 years. The preferential period of corporate income tax is from
2023 to 2025. The Company was subject to the enterprise income tax at the preferential rate of 15%
during the Reporting Period.
According to the Announcement of the Ministry of Finance and the State Taxation Administration on
Further Implementing Preferential Policies of Income Tax for Small and Micro Enterprises
(Announcement No. 13 of 2022 of the Ministry of Finance and the State Taxation Administration) and
the Announcement on Preferential Policies of Income Tax for Small and Micro Enterprises and
Individual Industrial and Commercial Households (Announcement No. 6 of 2023 of the Ministry of
Finance and the State Taxation Administration), the subsidiaries Huzhou Niuke Technology Co., Ltd.,
Xuzhou Laibo Information Technology Co., Ltd., Hangzhou CORRECTORS Trade Co., Ltd., and
Hangzhou Weiluoke Cosmetics Co., Ltd. meet the tax standards for small low-profit enterprises. Thus,
the portion of taxable income not exceeding RMB1 million in the current period is reduced by 25% to be
included in the taxable income and the enterprise income tax is paid by such subsidiaries at the rate of
170 / 272
Annual Report 2023
20%, and the portion of taxable income exceeding RMB1 million but not exceeding RMB3 million in
the current period is also reduced by 25% to be included in the taxable income and the enterprise income
tax is also paid by such subsidiaries at the rate of 20%.
According to the Announcement of the Ministry of Finance and the State Taxation Administration on
Clarifying Policies for Value-Added Tax Reduction and Exemption for Small-Scale Taxpayers
(Announcement No. 1 of 2023 of the Ministry of Finance and the State Taxation Administration), the
subsidiary Hangzhou Proya Commercial Management Co., Ltd. meets the conditions for general
taxpayers engaging in the life service industry. From January 1, 2023 to December 31, 2023, the
subsidiary is allowed to offset the tax payable by an additional 5% of the deductible input tax amount for
the current period.
3. Other
□ Applicable √ Not applicable
VII.Notes to the Items in Consolidated Financial Statements
1. Cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Cash on hand 29,332.00 20,176.08
Cash at bank 3,783,575,412.37 3,078,501,723.18
Other monetary capital 227,480,813.70 82,481,185.79
Deposits with finance
companies
Total 4,011,085,558.07 3,161,003,085.05
Including: Total cash
deposited outside 79,895,831.50 73,162,153.00
China
Other explanations
At the end of the period, bank deposits subject to restricted use included the fixed-term deposit of
RMB335,288,251.36, the transformer fixed-term deposit of RMB250,000.00, and the L/C deposit of
RMB8,800,000.00, ETC vehicle deposit of RMB70,000.00, Pinduoduo deposit of 5,298,890.00, and the
Tmall and Alipay deposits of RMB2,110,704.68 in other monetary capital.
At the beginning of the period, bank deposits subject to restricted use included the fixed-term deposit of
RMB30,000,000.00, the transformer fixed deposit of RMB250,000.00, the ETC vehicle deposit of
RMB70,000.00, the Pinduoduo deposit of RMB5,000,000.00, and the Tmall and Alipay deposits of
RMB350,000.00.
2. Held-for-trading financial assets
□ Applicable √ Not applicable
3. Derivative financial assets
□ Applicable √ Not applicable
4. Notes receivable
(1). Presentation of notes receivable by category
□ Applicable √ Not applicable
(2). Notes receivable pledged by the Company at the end of the period
□ Applicable √ Not applicable
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(3). Notes receivable endorsed or discounted by the Company at the end of the period and not
yet due on the balance sheet date
□ Applicable √ Not applicable
(4). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of notes receivable with changes in provision for loss
in the current period:
□ Applicable √ Not applicable
(5). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(6). Notes receivable actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important notes receivable:
□ Applicable √ Not applicable
Explanation on the write-off of notes receivable:
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
5. Accounts receivable
(1). Disclosed by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Account age Ending book balance Opening book balance
Within 1 year
Including: Sub-items within 1 year
Within 1 year 361,290,118.83 102,578,046.19
Sub-total within 1 year 361,290,118.83 102,578,046.19
1-2 years 1,358,203.20 3,828,412.88
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Annual Report 2023
2-3 years 787,682.79 5,152,061.48
Above 3 years 12,055,855.34 14,301,950.43
3-4 years
4-5 years
Above 5 years
Total 375,491,860.16 125,860,470.98
(2). Disclosed by the classification of bad debt accrual method
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Provision for bad Provision for bad
Carrying amount Carrying amount
debts debts
Category Per Accr Book Per Accr Book
cent ual value cent ual value
Amount Amount Amount Amount
age ratio age ratio
(%) (%) (%) (%)
Provision 8,401,266. 2.2 8,401,266. 100. 13,574,973 10. 13,574,97 100.
for bad 23 4 23 00 .09 79 3.09 00
debts
accrued
individua
lly
Including:
Provision 8,401,266. 2.2 8,401,266. 100. 13,574,973 10. 13,574,97 100.
for bad 23 4 23 00 .09 79 3.09 00
debts
accrued
individua
lly
Provision 367,090,59 97. 22,520,39 6.13 344,570,19 112,285,49 89. 10,127,59 9.02 102,157,89
for bad 3.93 76 7.39 6.54 7.89 21 9.48 8.41
debts
accrued
by
portfolio
Including:
Account 367,090,59 97. 22,520,39 6.13 344,570,19 112,285,49 89. 10,127,59 9.02 102,157,89
age 3.93 76 7.39 6.54 7.89 21 9.48 8.41
portfolio
375,491,86 / 30,921,66 / 344,570,19 125,860,47 / 23,702,57 / 102,157,89
Total
0.16 3.62 6.54 0.98 2.57 8.41
Provision for bad debts accrued individually:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance
Name Provision for Reason for
Carrying amount Accrual ratio (%)
bad debts accrual
Provision for bad 8,401,266.23 8,401,266.23 100.00 Expected to be
debts accrued unrecoverable
individually
Total 8,401,266.23 8,401,266.23 100.00 /
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
√ Applicable □ Not applicable
By portfolio: Account age portfolio
Unit: Yuan Currency: RMB
173 / 272
Annual Report 2023
Ending balance
Name
Accounts receivable Provision for bad debts Accrual ratio (%)
Account age 367,090,593.93 22,520,397.39 6.13
portfolio
Total 367,090,593.93 22,520,397.39 6.13
Explanation on provision for bad debts accrued by portfolio:
√ Applicable □ Not applicable
Ending amount
Account age
Carrying amount Provision for bad debts Accrual ratio (%)
Within 1 year 361,290,118.83 18,064,505.92 5.00
1-2 years 1,358,203.20 407,460.96 30.00
2-3 years 787,682.79 393,841.40 50.00
Above 3 years 3,654,589.11 3,654,589.11 100.00
Subtotal 367,090,593.93 22,520,397.39 6.13
Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of accounts receivable with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(3). Information on provisions for bad debts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount of changes in the current period
Opening Withdrawal Other Ending
Category Charge-off
balance Accrual or write- change balance
or write-off
back s
Provision 13,574,973.0 124,369.15 289,706.45 5,008,369.5 8,401,266.23
for bad 9 6
debts
accrued
individual
ly
Provision 10,127,599.4 13,254,766.4 861,968.51 22,520,397.39
for bad 8 2
debts
accrued
by
portfolio
Total 23,702,572.5 13,379,135.5 289,706.45 5,870,338.0 30,921,663.62
7 7 7
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
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Annual Report 2023
Other explanations:
None
(4). Accounts receivable actually written off in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Written off amount
Accounts receivable actually written off 5,870,338.07
Among them, information on accounts receivable significantly written off
□ Applicable √ Not applicable
Explanation on the write-off of the account receivable:
□ Applicable √ Not applicable
(5). Accounts receivable and contract assets of the top five ending balances collected by debtor
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Proportion
of total
Balance
Balance of balance of
of
Balance of accounts accounts
contract Ending balance
Company accounts receivable and receivable
assets at of provision for
name receivable at the contract assets at and
the end bad debts
end of the period the end of the contract
of the
period assets at the
period
end of the
period (%)
Beijing 318,502,679.98 318,502,679.98 84.82 15,925,134.00
Jingdong
Century
Trading Co.,
Ltd.
Vipshop 21,478,514.58 21,478,514.58 5.72 1,073,925.73
(China) Co.,
Ltd.
Zhejiang 3,779,622.99 3,779,622.99 1.01 188,981.15
Haochao
Network
Technology
Co., Ltd.
BOTANIERA 3,622,381.28 3,622,381.28 0.96 181,119.06
(Hangzhou)
Health
Technology
Co., Ltd.
Hangzhou 3,199,647.18 3,199,647.18 0.85 254,859.68
Zhishang
Technology
Co., Ltd.
Total 350,582,846.01 350,582,846.01 93.36 17,624,019.62
Other explanations
None
175 / 272
Annual Report 2023
Other explanations:
□ Applicable √ Not applicable
6. Contract assets
(1). Description of contract assets
□ Applicable √ Not applicable
(2). Amount of and reasons for significant changes in carrying amount during the Reporting
Period
□ Applicable √ Not applicable
(3). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of contract assets with changes in provision for loss
in the current period:
□ Applicable √ Not applicable
(4). Provision for bad debts of contract assets accrued in the current period
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(5). Contract assets actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important contract assets:
□ Applicable √ Not applicable
Explanation on write-off of contract assets:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
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Annual Report 2023
7. Receivable financing
(1). Presentation of receivable financing by category
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Bank acceptance bills 7,378,700.06
Total 7,378,700.06
(2). Receivable financing pledged by the Company at the end of the period
□ Applicable √ Not applicable
(3). Receivable financing endorsed or discounted by the Company at the end of the period and
not yet due on the balance sheet date
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount derecognized at the end Amount not derecognized at the
Item
of the period end of the period
Bank acceptance bills 600,000.00
Total 600,000.00
It is unlikely that a bank acceptance note will be overdue, as the acceptor of bank acceptance note is a
high-credit commercial bank. Therefore, the Company has derecognized endorsed or discounted bank
acceptance notes. If any of such notes is overdue, the Company will be still jointly and severally liable to
the holder according to the Negotiable Instruments Law.
(4). Disclosed by the classification of bad debt accrual method
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Provision for bad Provision for bad
Carrying amount Carrying amount
Category debts debts
Book Book
Accrual Accrual
Percentage value Percentage value
Amount Amount ratio Amount Amount ratio
(%) (%)
(%) (%)
Provision
for bad
debts
accrued
individually
Including:
Provision 7,378,700.06 100.00 7,378,700.06
for bad
debts
accrued by
portfolio
Including:
Bank 7,378,700.06 100.00 7,378,700.06
acceptance
bills
7,378,700.06 / / 7,378,700.06 / /
Total
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
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Annual Report 2023
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of receivable financing with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(5). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(6). Receivable financing actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important receivable financing:
□ Applicable √ Not applicable
Explanation on write-off of receivable financing:
□ Applicable √ Not applicable
(7). Changes in the current period of receivables financing and changes in fair value:
□ Applicable √ Not applicable
(8). Other explanations:
□ Applicable √ Not applicable
8. Prepayments
(1). Prepayments are presented by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Account age
Amount Percentage (%) Amount Percentage (%)
Within 1 200,521,100.41 98.84 88,898,806.55 97.18
year
1-2 years 1,427,668.59 0.70 1,696,085.16 1.85
2-3 years 383,035.66 0.19 829,263.44 0.91
Above 3 538,390.92 0.27 59,368.00 0.06
years
Total 202,870,195.58 100.00 91,483,523.15 100.00
Explanation on reasons for prepayments with an account age of more than one year and a significant
amount are not settled in time:
None
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Annual Report 2023
(2). Prepayments of the top five ending balances collected by prepaid objects
√ Applicable □ Not applicable
Ratio of total ending
Company name Ending balance balance of prepayment
(%)
Hangzhou Alimama Software Service Co., 57,138,476.76 28.17
Ltd. [Note 1]
Wuhan Juliang Xingtu Technology Co., 34,771,709.17 17.14
Ltd. [Note 2]
Guangxi Jingdong Qingchuan E- 29,688,880.41 14.63
commerce Co., Ltd. [Note 3]
Shanghai Boguan Ruisi Media Technology 12,671,442.01 6.25
Co., Ltd.
Shanghai Zhuiji Information Technology 9,140,806.81 4.51
Co., Ltd.
Total 143,411,315.16 70.70
Other explanations
[Note 1] The prepayments are the consolidated statistics of Hangzhou Alimama Software Service Co.,
Ltd. and Zhejiang Alibaba Communication Technology Co., Ltd. under common control.
[Note 2] The prepayments are the consolidated statistics of Hubei Juliang Engine Technology Co., Ltd.
and Wuhan Juliang Xingtu Technology Co., Ltd. under common control.
[Note 3] The prepayments are the consolidated statistics of Guangxi Jingdong Qingchuan E-commerce
Co., Ltd. and Chongqing Jingdong Haijia e-commerce Co., Ltd.. under common control.
Other explanations
□ Applicable √ Not applicable
9. Other receivables
Presentation by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Interest receivable
Dividend receivable
Other receivables 81,966,213.90 73,564,083.63
Total 81,966,213.90 73,564,083.63
Other explanations:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
□ Applicable √ Not applicable
(2). Significant overdue interest
□ Applicable √ Not applicable
(3). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
179 / 272
Annual Report 2023
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
(4). Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of interest receivable with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(5). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(6). Interest receivable actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important interest receivable
□ Applicable √ Not applicable
Explanation on write-off of receivable financing:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not applicable
(2). Important dividends receivable with an account age of more than one year
□ Applicable √ Not applicable
(3). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
180 / 272
Annual Report 2023
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
(4). Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of dividends receivable with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(5). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(6). Dividends receivable actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important dividends receivable
□ Applicable √ Not applicable
Explanation on write-off of receivable financing:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
Other receivables
(1). Disclosed by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Account age Ending book balance Opening book balance
Within 1 year
Including: Sub-items within 1 year
Within 1 year 83,104,304.36 65,862,919.09
Sub-total within 1 year 83,104,304.36 65,862,919.09
1-2 years 3,463,981.21 19,331,287.17
2-3 years 5,143,264.28 22,496,350.23
Above 3 years 28,159,425.53 6,470,493.57
3-4 years
4-5 years
Above 5 years
Total 119,870,975.38 114,161,050.06
(2). Classification by nature of payment
√ Applicable □ Not applicable
181 / 272
Annual Report 2023
Unit: Yuan Currency: RMB
Nature of payment Ending book balance Opening book balance
Security deposits 10,750,199.61 22,781,728.37
Suspense payment receivables 105,147,206.95 90,500,345.08
Reserve funds 620,596.53 552,985.89
Temporary loans 3,000,000.00
Other 352,972.29 325,990.72
Total 119,870,975.38 114,161,050.06
(3). Information on provision for bad debts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
First stage Second stage Third stage
Expected credit loss Expected credit loss
Expected
Provision for bad for the entire for the entire
credit losses Total
debts duration (credit duration (credit
over the next
impairment not impairment has
12 months
occurred) occurred)
Balance as of 3,293,145.99 4,430,510.11 32,873,310.33 40,596,966.43
January 1, 2023
Balance as of
January 1, 2023 in
the current period
– Transferred into -173,199.06 173,199.06
the second stage
– Transferred into -355,402.74 355,402.74
the 3rd stage
– Transferred
back to the second
stage
– Transferred
back to the first
stage
Amount accrued 1,035,268.26 -3,209,112.07 -518,361.14 -2,692,204.95
in the current
period
Amount written
back in the current
period
Amount charged-
off in the current
period
Amount written
off in the current
period
Other changes
Balance as of 4,155,215.19 1,039,194.36 32,710,351.93 37,904,761.48
December 31,
2023
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of other receivables with changes in provision for loss
in the current period:
182 / 272
Annual Report 2023
□ Applicable √ Not applicable
The amount of provision for bad debts in the current period and the basis for evaluating whether the
credit risk of financial instruments increases significantly:
□ Applicable √ Not applicable
(4). Information on provisions for bad debts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount of changes in the current period
Charge-
Opening Withdrawal Ending
Category off or Other
balance Accrual or write- balance
write- changes
back
off
Provision 25,821,363.11 382,862.44 26,204,225.55
for bad
debts
accrued
individually
Provision 14,775,603.32 -3,075,067.39 11,700,535.93
for bad
debts
accrued by
portfolio
Total 40,596,966.43 -2,692,204.95 37,904,761.48
Among them, significant amount of bad-debt provision written back or withdrawn in the current period:
□ Applicable √ Not applicable
Other explanations
None
(5). Other receivables actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of other important receivables:
□ Applicable √ Not applicable
Explanation on write-off of other receivables:
□ Applicable √ Not applicable
(6). Other receivables of the top five ending balances collected by debtor
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
As a
proportion
of total Provision for
Ending ending Nature of bad debts
Company name Account age
balance balance in payment Ending
other balance
receivables
(%)
183 / 272
Annual Report 2023
Beijing 58,826,562.99 49.07 Suspense RMB58,801,56 2,952,578.15
Youzhuju payment 2.99 with an
Network receivables account age
Technology within 1 year,
Co., Ltd. and
RMB25,000.00
with an account
age of 2-3
years
Zhejiang Tmall 18,463,296.17 15.40 Suspense Within 1 year 923,164.81
Technology payment
Co., Ltd. receivables
EURL 18,169,451.02 15.16 Suspense Above 3 years 18,169,451.0
PHARMATIC payment 2
A receivables
SIKEROM 8,034,774.53 6.70 Suspense Above 3 years 8,034,774.53
EURPOE payment
GMBH receivables
Hangzhou 4,708,614.72 3.93 Security Above 3 years 4,708,614.72
Property deposits
Maintenance
Fund
Management
Center
Total 108,202,699.4 90.26 / / 34,788,583.2
3 3
(7). Presented as other receivables due to centralized fund management
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
10. Inventories
(1). Classification of inventories
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Provision for Provision for
devaluation of devaluation of
Item Carrying Carrying
inventories/Impairment Carrying value inventories/Impairment Carrying value
amount amount
provision of contract provision of contract
performance cost performance cost
Raw 64,320,795.95 10,411,607.57 53,909,188.38 80,114,114.87 1,703,611.59 78,410,503.28
materials
Packaging 54,811,928.32 4,460,418.42 50,351,509.90 42,300,426.18 1,016,137.11 41,284,289.07
Work in 22,883,723.89 252,167.47 22,631,556.42 18,952,830.41 134,093.52 18,818,736.89
process
Outsourcing 22,364,071.52 171,660.98 22,192,410.54 12,011,197.41 65,685.51 11,945,511.90
gifts
Inventory 725,768,386.69 88,209,742.39 637,558,644.30 546,279,426.61 37,780,598.48 508,498,828.13
commodities
Low-value 10,957,787.46 385,941.32 10,571,846.14 10,474,077.34 380,619.88 10,093,457.46
consumables
Total 901,106,693.83 103,891,538.15 797,215,155.68 710,132,072.82 41,080,746.09 669,051,326.73
184 / 272
Annual Report 2023
(2). Provision for devaluation of inventories and impairment provision of contract
performance cost
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increased amount in the Decreased amount in
Opening current period the current period
Item Ending balance
balance Write-back or
Accrual Other Other
charge-off
Raw 1,703,611.59 9,254,051.84 546,055.86 10,411,607.57
materials
Packaging 1,016,137.11 4,393,756.45 949,475.14 4,460,418.42
Work in 134,093.52 250,947.19 132,873.24 252,167.47
process
Outsourcing 65,685.51 1,106,061.12 1,000,085.65 171,660.98
gifts
Inventory 37,780,598.48 91,647,961.79 41,218,817.88 88,209,742.39
commodities
Low-value 380,619.88 105,003.73 99,682.29 385,941.32
consumables
Total 41,080,746.09 106,757,782.12 43,946,990.06 103,891,538.15
Reason for write-back or charge-off of provisions for devaluation of inventories in the current period
√ Applicable □ Not applicable
At the end of the current period, the net realizable value of some products was lower than their
corresponding cost, so the provision for devaluation of inventories was accrued based on the difference
between the cost and the net realizable value; In the current period, the Company consumed, sold or
scraped some of the inventories of which the Company had already accrued provisions for devaluation,
so the provisions for devaluation was charged off in the current period.
Provision for devaluation of inventories accrued by portfolio
□ Applicable √ Not applicable
Accrual standards for provision for devaluation of inventories accrued by portfolio
□ Applicable √ Not applicable
(3). Capitalized amount of borrowing expenses included in ending balance of inventories and
its calculation standard and basis
□ Applicable √ Not applicable
(4). Explanation on current amortization amount of contract performance cost
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
11. Held-for-sale assets
□ Applicable √ Not applicable
12. Non-current assets due within one year
□ Applicable √ Not applicable
Debt investments due within one year
□ Applicable √ Not applicable
185 / 272
Annual Report 2023
Other debt investments due within one year
□ Applicable √ Not applicable
Other explanations on non-current assets due within one year
None
13. Other current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Contract acquisition cost
Return cost receivable 9,190,580.83 8,782,156.33
Input VAT to be deducted 90,306,570.44 36,944,213.35
Advance payment of taxes 267,921.80 4,009,626.89
Total 99,765,073.07 49,735,996.57
Other explanations
None
14. Debt investments
(1). Information on debt investments
□ Applicable √ Not applicable
Changes in impairment provisions of debt investments in the current period
□ Applicable √ Not applicable
(2). Significant debt investments at the end of the period
□ Applicable √ Not applicable
(3). Information on accrual of impairment provisions
□ Applicable √ Not applicable
Classification basis and accrual ratio of impairment provisions for each stage:
None
Explanation on significant changes in book balance of debt investments with changes in provision for loss
in the current period:
□ Applicable √ Not applicable
Amount of impairment provision accrued in the current period and the basis for evaluating whether the
credit risk of financial instruments increases significantly
□ Applicable √ Not applicable
(4). Information on debt investments actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important debt investments
□ Applicable √ Not applicable
Explanation on write-off of debt investments:
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
186 / 272
Annual Report 2023
15. Other debt investments
(1). Information on other debt investments
□ Applicable √ Not applicable
Changes in impairment provisions of other debt investments in the current period
□ Applicable √ Not applicable
(2). Important other debt investments at the end of the period
□ Applicable √ Not applicable
(3). Information on accrual of impairment provisions
□ Applicable √ Not applicable
Classification basis and accrual ratio of impairment provisions for each stage:
None
Explanation on significant changes in book balance of other debt investments with changes in provision
for loss in the current period:
□ Applicable √ Not applicable
Amount of impairment provision accrued in the current period and the basis for evaluating whether the
credit risk of financial instruments increases significantly
□ Applicable √ Not applicable
(4). Information on other debt investments actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important other debt investments
□ Applicable √ Not applicable
Explanation on write-off of other debt investments:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
16. Long-term receivables
(1). Information on long-term receivables
□ Applicable √ Not applicable
(2). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
187 / 272
Annual Report 2023
(3). Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of long-term receivables with changes in provision
for loss in the current period:
□ Applicable √ Not applicable
Amount of provision for bad debts accrued in the current period and the basis for evaluating whether the
credit risk of financial instruments increases significantly
□ Applicable √ Not applicable
(4). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(5). Information on long-term receivables actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important long-term receivables:
□ Applicable √ Not applicable
Explanation on the write-off of long-term receivables:
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
188 / 272
Annual Report 2023
17. Long-term equity investments
(1). Information on long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Current changes
Recognized
Declared Ending
investment Other Other
Invested Opening payment Impairment Ending balance of
Additional Investment gain and loss comprehensi chang
entity balance of cash provision Other balance impairment
investment decrease under the -ve income es in
dividends accrued provisions
equity adjustments equity
or profits
method
I. Joint Venture
Huzhou 3,068,948 -8,956.25 3,059,9
Panrui .16 91.91
Industry
Investment
Partnership
(Limited
Partnership)
Subtotal 3,068,948 -8,956.25 3,059,9
.16 91.91
II. Affiliate
Xiongke 2,649,619 -31,784.81 2,617,8
Culture .70 34.89
Media
(Hangzhou)
Co., Ltd.
Jiaxing 111,253,2 18,636,363.
Woyong 21.93 64
-
Investment - 100,964
20,250,000.0
Partnership 8,675,141.73 ,443.84
0
(Limited
Partnership)
Zhuhai 10,576,29
Haishilong 8.67 - 2,401,2 81,442,213.
Biotechnolo 8,175,090.89 07.78 22
gy Co., Ltd.
Beijing 4,918,865
Xiushi .34
4,530,6
Cultural -388,185.27
80.07
Developmen
t Co., Ltd.
Matis 6,066,423 6,066,423.
Information .66 66
Technology
(Guangzhou
) Co., Ltd.
Subtotal 135,464,4 18,636,363. 6,066,423. - -
110,514 81,442,213.
29.30 64 66 17,270,202.7 20,250,000.0
,166.58 22
0 0
138,533,3 18,636,363. 6,066,423. - -
113,574 81,442,213.
Total 77.46 64 66 17,279,158.9 20,250,000.0
,158.49 22
5 0
189 / 272
Annual Report 2023
(2). Information on impairment testing of long-term equity investments
□ Applicable √ Not applicable
Other explanations
None
190 / 272
Annual Report 2023
18. Other equity instrument investments
(1). Information on other equity instrument investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Current changes Reason for
other equity
Gains Losses Dividend Accumulated Accumulated instrument
recognized in recognized in income gains losses investments
Opening other other Ending recognized recognized in recognized in designated as
Item Additional Investment
balance comprehensi- comprehensi- Other balance in the other other measured at
investment decrease
ve income in ve income in current comprehensi- comprehensive fair value
the current the current period ve income income through other
period period comprehensi-
ve income
Hangzhou
Refer to
Regenovo Bio- 20,580,0 20,580,0
“Other
technology Co., 00.00 00.00
explanations”
Ltd.
Refer to
35,822,4 35,822,4
LIPOTRUE,S.L. “Other
00.00 00.00
explanations”
Refer to
Golong Holdings 90,000,0 - 51,258,0
-38,742,000.00 “Other
Co., Ltd. 00.00 38,742,000.00 00.00
explanations”
146,402, - 107,660,
Total -38,742,000.00 /
400.00 38,742,000.00 400.00
(2). Explanation on derecognition in the current period
□ Applicable √ Not applicable
Other explanations:
√ Applicable □ Not applicable
Reason for equity instrument investments designated as measured at fair value through other comprehensive income
The Company invests in equity for strategic investment purposes, and the investees will take the Company's investments as equity instruments. Therefore, the
Company designates such equity instrument investments as financial assets at fair value through other comprehensive income.
191 / 272
Annual Report 2023
19. Other non-current financial assets
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
20. Investment real estate
Measurement mode of investment real estate
(1). Investment real estate with the cost measurement mode
Unit: Yuan Currency: RMB
Building and Land use Construction
Item Total
construction rights in progress
I. Original carrying value
1. Beginning balance 78,781,143.26 78,781,143.26
2. Current increase
(1) Outsourcing
(2) Transfer-in of
inventories, fixed assets, or
construction in process
(3) Increase due to business
combination
3. Current decrease
(1) Disposal
(2) Other transfer-out
4. Ending balance 78,781,143.26 78,781,143.26
II. Accumulated depreciation and amortization
1. Beginning balance 10,126,442.45 10,126,442.45
2. Current increase 2,498,228.90 2,498,228.90
(1) Accrual or amortization 2,498,228.90 2,498,228.90
3. Current decrease
(1) Disposal
(2) Other transfer-out
4. Ending balance 12,624,671.35 12,624,671.35
III. Impairment provision
1. Beginning balance
2. Current increase
(1) Accrual
3. Current decrease
(1) Disposal
(2) Other transfer-out
4. Ending balance
IV. Carrying value
1. Ending carrying value 66,156,471.91 66,156,471.91
2. Opening carrying value 68,654,700.81 68,654,700.81
(2). Real estate held for investment with pending proprietorship certificate
□ Applicable √ Not applicable
192 / 272
Annual Report 2023
(3). Information on impairment testing of investment real estate with the cost
measurement mode
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
21. Fixed assets
Presentation by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Fixed assets 827,350,985.29 570,376,309.67
Disposal of fixed assets
Total 827,350,985.29 570,376,309.67
Other explanations:
□ Applicable √ Not applicable
Fixed assets
(1). Information on fixed assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Houses and General Dedicated Means of
Item Total
buildings equipment equipment transportation
I. Original carrying value:
1. Beginning
539,295,502.97 80,477,003.51 249,649,332.67 20,584,593.97 890,006,433.12
balance
2. Current
202,409,554.02 11,394,343.95 103,401,559.42 6,037,463.71 323,242,921.10
increase
(1) Purchase 9,613,663.30 11,847,662.98 6,037,463.71 27,498,789.99
(2) Transfer-
in of
202,409,554.02 1,780,680.65 91,553,896.44 295,744,131.11
construction
in process
(3) Increase
due to
business
combination
3. Current
4,685,530.91 11,082,474.20 510,746.31 16,278,751.42
decrease
(1) Disposal
4,685,530.91 11,082,474.20 510,746.31 16,278,751.42
or scrapping
4. Ending
741,705,056.99 87,185,816.55 341,968,417.89 26,111,311.37 1,196,970,602.80
balance
II. Accumulated depreciation
1. Beginning
127,549,692.50 41,778,273.41 133,987,291.36 16,314,866.18 319,630,123.45
balance
2. Current
21,550,471.57 10,992,033.33 24,581,637.89 3,356,409.23 60,480,552.02
increase
(1) Accrual 21,550,471.57 10,992,033.33 24,581,637.89 3,356,409.23 60,480,552.02
3. Current
946,981.73 10,457,692.86 423,915.63 11,828,590.22
decrease
193 / 272
Annual Report 2023
(1) Disposal
946,981.73 10,457,692.86 423,915.63 11,828,590.22
or scrapping
4. Ending
149,100,164.07 51,823,325.01 148,111,236.39 19,247,359.78 368,282,085.25
balance
III. Impairment provision
1. Beginning
balance
2. Current
1,337,532.26 1,337,532.26
increase
(1) Accrual 1,337,532.26 1,337,532.26
3. Current
decrease
(1) Disposal
or scrapping
4. Ending
1,337,532.26 1,337,532.26
balance
IV. Carrying value
1. Ending
carrying 592,604,892.92 35,362,491.54 192,519,649.24 6,863,951.59 827,350,985.29
value
2. Opening
carrying 411,745,810.47 38,698,730.10 115,662,041.31 4,269,727.79 570,376,309.67
value
(2). Information on temporarily idle fixed assets
□ Applicable √ Not applicable
(3). Fixed assets leased out through operating lease
□ Applicable √ Not applicable
(4). Information on fixed assets without property right certificate
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Reason for failure to obtain the
Item Carrying value
property right certificate
Expansion of Huzhou 123,603,623.54 The property right certificate is
Production Base still being processed
Longwu R&D Center 77,580,055.84 The property right certificate is
still being processed
Total 201,183,679.38
(5). Information on impairment testing of fixed assets
√ Applicable □ Not applicable
The recoverable amount is determined based on the net amount after deducting disposal
expenses from fair value
□ Applicable √ Not applicable
Unit: Yuan Currency: RMB
Determination
Determination
Carrying Recoverable Impairment of fair value Key
Item basis of key
value amount amount and disposal parameter
parameters
costs
194 / 272
Annual Report 2023
It is the
equipment to
be scrapped,
Dedicated 1,337,53 1,337,532.2
with the
equipment 2.26 6
estimated
disposal value
of RMB0
1,337,53 1,337,532.2
Total / / /
2.26 6
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable √ Not applicable
Reasons for significant discrepancies between the aforementioned information and the
information used in previous years’ impairment tests or external information
□ Applicable √ Not applicable
Reasons for significant discrepancies between the information used in previous years’
impairment tests of the Company and the actual situation of the current year
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
Disposal of fixed assets
□ Applicable √ Not applicable
22. Construction in progress
Presentation by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Construction in progress 52,038,642.94 207,378,935.86
Engineering materials
Total 52,038,642.94 207,378,935.86
Other explanations:
□ Applicable √ Not applicable
Construction in progress
(1). Information on construction in progress
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Item Carrying Impairment Carrying Carrying Impairment Carrying
amount provision value amount provision value
Huzhou 24,853,830. 24,853, 141,886,053. 141,886,05
Production 82 830.82 44 3.44
Base
Expansion
Project
(Phase I)
195 / 272
Annual Report 2023
Longwu 8,377,199.0 8,377,1 34,804,789.7 34,804,789
R&D 3 99.03 1 .71
Center
Constructio
n Project
Decoration 4,759,533.9 4,759,5 5,282,700.29 5,282,700.
engineering 3 33.93 29
Information 8,545,628.8 8,545,6 4,266,606.14 4,266,606.
System 3 28.83 14
Upgrade
Project
Makeup 14,323,636.4 14,323,636
Factory 7 .47
Other 5,502,450.3 5,502,4 6,815,149.81 6,815,149.
sporadic 3 50.33 81
projects
52,038,642. 52,038, 207,378,935. 207,378,93
Total
94 642.94 86 5.86
(2). Information on changes in important construction in progress projects in the current
period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Proport Including
Interest
ion of Accum : Amount
Amount of Amount capitali
Increased accum- -ulated of
transfer to of other Progres -zation
amount in ulated amount interest Source
Opening fixed decrease Ending -s of rate in
Item Budget the project of capitaliza of
balance assets in -s in the balance works the
current invest- interest -tion in funds
the current current (%) current
period ment to capitali the
period period period
budget -zation current
(%)
(%) period
Huzhou RMB4 141,886, 77,130,71 194,162,9 15,611, 5,220,46 4.57 Raised
Production 16.78m 053.44 9.15 41.77 853.14 5.60 funds
Base illion 24,853, and
61.15 61.15
Expansion 830.82 self-
Project owned
(Phase I) funds
Longwu RMB1 34,804,7 89,143,73 77,580,05 37,991,2 8,377,1 96.37 96.37 14,857, 7,969,29 4.57 Raised
R&D 28.61m 89.71 5.33 5.84 70.17 99.03 625.44 4.09 funds
Center illion and
Constructio self-
n Project owned
funds
Information RMB1 4,266,60 10,963,78 1,780,680. 4,904,08 8,545,6 13.55 13.55 5,338,1 2,702,09 4.57 Raised
System 12.40m 6.14 8.53 65 5.19 28.83 34.02 1.44 funds
Upgrade illion and
Project self-
owned
funds
Makeup RMB6 14,323,6 84,955.75 14,408,59 43.45 100.00
Factory 6.11mil 36.47 2.22
lion
RMB7 / /
195,281, 177,323,1 287,932,2 42,895,3 41,776, 35,807, 15,891,8
Total 23.90m / /
085.76 98.76 70.48 55.36 658.68 612.60 51.13
illion
[Note 1] Amount of other decreases in the current period of Longwu R&D Center Construction Project
was incurred due to the partial transfer of decoration fees of lease houses to long-term deferred expenses
[Note 2] Amount of decrease in the current period of the Information System Upgrade Project was
incurred due to the partial transfer of the Information System Upgrade Project to intangible assets or
long-term prepaid expenses upon completion
196 / 272
Annual Report 2023
(3). Information on impairment provision of construction in progress accrued in the
current period
□ Applicable √ Not applicable
(4). Information on impairment testing of construction in progress
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
Engineering materials
(1). Information on engineering materials
□ Applicable √ Not applicable
23. Productive biological assets
(1). Productive biological assets with the cost measurement mode
□ Applicable √ Not applicable
(2). Information on impairment testing of productive biological assets with the cost
measurement mode
□ Applicable √ Not applicable
(3). Productive biological assets with fair value econometric mode
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
24. Oil and gas assets
(1) Information on oil and gas assets
□ Applicable √ Not applicable
(2) Information on impairment testing of oil and gas assets
□ Applicable √ Not applicable
Other explanations:
None
25. Right-of-use assets
(1) Information on right-of-use assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Houses and buildings Total
I. Original carrying value
1. Beginning balance 7,481,934.15 7,481,934.15
2. Current increase 12,158,843.83 12,158,843.83
1) Lease-in 12,158,843.83 12,158,843.83
3. Current decrease
4. Ending balance 19,640,777.98 19,640,777.98
II. Accumulated depreciation
197 / 272
Annual Report 2023
1. Beginning balance 1,071,299.90 1,071,299.90
2. Current increase 4,464,656.74 4,464,656.74
(1) Accrual 4,464,656.74 4,464,656.74
3. Current decrease
(1) Disposal
4. Ending balance 5,535,956.64 5,535,956.64
III. Impairment provision
1. Beginning balance
2. Current increase
(1) Accrual
3. Current decrease
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 14,104,821.34 14,104,821.34
2. Opening carrying value 6,410,634.25 6,410,634.25
(2) Information on impairment testing of right-of-use assets
□ Applicable √ Not applicable
Other explanations:
None
26. Intangible assets
(1). Information on intangible assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Non-
Land use Office Patent patented Customer Trademar
Item Total
rights software right technolo resources k rights
gies
I. Original carrying value
1. 472,400,13 24,280,27 475,089 563,293. 12,833,68 39,897,00 550,449,47
Beginnin 0.10 8.43 .70 07 4.00 0.00 5.30
g balance
2. 2,891,511. 2,891,511.7
Current 70 0
increase
(1) 90,515.95 90,515.95
Purchase
(2)
Internal
R&D
(3)
Increase
due to
business
combinat
ion
(4) 2,800,995. 2,800,995.7
Transfer- 75 5
in of
198 / 272
Annual Report 2023
construct
ion in
process
3. 4,000.0 4,000.00
Current 0
decrease
(1) 4,000.0 4,000.00
Disposal 0
4. 472,400,13 27,171,79 471,089 563,293. 12,833,68 39,897,00 553,336,98
Ending 0.10 0.13 .70 07 4.00 0.0 7.00
balance
II. Accumulated amortization
1. 92,279,870. 21,721,92 430,621 539,820. 12,819,61 2,340,748. 130,132,59
Beginnin 46 0.25 .47 37 0.79 70 2.04
g balance
2. 11,948,578. 2,552,061. 6,705.9 5,966.14 14,073.21 3,989,700. 18,517,085.
Current 91 57 7 00 80
increase
(1) 11,948,578. 2,552,061. 6,705.9 5,966.14 14,073.21 3,989,700. 18,517,085.
Accrual 91 57 7 00 80
3. 700.00 700.00
Current
decrease
(1) 700.00 700.00
Disposal
4. 104,228,44 24,273,98 436,627 545,786. 12,833,68 6,330,448. 148,648,97
Ending 9.37 1.82 .44 51 4.00 70 7.84
balance
III. Impairment provision
1.
Beginnin
g balance
2.
Current
increase
(1)
Accrual
3.
Current
decrease
(1)
Disposal
4.
Ending
balance
IV. Carrying value
1. 368,171,68 2,897,808. 34,462. 17,506.5 33,566,55 404,688,00
Ending 0.73 31 26 6 1.30 9.16
carrying
value
2. 380,120,25 2,558,358. 44,468. 23,472.7 14,073.21 37,556,25 420,316,88
Opening 9.64 18 23 0 1.30 3.26
carrying
value
199 / 272
Annual Report 2023
At the end of the current period, the proportion of intangible assets formed through internal R&D of the
Company to the balance of intangible assets is 0.00%.
(2). Information on land use rights without the property ownership certificate
□ Applicable √ Not applicable
(3) Information on impairment testing of intangible assets
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
27. Goodwill
(1). Original carrying value of goodwill
□ Applicable √ Not applicable
(2). Impairment provision of goodwill
□ Applicable √ Not applicable
(3). Information about the asset group or combination of asset groups of goodwill
□ Applicable √ Not applicable
Changes to the asset group or combination of asset groups
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
(4). Specific methods for determining the recoverable amount
The recoverable amount is determined based on the net amount after deducting disposal expenses from
fair value
□ Applicable √ Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable √ Not applicable
Reasons for significant discrepancies between the aforementioned information and the information used
in previous years’ impairment tests or external information
□ Applicable √ Not applicable
Reasons for significant discrepancies between the information used in previous years’ impairment tests
of the Company and the actual situation of the current year
□ Applicable √ Not applicable
(5). Information on performance commitments and corresponding goodwill impairment
When goodwill is formed, there is a performance commitment and the reporting period or its previous
period is within the performance commitment period
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
200 / 272
Annual Report 2023
28. Long-term prepaid expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening Increased Amortized Other Ending balance
balance amount in the amount in the decreased
current period current period amount
Renovation 19,109,585.61 56,322,765.83 9,581,084.61 65,851,266.83
costs
Software 33,018.85 1,999,593.00 699,549.85 1,333,062.00
service fees
Total 19,142,604.46 58,322,358.83 10,280,634.46 67,184,328.83
Other explanations:
None
29. Deferred income tax assets or liabilities
(1). Deferred income tax assets without offset
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Item Deductible Deferred Deductible Deferred
temporary income taxes temporary income taxes
difference Assets difference Assets
Impairment provision of
assets
Provision for bad debts 22,142,965.55 5,533,579.62 14,181,029.90 3,545,098.74
of accounts receivable
Provision for devaluation 82,737,837.07 15,220,065.94 24,366,081.72 4,518,122.80
of inventories
Impact of share-based 31,715,129.69 5,935,847.80 31,280,678.91 5,940,147.52
payments
Unrealized profit from 159,567,947.59 39,891,986.91 42,025,801.32 10,506,450.33
internal transactions
Unused membership 127,713,129.39 31,928,282.35 83,272,601.46 20,818,150.36
points
Government subsidies 6,383,359.33 957,503.90 6,399,811.33 959,971.70
pertinent to assets
Anticipated return losses 6,686,117.43 1,671,529.37 4,541,544.48 1,135,386.12
Estimated unused gifts 50,074,244.87 12,518,561.21
for sold products
Interest expenses on 1,321,312.76 198,196.91
convertible bonds
Lease expenses 13,940,366.98 2,139,203.47 449,832.92 67,474.94
Advertising and business 10,339,382.64 2,584,845.66 3,258,145.25 814,536.31
promotion expenses
Accrued expenses 14,451,922.15 2,914,846.09
Changes in the fair value 38,742,000.00 5,811,300.00
of other equity
instrument investments
Total 565,815,715.45 127,305,749.23 209,775,527.29 48,305,338.82
(2). Deferred income tax liabilities without offset
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
201 / 272
Annual Report 2023
Ending balance Opening balance
Item Taxable Deferred Taxable Deferred income
temporary income taxes temporary taxes
difference Liabilities difference Liabilities
Assets assessment
appreciation in
businesses consolidation
under common control
Changes in the fair value
of other debt
investments
Changes in the fair value
of other equity
instrument investments
One-time deduction for 110,300,243.62 16,649,225.12 126,101,620.56 19,019,431.67
depreciation of fixed
assets
Deferred income tax 14,104,821.34 2,162,159.51
recognized on right-of-
use assets
Total 124,405,064.96 18,811,384.63 126,101,620.56 19,019,431.67
(3). Deferred income tax assets or liabilities presented in net amount after offset
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening
Deferred income Deferred income
of deferred balance of
tax assets and tax assets and
income tax deferred income
Item liabilities offset liabilities offset
assets or tax assets or
at the end of the at the beginning
liabilities after liabilities after
period of the period
offset offset
Deferred income tax 18,811,384.63 108,494,364.60 48,305,338.82
assets
Deferred income tax 18,811,384.63 19,019,431.67
liabilities
(4). Details of unrecognized deferred income tax assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Deductible temporary 200,424,961.81 218,452,946.39
difference
Deductible losses 414,387,984.35 393,391,257.51
Total 614,812,946.16 611,844,203.90
(5). Deductible loss of unrecognized deferred income tax assets will expire in the following
years
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Year Ending balance Beginning balance Remarks
2023 44,562,908.90
2024 71,058,103.62 89,520,734.89
2025 61,988,728.89 66,686,117.23
202 / 272
Annual Report 2023
2026 53,623,347.32 63,349,129.45
2027 127,093,665.49 129,272,367.04
2028 100,624,139.03
Total 414,387,984.35 393,391,257.51 /
Other explanations:
□ Applicable √ Not applicable
30. Other non-current assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Item Carrying Impairmen Carrying Carrying Impairmen Carrying
amount t provision value amount t provision value
Contract
acquisition
cost
Contract
performanc
e cost
Return cost
receivable
Contract
assets
Funds 8,775,522.84 8,775,522.84
prepaid for
purchase of
long-term
assets
Other long- 8,199,424.15 8,199,424.15 5,554,726.0 5,554,726.0
term assets 6 6
16,974,946.9 16,974,946.9 5,554,726.0 5,554,726.0
Total
9 9 6 6
Other explanations:
None
31. Assets with limited ownership or use rights
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending Opening
Carrying Carrying Type Descrip Carrying Carrying Type Descrip
Item amount value of tion amount value of tion
restricti restricti
ons ons
Cash 351,817,8 351,817,8 Other Note 1 35,670,00 35,670,00 Frozen Note 2
and 46.04 46.04 0.00 0.00
cash
equival
ents
Accoun
ts
receiva
ble
Invento
203 / 272
Annual Report 2023
ries
Fixed
assets
Intangi
ble
assets
Total 351,817,8 351,817,8 / / 35,670,00 35,670,00 / /
46.04 46.04 0.00 0.00
Note 1: It includes fixed-term deposits of RMB335,288,251.36 that cannot be withdrawn at any time,
and frozen monetary funds of RMB16,529,594.68, including: the L/C deposit of RMB8,800,000.00, the
transformer deposit of RMB250,000.00, ETC vehicle deposit of RMB70,000.00, Pinduoduo deposit of
RMB5,298,890.00, and the direct-sales store deposit of RMB2,110,704.68.
Note 2: It includes the transformer deposit of RMB250,000.00, ETC vehicle deposit of RMB70,000.00,
Pinduoduo deposit of RMB5,000,000.00, and the direct-sales store deposit of RMB350,000.00.
Other explanations:
None
32. Short-term borrowings
(1). Classification of short-term borrowings
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Pledged borrowings
Mortgaged borrowings
Guaranteed borrowings
Credit loans 200,155,555.56 200,195,890.41
Total 200,155,555.56 200,195,890.41
Explanation on classification of short-term borrowings
None
(2). Information on overdue but yet unrepaid short-term borrowings
□ Applicable √ Not applicable
Particulars of important overdue but yet unrepaid short-term borrowings:
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
33. Held-for-trading financial liabilities
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
34. Derivative financial liabilities
□ Applicable √ Not applicable
35. Notes payable
(1). Presentation of notes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
204 / 272
Annual Report 2023
Type Ending balance Opening balance
Commercial acceptance
bills
Bank acceptance bills 36,959,074.14 69,626,352.12
Total 36,959,074.14 69,626,352.12
The amount of notes payable due and unpaid at the end of this period is RMB0.00. The reason for failure
to pay is that such notes do not exist.
36. Accounts payable
(1). Presentation of accounts payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Payment for goods 524,325,866.69 252,113,782.78
Expenses 422,130,510.68 213,566,905.71
Payment for acquisition of 72,065,981.23 9,746,795.74
long-term assets
Total 1,018,522,358.60 475,427,484.23
(2). Important accounts payable with an account age of more than one year or overdue
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
37. Receipts in advance
(1). Presentation of receipts in advance
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Rents receivable in advance 30,514.45 464,328.26
Total 30,514.45 464,328.26
(2). Important receipts in advance with an account age of more than one year
□ Applicable √ Not applicable
(3). Amount of and reasons for significant changes in carrying amount during the Reporting
Period
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
38. Contract liabilities
(1). Information on contract liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Advance receipt of payment 116,005,079.06 83,234,612.24
for goods
Unused membership points 134,935,549.65 91,368,221.67
Unused gifts for sold products 50,074,244.87
205 / 272
Annual Report 2023
Total 301,014,873.58 174,602,833.91
(2). Important contract liabilities with an account age of more than one year
□ Applicable √ Not applicable
(3). Amount of and reasons for significant changes in carrying amount during the
Reporting Period
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
39. Employee compensation payable
(1). Presentation of employee compensation payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Opening Current Current
Item Ending balance
balance increase decrease
I. Short-term compensation 124,278,743.01 713,532,993.76 672,990,610.04 164,821,126.73
II. Post-employment 660,006.35 22,525,305.34 22,200,906.95 984,404.74
benefits – Defined
contribution plans
III. Dismissal benefits 3,252,390.82 2,613,427.86 638,962.96
IV. Other benefits due
within one year
Total 124,938,749.36 739,310,689.92 697,804,944.85 166,444,494.43
(2). Presentation of short-term compensation
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Opening Current Current
Item Ending balance
balance increase decrease
I. Salaries, bonuses, 123,139,326.87 650,994,994.44 611,956,277.51 162,178,043.80
allowances and subsidies
II. Welfare expense of 26,617,247.44 26,617,247.44
employee
III. Social insurance 764,855.85 15,244,969.41 13,835,210.62 2,174,614.64
premium
Including: Medical 747,556.58 14,300,711.60 12,909,467.01 2,138,801.17
insurance premium
Work-related injury 13,253.30 913,366.91 893,997.66 32,622.55
insurance premium
Maternity insurance 4,045.97 30,890.90 31,745.95 3,190.92
premium
IV. Housing provident fund 374,560.29 16,192,604.20 16,098,696.20 468,468.29
V. Trade union fund and 4,483,178.27 4,483,178.27
staff education fund
VI. Short-term paid leave
VII. Short-term profit
sharing plan
Total 124,278,743.01 713,532,993.76 672,990,610.04 164,821,126.73
206 / 272
Annual Report 2023
(3). Presentation by defined contribution plan
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Opening Ending
Item Current increase Current decrease
balance balance
1. Basic endowment 637,429.90 21,749,419.31 21,435,853.57 950,995.64
insurance
2. Unemployment 22,576.45 775,886.03 765,053.38 33,409.10
insurance
3. Enterprise annuity
payment
Total 660,006.35 22,525,305.34 22,200,906.95 984,404.74
Other explanations:
□ Applicable √ Not applicable
40. Taxes payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Enterprise income tax 127,005,079.31 111,162,751.37
Value-added tax (VAT) 71,556,095.69 27,112,038.46
Consumption tax
Income tax
Urban maintenance and 7,644,618.17 1,288,999.75
construction tax
Property tax 6,734,175.81 6,689,657.49
Education surcharge 4,287,830.76 1,003,854.07
Surcharge for local education 2,866,440.40 619,094.66
Withholding of personal 1,867,193.08 4,226,657.07
income tax
Stamp duties 804,436.72 796,591.64
Disabled security fund 19,226.94
Total 222,765,869.94 152,918,871.45
Other explanations:
None
41. Other payables
(1). Presentation by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Interest payable
Dividends payable
Other payables 155,345,148.68 216,392,183.41
Total 155,345,148.68 216,392,183.41
Other explanations:
□ Applicable √ Not applicable
(2). Interest payable
Presentation by category
□ Applicable √ Not applicable
207 / 272
Annual Report 2023
Important overdue interest payable:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
(3). Dividends payable
Presentation by category
□ Applicable √ Not applicable
(4). Other payables
Other payables presented by nature of payment
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Security deposits 41,092,318.36 46,394,144.19
Restricted share repurchase 107,884,296.66 164,976,000.00
obligations
Other 6,368,533.66 5,022,039.22
Total 155,345,148.68 216,392,183.41
Important other payables with an account age of more than one year or overdue
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Reason for failure to repay or carry forward
Restricted share repurchase 107,884,296.66 Restricted share repurchase obligations have
obligations not been fulfilled yet
Total 107,884,296.66 /
Other explanations:
□ Applicable √ Not applicable
42. Held-for-sale liabilities
□ Applicable √ Not applicable
43. Non-current liabilities due within one year
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Long-term borrowings due
within one year
Bonds payable due within one
year
Long-term payables due
within one year
Lease liabilities due within 3,970,060.11 2,549,452.14
one year
Total 3,970,060.11 2,549,452.14
Other explanations:
None
208 / 272
Annual Report 2023
44. Other current liabilities
Information on other current liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Short-term bonds payable
Return payment payable
Tax on items to be resold 15,022,173.42 10,820,499.59
Total 15,022,173.42 10,820,499.59
209 / 272
Annual Report 2023
Changes in short-term bonds payable:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
210 / 272
Annual Report 2023
45. Long-term borrowings
(1). Classification of long-term loans
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
46. Bonds payable
(1). Bonds payable
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Convertible corporate bonds 753,119,902.88 724,491,557.93
Total 753,119,902.88 724,491,557.93
211 / 272
Annual Report 2023
(2). Specific information on bonds payable (excluding other financial instruments such as preferred shares and perpetual bonds classified as financial
liabilities):
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Premium
Interest Current Impact of
Current or
Bonds Face Coupon Issuance Bonds Issuance Opening accrued period current Ending Default
period discount
Name value rate (%) Date Period Amount balance by face Repaym share balance or not
Issuance amortiza
value ent conversion
tion
Proya 100.0 0.5 December 6 years 751,713, 724,491, 4,000,21 28,522,1 3,753,95 140,122.09 753,119, No
Convertible 0 8, 2021 000.00 557.93 9.29 97.85 0.00 902.88
Bond
Total / / / / 751,713, 724,491, 4,000,21 28,522,1 3,753,95 140,122.09 753,119, /
000.00 557.93 9.29 97.85 0.00 902.88
(3). Explanation on convertible corporate bonds
√ Applicable □ Not applicable
Item Share conversion conditions Share conversion time
212 / 272
Annual Report 2023
Proya With the approval of the CSRC, namely, the Reply on Approving Proya Cosmetics Co., Ltd.’s Public Issuance June 14, 2022 to December 7,
Convertible of Convertible Corporate Bonds (CSRC Approval [2021] No. 3408), the Company publicly issued 7,517,130 2027
Bond convertible bonds to non-specific targets on December 8, 2021, each bond with a face value of RMB 100.00.
The total amount of issuance is RMB751,713,000.00. The coupon rate of the aforesaid convertible corporate
bonds is 0.30% for the first year, 0.50% for the second year, 1.00% for the 3rd year, 1.50% for the fourth year,
1.80% for the fifth year and 2.00% for the sixth year. Annual interest payment dates are anniversaries of the
date of initial offering of convertible bonds. The Company will, no later than five trading days after the
interests payment day of each year, pay the interests of the year and, no later than five trading days after the
maturity date of convertible corporate bonds, redeem all unconverted convertible bonds from investors at a
price of 115% of the par value of the convertible bonds issued that time (including the annual interests of the
last tranche). The convertible period of convertible bonds starts from the first trading day after the expiration
of six months from the issuance date of convertible bonds until the maturity date of convertible bonds. The
initial conversion price is RMB195.98/share, in no case, lower than the average trading price of A shares of
the Company in the twenty trading days prior to the publication of the prospectus (if the stock price is adjusted
for ex-dividend or ex-dividend in the twenty trading days, the closing price of the trading day before such
adjustment is calculated according to the price after the ex-dividend or ex-dividend adjustment) or the average
trading price of A shares of the Company in the previous trading day, and is not adjusted up. Due to the
implementation of the equity distribution plan and the repurchase and cancellation of some equity incentive
restricted shares by the Company, according to the relevant provisions of the Prospectus of Proya Cosmetics
Co., Ltd. for Public Issuance of A-share Convertible Corporate Bonds and the relevant provisions of the CSRC
on the issuance of convertible corporate bonds, the conversion price of Proya convertible bonds was adjusted
from RMB195.98/share to RMB98.25/share, and the adjusted price took effect on December 18, 2023.
Accounting treatment and judgment basis of share conversion rights
√ Applicable □ Not applicable
In the current period, a total of 1,480 convertible corporate bonds were converted, with an increase of RMB1,121.00 in capital stock, an increase of RMB148,524.61
in capital reserve (capital stock premium), and a decrease of RMB9,523.52 in other equity instruments.
(4). Explanation on other financial instruments classified as financial liabilities
Basic information on other financial instruments such as preferred shares and perpetual bonds issued at the end of the period
□ Applicable √ Not applicable
Statement of changes in financial instruments such as preferred shares and perpetual bonds issued at the end of the period
□ Applicable √ Not applicable
213 / 272
Annual Report 2023
Explanation on the basis for classifying other financial instruments as financial liabilities:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
214 / 272
Annual Report 2023
47. Lease liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Payable operating lease payment 11,172,403.17 3,814,629.83
Unrecognized financing expenses -1,202,096.30 -96,510.42
Total 9,970,306.87 3,718,119.41
Other explanations:
None
48. Long-term payable
Presentation by item
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
Long-term payable
(1). Long-term payables presented by nature
□ Applicable √ Not applicable
Special accounts payable
(1). Special payables presented by nature
□ Applicable √ Not applicable
49. Long-term employee compensation payable
□ Applicable √ Not applicable
50. Estimated liabilities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening balance Ending balance Cause of formation
Provide external
guarantees
Pending litigations
Product quality
assurance
Restructuring
obligation
Loss-making contract
to be performed
Return payment 59,282,928.68 33,063,299.45 Estimated future
payable potential return losses
Other
Total 59,282,928.68 33,063,299.45 /
Other particulars, including the particulars on key assumptions and estimates concerning estimated
significant liabilities
None
215 / 272
Annual Report 2023
51. Deferred income
Information on deferred income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Opening Current Current Ending Cause of
Item
balance increase decrease balance formation
Government 6,399,811.33 2,062,638.00 2,079,090.00 6,383,359.33 Government
subsidies subsidies
Total 6,399,811.33 2,062,638.00 2,079,090.00 6,383,359.33 /
Other explanations:
□ Applicable √ Not applicable
52. Other non-current liabilities
□ Applicable √ Not applicable
53. Share capital
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Increase or decrease in the change (+, -)
Opening Provident Ending
balance Issuance Bonus fund balance
Other Subtotal
of shares shares Share
conversion
Total 283,519,469 -171,542 113,408,136 1,121 113,237,715 396,757,184
shares
Other explanations:
According to the resolution of the 11th meeting of the 3rd session of Board of Directors, the resolution
of the 13th meeting of the 3rd session of Board of Directors, the resolution of the 2022 annual General
Meeting of Shareholders, the resolution of the First Extraordinary General Meeting of Shareholders in
2023 and the revised articles of association of the Company, the Company applied for an increase in
registered capital of RMB113,408,136.00, which is increased from capital reserve. The base date of
increase is the registration date of implementing equity distribution, and the registered capital after
change is RMB396,927,605.00. The above matter has been verified by Pan-China Certified Public
Accountants LLP (Special General Partnership) which has issued the Capital Verification Report (TJY
(2023) No. 551).
According to the resolution of the 12th meeting of the 3rd session of Board of Directors, the resolution
of the 13th meeting of the 3rd session of Board of Directors, the resolution of the First Extraordinary
General Meeting of Shareholders in 2023 and the revised articles of association of the Company, the
Company applied for cash repurchase of 105,350 restricted RMB ordinary shares (A shares) granted but
not yet released, and paid a total share repurchase amount of RMB5,846,187.54, of which
RMB105,350.00 was reduced in share capital and RMB5,740,837.54 was reduced in capital reserve
(equity premium). The above matter has been verified by Pan-China Certified Public Accountants LLP
(Special General Partnership) which has issued the Capital Verification Report (T.J.Y. (2023) No. 552).
According to the resolution of the 15th meeting of the 3rd session of Board of Directors and the
resolution of the 14th meeting of the 3rd session of Board of Supervisors of the Company in 2023, the
Company applied for cash repurchase of 66,192 restricted RMB ordinary shares (A shares) granted but
not yet released, and paid a total share repurchase amount of RMB3,648,039.70, of which
RMB66,192.00 was reduced in share capital and RMB3,581,847.70 was reduced in capital reserve
(equity premium). The above matter has been verified by Pan-China Certified Public Accountants LLP
(Special General Partnership) which has issued the Capital Verification Report (T.J.Y. (2024) No.93).
In the current period, a total of 1,480 convertible corporate bonds were converted, with an increase of
RMB1,121.00 in capital stock, an increase of RMB148,524.61 in capital reserve (capital stock
premium), and a decrease of RMB9,523.52 in other equity instruments.
216 / 272
Annual Report 2023
54. Other equity instruments
(1). Basic information on other financial instruments such as preferred shares and perpetual
bonds issued at the end of the period
□ Applicable √ Not applicable
(2). Statement of changes in financial instruments such as preferred shares and perpetual
bonds issued at the end of the period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Outstandi Opening Current increase Current decrease Ending
ng
financial Carryi Carryi
Carrying Numb Numb Carrying
instrumen Number ng ng Number
value er er value
ts value value
Proya 7,509,3 50,903,510. 1,480 9,523.5 7,507,8 50,893,986.
Convertib 70 12 2 90 60
le Bond
Total 7,509,3 50,903,510. 1,480 9,523.5 7,507,8 50,893,986.
70 12 2 90 60
Information on changes of other equity instruments in the current period, explanation on reasons for
changes, and basis for relevant accounting treatment:
□ Applicable √ Not applicable
Other explanations:
√ Applicable □ Not applicable
In the current period, there was a decrease of RMB9,523.52 due to the current conversion of 1,480
convertible corporate bonds into shares, with an increase of RMB1,121.00 in capital stock, an increase
of RMB148,524.61 in capital reserve (capital stock premium), and a decrease of RMB9,523.52 in other
equity instruments.
55. Capital reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening balance Current increase Current decrease Ending balance
Capital premium 858,188,638.87 51,289,781.41 126,433,214.30 783,045,205.98
(Equity
premium)
Other capital 56,627,147.35 75,619,877.90 51,141,256.80 81,105,768.45
reserve
Total 914,815,786.22 126,909,659.31 177,574,471.10 864,150,974.43
Other explanations, including the information on current changes and the explanation on reasons for the
changes:
1) Changes in capital premium
Capital reserve (capital stock premium) increased by RMB51,289,781.41 in the current period, of which:
① RMB148,524.61 was increased due to the current conversion of convertible corporate bonds into
shares. For relevant details, refer to the particulars contained in "46. Bonds payable", "VII. Notes to the
Items of Consolidated Financial Statements", "Section X Financial Report" of this Report; ②
RMB51,141,256.80 was increased due to the transfer of other capital reserves recognized during the
waiting period for the released portion of restricted shares issued by the equity incentive plan into capital
stock premium;
Capital reserve (capital stock premium) decreased by RMB126,433,214.30, of which: ①
RMB113,408,136.00 was decreased due to capitalization of capital reserves. For relevant details, refer to
217 / 272
Annual Report 2023
the particulars contained in "53. Capital stock", "VII. Notes to the Items of Consolidated Financial
Statements", "Section X Financial Report" of this Report; ② RMB9,322,685.24 was decreased due to
the Company's cash repurchase of restricted RMB ordinary shares (A shares) granted but not yet
released. For relevant details, refer to the particulars contained in "53. Capital stock", "VII. Notes to the
Items of Consolidated Financial Statements", "Section X Financial Report" of this Report; ③
RMB3,702,393.06 was decreased due to the difference between the payment for purchase of minority
equity of the subsidiary Huzhou Niuke Technology Co., Ltd. and the attributable share of identifiable net
assets of the subsidiary calculated according to the newly increased shareholding ratio.
2) Changes in other capital reserves
Other capital reserve increased by RMB75,619,877.90 in the current period, of which: ①
RMB104,825.19 was increased due to the deferred income tax assets accrued for the positive difference
between the amount expected to be deducted before tax in the future period and the recognized restricted
stock incentive expenses, which is included in other capital reserves increased; ② RMB75,515,052.71
was increased due to the incentive expenses of RMB75,515,052.71 for restricted shares in 2023
recognized according to the Company's equity incentive plan, which are included in other capital
reserves.
Other capital reserve decreased by RMB51,141,256.80 in the current period due to the transfer of other
capital reserves recognized during the waiting period for the released portion of restricted shares issued
by the equity incentive plan into capital stock premium.
56. Treasury stock
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening balance Current increase Current decrease Ending balance
Restricted shares 164,976,000.00 57,091,703.34 107,884,296.66
with repurchase
obligation
Share repurchase 39,082,438.95 39,082,438.95
Total 164,976,000.00 39,082,438.95 57,091,703.34 146,966,735.61
Other explanations, including the information on current changes and the explanation on reasons for the
changes:
RMB39,082,438.95 was increased in the current period due to the Company's repurchase of shares
through centralized bidding trading with its own funds according to the Proposal on Repurchasing the
Company's Shares Through Centralized Bidding Trading, which was approved at the 17th meeting of
the 3rd session of Board of Directors in December 13, 2023. As of December 31, 2023, the Company
had cumulatively repurchased 395,980 shares of the Company through centralized bidding trading, with
a total payment of RMB39,076,754.20 and the transaction costs of RMB5,684.75.
RMB57,091,703.34 was decreased in the current period, of which: ① RMB2,570,682.80 was
decreased since dividends allocated to restricted stocks that have not yet been released were offset
against treasury stocks and other payables were adjusted accordingly; ② RMB9,494,227.24 was
decreased since the Company repurchased in form of cash 171,542 restricted RMB ordinary shares (A
shares) granted but not yet released. For relevant details, refer to Note V(I) 33 Capital stock herein; ③
RMB45,026,793.30 was decreased since the Company released 811,398 restricted shares according to
the Proposal on Satisfying the Conditions for Release from Sales Restrictions in the First Release Period
Under 2022 Restricted Share Incentive Plan deliberated and approved at the 14th meeting of the 3rd
session of Board of Directors of the Company held on September 8, 2023 (the Company issued 0.40
share for every 1 share to all shareholders through capital reserve in May 2023, resulting in a total of
579,570 shares before the capital reserve was increased), and the grant price per share was RMB77.31
after the deduction of the distributed cash dividends.
57. Other comprehensive income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening Amount incurred in the current period Ending
218 / 272
Annual Report 2023
balance Less: balance
Included in Less: Included
other in other
Amount
comprehens comprehensiv
incurred Attributed
ive income e income for
before Less: Attributed to
for the the previous
income Income to parent minority
previous period and
tax in tax company sharehold
period and transferred in
the expenses after tax ers after
transferred retained
current tax
in profit or earnings for
period
loss for the the current
current period
period
I. Other
comprehensive
income that will - - - -
not be 58,992,0 5,811,300. 53,180,70 53,180,70
subsequently 00.00 00 0.00 0.00
reclassified into
profit and loss
Including:
Changes arising
from re-
measurement of
defined benefit
plans
Other
comprehensive
income that
- - -
can't be reversed
20,250,0 20,250,00 20,250,00
through profit
00.00 0.00 0.00
and loss under
the equity
method
Changes in the
fair value of - - - -
other equity 38,742,0 5,811,300. 32,930,70 32,930,70
instrument 00.00 00 0.00 0.00
investments
Changes in the
fair value of
enterprise’s own
credit risk
II. Other
comprehensive
- -
income that will 1,252,20 1,252,202.
1,918,60 666,400.9
be reclassified 2.16 16
3.07 1
into profit or
loss
Including: Other
comprehensive
income that will
be reclassified
to profit or loss
under the equity
method
Changes in the
fair value of
other debt
investments
Amount of
financial assets
reclassified into
other
comprehensive
income
219 / 272
Annual Report 2023
Credit
impairment
provision of
other debt
investments
Cash flow
hedge reserve
Difference
from translation - -
1,252,20 1,252,202.
of financial 1,918,60 666,400.9
2.16 16
statements in 3.07 1
foreign currency
Total other - - - - -
comprehensive 1,918,60 57,739,7 5,811,300. 51,928,49 53,847,10
income 3.07 97.84 00 7.84 0.91
Other explanations, including the adjustment of the effective part of cash flow hedging gains and losses
into the initially recognized amount of the hedged item:
None
58. Special reserve
□ Applicable √ Not applicable
59. Surplus reserve
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Opening balance Current increase Current decrease Ending balance
Legal surplus 141,759,734.50 56,651,848.00 198,411,582.50
Discretionary
surplus reserve
Reserve fund
Enterprise
development
fund
Other
Total 141,759,734.50 56,651,848.00 198,411,582.50
Explanation on surplus reserves, including the current changes and the explanation on the reasons for the
changes:
RMB56,651,848.00 was increased in the current period due to the withdrawal of statutory surplus
reserve according to the net profit of the parent company. The statutory surplus reserve does not need to
be withdrawn if the cumulative amount reaches 50% or more of the registered capital.
60. Undistributed profits
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Current period Prior period
Undistributed profit at the end of previous period 2,300,384,763.19 1,696,978,064.52
before adjustment
Total undistributed profit at the beginning of the
adjustment period (+ for increase, - for decrease)
Unappropriated earnings at the beginning of the 2,300,384,763.19 1,696,978,064.52
period after adjustment
Add: Net profit attributable to the owner of the 1,193,868,141.81 817,400,223.93
parent company in the current period
Less: Withdrawal of statutory surplus reserve 56,651,848.00 41,124,954.50
220 / 272
Annual Report 2023
Withdrawal of any surplus reserves
Withdrawal of general risk provision
Dividends payable on common stock 397,455,566.41 172,868,570.76
Common stock dividends converted to share
capital
Undistributed profit at the end of the period 3,040,145,490.59 2,300,384,763.19
According to the Resolution of the 2022 annual General Meeting of Shareholders of the Company, the
Company distributed cash dividends of RMB8.70 (tax inclusive) per 10 shares to all shareholders based
on the total share capital of 283,520,339 shares registered on the registration date of dividend-paying
equity, totaling RMB246,662,694.93 (tax inclusive).
According to the Resolution of the First Extraordinary General Meeting of Shareholders of the Company
in 2023, the Company distributed cash dividends of RMB3.80 (tax inclusive) per 10 shares to all
shareholders based on the total share capital of 396,823,346 shares registered on the registration date of
dividend-paying equity, totaling RMB150,792,871.48 (tax inclusive).
Details of the adjustment of the undistributed profit at the beginning of the period:
1. The undistributed profit affected by the retroactive adjustment in accordance with Accounting
Standards for Business Enterprises and its related new regulations at the beginning of the period is
RMB0.00.
2. The undistributed profit affected by the change of accounting policy at the beginning of the period is
RMB0.00.
3. The undistributed profit affected by the correction of major accounting errors at the beginning of the
period is RMB0.00.
4. The undistributed profit affected by the change of combination scope caused by common control at
the beginning of the period is RMB0.00.
5. The undistributed profit affected by other adjustments at the beginning of the period is RMB0.00.
61. Operating revenue and costs
(1). Information of operating revenue and costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the current period Amount incurred in the previous period
Item
Revenue Cost Revenue Cost
Main 8,890,227,788.97 2,666,864,872.50 6,361,763,550.69 1,916,352,535.29
business
Other 14,345,712.42 10,580,834.11 23,687,873.31 18,497,668.36
business
Total 8,904,573,501.39 2,677,445,706.61 6,385,451,424.00 1,934,850,203.65
221 / 272
Annual Report 2023
(2). Breakdown of operating revenue and costs
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
(3). Explanation on performance obligations
□ Applicable √ Not applicable
(4). Explanation on remaining performance obligations allocated
□ Applicable √ Not applicable
(5). Significant contract changes or significant transaction price adjustments
□ Applicable √ Not applicable
Other explanations:
Breakdown of revenue
1) Breakdown of income generated from contracts with clients by goods or service type
Amount for the current period Amount for the same period last year
Item
Revenue Cost Revenue Cost
Products
8,890,227,788.97 2,666,864,872.50 6,363,192,536.17 1,920,643,747.84
sales
Other
14,345,712.42 10,580,834.11 22,258,887.83 14,206,455.81
Subtotal 8,904,573,501.39 2,677,445,706.61 6,385,451,424.00 1,934,850,203.65
2) Breakdown of income generated from contracts with clients by goods or service transfer time
Amount for the current Amount for the same period
Item
period last year
Income recognized at a certain point 8,901,828,883.95 6,383,224,182.76
Income recognized in a certain
2,744,617.44 2,227,241.24
period
Subtotal 8,904,573,501.39 6,385,451,424.00
3) Revenue recognized in the current period and included in the beginning carrying value of contract
liabilities is RMB174,418,612.87.
62. Taxes and surcharges
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the previous
Item
period period
Income tax
Urban maintenance and 43,276,504.94 25,692,368.39
construction tax
Education surcharge 21,357,013.35 12,641,385.47
Surcharge for local education 14,122,981.38 8,447,813.01
Stamp duties 3,999,013.74 2,921,661.26
Property tax 7,672,905.13 6,663,485.15
Consumption tax 186,353.52 14,370.78
Vehicle and vessel use tax 35,456.20 10,724.88
222 / 272
Annual Report 2023
Cultural undertaking 5,528.94 2,700.00
construction tax
Resource tax
Land use tax
Total 90,655,757.20 56,394,508.94
Other explanations:
None
63. Selling expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the
Item
current period previous period
Image promotion expenses 3,533,952,237.22 2,419,867,469.08
Employee compensation and
362,407,560.34 314,177,020.39
service fees
Office allowances 37,424,067.84 28,106,339.49
Travel expenses 15,189,368.08 11,852,844.96
Meeting affair charges 12,158,679.33 4,094,821.02
Equity incentive expenses for
4,186,552.14 3,815,630.91
restricted shares
Survey consulting fees 4,761,013.66 3,156,462.06
Other 2,121,673.88 766,765.04
Total 3,972,201,152.49 2,785,837,352.95
Other explanations:
None
64. General and administrative expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Employee compensation and service fees 199,180,004.62 156,737,777.08
Office allowance and business 86,374,110.35 61,368,432.01
entertainment expenses
Equity incentive expenses for restricted 62,868,293.10 38,406,625.33
shares
Expenses for depreciation, amortization 47,863,814.80 45,778,417.02
and lease
Travel expense and conference fees 28,771,703.61 5,024,738.17
Consultation and intermediary fees 26,131,927.56 12,338,732.18
Other 4,251,916.66 7,642,027.58
Total 455,441,770.70 327,296,749.37
Other explanations:
None
65. R&D expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Labor cost 87,886,568.10 66,055,676.59
223 / 272
Annual Report 2023
Outsourced R&D expenses 49,917,542.88 41,417,003.04
Expenses for depreciation, amortization 14,907,715.74 5,485,513.91
and lease
Direct input costs 9,067,633.86 8,833,694.90
Equity incentive expenses for restricted 8,460,207.47 5,134,865.00
shares
Other 3,330,459.44 1,082,351.05
Total 173,570,127.49 128,009,104.49
Other explanations:
None
66. Financial expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Interest expenses 18,355,694.64 13,019,503.91
Handling fees 712,455.44 634,636.61
Exchange gains and losses -2,800,529.37 -2,943,538.91
Interest income -75,347,198.04 -51,707,124.62
Total -59,079,577.33 -40,996,523.01
Other explanations:
None
67. Other income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Classification by nature Amount incurred in the current Amount incurred in the
period previous period
Government subsidies pertinent 2,079,090.00 2,079,090.00
to assets
Government subsidies related to 41,964,528.77 36,384,642.07
income
Refund of service charges for 702,780.68 507,799.10
withholding personal income
tax
Additional deduction for VAT 279,900.29 93,574.45
Total 45,026,299.74 39,065,105.62
Other explanations:
None
68. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the
Item
current period previous period
Long-term equity investment income -17,279,158.95 -5,658,023.28
calculated by the equity method
Investment income from disposal of -113,212.70
long-term equity investment
Investment income of held-for-trading
financial assets during the holding
period
224 / 272
Annual Report 2023
Dividend income from other equity
instrument investments during the
holding period
Interest income from debt investment
during the holding period
Interest income from other debt
investments during the holding period
Investment income from disposal of
held-for-trading financial assets
Investment income from disposal of
other equity instrument investments
Investment income from disposal of
debt investment
Investment income from disposal of
other debt investments
Gains of debt restructuring
Total -17,392,371.65 -5,658,023.28
Other explanations:
None
69. Net exposure hedging income
□ Applicable √ Not applicable
70. Income from the change in fair values
□ Applicable √ Not applicable
71. Credit impairment loss
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the
Item
current period previous period
Loss on bad debts of notes receivable
Loss on bad debts of accounts -13,089,429.12 741,308.99
receivable
Loss on bad debts of other receivables 2,692,204.95 -5,798,734.42
Impairment losses of debt investment
Impairment losses of other debt
investments
Loss on bad debts of long-term
receivables
Impairment losses related to financial
guarantees
Total -10,397,224.17 -5,057,425.43
Other explanations:
None
72. Asset impairment losses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the previous
Item
current period period
I. Impairment losses of contract
assets
225 / 272
Annual Report 2023
I. Loss for devaluation of -106,757,782.12 -94,640,937.84
inventories and impairment loss of
contract performance cost
II. Impairment loss of long-term -66,771,744.63
equity investment
III. Impairment loss of investment
real estate
IV. Impairment loss of fixed assets -1,337,532.26
V. Impairment loss of engineering
materials
VI. Impairment loss of construction
in progress
VII. Impairment loss of productive
biological assets
VIII. Impairment loss of oil and gas
assets
IX. Impairment loss of intangible
assets
X. Impairment loss of goodwill
XI. Others
Anticipated return losses -3,471,872.81
Total -108,095,314.38 -164,884,555.28
Other explanations:
None
73. Income from disposal of assets
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the current Amount incurred in the
period previous period
Income from disposal of non- -703,593.33 60,155.60
current assets
Total -703,593.33 60,155.60
Other explanations:
None
74. Non-operating revenue
Information on non-operating revenue
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
gains and losses
Total profit from
disposal of non-
current assets
Including: Gains
from disposal of
fixed assets
Gains from disposal
of intangible assets
Non-monetary asset
exchange profits
Accepting donations
226 / 272
Annual Report 2023
Government
subsidies
Revenue from fines 1,787,058.74 252,782.71 1,787,058.74
and liquidated
damages
Amount not required 686,774.60 505,051.10 686,774.60
to be paid
Income from right 1,528,566.87 1,528,566.87
protection funds
Other 164,261.56 421,052.52 164,261.56
Total 4,166,661.77 1,178,886.33 4,166,661.77
Other explanations:
□ Applicable √ Not applicable
75. Non-operating expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
gains and losses
Total loss from
disposal of non-
current assets
Including: Losses
from disposal of
fixed assets
Loss from disposal
of intangible assets
Non-monetary asset
exchange losses
External donation 8,865,320.50 1,434,600.00 8,865,320.50
Late fees 2,320,528.94 2,320,528.94
Fines 220,000.00 2,915,707.07 220,000.00
Other 116,512.19 126,645.38 116,512.19
Loss from damage 100,854.99 136,692.79 100,854.99
and scrapping of
non-current assets
Total 11,623,216.62 4,613,645.24 11,623,216.62
Other explanations:
None
76. Income tax expenses
(1). Income tax expense statement
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the
Item
period previous period
Current income tax expense 337,808,223.91 239,665,217.82
Deferred income tax expense -73,292,568.66 -16,798,498.26
Total 264,515,655.25 222,866,719.56
227 / 272
Annual Report 2023
(2). Adjustment process of accounting profit and income tax expense
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the current period
Total profit 1,495,319,805.59
Income tax expense calculated at statutory or 373,829,951.41
applicable tax rate
Impact of different tax rates applicable to
subsidiaries
Impact of adjusting income tax in previous 2,053,410.29
periods
Impact of non-taxable income
Impact of non-deductible costs, expenses and 11,462,350.79
losses
Impact of using deductible losses of deferred -13,652,192.96
income tax assets unrecognized in the previous
period
Impact of deductible temporary differences or 27,431,942.45
deductible losses of deferred income tax assets
unrecognized in the current period
Impact of applicable preferential tax rates -114,497,159.95
Additional deductions for R&D expenditures -22,112,646.78
Income tax expenses 264,515,655.25
Other explanations:
□ Applicable √ Not applicable
77. Other comprehensive income
√ Applicable □ Not applicable
For details, refer to the particulars contained in "57. Other comprehensive income", "VII. Notes to the
Items of Consolidated Financial Statements", "Section X Financial Report" of this Report.
78. Items in the cash flow statement
(1). Cash related to operating activities
Other cash received related to operating activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Interest income from bank deposits 74,557,758.90 51,707,124.62
Government subsidies 45,009,847.74 38,447,280.07
Receivables and payables and others 5,846,000.83 9,345,735.71
Total 125,413,607.47 99,500,140.40
Explanation on other cash received related to operating activities:
None
Other cash paid related to operating activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Expenses paid in cash 3,732,844,574.91 2,579,629,003.60
Receivables and payables 28,579,145.07 36,679,087.31
Total 3,761,423,719.98 2,616,308,090.91
228 / 272
Annual Report 2023
Explanation on other cash paid related to operating activities:
None
(2). Cash related to investing activities
Important cash received related to investing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Cash received for construction
deposit 13,193,392.00
Total 13,193,392.00
Explanation on important cash received related to investing activities
None
Important cash paid related to investing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the
Item
current period previous period
Payment for the purchase and
179,658,688.53 170,963,405.43
construction of long-term assets
Capital increase by Jiaxing Woyong
Investment Partnership (Limited 18,636,363.64 41,003,609.10
Partnership)
Investment by Golong Holdings
90,000,000.00
Co., Ltd.
Purchase of fixed-term deposits 300,000,000.00
Total 498,295,052.17 301,967,014.53
Explanation on important cash paid related to investing activities
None
Other cash received related to investing activities
□ Applicable √ Not applicable
Other cash paid related to investing activities
□ Applicable √ Not applicable
(3). Cash related to financing activities
Other cash received related to financing activities
□ Applicable √ Not applicable
Other cash paid related to financing activities
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the current Amount incurred in the
period previous period
Payment for equity incentive
repurchase 9,494,227.24
Payment for repurchase of the
Company’s shares 39,082,438.95
Payment for acquisition of minority 46,085,313.00
equity
Payment for operating lease rent 3,607,485.92 1,319,087.27
229 / 272
Annual Report 2023
Payment for liquidation funds to 859,171.61
minority shareholders 1,003,954.40
Total 53,188,106.51 48,263,571.88
Explanation on other cash paid related to financing activities:
None
Information on changes in liabilities arising from financing activities:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Current increase Current decrease
Opening Ending
Item Cash changes Non-cash Cash changes Non-cash
balance balance
changes changes
Short-term 200,195,890. 300,000,000. 300,000,000. 40,334.85 200,155,555.
borrowing 41 00 00 56
s
Bonds 724,491,557. 33,093,877.8 3,753,950.00 711,582.92 753,119,902.
payable 93 7 88
(including
bonds
payable
due within
one year)
Lease 6,267,571.55 12,997,592.6 3,607,485.92 1,717,311.3 13,940,366.9
liabilities 5 0 8
(including
lease
liabilities
due within
one year)
Total 930,955,019. 300,000,000. 46,091,470.5 307,361,435. 2,469,229.0 967,215,825.
89 00 2 92 7 42
(4). Explanation on presentation of cash flows at net amount
□ Applicable √ Not applicable
(5). Significant activities and financial impacts that do not involve current cash receipts and
payments but affect the financial condition of the enterprise or may affect the cash flow of the
enterprise in the future
√ Applicable □ Not applicable
Amount for the
Amount for the
Item same period last
current period
year
Amount of the commercial paper transferred by
3,900,925.86 26,020,864.88
endorsement
Including: Payment for goods 3,900,925.86 26,020,864.88
79. Supplementary information to cash flow statement
(1). Supplementary information to cash flow statement
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
230 / 272
Annual Report 2023
Amount for the current
Supplementary Information Amount of previous period
period
1. Reconciliation of net profits to cash flows from operating activities:
Net profit 1,230,804,150.34 831,283,806.37
Add: Impairment provision of assets 118,492,538.55 169,941,980.71
Credit impairment loss
Depreciation of fixed assets, 62,978,780.92 52,552,861.25
depletion of oil and gas assets and
depreciation of productive biological
assets
Amortization of right-to-use assets 4,464,656.74 1,071,299.90
Amortization of intangible assets 18,517,085.80 17,445,985.14
Amortization of long-term 10,280,634.46 17,522,556.64
unamortized expenses
Losses on disposal of fixed assets, 703,593.33 -60,155.60
intangible assets and other long-term
assets ("-" refers to income)
Losses on retirement of fixed assets 100,854.99 136,692.79
("-" refers to income)
Losses on changes in fair value ("-"
refers to income)
Financial expenses ("-" refers to 13,067,443.28 13,019,503.91
income)
Investment loss ("-" refers to income) 17,392,371.65 5,658,023.28
Decrease in deferred income tax -54,273,136.99 -27,409,771.12
assets ("-" refers to increase)
Increase in deferred income tax -19,019,431.67 10,611,272.86
liabilities ("-" refers to decrease)
Decrease in inventories ("-" refers to -234,921,611.07 -315,753,506.27
increase)
Decrease in operating receivables ("- -449,560,276.02 -28,573,373.07
" refers to increase)
Decrease in operating payables ("-" 674,251,107.56 316,331,819.20
refers to increase)
Other 75,515,052.71 47,357,121.24
Net cash flow from operating 1,468,793,814.58 1,111,136,117.23
activities
2. Major investment and financing activities that do not involve cash receipts and payments:
Conversion of debt into capital
Convertible corporate bonds due
within one year
Fixed assets under finance lease
3. Net changes in cash and cash equivalents:
Ending balance of cash 3,659,267,712.03 3,125,333,085.05
Less: Beginning balance of cash 3,125,333,085.05 2,378,334,768.09
Add: Ending balance of cash
equivalents
Less: Beginning balance of cash
equivalents
Net increase in cash and cash 533,934,626.98 746,998,316.96
equivalents
(2). Net cash paid for acquisition of subsidiaries in the current period
□ Applicable √ Not applicable
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Annual Report 2023
(3). Net cash received from disposal of subsidiaries in the current period
□ Applicable √ Not applicable
(4). Composition of cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
I. Cash 3,659,267,712.03 3,125,333,085.05
Including: Cash on hand 29,332.00 20,176.08
Bank deposits that can be used
3,448,037,161.01 3,048,251,723.18
for payment at any time
Other monetary funds that can
211,201,219.02 77,061,185.79
be used for payment at any time
Funds deposited with the
central bank for payment
Deposits in interbank
Funds for interbank lending
II. Cash equivalents
Including: Bond investments due
within three months
III. Ending balance of cash and cash
3,659,267,712.03 3,125,333,085.05
equivalents
Including: Cash and cash
equivalents with restricted use by
257,906,850.60 507,079,183.81
the parent company or a subsidiary
of the group
(5). Information on funds with restricted use but still presented as cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount for the current Reason
Item
period
178,011,019.10 Special account of
Raised funds
raised funds
Cash subject to foreign exchange control of 79,895,831.50 Subject to foreign
overseas operating subsidiaries exchange control
Total 257,906,850.60 /
(6). Monetary funds not belonging to cash and cash equivalents
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount for the Amount of previous
Item Reason
current period period
Fixed-term deposit 335,288,251.36 30,000,000.00 No withdrawal at any time
L/C deposit 8,800,000.00 No withdrawal at any time
Transformer deposit 250,000.00 250,000.00 No withdrawal at any time
Vehicle ETC deposit 70,000.00 70,000.00 No withdrawal at any time
Pinduoduo deposit 5,298,890.00 5,000,000.00 No withdrawal at any time
Direct store deposit 2,110,704.68 350,000.00 No withdrawal at any time
Total 351,817,846.04 35,670,000.00 /
Other explanations:
232 / 272
Annual Report 2023
□ Applicable √ Not applicable
80. Notes on items in the statement of changes in owners’ equity
Explanation on the names of "other" items for adjusting the ending balance of the previous year and
adjustment amounts:
□ Applicable √ Not applicable
81. Foreign-currency monetary items
(1). Foreign-currency monetary items
√ Applicable □ Not applicable
Unit: Yuan
Converted RMB at
Ending foreign Converted exchange
Item the end of period
currency balance rate
balance
Cash and cash equivalents - - 284,606,933.99
Including: USD 7,847,098.42 7.0827 55,578,643.98
EUR 26,105,651.86 7.8592 205,169,539.10
HKD 22,387,179.89 0.9062 20,287,262.42
SF 193,233.76 8.4184 1,626,719.09
JPY 32,304,317.77 0.0502 1,621,676.75
KRW 58,744,118.00 0.0055 323,092.65
Accounts receivable - - 4,164,394.64
Including: EUR 218,942.52 7.8592 1,720,713.05
HKD 66,999.18 0.9062 60,714.66
JPY 47,465,900.00 0.0502 2,382,788.18
KRW 32,499.71 0.0055 178.75
Other receivables - - 26,732,449.48
Including: USD 558,965.44 7.0827 3,958,984.52
EUR 2,832,778.86 7.8592 22,263,375.62
HKD 99,313.63 0.9062 89,998.01
JPY 8,368,353.22 0.0502 420,091.33
Accounts payable - - 8,078,057.66
Including: EUR 777,723.41 7.8592 6,112,283.82
HKD 610,942.50 0.9062 553,636.09
JPY 28,130,234.00 0.0502 1,412,137.75
Other payables - - 865,815.54
Including: HKD 5,975.00 0.9062 5,414.55
JPY 683,412.06 0.0502 34,307.29
KRW 150,198,853.99 0.0055 826,093.70
Other explanations:
None
(2). Explanation on overseas operating entities, including the main overseas operating location,
bookkeeping currency, selection criteria, and reasons for change in the bookkeeping currency
of important overseas operating entities, which should be disclosed
√ Applicable □ Not applicable
Hapsode Co., Ltd.and Hanna Cosmetics Co., Ltd. operate in South Korea, and their business income and
expenditures are mainly in KRW, thus they choose KRW as the bookkeeping currency. Hong Kong
Xinghuo Industry Limited, LIMITED, Hong Kong Zhongwen Electronic Commerce Co., Limited, Hong
Kong Xuchen Trading Limited, Hong Kong Keshi Trading Co., Ltd., Boya (Hong Kong) Investment
Management Co., Limited and Hong Kong Wanyan Electronic Commerce Co., Limited operate in Hong
Kong, thus they choose HKD as the bookkeeping currency. OR Off&Relax operates in Japan and its
233 / 272
Annual Report 2023
business income and expenditures are mainly in JPY, thus it chooses JPY as the bookkeeping
currency.PROYA PTE. LTD. operates in Singapore, and its business income and expenditures are
mainly in SGD, thus it chooses SGD as the bookkeeping currency; PROYA BEAUTY ALAYSIA SDH
BHD. operates in Malaysia and its business income and expenditures are mainly in MYR, thus it
chooses MYR as the bookkeeping currency.
82. Lease
(1) The Company as the lessee
√ Applicable □ Not applicable
1) For details on right-of-use assets, refer to the particulars contained in "25. Right-of-use assets" in
"VII. Notes to the Items of Consolidated Financial Statements" of "Section X Financial Report" hereof.
2) For the details on accounting policies for short-term leases and low-value asset leases of the
Company, refer to the particulars contained in "38. Lease" in "V. Significant Accounting Policies and
Estimates" of "Section X Financial Report" of this Report.
Variable lease payments not included in the measurement of lease liabilities
□ Applicable √ Not applicable
Lease expenses of short-term leases or low-value asset leases subject to simplified treatment
√ Applicable □ Not applicable
Amount for the
Amount for the
Item same period last
current period
year
Short-term lease expenses 6,986,080.67 2,725,585.47
Low value asset lease expenses (except for short-term
2,169,311.63 178,817.29
lease expenses)
Total 9,155,392.30 2,904,402.76
Sale and leaseback transactions and judgment basis
□ Applicable √ Not applicable
Total cash outflows related to leases is 13,312,201.76 (Unit: Yuan Currency: RMB)
For the details of maturity analysis and corresponding liquidity risk management of lease liabilities, refer
to the particulars contained in "1(II) Liquidity risk" in "XII. Risks related to Financial Instruments" in
"Section X Financial Report" hereof.
(2) The Company as the lessor
Operating lease where the Company is the lessor
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Including: Income related to
Item Lease income variable lease payments not
included in lease receipts
Investment real estate 2,744,617.44
Total 2,744,617.44
For the details of fixed assets leased out through operating lease, refer to the particulars contained in "20
Investment real estate" in "VII. Notes to the Items of Consolidated Financial Statements" of "Section X
Financial Report" hereof.
Financing lease where the Company is the lessor
□ Applicable √ Not applicable
Reconciliation of undiscounted lease receipts and net lease investments
234 / 272
Annual Report 2023
□ Applicable √ Not applicable
Undiscounted lease receipts in the next five years
□ Applicable √ Not applicable
(3) Profits and losses of financial lease sales recognized by the Company as a manufacturer or
distributor
□ Applicable √ Not applicable
Other explanations
None
83. Other
□ Applicable √ Not applicable
VIII.R&D expenditures
(1). Presentation by nature of expenses
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the
current period previous period
Labor cost 87,886,568.10 66,055,676.59
Outsourced R&D expenses 49,917,542.88 41,417,003.04
Expenses for depreciation, amortization 14,907,715.74 5,485,513.91
and lease
Direct input costs 9,067,633.86 8,833,694.90
Equity incentive expenses for restricted 8,460,207.47 5,134,865.00
shares
Other 3,330,459.44 1,082,351.05
Total 173,570,127.49 128,009,104.49
Including: Expensed R&D expenditures 173,570,127.49 128,009,104.49
Capitalized R&D expenditures
Other explanations:
None
(2). R&D project development expenditures eligible for capitalization
□ Applicable √ Not applicable
Important capitalized R&D project
□ Applicable √ Not applicable
Impairment provision of development expenditures
□ Applicable √ Not applicable
Other explanations
None
(3). Important outsourcing projects under research
□ Applicable √ Not applicable
IX.Change of Consolidation Scope
1. Business combination not under common control
□ Applicable √ Not applicable
235 / 272
Annual Report 2023
2. Business combination under common control
□ Applicable √ Not applicable
3. Counter purchase
□ Applicable √ Not applicable
236 / 272
Annual Report 2023
4. Disposal of subsidiaries
Were there any transactions or events that resulted in the loss of control over a subsidiary in the current period
□ Applicable √ Not applicable
Unit: Yuan Currency: RMB
Difference
between the Amount of
Determination
disposal price other
Carrying Fair value methods and
and the comprehensive
value of of major
attributable Proportion Gains or income related
Disposal Disposal remaining remaining assumptions
Judgment share of net of losses to equity
Disposal ratio at method equity at the equity at the for fair value
Time basis of assets of the remaining arising from investments in
price at the the time at the level of level of of remaining
Name of point of the time subsidiary at equity on re- original
time point of point of time consolidated consolidated equity at the
subsidiary loss of point of the level of the date of measurement subsidiaries
loss of loss of point of financial financial level of
control loss of consolidated loss of of remaining transferred to
control control loss of statements statements consolidated
control financial control equity at fair investment
(%) control on the date on the date financial
statements (%) value gains and
of loss of of loss of statements on
corresponding losses or
control control the date of
to the retained
loss of control
disposal of earnings
investment
Hangzhou February 1,500,000.00 100.00 Selling Completed -12,828.43
Tiedingxian 2023 equity to equity
Catering external delivery
Management parties
Co., Ltd.
Hangzhou February 3,500,000.00 100.00 Selling Completed -11,332.08
Xiake Bar 2023 equity to equity
Catering external delivery
Management parties
Co., Ltd.
Other explanations:
□ Applicable √ Not applicable
Was there a stepwise disposal of investment to subsidiaries through multiple transactions and a loss of control in the current period
237 / 272
Annual Report 2023
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
5. Change of combination scope for other reasons
Explain the changes in the consolidation scope caused by other reasons (for example, newly established subsidiary, liquidated subsidiary, etc.) and the specific
information:
√ Applicable □ Not applicable
1. Expansion of consolidation scope
Company name Equity acquisition method Time point of equity acquisition Contribution amount Contribution ratio
Huzhou Keyan Trading Co., Ltd. Newly established subsidiary March 2023 100.00%
Hubei Laibo Information Co., Ltd. Newly established subsidiary July 2023 100,000.00 100.00%
PROYA PTE. LTD Newly established subsidiary November 2023 100.00%
PROYA BEAUTY MALAYSIA SDH. BHD. Newly established subsidiary November 2023 100.00%
2. Narrowing of consolidation scope
From the beginning of the period to
Equity disposal Time point of equity Net assets as at the
Company name the disposal date
method disposal disposal date
Net profit
Korea Younimi Cosmetics Co., Ltd. Cancel April 2023 1,801,826.67 -1,740,215.20
Hangzhou Donghai Wangchao Catering
Cancel June 2023
Management Co., Ltd.
Danyang Hapsode Cosmetics Trading Co.,
Cancel December 2023 970.33 7,268,352.65
Ltd.
6. Other
□ Applicable √ Not applicable
238 / 272
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X.Equity in Other Entities
1. Equity in subsidiaries
(1). Composition of enterprise group
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Main Shareholding
Subsidiary Registered Registration Nature of ratio (%) Mode of
place of
Name capital place business acquisition
business Direct Indirect
Zhejiang
Meiligu
Wholesale and
Electronic Hangzhou 10 million Hangzhou 100.00 Establishment
retail
Commerce
Co., Ltd.
Ningbo
TIMAGE Wholesale and
Ningbo 1 million Ningbo 71.36 Establishment
Cosmetics retail
Co., Ltd.
Proya
(Zhejiang)
Huzhou 10 million Huzhou Manufacturing 100.00 Establishment
Cosmetics
Co., Ltd.
Explanation on the shareholding ratio in subsidiaries different from the voting ratio:
None
Basis for holding half or less voting rights but still controlling the investee, and holding more than half
voting rights but not controlling the investee:
None
Basis for controlling the important structured entities included in the consolidation scope:
None
Basis for determining whether a company is an agent or a principal:
None
Other explanations:
The Company incorporated 46 subsidiaries, including Hangzhou Proya Trade Co.,Ltd. and Zhejiang
Meiligu Electronic Commerce Co., Ltd., into the consolidation scope of the consolidated financial
statements.
(2). Important non-wholly-owned subsidiaries
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Shareholding Gain or loss Dividends declared
Balance of
ratio of the attributable to and distributed to
Name of minority interest
minority minority minority
subsidiary at the end of the
shareholder shareholders in the shareholders in the
period
Percentage current period current period
Ningbo
TIMAGE
28.64% 37,167,220.38 55,449,339.11
Cosmetics Co.,
Ltd.
Explanation on the shareholding ratio of minority shareholders in subsidiaries different from the voting
ratio:
□ Applicable √ Not applicable
239 / 272
Annual Report 2023
Other explanations:
□ Applicable √ Not applicable
(3). Major financial information of important non-wholly-owned subsidiaries
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Non- Curre Non- Curre Non-
Name of Total Curre Non- Total
Curren curren Total nt current Total nt current
subsidiary liabilit nt current liabili
t assets t assets liabili liabilit assets liabili liabilit
ies assets assets ties
assets ties ies ties ies
Ningbo 11,0 173,7 5,19 178,9 112,2 1,67 113,9
TIMAGE 297,73 308,7 111,9 1,07 113,0 12,88 8,05 10,94 48,42 2,65 21,07
52,0
Cosmetics 3,820.7 26.2 85,84 87,80 9,01 66,82 2.33 9.78 2.11 3.70 5.27 8.97
Co., Ltd. 4 6.95 9.76 7.49 7.25
1
Amount incurred in the current period Amount incurred in the previous period
Cash Cash
Total flows Total flows
Name of
Operating Net comprehe generated Operating Net comprehen generate
subsidiary
revenue profit nsive from revenue profit sive d from
income operating income operating
activities activities
Ningbo 1,000,707, 129,773 129,773,8 98,459,95 571,701,5 76,09 76,095,82 36,940,3
TIMAGE 718.37 ,814.16 14.16 0.02 21.25 5,826 6.44 77.15
Cosmetics .44
Co., Ltd.
Other explanations:
None
(4). Major restrictions on using enterprise group assets and paying off enterprise group debts
□ Applicable √ Not applicable
(5). Financial support or other support provided to structured entities included in the scope of
consolidated financial statements
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
2. Transactions where the share of owners' equity in a subsidiary changes and the subsidiary
is still controlled
□ Applicable √ Not applicable
3. Rights and interests in joint ventures and affiliates
√ Applicable □ Not applicable
(1). Important joint ventures and affiliates
□ Applicable √ Not applicable
(2). Major financial information of important joint ventures
□ Applicable √ Not applicable
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Annual Report 2023
(3). Major financial information of important affiliates
□ Applicable √ Not applicable
(4). Summary financial information of unimportant joint ventures and affiliates
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance or amount Beginning balance or amount
incurred in the current period incurred in the previous period
Joint ventures:
Total carrying value of 3,059,991.91 3,068,948.16
investment
Total of the following items calculated according to the shareholding ratio
– Net profit -8,956.25 -5,810.52
– Other comprehensive
income
– Total comprehensive income
Affiliates:
Total carrying value of 110,514,166.58 135,464,429.30
investment
Total of the following items calculated according to the shareholding ratio
– Net profit -17,270,202.70 -5,652,212.76
– Other comprehensive -20,250,000.00
income
– Total comprehensive income
Other explanations
None
(5). Explanation on major restrictions on the ability of joint ventures or associates to transfer
capital to the Company
□ Applicable √ Not applicable
(6). Excess losses incurred by joint ventures or affiliates
□ Applicable √ Not applicable
(7). Unconfirmed commitments related to investments in joint ventures
□ Applicable √ Not applicable
(8). Contingent liabilities related to investments in joint ventures or associates
□ Applicable √ Not applicable
4. Important joint operations
□ Applicable √ Not applicable
5. Rights and interests in structured entities not included in the scope of consolidated
financial statements
Explanation on structured entities not included in the scope of consolidated financial statements:
□ Applicable √ Not applicable
6. Other
□ Applicable √ Not applicable
241 / 272
Annual Report 2023
XI.Government subsidies
1. Government subsidies recognized by amount receivable at the end of the Reporting Period
□ Applicable √ Not applicable
Reasons for failure to receive the expected amount of government subsidies at the expected time point
□ Applicable √ Not applicable
2. Liability items involving government subsidies:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount Amount
Relate
Amount of included in transferre Other
Items in d to
new non- d in other change
financial Opening Ending assets
subsidies in operating income in s in the
statement balance balance or
the current revenue in the current
s incom
period the current current period
e
period period
Deferred 6,399,811.3 2,062,638.0 2,079,090.0 6,383,359.3 Relate
income 3 0 0 3 d to
assets
Total 6,399,811.3 2,062,638.0 2,079,090.0 6,383,359.3 /
3 0 0 3
3. Government subsidies included in the current profit or loss
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the previous
Type
period period
Related to income 44,043,618.77 38,463,732.07
Total 44,043,618.77 38,463,732.07
Other explanations:
None
XII.Risks Related to Financial Instruments
1. Risks of financial instruments
√ Applicable □ Not applicable
The Company's risk management aims to reach balancing between risks and benefits, to minimize the
negative impact of risks on the Company's operating results, and to maximize the interests of
shareholders and other equity investors. Based on these risk management goals, the Company's basic
strategy for risk management is to determine and analyze various risks faced by the Company, establish
an appropriate risk tolerance bottom line and conduct risk management, and supervise various risks in a
timely and reliable manner to control the risks within a limited scope.
The Company faces various risks related to financial instruments in its daily activities, including credit
risk, liquidity risk and market risk. The management has deliberated and approved the policing
governing these risks as outlined below:
(I) Credit risk
Credit risk refers to the risk that one party of a financial instrument fails or is unable to fulfill its
obligations, resulting in financial losses to the other party.
1. Credit risk management practice
(1) Assessment method of credit risk
The Company, on each balance sheet date, assesses whether the credit risk of relevant financial
instruments has increased significantly since initial recognition. In determining whether the credit risk
242 / 272
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has increased significantly since initial recognition, the Company takes into account the reasonable and
well-founded information available without unnecessary additional costs or efforts, including qualitative
and quantitative analyses based on historical data, external credit risk rating and forward-looking
information. The Company determines the changes that may result in default risk of financial
instruments within their expected duration by comparing the default risk of the financial instruments on
the balance sheet date and the initial recognition date based on an individual financial instrument or
combined financial instruments with similar credit risk characteristics.
The Company deems that the credit risk of the financial instruments has increased significantly if one or
more of the following quantitative and qualitative standards are reached:
1) The main quantitative standard is that the probability of default within the remaining duration on the
balance sheet date has increased by more than a certain proportion compared with that at the initial
recognition;
2) The main qualitative standard is that there are material adverse changes occurring to the business or
financial conditions of the debtor and changes in the exiting or anticipated technology, market, economic
or legal environment which have a material adverse effect on the debtor's ability to make repayment to
the Company.
(2) Definitions of default and assets with credit impairment
If the financial instruments meet one or more of the following conditions, the Company defines the
financial assets as in default, with its standard consistent with the definition of credit impairment:
1) The debtor faces major financial difficulties;
2) The debtor breaches the provisions governing it in the contract;
3) The debtor is very likely to become bankrupt or go into other financial restructuring proceedings;
4) The creditor makes a concession to the debtor which it will not make under any other circumstances
for the economic or contractual considerations in connection with the debtor’s financial difficulties.
2. Measurement of expected credit loss
The key parameters for measurement of expected credit loss include the probability of default, loss given
default and default risk exposure. The Company builds the models of probability of default, loss given
default and default risk exposure considering the quantitative analysis of historical statistical data (such
as counterparty rating, guarantee type, category of collateral and pledge, repayment method) and
forward-looking information.
3. For the details of the Reconciliation of Beginning Balance and Ending Balance of Provision for Loss of
Financial Instruments, refer to the particulars contained in "5. Accounts receivable", “7. Receivable
financing” and “9. Other receivables” in "VII. Notes to the Items of Consolidated Financial Statements"
of "Section X Financial Report" of this Report.
4. Credit risk exposure and credit risk concentration
The credit risk of the Company is derived mainly from the monetary capital and accounts receivable. To
control the above related risk, the Company has respectively taken the following measures.
(1) Monetary capital
The bank deposit and other monetary capitals of the Company were deposited with financial institutions
with high credit rating; therefore, the credit risk was low.
(2) Accounts receivable
The Company continuously carries out credit assessments on customers who trade in credit. According
to the results of credit assessments, the Company deals with approved and credible customers, and
monitors the balance of its accounts receivable, so as to prevent significant bad debt risk.
No guarantee is required as the Company only transacts with recognized and reputable 3rd parties.
Credit risk concentration is managed on a per-customer basis. As of December 31, 2023, the Company
had a certain credit concentration risk of 93.36% (as of December 31, 2022: 68.05%) of the Company's
accounts receivable originating from the top five customers in the balance. The Company had no
guarantee or other credit enhancement on the balance of the accounts receivable.
The maximum credit risk exposure of the Company is the book value of the financial assets in the
balance sheet.
(II) Liquidity risk
Liquidity risk refers to the risk of shortage of funds when the Company fulfills its obligation to settle by
delivering cash or other financial assets. Liquidity risk may arise from the inability to sell financial
assets at fair value as soon as possible, the counterparty's inability to pay off its contractual debt, the
acceleration of debt or the inability to generate expected cash flow.
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To control such risk, the Company applies various financing methods, such as bill settlements and bank
loans, in appropriate combination of long-term and short-term financing to optimize the financing
structure and keep the balancing between financing sustainability and flexibility. The Company has
obtained lines of credit from several commercial banks to satisfy its working capital demand and capital
expenditure.
Classification of financial liabilities by the remaining due days
Ending amount
Item Undiscounted
Carrying value Within 1 year 1-3 years Above 3 years
contract value
Short-term
200,155,555.56 204,136,925.42 204,136,925.42
borrowings
Notes
36,959,074.14 36,959,074.14 36,959,074.14
payable
Accounts
1,018,522,358.60 1,018,522,358.60 1,018,522,358.60
payable
Other
155,345,148.68 155,345,148.68 155,345,148.68
payables
Bonds
753,119,902.88 902,651,337.03 7,500,387.51 31,446,772.75 863,704,176.77
payable
Lease
9,970,306.87 14,684,876.69 5,269,969.69 9,414,907.00
liabilities
Non-current
liabilities
3,970,060.11 4,213,792.92 4,213,792.92
due within
one year
Subtotal 2,178,042,406.84 2,336,513,513.48 1,426,677,687.27 36,716,742.44 873,119,083.77
(Continued)
Balance at the end of the previous year
Item Undiscounted
Carrying value Within 1 year 1-3 years Above 3 years
contract value
Short-term
200,195,890.41 201,900,886.94 201,900,886.94
borrowings
Notes
69,626,352.12 69,626,352.12 69,626,352.12
payable
Accounts
475,427,484.23 475,427,484.23 475,427,484.23
payable
Other
216,392,183.41 216,392,183.41 216,392,183.41
payables
Bonds
724,491,557.93 900,552,174.00 3,754,685.00 18,773,425.00 877,094,416.00
payable
Lease
3,718,119.41 3,718,119.41 3,718,119.41
liabilities
Non-current
liabilities
2,549,452.14 2,549,452.14 2,549,452.14
due within
one year
Subtotal 1,692,401,039.65 1,870,166,652.25 969,651,043.84 22,491,544.41 877,094,416.00
(III) Market risk
Market risk refers to the risk of fluctuations in the fair value or future cash flow of financial instruments
due to changes in market prices. Market risks include interest rate and foreign exchange risks.
1. Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flow of financial
instruments due to changes in market interest rates. Interest-bearing financial instruments with a fixed
interest rate cause the interest rate risk of fair value, and those with a floating interest rate cause the
interest rate risk of cash flow. The Company determines the proportion of financial instruments with a
fixed interest rate and financial instruments with a floating interest rate according to the market
244 / 272
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environment, and maintains an appropriate combination of financial instruments through regular review
and monitoring.
2. Foreign exchange risk
Foreign exchange risk refers to the risk of fluctuations in the fair value or future cash flow of financial
instruments due to the change of foreign exchange rates. The risk of changes in foreign exchange rates
faced by the Company is mainly related to the Company's foreign currency assets and liabilities. The
Company carries out business in the Chinese mainland, and therefore has main activities valuated in
RMB. Therefore, the market risk of foreign exchange changes faced by the Company is minor.
For the details on foreign-currency monetary assets and liabilities of the Company at the end of the
period, refer to the particulars contained in "81. Foreign-currency monetary items" in "VII. Notes to the
Items of Consolidated Financial Statements" of "Section X Financial Report" of this Report.
2. Hedging
(1) The Company carries out hedging business for risk management
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
(2) The Company carries out qualified hedging business and applies hedging accounting
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
(3) The Company carries out hedging business for risk management, expects to achieve risk
management objectives, but does not apply hedging accounting
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
3. Transfer of financial assets
(1) Classification of transfer methods
□ Applicable √ Not applicable
(2) Financial assets derecognized due to transfer
□ Applicable √ Not applicable
(3) Financial assets transferred due to continued involvement
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
XIII.Disclosure of Fair Value
1. Ending fair value of assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending fair value
The first level The 3rd level of
Item The second
of fair value fair value Total
level of fair
measurement measurement
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Annual Report 2023
value
measurement
I. Continuous fair
value measurement
(I) Held-for-trading
financial assets
1. Financial assets
measured at fair value
through profit or loss
(1) Debt instrument
investment
(2) Equity instrument
investment
(3) Derivative financial
assets
2. Financial assets
designated as measured
at fair value through
profit or loss
(1) Debt instrument
investment
(2) Equity instrument
investment
(II) Other debt
investments
(III) Other equity
107,660,400.00 107,660,400.00
instrument investments
(IV) Investment real
estate
1. Land use rights for
lease
2. Leased buildings
3. Land use rights that
are held for transfer
upon appreciation
(V) Biological assets
1. Consumable
biological assets
2. Productive biological
assets
Receivable financing 7,378,700.06 7,378,700.06
Total assets
continuously measured 115,039,100.06 115,039,100.06
at fair value
(VI) Held-for-trading
financial liabilities
1. Financial liabilities
measured at fair value
through profit or loss
Including: Trading
bonds issued
Derivative financial
liabilities
Other
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Annual Report 2023
2. Financial liabilities
designated to be
measured at fair value
through profit or loss
Total liabilities
continuously measured
at fair value
II. Non-continuous
Fair Value
Measurement
(I) Held-for-sale assets
Total assets not
continuously measured
at fair value
Total liabilities not
continuously measured
at fair value
2. Determination basis for the market price of continuous and non-continuous first-level fair
value measurement items
□ Applicable √ Not applicable
3. Qualitative and quantitative information on the valuation techniques and important
parameters used in continuous and non-continuous second-level fair value measurement items
□ Applicable √ Not applicable
4. Qualitative and quantitative information on the valuation techniques and important
parameters used in continuous and non-continuous 3rd-level fair value measurement items
√ Applicable □ Not applicable
1. For bank acceptance bills held by the Company, the fair value is determined by the par value.
2. As for investments in other equity instruments held by the Company, due to important changes in
business environment, operating conditions, financial conditions and external valuation of the investees,
including Hangzhou Regenovo Bio-technology Co., Ltd., Golong Holdings Co., Ltd., and
LIPOTRUE,S.L., the Company takes the investment cost as a reasonable estimate of fair value for
measurement. Due to the difference between the financial situation of the investee Golong Holdings Co.,
Ltd. in 2023 and the expectations at the time of investment, the Company determines the fair value at the
end of the period based on the asset evaluation report issued by a professional evaluation agency, the
valuation technique adopted by the Company is based on the reasonably available information, and the
important parameters adopted include the EBITDA, and the P/E ratio and EV/EBITDA value ratio of
listed companies in the same industry.
5. Adjustment information and sensitivity analysis of non-observable parameters between
beginning and ending carrying value for continuous 3rd-level fair value measurement items
□ Applicable √ Not applicable
6. For continuous fair value measurement items, if the conversion occurs among different
levels within the current period, the reasons for the conversion and the policy for determining
the conversion time point
□ Applicable √ Not applicable
7. Changes in valuation techniques during the current period and the reasons for the changes
□ Applicable √ Not applicable
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Annual Report 2023
8. Information on Fair value of financial assets and liabilities not measured at fair value
□ Applicable √ Not applicable
9. Other
□ Applicable √ Not applicable
XIV.Related Parties and Transactions
1. Information on the parent company of the Company
□ Applicable √ Not applicable
2. Information on subsidiaries of the Company
Refer to the notes for the details on subsidiaries of the Company
√ Applicable □ Not applicable
For the details on subsidiaries of the Company, refer to the particulars contained in "X. Equity in Other
Entities","Section X Financial Report" of this Report.
3. Information on joint ventures and affiliates of the Company
Refer to the notes for details of the important joint ventures or affiliates of the Company
√ Applicable □ Not applicable
For the details on important joint ventures or affiliates of the Company, refer to the particulars contained
in "X. Equity in Other Entities","Section X Financial Report" of this Report.
Information about other joint ventures or associates that have related transactions with the Company in
the current period, or have balance resulting from related transactions with the Company in the previous
period is as follows
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
4. Information on other related parties
√ Applicable □ Not applicable
Name of other related party Relationship between other related party and the
Company
Huzhou Beauty Town Technology Other
Incubation Park Co., Ltd.
Ningbo Weiman Cosmetics Co., Ltd. Other
Cosmetics Industry (Huzhou) Investment Other
Development Co., Ltd.
Beijing Xiushi Cultural Development Co., Other
Ltd.
Hangzhou Regenovo Bio-technology Co., Other
Ltd.
Hangzhou Slow Coral Cultural Tourism Other
Planning and Design Co., Ltd.
PARISEZHAN HK LIMITED Other
EURL PHARMATICA Other
SARL ORTUS Other
S.A.S AREDIS Other
Shanghai Youke Brand Management Co., Other
Ltd.
Shanghai Youke Jiabei Technology Co., Other
Ltd.
Beauty Hi-tech Innovation Co.Ltd Other
248 / 272
Annual Report 2023
Other explanations
None
5. Information on related transactions
(1). Related transactions of purchasing and selling goods, and providing and receiving labor
services
Statement of purchasing goods or accepting labor services
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Approved Whether the Amount
Related Amount
Related transaction transaction limit incurred in
transaction incurred in the
parties limit (if is exceeded (if the previous
content current period
applicable) applicable) period
Hangzhou Promotional 621,966.94 Not applicable
Slow Coral services
Cultural
Tourism
Planning and
Design Co.,
Ltd.
Beijing Xiushi Promotional 169,811.41 Not applicable
Cultural services
Development
Co., Ltd.
Ningbo Purchase of 121,884.94 Not applicable 107,862.78
Weiman goods
Cosmetics
Co., Ltd.
Hangzhou Purchase of 41,663.72 Not applicable
Regenovo goods
Bio-
technology
Co., Ltd.
Beauty Hi- Purchase of 4,545,263.84 Not applicable 324,982.00
tech goods
Innovation
Co.Ltd
Statements of sales of goods or provision of services
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Related transaction Amount incurred in Amount incurred in
Related parties
content the current period the previous period
Shanghai Youke Brand Sales of goods 12,289,045.76
Management Co., Ltd.
Shanghai Youke Jiabei Sales of goods 33,616,486.42
Technology Co., Ltd.
Ningbo Weiman Sales of goods 14,321.36 630,810.70
Cosmetics Co., Ltd.
Cosmetics Industry Sales of goods 3,396.23
(Huzhou) Investment
Development Co., Ltd.
Explanation on related party transactions in purchasing and selling goods, and providing and receiving
labor services
□ Applicable √ Not applicable
249 / 272
Annual Report 2023
(2). Related entrusted management, contracting and entrusted management, and outsourcing
Statement of entrusted management or contracting of the Company:
□ Applicable √ Not applicable
Explanation on related trusteeship or contracting
□ Applicable √ Not applicable
Statement of entrusted management or outsourcing of the Company
□ Applicable √ Not applicable
Explanation on related management or outsourcing
□ Applicable √ Not applicable
(3). Information on related lease
The Company as the lessor:
□ Applicable √ Not applicable
250 / 272
Annual Report 2023
The Company as the lessee:
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Variable lease
Rent expenses of short-
payments not
term leases and low- Interest expenses on
included in the
value asset leases Rent paid lease liabilities Right-of-use assets increased
measurement of
subject to simplified assumed
Types of lease liabilities (if
Name of treatment (if applicable)
leased applicable)
lessor
assets Amount Amount Amount Amount Amount Amount Amount
Amount Amount
incurred incurred in incurred incurred incurred in incurred incurred Amount
incurred in incurred in
in the the in the in the the in the in the incurred in the
the current the previous
current previous current previous previous current previous current period
period period
period period period period period period period
Huzhou
Beauty
Town
Technology Field 85,715.77 214,434.03 517,536.00 386,182.00 27,952.40 15,292.30 -229,315.75 693,678.71
Incubation
Park Co.,
Ltd.
Explanation on related lease
□ Applicable √ Not applicable
251 / 272
Annual Report 2023
(4). Information on related guarantee
The Company as the guarantor
□ Applicable √ Not applicable
The Company as the guarantee
□ Applicable √ Not applicable
Description of related guarantee
□ Applicable √ Not applicable
(5). Borrowing of related party funds
□ Applicable √ Not applicable
(6). Information of asset transfer and debt restructuring of related parties
□ Applicable √ Not applicable
(7). Remuneration of key management personnel
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the
Item
period previous period
Remuneration of key management
9,373,634.51 6,664,014.49
personnel
Note: The above remuneration excludes the relevant remuneration recognized by share-based payment
(8). Other related party transactions
□ Applicable √ Not applicable
6. Information on unsettled items such as accounts receivable from and accounts payable to
related parties
(1). Receivable items
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Item Related parties Provision for Carrying Provision for
Carrying amount
bad debts amount bad debts
Accounts
receivable
Ningbo
Weiman
15,052.00 752.60
Cosmetics Co.,
Ltd.
Subtotal 15,052.00 752.60
Prepayments
Huzhou Beauty
Town
Technology 43,000.00
Incubation Park
Co., Ltd.
Beauty Hi-tech
Innovation 21,021.52
Co.Ltd
Subtotal 21,021.52 43,000.00
252 / 272
Annual Report 2023
Other
receivables
EURL
PHARMATICA 18,169,451.02 18,169,451.02 18,232,635.52 18,232,635.52
[Note]
Huzhou Beauty
Town
Technology 132,568.20 132,568.20 133,568.20 132,868.20
Incubation Park
Co., Ltd.
Beauty Hi-tech
Innovation Co., 82,767.74 4,138.39
Ltd.
Subtotal 18,384,786.96 18,306,157.61 18,366,203.72 18,365,503.72
[Note] Other receivables from EURL PHARMATICA are the consolidated statistics of receivables from
PAN Xiang and receivables from EURL PHARMATICA, PARISEZHAN HK LIMITED,
SARLORTUS, and S.A.SAREDIS controlled by PAN Xiang.
(2). Payable items
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Related parties Ending book balance Opening book balance
Accounts payable
Hangzhou Slow 199,622.64
Coral Cultural
Tourism Planning
and Design Co., Ltd.
Ningbo Weiman 121,884.94 121,884.94
Cosmetics Co., Ltd.
S.A.S AREDIS 243,598.94
Subtotal 321,507.58 365,483.88
Other payables
HOU Juncheng 2,000,000.00
Subtotal 2,000,000.00
(3). Other items
□ Applicable √ Not applicable
7. Commitment of related parties
□ Applicable √ Not applicable
8. Other
□ Applicable √ Not applicable
XV.Share-based Payments
1. Equity instruments
√ Applicable □ Not applicable
Quantity unit: Share Amount unit: Yuan Currency: RMB
Categories Awarded in the Exercised in the Released in the current Invalid in the current
of granted current period current period period period
objects Number Amount Number Amount Number Amount Number Amount
Management 679,770 42,844,932.00 110,404 6,105,220.21
R&D 91,518 5,768,248.80 13,720 761,363.96
personnel
253 / 272
Annual Report 2023
Sales 40,110 2,528,076.00 47,418 2,627,643.07
specialists
Total 811,398 51,141,256.80 171,542 9,494,227.24
[Note] On May 29, 2023, the Company implemented the annual equity distribution for 2022, distributing
a cash dividend of RMB0.87 (including tax) per share and issuing 0.40 shares for every 1 share to all
shareholders through capitalization of the capital reserve, so this number is the number of shares after
the capitalization of the capital reserve.
Outstanding stock options and other equity instruments at the end of the period
√ Applicable □ Not applicable
Outstanding stock options at the end Outstanding other equity instruments at
Categories of of the period the end of the period
granted objects Scope of exercise Remaining term Scope of exercise Remaining term
price of contract price of contract
Management Not applicable Not applicable RMB78.56/Share 31 months
R&D personnel Not applicable Not applicable RMB78.56/Share 31 months
Sales specialists Not applicable Not applicable RMB78.56/Share 31 months
Other explanations
On July 25, 2022, the Company, according to the Proposal on the 2022 Restricted Shares Incentive Plan
of the Company (Draft) and Its Summary deliberated and approved at the First Extraordinary General
Meeting of Shareholders of the Company in 2022, under the Incentive Plan, proposed to grant up to
2,100,000 restricted shares to incentive objects. The grant date of restricted shares is July 25, 2022, and
the incentive objects are 101 persons including senior managers, middle managers and core backbone
personnel of the Company (excluding independent directors, supervisors and shareholders or actual
controllers holding more than 5% of the company's shares alone or in total, as well as their spouses,
parents and children). The grant price is RMB78.56 per share. The subject shares under the Incentive
Plan are derived from the A-share ordinary shares of the Company privately issued by the Company to
the incentive objects. The validity period of the Incentive Plan begins from the date when the
registration of the grant of restricted shares is completed to the date when all the restricted shares
granted to the incentive objects are released or repurchased and de-registered, in no case taking longer
than 48 months. The granted restricted shares will be released in 3 installments (30%, 30%, 40%) over
36 months after the first 12 months after the initial grant of the restricted shares. The performance
condition for the first release is that: On the basis of the operating revenue and net profit in 2021, the
growth rates of operating revenue and net profit in 2022 were no less than 25% and 25%, respectively.
The performance condition for the second release is that: On the basis of the operating revenue and net
profit in 2021, the growth rates of operating revenue and net profit in 2023 were no less than 53.75%
and 53.75%, respectively. The performance condition for the 3rd release is that: On the basis of the
operating revenue and net profit in 2021, the growth rates of operating revenue and net profit in 2024
were no less than 87.58% and 87.58%, respectively.
According to the Proposal on Satisfying the Conditions for Release from Sales Restrictions in the First
Release Period under the 2022 Restricted Shares Incentive Plan deliberated and approved at the 14th
meeting of the 3rd session of Board of Directors of the Company in 2023, the Company released the
811,398 restricted shares held by the incentive objects who had satisfied the first release conditions (and
issued 0.40 shares for every 1 share to all shareholders through capitalization of the capital reserve, so
this number is the number of shares after the capitalization of the capital reserve). The circulating date of
the sales was September 26, 2023.
2. Equity-settled share-based payment
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Determination method of the fair value of equity Determined as per the share price on the grant
instruments on the grant date date and the grant price of restricted shares
Important parameters of fair value of equity
instruments on the grant date
Basis for determining the quantity of feasible Determined according to the estimated
equity instruments performance conditions in the release period
254 / 272
Annual Report 2023
Reason for significant difference with estimation Not applicable
in the current period and estimation in the previous
period
Cumulative amount of equity-settled share-based 163,564,812.98
payments included in the capital reserve
Other explanations
None
3. Information on cash-settled share-based payments
□ Applicable √ Not applicable
4. Share-based payment expenses in the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Categories of granted objects Equity-settled share-based Cash-settled share-based
payment expenses payment expenses
Management 62,868,293.10
R&D personnel 8,460,207.47
Sales specialists 4,186,552.14
Total 75,515,052.71
Other explanations
None
5. Information on modification and termination of share-based payments
□ Applicable √ Not applicable
6. Other
□ Applicable √ Not applicable
XVI.Commitments and Contingencies
1. Important commitments
√ Applicable □ Not applicable
Important external commitments, nature and amount existing at the balance sheet date
As of December 31, 2023, the investment projects conducted by the Company through public issuance
of convertible bonds were as follows:
Unit: RMB '0,000
Adjusted
Total Ending
investment Project filing
Item investment accumulated
amount of raised or approval No.
amount investment
funds
Huzhou Production Base 2011-330502-04-01-
43,752.54 33,850.00 23,435.69
Expansion Project (Phase I) 178735
Longwu R&D Center 2101-330106-04-02-
21,774.45 19,450.00 19,053.45
Construction Project 307916
Information System
11,239.50 8,801.27 3,143.45
Upgrade Project
Additional working capital 18,000.00 12,349.60 12,533.15
Total 94,766.49 74,450.87 58,165.74
255 / 272
Annual Report 2023
2. Contingencies
(1). Important contingencies on the balance sheet date
□ Applicable √ Not applicable
(2). Even if the Company does not have important contingencies to be disclosed, it must
also state:
□ Applicable √ Not applicable
3. Other
□ Applicable √ Not applicable
XVII.Events after the balance sheet date
1. Important non-adjustment matters
□ Applicable √ Not applicable
2. Information on profit distribution
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Profits or dividends to be distributed 359,037,186.69
Profits or dividends declared after
397,455,566.41
deliberation and approval
According to the 18th meeting of the 3rd session of Board of Directors on April 17, 2024, the Company
distributed a cash dividend of RMB9.10 (including tax) per 10 shares to all shareholders registered on
the equity registration date based on the total share capital on the registration date of dividend
distribution (deducting the shares in the Company's special securities account for repurchase), totaling
RMB 359,037,186.69 (including tax). In case of a change in the Company's total share capital due to the
conversion of convertible bonds before the date of record for equity distribution, the Company maintains
the said distribution and conversion ratios and adjusts the total distribution and conversion amounts. The
above matter is yet to be deliberated and approved at the shareholders’ meeting.
3. Sales return
□ Applicable √ Not applicable
4. Explanation on other events after the balance sheet date
□ Applicable √ Not applicable
XVIII.Other Important Matters
1. Correction of early accounting errors
(1). Retrospective restatement
□ Applicable √ Not applicable
(2). Prospective application
□ Applicable √ Not applicable
2. Important debt restructuring
□ Applicable √ Not applicable
256 / 272
Annual Report 2023
3. Asset replacement
(1). Exchange of non-monetary assets
□ Applicable √ Not applicable
(2). Replacement of other assets
□ Applicable √ Not applicable
4. Annuity plan
□ Applicable √ Not applicable
5. Termination of operation
□ Applicable √ Not applicable
6. Segment information
(1). Determination basis and accounting policy of reportable segment
√ Applicable □ Not applicable
The Company's main business is the production and sale of cosmetics. The Company regards this
business as a whole to implement management and evaluate business results. Therefore, the Company
has no need to disclose segment information. For the details on revenue breakdown of the Company,
refer to the particulars contained in Note V(II)1 of the Financial Statements.
The details of main business income and main business cost of the Company classified by brands are as
follows:
2023
Brand Income from main Cost of main business Gross profit
business
Proya brand 7,177,344,635.84 2,097,878,713.27 5,079,465,922.57
Other brands 1,712,883,153.13 568,986,159.23 1,143,896,993.90
Subtotal 8,890,227,788.97 2,666,864,872.50 6,223,362,916.47
2022
Brand Income from main Cost of main business Gross profit
business
Proya brand 5,263,675,333.17 1,520,575,295.77 3,743,100,037.40
Other brands 1,098,088,217.52 395,777,239.52 702,310,978.00
Subtotal 6,361,763,550.69 1,916,352,535.29 4,445,411,015.40
(2). Financial information of the reportable segment
□ Applicable √ Not applicable
(3). If the Company has no reportable segment, or cannot disclose the total assets and liabilities
of each reportable segment, the reasons must be explained
□ Applicable √ Not applicable
(4). Other explanations
□ Applicable √ Not applicable
7. Other important transactions and matters that have an impact on investors' decisions
□ Applicable √ Not applicable
8. Other
□ Applicable √ Not applicable
257 / 272
Annual Report 2023
XIX.Notes on Main Items of the Financial Statements of the Parent Company
1. Accounts receivable
(1). Disclosed by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Account age Ending book balance Opening book balance
Within 1 year
Including: Sub-items within 1 year
Within 1 year 601,922,452.45 259,683,548.62
Sub-total within 1 year 601,922,452.45 259,683,548.62
1-2 years 21,289,087.90 54,333,721.43
2-3 years 10,300,174.10
Above 3 years
3-4 years
4-5 years
Above 5 years
Total 623,211,540.35 324,317,444.15
(2). Disclosed by the classification of bad debt accrual method
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Provision for bad Provision for bad
Carrying amount Carrying amount
Category debts debts
Book Book
Percen Accrual Accrual
value Percentage value
Amount tage Amount ratio Amount Amount ratio
(%)
(%) (%) (%)
Provision
for bad
debts
accrued
individua
lly
Including:
Provision 623,211, 100.00 36,482, 5.85 586,7 324,317, 100.00 34,434,3 10.62 289,88
for bad 540.35 849.00 28,69 444.15 80.91 3,063.
debts 1.35 24
accrued
by
portfolio
Including:
Account 623,211, 100.00 36,482, 5.85 586,7 324,317, 100.00 34,434,3 10.62 289,88
age 540.35 849.00 28,69 444.15 80.91 3,063.
portfolio 1.35 24
623,211, / 36,482, / 586,7 324,317, / 34,434,3 / 289,88
Total 540.35 849.00 28,69 444.15 80.91 3,063.
1.35 24
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
√ Applicable □ Not applicable
By portfolio: Account age portfolio
Unit: Yuan Currency: RMB
Ending balance
Name
Accounts receivable Provision for bad debts Accrual ratio (%)
258 / 272
Annual Report 2023
Within 1 year 601,922,452.45 30,096,122.63 5.00
1-2 years 21,289,087.90 6,386,726.37 30.00
Total 623,211,540.35 36,482,849.00 5.85
Explanation on provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of accounts receivable with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(3). Information on provisions for bad debts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount of changes in the current period
Charge-
Opening Withdrawal
Category off or Other Ending balance
balance Accrual or write-
write- changes
back
off
Provision 34,434,380.91 2,048,468.09 36,482,849.00
for bad
debts
accrued by
portfolio
Total 34,434,380.91 2,048,468.09 36,482,849.00
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations
None
(4). Accounts receivable actually written off in the current period
□ Applicable √ Not applicable
Among them, information on accounts receivable significantly written off
□ Applicable √ Not applicable
Explanation on the write-off of the account receivable:
□ Applicable √ Not applicable
(5). Accounts receivable and contract assets of the top five ending balances collected by debtor
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
259 / 272
Annual Report 2023
Proportion of
Balance of total balance
Balance of Balance of
accounts of accounts Ending
accounts contract
Company receivable and receivable balance of
receivable at assets at the
name contract assets and contract provision for
the end of the end of the
at the end of assets at the bad debts
period period
the period end of the
period (%)
Proya 260,909,671.88 260,909,671.88 41.87 13,045,483.59
(Zhejiang)
Cosmetics
Co., Ltd.
Huzhou 84,267,184.00 84,267,184.00 13.52 4,213,359.20
Hapsode
Trading Co.,
Ltd.
Huzhou 51,127,826.40 51,127,826.40 8.20 2,556,391.32
UZERO
Trading Co.,
Ltd.
Ningbo 49,945,434.71 49,945,434.71 8.01 2,497,271.74
Tangyu
Trading Co.,
Ltd.
Hangzhou 43,959,624.86 43,959,624.86 7.05 6,633,111.85
Proya
Commercial
Management
Co., Ltd.
Total 490,209,741.85 490,209,741.85 78.65 28,945,617.70
Other explanations
None
Other explanations:
□ Applicable √ Not applicable
2. Other receivables
Presentation by item
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Interest receivable
Dividend receivable
Other receivables 80,702,024.60 141,574,549.59
Total 80,702,024.60 141,574,549.59
Other explanations:
□ Applicable √ Not applicable
Interest receivable
(1). Classification of interest receivable
□ Applicable √ Not applicable
260 / 272
Annual Report 2023
(2). Significant overdue interest
□ Applicable √ Not applicable
(3). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
(4). Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of interest receivable with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(5). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(6). Interest receivable actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important interest receivable
□ Applicable √ Not applicable
Explanation on write-off of receivable financing:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
Dividend receivable
(1). Dividend receivable
□ Applicable √ Not applicable
(2). Important dividends receivable with an account age of more than one year
□ Applicable √ Not applicable
261 / 272
Annual Report 2023
(3). Disclosed by the classification of bad debt accrual method
□ Applicable √ Not applicable
Provision for bad debts accrued individually:
□ Applicable √ Not applicable
Explanation on provision for bad debts accrued individually:
□ Applicable √ Not applicable
Provision for bad debts accrued by portfolio:
□ Applicable √ Not applicable
(4). Provision for bad debts accrued according to the general model of expected credit loss
□ Applicable √ Not applicable
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of dividends receivable with changes in provision for
loss in the current period:
□ Applicable √ Not applicable
(5). Information on provisions for bad debts
□ Applicable √ Not applicable
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
□ Applicable √ Not applicable
Other explanations:
None
(6). Dividends receivable actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of important dividends receivable
□ Applicable √ Not applicable
Explanation on write-off of receivable financing:
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
Other receivables
(1). Disclosed by account age
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Account age Ending book balance Opening book balance
Within 1 year
Including: Sub-items within 1 year
Within 1 year 36,258,395.66 33,856,482.33
Sub-total within 1 year 36,258,395.66 33,856,482.33
1-2 years 32,135,546.26 62,659,488.92
2-3 years 47,523,332.69 131,098,498.27
262 / 272
Annual Report 2023
Above 3 years 135,780,112.99 4,741,614.72
3-4 years
4-5 years
Above 5 years
Total 251,697,387.60 232,356,084.24
(2). Classification by nature of payment
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Nature of payment Ending book balance Opening book balance
Current accounts receivable 244,184,515.37 210,637,812.50
Security deposits 6,322,669.24 18,833,006.72
Suspense payment receivables 234,768.29 2,334,148.44
Other 955,434.70 551,116.58
Total 251,697,387.60 232,356,084.24
(3). Information on provision for bad debts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
First stage Second stage Third stage
Expected credit loss Expected credit loss
Expected
Provision for bad for the entire for the entire Total
credit losses
debts duration (credit duration (credit
over the next
impairment not impairment has
12 months
occurred) occurred)
Balance as of 1,692,824.12 18,797,846.68 70,290,863.86 90,781,534.65
January 1, 2023
Balance as of
January 1, 2023 in
the current period
– Transferred into -1,606,777.31 1,606,777.31
the second stage
– Transferred into -7,128,499.90 7,128,499.90
the Third stage
– Transferred
back to the second
stage
– Transferred
back to the first
stage
Amount accrued 1,726,872.98 -3,635,460.21 82,122,415.58 80,213,828.35
in the current
period
Amount written
back in the current
period
Amount charged-
off in the current
period
Amount written
off in the current
period
Other changes
263 / 272
Annual Report 2023
Balance as of 1,812,919.79 9,640,663.88 159,541,779.34 170,995,363.00
December 31,
2023
Classification basis and accrual ratio of provision for bad debts for each stage
None
Explanation on significant changes in book balance of other receivables with changes in provision for loss
in the current period:
□ Applicable √ Not applicable
The amount of provision for bad debts in the current period and the basis for evaluating whether the
credit risk of financial instruments increases significantly:
□ Applicable √ Not applicable
(4). Information on provisions for bad debts
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount of changes in the current period
Opening Withdrawal Charge- Ending
Category Other
balance Accrual or write- off or balance
changes
back write-off
Account 90,781,534.65 70,995,363.00
age 80,213,828.35
portfolio
Total 90,781,534.65 80,213,828.35 70,995,363.00
Among them, significant amount of bad-debt provision written back or withdrawn in the current period:
□ Applicable √ Not applicable
Other explanations
None
(5). Other receivables actually written off in the current period
□ Applicable √ Not applicable
Wherein, write-off of other important receivables:
□ Applicable √ Not applicable
Explanation on write-off of other receivables:
□ Applicable √ Not applicable
(6). Other receivables of the top five ending balances collected by debtor
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
As a proportion
Provision for bad
Company of total ending Nature of Account
Ending balance debts
name balance in other payment age
Ending balance
receivables (%)
Hong Kong 158,596,921.24 63.01 Current Note [1] 138,826,631.30
Xinghuo accounts
Industry receivable
Limited
264 / 272
Annual Report 2023
Boya (Hong 37,724,160.00 14.99 Current 2-3 years 18,862,080.00
Kong) accounts
Investment receivable
Management
Co., Limited
Zhejiang 17,430,278.00 6.93 Current Within 1 871,513.90
Meiligu accounts year
Electronic receivable
Commerce
Co., Ltd.
Hangzhou 7,491,913.31 2.98 Current Note [2] 2,484,299.62
Yizhuo accounts
Culture receivable
Media Co.,
Ltd.
Ningbo 7,053,500.14 2.80 Current Note [3] 978,425.05
Keshi accounts
Trading receivable
Limited
Total 228,296,772.69 90.71 / / 162,022,949.87
[Note 1] RMB1,378,625.13 with an account age within 1 year, RMB25,296,150.57 with an account age
of 1-2 years, RMB1,506,581.35 with an account age of 2-3 years, and RMB130,415,564.19 with an
account age of above 3 years.
[Note 2] RMB2,253,097.49 with an account age within 1 year, RMB1,238,815.82 with an account age
of 1-2 years, and RMB4,000,000.00 with an account age of 2-3 years.
[Note 3] RMB5,609,833.36 with an account age within 1 year, RMB119,500.04 with an account age of
1-2 years, and RMB1,324,166.74 with an account age of 2-3 years.
(7). Presented as other receivables due to centralized fund management
□ Applicable √ Not applicable
Other explanations:
□ Applicable √ Not applicable
3. Long-term equity investments
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Ending balance Opening balance
Item Carrying Impairment Carrying Carrying Impairment Carrying
amount provision value amount provision value
Investments 347,674,082. 42,500,000.0 305,174,082. 304,354,996. 42,500,000.0 261,854,996.
in 74 0 74 61 0 61
subsidiaries
Investments 195,016,371. 81,442,213.2 113,574,158. 213,909,167. 81,442,213.2 132,466,953.
in affiliates 71 2 49 02 2 80
and joint
ventures
542,690,454. 123,942,213. 418,748,241. 518,264,163. 123,942,213. 394,321,950.
Total
45 22 23 63 22 41
(1) Investments in subsidiaries
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Impai
Opening Current Current Ending Ending
Invested entity rment
balance increase decrease balance balance of
provi
265 / 272
Annual Report 2023
sion impairment
accru provisions
ed in
the
curre
nt
perio
d
Hangzhou Proya 32,241,059.0 2,338,647.3 1,468,369.2 33,111,337.2
Trade Co.,Ltd. 9 2 1 0
Hanna Cosmetics Co., 2,094,048.00 2,094,048.00
Ltd.
Zhejiang Meiligu 26,913,422.6 19,870,916. 3,208,555.1 43,575,783.6
Electronic Commerce 9 12 3 8
Co., Ltd.
Yueqing Laiya 1,000,000.00 1,000,000.00
Trading Co., Ltd.
Hapsode (Hangzhou) 42,500,000.0 42,500,000.0 42,500,000.
Cosmetics Co., Ltd. 0 0 00
Mijing Siyu 18,000,000.0 18,000,000.0
(Hangzhou) 0 0
Cosmetics Co., Ltd.
Huzhou UZERO 5,460,276.70 5,460,276.70
Trading Co., Ltd.
Huzhou Niuke 3,500,000.00 3,500,000.00
Technology Co., Ltd.
Hangzhou Proya 5,000,000.00 5,000,000.00
Commercial
Management Co., Ltd.
Huzhou Younimi 21,393,476.0 21,393,476.0
Cosmetics Co., Ltd. 0 0
Shanghai Zhongwen 5,929,948.75 936,247.72 6,866,196.47
Electronic Commerce
Co., Ltd.
Korea Younimi 5,046,455.61 5,046,455.6
Cosmetics Co., Ltd. 1
Hong Kong Keshi 24,736,491.0 24,736,491.0
Trading Co., Ltd. 0 0
Hong Kong Xinghuo 10,185,924.0 10,185,924.0
Industry Limited 0 0
Ningbo TIMAGE 61,330,669.1 756,966.23 62,087,635.4
Cosmetics Co., Ltd. 9 2
Ningbo Keshi Trading 520,000.00 520,000.00
Limited
Zhejiang Beauty 10,181,983.2 10,181,983.2
Cosmetics Co., Ltd. 1 1
Ningbo Proya 19,558,487.3 24,613,354. 272,867.22 43,898,974.3
Enterprise Consulting 3 27 8
Management Co., Ltd.
Hangzhou Yizhuo 1,000,000.00 1,000,000.00
Culture Media Co.,
Ltd.
Hangzhou Oumisi 3,900,000.00 3,900,000.00
Trade Co., Ltd.
266 / 272
Annual Report 2023
Guangzhou Qianxi 1,000,000.00 1,000,000.00
Network Technology
Co., Ltd.
Zhejiang Qingya 1,650,000.00 1,650,000.00
Culture Art
Communication Co.,
Ltd.
Hangzhou Weiluoke 500,000.00 500,000.00
Cosmetics Co., Ltd.
Singuladerm 500,000.00 4,500,000.0 5,000,000.00
(Hangzhou) 0
Cosmetics Co., Ltd.
Proya (Hainan) 100,000.00 100,000.00
Cosmetics Co., Ltd.
Hangzhou TIMAGE 112,755.04 199,201.64 311,956.68
Cosmetics Co., Ltd.
Hubei Laibo 100,000.00 100,000.00
Information Co., Ltd.
304,354,996. 53,315,333. 9,996,247.1 347,674,082. 42,500,000.
Total
61 30 7 74 00
(2) Investments in affiliates and joint ventures
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Current changes
Recogniz
ed Other Ending
Declared
Investment Opening investme compre Other Ending balance of
Investme payment Impairment
Unit balance Additional nt gain hensive changes balance impairment
nt of cash provision Other
investment and loss income in provisions
decrease dividends accrued
under the adjustm equity
or profits
equity ents
method
I. Joint Venture
Huzhou Panrui 3,068,948 -8,956.25 3,059,99
Industry Investment .16 1.91
Partnership (Limited
Partnership)
Subtotal 3,068,948 -8,956.25 3,059,99
.16 1.91
II. Affiliate
Xiongke Culture 2,649,619 - 2,617,83
Media (Hangzhou) .70 31,784.8 4.89
Co., Ltd. 1
Jiaxing Woyong 111,253,2 18,636,363. - - 100,964,
Investment 21.93 64 8,675,14 20,250, 443.84
Partnership (Limited 1.73 000.00
Partnership)
Zhuhai Haishilong 10,576,29 - 2,401,20 81,442,213.
Biotechnology Co., 8.67 8,175,09 7.78 22
Ltd. 0.89
267 / 272
Annual Report 2023
Beijing Xiushi 4,918,865 - 4,530,68
Cultural Development .34 388,185. 0.07
Co., Ltd. 27
Subtotal 129,398,0 18,636,363. - - 110,514, 81,442,213.
05.64 64 17,270,2 20,250, 166.58 22
02.70 000.00
132,466,9 18,636,363. - - 113,574, 81,442,213.
53.80 64 17,279,1 20,250, 158.49 22
Total 58.95 000.00
(3). Information on impairment testing of long-term equity investments
□ Applicable √ Not applicable
Other explanations:
None
4. Operating revenue and costs
(1). Information of operating revenue and costs
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the previous
Item period period
Revenue Cost Revenue Cost
Main business 4,208,203,129.11 1,951,916,303.90 3,061,899,622.39 1,407,736,680.98
Other business 36,251,912.21 15,065,147.90 19,237,314.36 16,988,430.02
Total 4,244,455,041.32 1,966,981,451.80 3,081,136,936.75 1,424,725,111.00
(2). Breakdown of operating revenue and costs
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
(3). Explanation on performance obligations
□ Applicable √ Not applicable
(4). Explanation on remaining performance obligations allocated
□ Applicable √ Not applicable
(5). Significant contract changes or significant transaction price adjustments
□ Applicable √ Not applicable
Other explanations:
1) Breakdown of income generated from contracts with clients by goods or service type
Item Amount for the current period Amount for the same period last year
Revenue Cost Revenue Cost
Products sales 4,208,203,129.11 1,951,916,303.90 3,063,670,101.01 1,407,736,680.98
Other
36,251,912.21 15,065,147.90 17,466,835.74 16,988,430.02
268 / 272
Annual Report 2023
Item Amount for the current period Amount for the same period last year
Revenue Cost Revenue Cost
Subtotal 4,244,455,041.32 1,966,981,451.80 3,081,136,936.75 1,424,725,111.00
2) Breakdown of income generated from contracts with clients by goods or service transfer time
Amount for the
Amount for the
Item same period last
current period
year
Income recognized at a certain point 4,215,112,328.12 3,063,670,101.01
Income recognized in a certain period 29,342,713.20 17,466,835.74
Subtotal 4,244,455,041.32 3,081,136,936.75
3) Revenue recognized in the current period and included in the beginning carrying value of contract
liabilities is RMB68,099,041.17.
5. Investment income
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the
Item
current period previous period
Long-term equity investment income
calculated by applying the cost method
Long-term equity investment income -17,279,158.95 -5,149,438.13
calculated by the equity method
Investment income from disposal of -2,545,129.34 988,000.42
long-term equity investment
Investment income of held-for-trading
financial assets during the holding
period
Dividend income from other equity
instrument investments during the
holding period
Interest income from debt investment
during the holding period
Interest income from other debt
investments during the holding period
Investment income from disposal of
held-for-trading financial assets
Investment income from disposal of
other equity instrument investments
Investment income from disposal of
debt investment
Investment income from disposal of
other debt investments
Gains of debt restructuring
Total -19,824,288.29 -4,161,437.71
Other explanations:
None
6. Other
□ Applicable √ Not applicable
269 / 272
Annual Report 2023
XX.Supplementary Information
1. Statement of non-recurring gains and losses for the current period
√ Applicable □ Not applicable
Unit: Yuan Currency: RMB
Item Amount Note
Gains or losses from disposal of non-current
assets, including write-offs of provision for -703,593.33
adjusted asset impairment
Government grants recognized in profit or loss
for the current period (excluding government
grants that are closely related to the Company’s
business operations, compliant with national 44,043,618.77
policies, granted at set standards, and imposing
sustaining influence on the Company's gains and
losses)
Gains or losses from change in fair value
generated by financial assets and liabilities held
by non-financial businesses as well as gains or
losses from disposal of financial assets and
liabilities
Capital occupation fees charged to the non-
financial enterprises and included in profit or
loss for the current period
Gains or losses from entrusting others with
investment or asset management
Gains or losses from outward entrusted loaning
Asset loss incurred by force majeure such as
natural disasters
Reversal of impairment provisions of accounts
receivable that have undergone impairment 289,706.45
testing alone
Gains when the investment cost of acquiring a
subsidiary, an associate and a joint venture is less
than the fair value of the identifiable net assets of
the invested entity
Current net gains or losses of subsidiaries
established by business combination involving
enterprises under common control from the
beginning of the period to the combination date
Gains or losses from exchange of non-monetary
assets
Gains or losses from debt restructuring
One-time expenses incurred due to the cessation
of relevant business activities, such as staffing
expenses
One-time impact on current profit and loss due to
the adjustments of taxes and accounting laws and
regulations
One-time share-based payment recognized for
cancellation and modification of equity incentive
plans
Gains and losses from changes in the fair values
of employee compensation payable for share-
based payment in cash after the exercise date
Gains or losses from changes in the fair values of
Investment real estate that are subsequently
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Annual Report 2023
measured using the fair value model
Profits generated from transactions with
unreasonable transaction price
Gains or losses on contingencies that have no
relation with the normal operation of the
Company
Custody fees of entrusted operation
Other non-operating revenue and expenses
-7,456,554.85
besides the above items
Other items that conform to the definition of Investment income from
non-recurring profit or loss -113,212.70 disposal of long-term
equity investment
Less: Effect of income tax 10,105,613.47
Effect of minority equity (after tax) 6,230,469.38
Total 19,723,881.49
Impact of the implementation of the Explanatory Announcement on Information Disclosure for
Companies Offering Their Securities to the Public No.1 - Non-recurring Gains and Losses (Revised in
2023) on the amount of non-recurring gains and losses for the year of 2022
Item Amount
Net non-recurring gains and losses attributable to
28,886,986.92
owners of the parent company for the year of 2022
Net non-recurring gains and losses attributable to
owners of the parent company for the year of 2022
calculated in accordance with the Explanatory
Announcement on Information Disclosure for 28,474,794.06
Companies Offering Their Securities to the Public
No.1 - Non-recurring Gains and Losses (Revised in
2023)
Difference 412,192.86
The reasons should be explained for the Company defining the non-recurring gains and losses items not
listed in the Explanatory Announcement on Information Disclosure for Companies Offering Their
Securities to the Public No. 1 – Non-Recurring Gains and Losses as non-recurring gains and losses items
of high value and defining the non-recurring profit and loss items listed in the same document as
recurring gains and losses items.
□ Applicable √ Not applicable
Other explanations
□ Applicable √ Not applicable
2. Return on equity and earnings per share
√ Applicable □ Not applicable
Weighted Earnings per share
Profit during the Reporting Period average ROE Basic earnings per Diluted earnings per
(%) share share
Net profits attributable to ordinary 29.94 3.01 2.97
shareholders of the Company
Net profits attributable to ordinary 29.44 2.96 2.92
shareholders of the Company after
deducting non-recurring gains and
losses
271 / 272
Annual Report 2023
3. Differences in Accounting Data under Chinese and International Accounting Standards
□ Applicable √ Not applicable
4. Other
□ Applicable √ Not applicable
Chairman of the Board of Directors: HOU Juncheng
Date of submission approved by the Board of Directors: April 17, 2024
Revision information
□ Applicable √ Not applicable
272 / 272
