Annual Report 2021
Stock Code: 603605 Abbreviation: Proya
Bond Code: 113634 Bond Abbreviation: Proya convertible bond
Proya Cosmetics Co., Ltd.
Annual Report 2021
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Important Notes
I. The Board of Directors, Board of Supervisors, directors, supervisors, and officers of the
Company warrant that the content of the Annual Report is authentic, accurate, and complete,
and is free of false records, misleading statements, and major omissions, and that they 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, Wang Li, CFO 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
Based on the total share capital as of the record date for dividend distribution, the Company plans to
distribute to all shareholders registered on the record date a cash dividend of RMB8.60 (tax inclusive)
per 10 shares and proposes to convert the capital reserve into share capital in the proportion of four4
shares for every 10 shares without bonus shares. Based on a total of 201,009,966 shares on December
31, 2021, the estimated cash dividend amounts to RMB172,868,570.76 (tax inclusive) and 80,403,986
shares will be issued through the capital reserve capitalization. In case of a change in the Company's
total share capital prior to before the record date for equity distribution, the Company would maintain
the said distribution and conversation ratios and yet adjusted the total distribution and conversion
amounts and would otherwise announce such adjustments.
VI. Disclosure of risks involved in forward-looking statements
"√ Applicable" "□ Not applicable"
Any future plan, development strategy, or other description contained in the forward-looking statements
herein shall not be deemed as the Company's substantial commitments to investors. Investors should
note that investment involves risks.
VII. Whether there is any non-operating capital occupation by a controlling shareholder and its
related parties
No
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VIII. Whether there is any external guarantee provided in violation of the 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. Major risk tips
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. Others
"□ Applicable" "√ Not applicable"
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Contents
Section I Definitions........................................................................................................................... 5
Section II Company Profile and Key Financial Indicators ............................................................. 8
Section III Management Discussion and Analysis .............................................................................. 14
Section IV Corporate Governance ...................................................................................................... 50
Section V Environmental and Social Responsibility ......................................................................... 81
Section VI Significant Issues .............................................................................................................. 84
Section VII Changes in Shares and Shareholders............................................................................... 127
Section VIII Preferred Shares .............................................................................................................. 141
Section IX Corporate Bonds ............................................................................................................. 142
Section X Financial Report .............................................................................................................. 143
Financial statements signed and sealed by the legal representative, the CFO of the
Company, and the head of accounting department
Documents Original copy of the auditors' report with the auditing firm's chop affixed, signed and
Available for sealed by certified public accountants.
Inspection Original copies of all documents and announcements of the Company disclosed during
the reporting period in newspapers designated by the 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, this shall mean Proya Cosmetics Co., Ltd.
Company or the Company
Huzhou Branch shall mean Huzhou Branch of Proya Cosmetics Co., Ltd., a branch of
the Company
Proya Trading shall mean Hangzhou Proya Trading Co., Ltd., a wholly-owned
subsidiary of the Company
Korea Hanna shall mean Hanna Cosmetics Co., Ltd., a wholly-owned subsidiary of
the Company
Hanya (Huzhou) shall mean Hanya (Huzhou) Cosmetics Co., Ltd., a wholly-owned
subsidiary of Korea Hanna
Yueqing Laiya shall mean Yueqing Laiya Trading Co., Ltd., a wholly-owned
subsidiary of the Company
Huzhou Uzero shall mean Huzhou Uzero Trading Co., Ltd., a wholly-owned
subsidiary of the Company
Mijing Siyu (Hangzhou) shall mean Mijingsiyu (Hangzhou) Cosmetics Co., Ltd., a
wholly-owned subsidiary of the Company
Meiligu shall mean Zhejiang Meiligu Electronic Commerce Co., Ltd., a
wholly-owned subsidiary of the Company
Chuangdai Electronics shall mean Huzhou Chuangdai E-commerce Co., Ltd., a
wholly-owned subsidiary of Meiligu
Hapsode (Hangzhou) shall mean Hapsode (Hangzhou) Cosmetics Co., Ltd., a
wholly-owned subsidiary of the Company
Korea Hapsode shall mean Hapsode Co., Ltd., a wholly-owned subsidiary of
Hapsode (Hangzhou)
Huzhou Hapsode shall mean Huzhou Hapsode Trading Co., Ltd., a wholly-owned
subsidiary of Hapsode (Hangzhou)
Danyang Hapsode shall mean Danyang Hapsode Cosmetics Trading Co., Ltd., a
wholly-owned subsidiary of Hapsode (Hangzhou)
Proya Commercial shall mean Hangzhou Proya Commercial Management Co., Ltd., a
wholly-owned subsidiary of the Company
Tiedingxian shall mean Hangzhou Tiedingxian Catering Management Co., Ltd., a
holding subsidiary of Proya Commercial
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Tielexin Aini shall mean Hangzhou Tieluoxin Aini Catering Management Co.,
Ltd., a wholly-owned subsidiary of Proya Commercial
Xiake Bar shall mean Hangzhou Xiake Bar Catering Management Co., Ltd., a
wholly-owned subsidiary of Proya Commercial
Luxiaotie shall mean Hangzhou Luxiaotie Fitness Co., Ltd., a wholly-owned
subsidiary of Proya Commercial
Hong Kong Keshi shall mean Hong Kong Keshi Trading Co., Ltd., a holding subsidiary
of the Company
Hong Kong Xinghuo shall mean Hong Kong Xinghuo Industry Limited, a
wholly-owned subsidiary of the Company
Hong Kong Zhongwen shall mean Hong Kong Zhongwen Electronic Commerce Co.,
Limited, a wholly-owned subsidiary of Hong Kong
Xinghuo
Hong Kong Xuchen shall mean Hong Kong Xuchen Trading Limited, a wholly-owned
subsidiary of Hong Kong Xinghuo
Proya Luxembourg shall mean Proya Europe SARL, a wholly-owned subsidiary of Hong
Kong Xinghuo
Shanghai Zhongwen shall mean Shanghai Zhongwen Electronic Commerce Co., Ltd., a
wholly-owned subsidiary of the Company
Huzhou Niuke shall mean Huzhou Niuke Technology Co., Ltd., a holding
subsidiary of the Company
Hangzhou Wanyan shall mean Hangzhou Wanyan Culture Media Co., Ltd., a
wholly-owned subsidiary of Huzhou Niuke
Hong Kong Wanyan shall mean Hong Kong Wanyan Electronic Commerce Co.,
Limited, a wholly-owned subsidiary of Huzhou Niuke
Huzhou Younimi shall mean Huzhou Younimi Cosmetics Co., Ltd., a holding
subsidiary of the Company
Korea Younimi shall mean Korea Younimi Cosmetics Co., Ltd., a holding
subsidiary of the Company
Ningbo Timage shall mean Ningbo Timage Cosmetics Co., Ltd., a holding subsidiary
of the Company
Ningbo Keshi shall mean Ningbo Keshi Trading Limited, a holding subsidiary of
the Company
Zhejiang Biyouti shall mean Zhejiang Biyouti Cosmetics Co., Ltd., a wholly-owned
subsidiary of the Company
Ningbo Proya shall mean Ningbo Proya Enterprise Consulting Management Co.,
Ltd., a wholly-owned subsidiary of the Company
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Zhejiang Qingya shall mean Zhejiang Qingya Culture Art Communication Co.,
Ltd., a holding subsidiary of the Company
Boya (Hong Kong) shall mean BOYA (Hong Kong) Investment Management Co.,
Limited, a wholly-owned subsidiary of the Company
Japan OR shall mean Or Off&Relax, a holding subsidiary of Boya (Hong
Kong)
Ningbo Tangyu shall mean Ningbo Tangyu Trading Co., Ltd., a wholly-owned
subsidiary of Japan OR
Hangzhou Weiluoke shall mean Hangzhou Weiluoke Cosmetics Co., Ltd., a
wholly-owned subsidiary of the Company
Hangzhou Yizhuo shall mean Hangzhou Yizhuo Culture Media Co., Ltd., a
wholly-owned subsidiary of the Company
Hangzhou Oumisi shall mean Hangzhou Oumisi Trading Co., Ltd., a wholly-owned
subsidiary of the Company
Huzhou Poyun shall mean Huzhou Poyun Electronic Commerce Co., Ltd., a
holding subsidiary of the Company
Guangzhou Qianxi shall mean Guangzhou Qianxi Network Technology Co., Ltd., a
wholly-owned subsidiary of the Company
Xuzhou Proya shall mean Xuzhou Proya Information Technology Co., Ltd., a
wholly-owned subsidiary of the Company
Proya (Hainan) shall mean Proya (Hainan) Cosmetics Co., Ltd., a wholly-owned
subsidiary of the Company
Singuladerm (Hangzhou) shall mean Shenggelan (Hangzhou) Cosmetics Co., Ltd., a
wholly-owned subsidiary of the Company
CSRC shall mean China Securities Regulatory Commission
SSE shall mean Shanghai Stock Exchange
Pan-China shall mean Pan-China Certified Public Accountants (Special General
Partnership)
CSC shall mean China Securities Co., Ltd.
Company Law shall mean Company Law of the People's Republic of China
Securities Law shall mean Securities Law of the People's Republic of China
Articles of Association shall mean Articles of Association of Proya Cosmetics Co., Ltd.
RMB/RMB10,000 shall mean RMB/RMB10,000
Reporting Period shall mean January 1, 2021 to December 31, 2021
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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
Mailing address 10/F, Proya Building, No. 588 Xixi 10/F, Proya Building, No. 588
Road, Xihu District, Hangzhou Xixi Road, Xihu District,
City, Zhejiang Province Hangzhou City, Zhejiang Province
Telephone 0571-87352850 0571-87352850
Fax 0571-87352813 0571-87352813
Email proyazq@proya.com proyazq@proya.com
III. General Information
Registered address No. 588, Xixi Road, Liuliu Street, Xihu District, Hangzhou
City, Zhejiang Province
Historical changes in the Company's 310023
registered address
Office address of the Company Proya Building, No. 588 Xixi Road, Xihu District, Hangzhou
City, Zhejiang Province
Postal code of registered address 310023
Company website http://www.proya-group.com
Email proyazq@proya.com
IV. Information Disclosure and Place for Obtaining the Report
Media for the Company's information Shanghai Securities News, Securities Times
disclosure
CSRC's designated website for the http://www.sse.com.cn
Company's Annual Report disclosure
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The Company's Annual Report may be Board of Director's Office, Proya Building, No.588
obtained at Xixi 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 珀莱雅 603605 None
Exchange
VI. Other Relevant Information
Name Pan-China Certified Public Accountants (Special
General Partnership)
Auditor of the Office address Block B, China Resources Building, No. 1366,
Company (domestic) Qianjiang Road, Jianggan District, Hangzhou
Name of the signing Yin Zhibin, Wang Xiaokang
accountant
Name China Securities Co., Ltd.
Sponsor performing Office address 2203, North Tower, Shanghai Securities Building,
continuous 528 Pudong South Road, Shanghai
supervisory duty Names of the sponsor's Ge Liang, Wang Zhan
during the reporting signing representatives
period Period of continuous 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
Major accounting Year-on-year
2021 2020 2019
data change (%)
Operating revenue 4,633,150,538.43 3,752,386,849.02 23.47 3,123,520,211.77
Net profit attributable 576,119,025.56 476,009,298.41 21.03 392,681,976.58
to shareholders of the
listed company
Net profit attributable 568,092,480.38 469,935,904.22 20.89 386,170,257.02
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to shareholders of the
listed company net of
non-recurring profit
and loss
Net cash flow from 829,670,943.82 331,550,109.14 150.24 235,961,328.34
operating activities
As of the end of As of the end of Year-on-year As of the end of
2021 2020 change (%) 2019
Net assets attributable 2,876,975,835.98 2,391,535,435.94 20.30 2,029,687,883.68
to shareholders of the
listed company
Total assets 4,633,049,783.03 3,636,882,185.29 27.39 2,979,365,076.82
(II) Key financial indicators
Key financial indicators 2021 2020 Year-on-year change (%) 2019
Basic earnings per share 2.87 2.37 21.10 1.96
(RMB/share)
Diluted earnings per share 2.81 2.37 18.57 1.96
(RMB/share)
Basic earnings per share net of 2.83 2.34 20.94 1.93
non-recurring Profit or loss
(RMB/share)
Weighted average ROE (%) 22.25 21.82 Up by 0.43 percentage points 21.24
Weighted average ROE net of 21.94 21.54 Up by 0.40 percentage points 20.89
non-recurring profit and loss (%)
Explanation on 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
(I) 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"
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(II) 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"
(III) Description of differences between domestic and foreign accounting standards:
"□ Applicable" "√ Not applicable"
IX. Major Financial Data for 2021 by Quarter
Unit: Yuan Currency: RMB
Q4
Q1 Q2 Q3
(October -
(January - March) (April - June) (July - September)
December)
Operating revenue 905,464,673.13 1,012,253,824.47 1,094,533,358.54 1,620,898,682.29
Net profit attributable
to shareholders of the 109,895,944.66 116,205,369.20 138,195,475.24 211,822,236.46
listed company
Net profit attributable
to shareholders of the
listed company net of 107,715,991.57 112,564,401.71 136,116,085.45 211,696,001.65
non-recurring profit
and loss
Net cash flow from
55,030,968.90 211,144,609.92 224,312,917.94 339,182,447.06
operating activities
Notes: Major reasons for fluctuations in operating revenue and net profit attributable to
shareholders of the listed company among quarters: Quarterly sales fluctuated in cosmetics industry
due to vulnerability to seasonal factors and holiday activities. For example, Q4 garnered peak
sales such as for the National Day, Double Eleven, and Double Twelve shopping festivals. As a
result, operating revenue and net profit were higher in Q4 than in other quarters.
Description of differences among quarterly data and disclosed regular reporting data
"□ Applicable" "√ Not applicable"
X. Non-recurring Profit and Loss Items and Amounts
"√ Applicable" "□ Not applicable"
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Unit: Yuan Currency: RMB
Notes
Amount for Amount for Amount for
Non-recurring profit and loss item (if
2021 2020 2019
applicable)
Gain or loss on disposal of non-current -112,183.24 150,560.30 43,245.67
assets
Unauthorized approval, no formal 8,167.37
approval, or occasional tax refund or
reduction
Government grants included in the current 15,448,962.01 12,198,410.18 7,913,746.66
profit and loss, except those closely
related to the Company's normal
operations and continuously enjoyed in
line with national policies and regulations
and up to some limits or in fixed amounts
Fund occupation fees charged from 27,000.00
non-financial businesses included in
current profit and loss
Gains arising from investment costs for
acquisition of subsidiaries, associates
and joint ventures less than the fair
value of attributable identifiable net
assets of the invested entity at the time
of acquisition
Gain or loss from exchange of
non-monetary assets
Gain or loss on entrusted investment or
asset management
Provision for various asset impairments
due to force majeure factors such as
natural disasters
Gain and loss from restructuring of
debts
Restructuring expenses, such as
re-settlement cost, integration cost, etc.
Profit or loss of the part exceeding fair
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value generated from transactions with
unreasonable transaction price
Net profit or loss of subsidiaries
generated from the merger of companies
under common control from the
beginning of the period to the date of
merger
Profit or loss generated from
contingencies unrelated to the
Company's normal operations
Profit or loss from changes in fair value 2,266,301.37 4,653,362.83
arising from holding of trading financial
assets, derivative financial assets, trading
financial liabilities and derivative
financial liabilities, and investment gain
from disposal of trading financial assets,
derivative financial assets, trading
financial liabilities, derivative financial
liabilities and other debt investments,
except for effective hedging related to the
Company's normal operations
Reversal of provision for impairment of
receivables and contract assets
individually tested for impairment
Profit or loss from entrusted loans
Profit and loss arising from changes in
the fair value of investment property
subsequently measured with the fair value
model
Impact of one-time adjustments to the
current profit and loss according to the
requirements of tax and accounting laws
and regulations on the current profit and
loss
Custody fee income from entrusted
operations
Other non-operating revenue and -3,078,442.83 -6,810,805.57 -5,128,895.30
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expenses other than the above items
Other profit or loss items under the
definition of non-recurring profit or loss
Less: Income tax impact 1,917,310.27 1,042,102.64 1,192,155.21
Impact of minority shareholder 2,314,480.49 688,969.45 -187,247.54
equity (after tax)
Total 8,026,545.18 6,073,394.19 6,511,719.56
Explanation of non-recurring profit and loss items listed in the Explanatory Announcement on
Information Disclosure for Companies Offering Their Securities to the Public No.1--Non-recurring
Gains and Losses as recurring gain and loss items.
"□ Applicable" "√ Not applicable"
XI. Items Measured at Fair Value
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount of impact
Item Opening balance Ending balance Current change
on the current profit
Receivables financing 5,531,997.32 3,242,000.00 -2,289,997.32 0.00
Investment in other 20,580,000.00 56,402,400.00 35,822,400.00 0.00
equity instruments
Total 26,111,997.32 59,644,400.00 33,532,402.68 0.00
XII. Others
"□ Applicable" "√ Not applicable"
Section III Management Discussion and Analysis
I. Business Discussion and Analysis
1. Year-on-year growth in operating revenue
RMB4.633 billion RMB operating revenue, up by 23.47% YOY
Including RMB4.62 billion prime operating revenue, up by 23.28% YOY
RMB12.72 million non-operating revenue
Prime operating revenue:
(1) Divided by channel
Channels Amount Change in Change in Change in
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(RMB100 2021 over the 2020 over 2019 over Percentage Percentage Percentage
million) previous year the previous the previous in 2021 in 2020 in 2019
YOY (%) year YOY year (%) (%) (%)
(%) YOY (%)
Direct sales 28.03 76.16 79.63 88.25 60.66 42.45 28.42
Online Distribution 11.21 8.56 34.36 37.95 24.27 27.56 24.67
Subtotal 39.24 49.54 58.59 60.97 84.93 70.01 53.09
Cosmetics
5.03 -40.52 -19.28 4.42 10.88 22.56 33.61
store
Offline
Others 1.94 -30.50 -32.81 26.33 4.19 7.43 13.30
Subtotal 6.96 -38.03 -23.12 9.82 15.07 29.99 46.91
Total 46.20 23.28 20.26 32.11 100.00 100.00 100.00
Note: The percentage of sales from each channel is the proportion of its sales in prime operating
revenue.
(2) Divided by brand
Change in
Change in Change in
Amount 2019 over Percentage Percentage
2021 over the 2020 over the Percentage
By brand (RMB100 the previous in 2021 in 2020
previous year previous year in 2019
million) year (%) (%)
YOY (%) YOY (%) (%)
YOY (%)
Proya 38.29 28.25 12.43 26.81 82.87 79.66 85.21
Own Timage 2.46 103.48 - - 5.33 3.23 0.00
brands Other brands 4.09 -5.96 36.91 19.74 8.85 11.59 10.18
Subtotal 44.84 26.63 19.11 26.02 97.05 94.48 95.39
Cross-border
Agency
agency 1.36 -34.04 44.09 - 2.95 5.52 4.61
brands
brands
Total 46.20 23.28 20.26 32.11 100.00 100.00 100.00
Note: The proportion of sales of each brand is the proportion of its sales in prime operating revenue.
Among other self-owned brands, Timage achieved RMB246 million.
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(3) Divided by category
Change in Change in Change in 2019
Amount Percentage Percentage
2021 over the 2020 over the over the Percentage
Category (RMB100 in 2021 in 2019
previous year previous year previous year in 2020
million) (%) (%)
YOY (%) YOY (%) YOY (%) (%)
Skincare
(including 39.78 22.70 11.38 24.89 86.10 86.50 93.40
cleansing)
Make-up 6.18 32.97 181.91 482.43 13.38 12.41 5.29
Others 0.24 -41.05 0.47 - 0.52 1.09 1.31
Total 46.20 23.28 20.26 32.11 100.00 100.00 100.00
2. Year-on-year growth in net profit
RMB576 million net profit attributable to shareholders of the listed company, up by 21.03% YOY
RMB568 million net profit attributable to shareholders of the listed company net of non-recurring profit
and loss, up by 20.89% YOY
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Indicator 2021 2020 2019 Notes
1. Net profit margin 12.02% 12.04% 11.73%
1. Increased percentage of online sales; 2. Hero product
2. Gross profit margin 66.46% 63.55% 63.96%
strategy; 3. Increased percentage of online self-broadcasting.
Incubation of new brands (such as Timage, Correctors) and
3. Sales expense ratio 42.98% 39.90% 39.16% reshaping of brands (such as Hapsode), increased the expense
in image promotion.
Where: Image
promotion expense 36.12% 32.68% 26.86%
ratio
4. Administrative
5.12% 5.44% 6.25%
expense ratio
R&D expenses increased by RMB4.38 million YOY. The
5. R&D expense ratio 1.65% 1.92% 2.39% parent company's R&D expense ratio in 2021 was 3.55%
(compared with 3.96% in the previous year).
Mainly because: (1) Revenue in 2021 increased by 23.47%
6. Accounts receivable YOY; (2) Accounts receivable as of the end of 2021 decreased
turnover rate 21.88 15.53 21.74 by RMB146 million or 51.34% from the beginning of the year;
(time/year) the two factors above together increased the accounts
receivable turnover rate.
7. Accounts receivable
16.45 23.18 16.56
turnover days (days)
8. Inventory turnover
3.39 3.50 4.12
rate (time/year)
9. Inventory turnover
106.19 102.86 87.38
days (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 Industrial Classifications and Codes of National Economic Activities (GB/T
4754-2011), the Company falls under manufacture of daily chemical products (C268) and further under
manufacture of cosmetics (C2682).
According to statistics from the National Bureau of Statistics, in 2021, the total retail sales of consumer
goods reached RMB44,082.3 billion, up by 12.5% YOY; the total retail sales of cosmetics reached
RMB402.6 billion, up by 14.0% YOY (covering consumer goods above designated units).
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III. The Company's Business Operations during the Reporting Period
(I) Business operations
The Company seeks to build a new domestic cosmetics industry platform, primarily engaged in R&D,
production, and sale of cosmetic products. Main brands owned by the company include Proya, Timage,
Off&Relax, Hapsode, Correctors, Uzro, and Hanya. The Company's own brands have covered fields
such as popular exquisite skincare, make-up, body & hair, and high-efficacy skincare:
1. Popular Exquisite Skincare
(1) PROYA, focusing on skincare technology, designed for young white-collar female customers,
priced at RMB200-400, sold both online and offline.
(2) Hapsode, customized for young skin, especially for college students and other young female
customers, priced at RMB50-100, sold mainly online.
2. Make-up
Timage, a professional make-up brand with a new Chinese style, priced at RMB150-200, sold online
only.
3. Body & Hair
Off&Relax, developed and made in Japan, focusing on scalp care, priced at RMB150-200, sold mainly
online.
4. High-efficacy skincare
Correctors, a high-efficacy skincare brand, priced at RMB260-600, sold online only.
(II) Business models
1. Sales models
Mainly online sales, supplemented by offline sales.
Online sales are mainly conducted through direct sales and distribution. Direct sales are mainly based on
platforms such as Tmall, TikTok, JD, Kwai, and Pinduoduo, and distribution platforms include Taobao,
JD, Vipshop.
Offline sales are mainly conducted through dealers. Channels include cosmetics stores, supermarkets,
and single-brand 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 and OEM-produced. The Company has 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 has maintained R&D cooperation with
front-end research institutions and high-quality raw material suppliers including the Institute of
Microbiology, the Chinese Academy of Sciences, Zhejiang University of Technology, BASF China,
Ashland China, DSM Shanghai, LIPOTRUE S.L., and Shenzhen Siyomicro Bio-tech.
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IV. Analysis of Core Competitiveness during the Reporting Period
"√ Applicable" "□ Not applicable"
The Company's core competitiveness is mainly embodied by:
A consolidated and deepened precise operation management system highlighting "R&D, products,
contents, operation". Continuous development and optimization of a matrix of "hero products" on the
basis of keen insight into consumer needs by strengthening independent R&D capabilities and
integrating global R&D resources.
Construction of a self-driven organization highlighting "culture-strategy-mechanism-talents". A
value-creation oriented organizational operation and performance management mechanism based on
corporate culture and strategy to enhance organizational vitality and efficiency.
V. Main Operations during the Reporting Period
1. New product strategy
During the reporting period, the Company further optimized the product structure, deepened the hero
product strategy, and created a matrix of hero products.
(1) Based on the increasingly mature digital management of the whole product life cycle, the Proya
brand upgraded its matrix of existing hero products, and launched a new series of hero products.
The Company upgraded the ingredients, formulas, and packaging materials of ruby essence and
double-antibody essence, and launched version 2.0; mainly promoted hero products including
Deep Ocean Energy Wrinkless and Firming Moisture Cream, Deep Ocean Energy Wrinkless and
Firming Eye Cream, Elastic Brightening Youth Activating Eye Cream, and Elastic Brightening
Youth Dual-Action Mask; newly launched hero products including Advanced Original Repair
Concentrating Essence, PROYA Ultimate Repairing and SUN AROUND UV Protective Sunscreen
Serum. By further highlighting the cutting-edge technology and youth orientation of our hero
products, the Company sought to guide consumers' mindset in the decision-making process,
increased the average revenue per account and repurchase rate, and enhanced brand loyalty.
(2) Expanded the scope of promotion of hero products from vertical make-up customers to various
pan-make-up customers; improved the promotional efficiency of hero products and optimized
intervention in the whole chain from consumer contact, to arousing interest, to building trust and
conversion into transactions; deepened the cooperation with talents and the content operation mechanism
to form high-frequency communication with target users. Adopted cost-effective and efficient launch
models and excellent products to meet consumer needs. Revised the mindset of consumers "Proya is
now different" last year to "Proya is one of the top Chinese cosmetics brands comparable to international
counterparts".
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2. New marketing strategy
During the reporting period, the PROYA brand continued its "spirit of discovery", communicated with
the public in a sincere and equal attitude, continuously paid attention to social hotspots and conveyed
clear opinions, assumed social responsibility as a Chinese make-up brand and made a solid contribution
to public welfare. The Company carried out brand marketing events as follows:
(1) In January, "New Graduate Training", focused on the living conditions of new graduates, and
encouraged and cared for young people.
(2) In march, "No Gender Discrimination" on Women's Day was an insight into "gender prejudice", an
in-depth reflection on "gender equality" and a strong message made by the brand together with
China Women's News.
(3) In May, the brand announced its cooperation with China Aerospace IP to pay tribute to the 65th
anniversary of China Aerospace with "Marching to the Universe from China". The series was very
well received by consumers.
On May 20, Proya, Owspace, and Shanghai Translation Publishing House co-organized a discussion on
the expression of love. The brand conveyed a love proposition with emotional resonance, and also
created a warm and healing brand image.
(4) In June, the brand released the "Salute to All Discoverers" video, and invited well-known writer
Hao Jingfang and People's Daily Online to pay tribute to the discoverers of each era. While
inspiring the audience's national pride, the video conveyed the "spirit of discovery" of the brand.
(5) In September, the brand focused on the theme of youth growth through the scenario of beginning of
a new term, invited tour bands to compose new songs, and discussed the meaning of growth with
consumers.
(6) In October, on World Mental Health Day, the brand launched the "Proya Youth Mental Health
Charity Action - Echo Plan" together with China Youth Daily and xinli001.com, and released the
feature film Don't Be Ashamed of Your Feelings, and jointly filmed four series of documentaries. It
cooperated with the China Youth Development Foundation to carry out long-term charity projects.
(7) At the end of the year, Proya collected suggestions and well-wishes to Proya from 76 users in the
annual gratitude video, and sent New Year cards to users.
3. New channel strategy
Online:
(1) Tmall:
During the reporting period, the Company enhanced the hero product strategy and refined operation.
(2) TikTok and Kwai:
During the reporting period, the Company seized the opportunity of short videos and live streaming,
strengthened brand self-broadcasting and optimized the product structure; cooperated with high-quality
KOLs, expanded partners to medium-grade and non-vertical-category KOLs; increased the share of hero
products and increased gross and net profit.
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(3) JD:
During the reporting period, the Company further strengthened precise operation management, by
innovating operations, optimizing the product structure, and launching a number of popular categories
such as kits, essence and eye cream, better controlling launch expenses, and promoting the sales of hero
products and new products.
(4) Other platforms:
The Company optimized operational content, adjusted the product structure, and strengthened the
matching between products and platform users to attract targeted customers; implemented precise
operations and increased the proportion of daily sales; deepened cooperation with leading KOLs,
strengthened content recommendation, and used the brand reputation to promote the brand.
Offline:
(1) Daily cosmetics stores: Adjusted and upgraded stores, and enhanced terminal service awareness.
(2) Supermarkets: The Company focused on building the department store system covering Intime,
Chongqing Department, and Rainbow Plaza, expanded other high-quality department store systems,
adjusted shopping mall counters, and exported the power of branding.
4. New organizational strategy
(1) The Company deepened the hero product strategy, and focused on building a digital middle-ground
to enable the front-ground operations; launched middle-ground to accurately improve the ROI
strategy, adopted the organizational form of R&D, product, launch, and operation of virtual
projects, and opened up an end-to-end, efficient self-driven process organization.
(2) The Company continuously promoted the talent supply chain mechanism for young and
international talents based on business needs, accurately and rapidly identified, and efficiently
utilized talents, and gradually built a dynamic, competent and self-driven talent team through
actual tasks other than training.
(3) The Company advocated a performance culture featuring high investment, high performance and
high returns, established a performance management system emphasizing targets, process and
results; established a diversified incentive system covering short-term (quarterly performance and
project incentives), middle-term (annual performance dividends) and long-term (equity incentives
and partners) incentives.
5. New R&D strategy
(1) On the basis of the existing R&D Innovation Center, the Company set up an International Academy
of Science to strengthen basic R&D, focusing on the development of cells, skin and raw materials,
and to deepen research on functional raw materials
(2) During the reporting period, the Company obtained 19 nationally authorized invention patents and
applied for 11 new invention patents and 10 design patents. As of the end of the reporting period,
the Company had 92 nationally authorized invention patents, 19 utility model patents, and 90
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Annual Report 2021
design patents, totaling 201 patents.
(3) Participation in standard preparation: 10 national standards, 3 industry standards, and 13 group
standards.
(4) Certification and awards: The Company's testing center was CNAS certified by the China National
Accreditation Service for Conformity Assessment and was awarded a Laboratory Accreditation
Certificate; it won second prize of Zhejiang Provincial Science and Technology Progress Award for
the project Key Technology and Industrialized Application of Value-added Processing of Seaweed
Polysaccharide, jointly developed with the Zhejiang University of Technology.
(5) Industry-university-research cooperation: Following strategic cooperation with BASF (China) Co.,
Ltd., the Company signed a strategic cooperation agreement with DSM (China) Co., Ltd., Ashland
(China) Investment Co., Ltd., Evonik Specialty Chemicals (Shanghai) Co., Ltd., and Croda
Chemicals (Shanghai) Co., Ltd.
(6) Academic and research findings: The Company's supramolecular vitamin A alcohol paper
Improvement of Urban Eye Skin in Chinese Female by Supramolecular Retinol Plus Acmella
Oleracea Extract-Containing Product was published in the Journal of Cosmetic Dermatology
(JCD, IF 2.696).
6. New supply chain guarantee
During the reporting period, the Company's supply chain, guided by customer needs, opened up the data
information chain from the production end to the demand end through the continuous upgrading and
transformation of supply chain automation, digitization and intelligence, and ensured stable product
supply and logistics delivery for online and offline sales.
(1) The Huzhou production base transformed its factory by adding multiple emulsification units to
upgrade its production capacity; an intelligent storage logistics center was put into operation to
upgrade the supply chain; multiple sub-warehouses were built across China to realize a precise
logistics layout and to expand the logistics delivery channels and improve terminal satisfaction.
(2) In terms of informatization construction, the Company built a supply chain informatization
platform based on IoT, big data, and the 5G network. During the reporting period, the Company
became a contractor of Innovative Supply Chain Collaboration Complex in Zhejiang Province.
(3) In terms of production safety, the Company purchased dedicated safety facilities and emergency
rescue equipment to provide a guarantee for emergency rescue in limited space; introduced an
online monitoring system connected with the government video monitoring platform and
incorporated it into the intelligent management.
(4) The Huzhou Production Base continuously provided safety training programs for employees to
strengthen their awareness of work safety laws and regulations and to promote accident prevention
and emergency response measures.
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(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 period last Change ratio (%)
current period
year
Operating revenue 4,633,150,538.43 3,752,386,849.02 23.47
Operating cost 1,554,155,646.61 1,367,561,949.78 13.64
Sales expenses 1,991,534,076.73 1,497,058,943.34 33.03
Administrative expenses 236,988,519.23 204,279,378.68 16.01
Financial expenses -7,484,395.13 -13,607,115.53 Not applicable
R&D expenses 76,583,650.83 72,200,028.77 6.07
Net cash flow from operating activities 829,670,943.82 331,550,109.14 150.24
Net cash flow from investment -341,823,618.60 14,534,157.08 -2451.86
activities
Net cash flow from financing activities 489,615,295.96 -43,382,734.32 Not applicable
Cause for change in operating revenue: mainly due to increased online sales.
Cause for change in operating cost: mainly due to increased operating revenue.
Cause for change in sales expenses:
In 2021, sales expenses amounted to RMB1.992 billion, accounting for 42.98% of the operating revenue
(compared with 39.90% for the same period last year). Sales expenses increased by RMB494 million or
33.03% YOY, mainly due to an increase of RMB447 million or 36.45% in the image promotion
expenses for the current period (used for the incubation of new brands such as Timage, Correctors and
brand re-shaping).
Cause for change in administrative expenses:
In 2021, administrative expenses amounted to RMB237 million, accounting for 5.12% of the operating
revenue (compared with 5.44% for the same period last year). Administrative expenses increased by
RMB32.71 million or 16.01% YOY, mainly due to increased employee compensation and service fees.
Cause for change in financial expenses:
Mainly including: (1) an increase of RMB13.12 million in foreign exchange gains or losses during the
period; (2) an increase of RMB7.36 million in interest income.
Cause for change in R&D expenses:
In 2021, R&D expenses amounted to RMB76.58 million, an increase of RMB4.38 million YOY,
accounting for 1.65% of operating revenue (compared with 1.92% for the same period last year). In
2021, the parent company's R&D expense ratio was 3.55% (compared with 3.96% for the same period
last year).
Cause for change in net cash flow from operating activities:
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Annual Report 2021
Net cash flow from operating activities increased by RMB498 million YOY, mainly due to:
(1) Factors increasing cash: sales outstanding increased by RMB1.246 billion YOY (increased sales
YOY and reduced accounts receivable as of the end of the period increased).
(2) Factors reducing cash: payment for goods increased by RMB161 million YOY, cash paid for other
operating activities increased by RMB442 million (mainly due to increased image promotion fees
paid), and wages and taxes paid increased by RMB116 million YOY.
Cause for change in net cash flow from investment activities:
Net cash flow from investment activities decreased by RMB356 million YOY, mainly due to:
(1) No financial products during the current period;
(2) The disposal of a 52% equity investment in Shanghai Healthlong Biotechnology Co., Ltd.,
resulting in a decrease of RMB130 million in net cash flow from investment activities.
Cause for change in net cash flow from financing activities:
Net cash flow from financing activities increased by RMB533 million YOY, mainly due to:
(1) Factors increasing cash: In December 2021, the Company issued a Proya convertible bond and
raised RMB747 million.
(2) Factors decreasing cash: (1) Short-term loans received from banks decreased by RMB99 million
YOY and debt repayment expenditure increased by RMB85 million YOY. The total net cash
outflow of the two items was RMB184 million; (2) Dividend distribution and interest payments
increased by RMB27 million YOY.
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 table of changes in related items in the Income Statement and
the Cash Flow Statement/(I) Analysis of primary business activities/V. Primary Business Activities
during the Reporting Period/Section III Management Discussion, and Analysis herein.
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Annual Report 2021
(1). Primary business activities by industry, product, region and sales model
Unit: Currency: RMB
Main business activities by industry
Change in Change in Change in
Operating Gross profit operating operating gross profit
By industry Operating cost
revenue margin (%) revenue cost YOY margin
YOY (%) (%) YOY (%)
Personal care 4,620,431,686.01 1,545,098,469.32 66.56 23.28 13.32 Increased
by 2.94
percent
Main business activities by product
Change in Change in Change in
Operating Gross profit operating operating gross profit
By product Operating cost
revenue margin (%) revenue cost YOY margin
YOY (%) (%) YOY (%)
Skincare 3,978,062,234.06 1,257,112,675.98 68.40 22.70 10.29 Increased
(including by 3.56
cleansing) percent
Make-up 618,279,406.67 263,418,628.27 57.39 32.97 33.32 Decreased
by 0.11
percent
Others 24,090,045.28 24,567,165.07 -1.98 -41.05 -5.66 Decreased
by 38.25
percent
Total 4,620,431,686.01 1,545,098,469.32 66.56 23.28 13.32 Increased
by 2.94
percent
Main business activities by region
Change in Change in Change in
Operating Gross profit operating operating gross profit
By region Operating cost
revenue margin (%) revenue cost YOY margin
YOY (%) (%) YOY (%)
Northeast 22,063,455.74 8,099,087.60 63.29 -50.20 -48.23 Decreased
China by 1.39
percent
North China 63,472,624.85 28,196,585.18 55.58 -42.23 -37.40 Decreased
by 4.14
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Annual Report 2021
percent
East China 683,139,969.46 342,561,983.72 49.85 -15.23 23.50 Decreased
by 15.72
percent
South China 77,340,188.87 33,012,488.43 57.32 -0.96 4.65 Decreased
by 2.29
percent
Central China 177,248,407.27 69,762,606.40 60.64 -15.33 -15.79 Increased
by 0.21
percent
Northwest 53,626,439.82 17,989,325.74 66.45 -26.16 -27.32 Increased
China by 0.53
percent
Southwest 89,661,325.08 34,826,256.75 61.16 -37.46 -32.42 Decreased
China by 2.90
percent
Hong Kong 38,668,583.29 34,780,301.65 10.06 -69.66 -68.42 Decreased
and overseas by 3.52
percent
Others 3,415,210,691.63 975,869,833.85 71.43 58.47 34.68 Increased
(e-commerce) by 5.05
percent
Total 4,620,431,686.01 1,545,098,469.32 66.56 23.28 13.32 Increased
by 2.94
percent
Main business activities by sales model
Change in Change in Change in
Operating Gross profit operating operating gross profit
Sales model Operating cost
revenue margin (%) revenue cost YOY margin
YOY (%) (%) YOY (%)
Online 3,923,997,139.76 1,245,165,621.56 68.27 49.54 41.00 Increased
by 1.92
percent
Offline 696,434,546.25 299,932,847.76 56.93 -38.03 -37.56 Decreased
by 0.33
percent
Total 4,620,431,686.01 1,545,098,469.32 66.56 23.28 13.32 Increased
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Annual Report 2021
by 2.94
percent
Description of main business activities by industry, product, region and sales model
(1) Description of growth in personal care products: The growth in prime operating revenue this year
was mainly due to RMB3.924 billion in online sales (accounting for 84.93% of online sales
revenue), an increase of RMB1.3 billion or 49.54% YOY.
(2) Description of growth in make-up: mainly due to RMB246 million in sales of Timage that falls
under the make-up category during the reporting period, an increase of RMB125 million or 103.48%
YOY.
(3) Description of other categories: The sales of other categories decreased sharply, mainly due to the
decline in the sales of cross-border brand agency in other categories. In 2021, due to business
adjustments, the Company started to clear inventory and offered discounts on certain products.
(4) Description by region: The sales of other regions except for e-commerce declined, mainly due to a
YOY fall in offline sales.
(2). Analysis table of production and sales
"√ Applicable" "□ Not applicable"
Change Change
Change in
Major in sales in
Unit Production Sales Inventory production
products YOY inventory
YOY (%)
(%) YOY (%)
Personal piece 220,485,596 216,218,102 52,140,866 13.65 19.57 8.91
care
Description of production and sales
The quantities mentioned above 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: RMB
By industry
% in Amount for the % in YOY
By Cost Amount for the Description
total same period last total change
industry composition current period Notes
cost for year cost ratio
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Annual Report 2021
the for the (%)
current same
period period
last
year
Personal Raw materials 976,123,853.77 63.18 851,018,281.40 62.41 14.70
care Labor and 81,119,950.03 5.25 82,914,903.34 6.08 -2.16
manufacturing
cost
Outsourcing 316,528,909.08 20.49 311,700,853.56 22.86 1.55
Freight 171,325,756.44 11.09 117,852,735.96 8.64 45.37
Subtotal 1,545,098,469.3 100.00 1,363,486,774.26 100.0 13.32
2 0
By product
% in
% in total
total cost YOY
Amount for the
By Cost Amount for the cost for for the change Description
same period last
product composition current period the same ratio Notes
year
current period (%)
period last
year
Skincare Raw materials 914,082,589.13 72.71 798,070,230.37 70.02 14.54
(including Labor and 74,591,026.00 5.93 76,267,474.56 6.69 -2.20
cleansing) manufacturing
cost
Outsourcing 121,435,395.54 9.66 164,300,108.50 14.41 -26.09
Freight 147,003,665.31 11.70 101,227,662.07 8.88 45.22
Subtotal 1,257,112,675.9 100.00 1,139,865,475.50 100.0 10.29
8 0
Make-up Raw materials 62,041,264.64 23.55 52,948,051.03 26.80 17.17
Labor and 6,528,924.03 2.48 6,647,428.78 3.36 -1.78
manufacturing
cost
Outsourcing 170,978,877.92 64.91 121,703,172.90 61.60 40.49
Freight 23,869,561.68 9.06 16,280,261.65 8.24 46.62
Subtotal 263,418,628.27 100.00 197,578,914.36 100.0 33.32
0
Others Raw materials
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Annual Report 2021
Labor and
manufacturing
cost
Outsourcing 24,114,635.62 98.16 25,697,572.16 98.68 -6.16
Freight 452,529.45 1.84 344,812.24 1.32 31.24
Subtotal 24,567,165.07 100.00 26,042,384.40 100.0 -5.66
0
Other description
No
(5). Changes in consolidation due to changes in the equity of major subsidiaries during the
reporting period
"√ Applicable" "□ Not applicable"
For details, see VIII. Changes in the Consolidation Scope, Section X Financial 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
Sales to our top five customers amounted to RMB702,599,800 accounting for 15.21% of total annual
sales; sales to related parties of said top five customers amounted to RMB0, accounting for 0.00% of
total annual sales.
Circumstances wherein a single customer contributed more than 50% of total sales, top five 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
The procurement amount of our top five suppliers amounted to RMB307,077,300, accounting for 23.25%
of the total annual procurement amount; the procurement amount of related parties of said top five
suppliers amounted to RMB0, accounting for 0.00% of the total annual procurement amount.
Circumstances wherein a single supplier accounted for more than 50% of total procurement, top five
suppliers included a new supplier, or the Company relied heavily on a small number of suppliers during
the reporting period.
"□ Applicable" "√ Not applicable"
Other description
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Annual Report 2021
No
3. Expenses
"√ Applicable" "□ Not applicable"
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Annual Report 2021
Currency: RMB
Change for the
Expense item 2021 2020 Growth rate
current period
Sales expenses 1,991,534,076.73 1,497,058,943.34 494,475,133.39 33.03%
Administrative
236,988,519.23 204,279,378.68 32,709,140.55 16.01%
expenses
R&D expenses 76,583,650.83 72,200,028.77 4,383,622.06 6.07%
Financial expenses -7,484,395.13 -13,607,115.53 6,122,720.40 Not applicable
4. R&D investment
(1). R&D investment table
"√ Applicable" "□ Not applicable"
Unit: RMB
Expensed R&D investment for the current period 76,583,650.83
Capitalized R&D investment for the current period
Total R&D investment 76,583,650.83
Total R&D investment in operating revenue (%) 1.65
Capitalization of R&D investment (%)
(2). R&D personnel table
"√ Applicable" "□ Not applicable"
Number of R&D personnel 159
Percentage of R&D personnel (%) 5.59
Educational background structure
Educational level Number of persons
PhD 3
Master 48
Bachelor 90
Associate 18
High school and below 0
Age
Age range Number of persons
Under 30 64
30-40 (incl. 30 and excl. 40) 77
40-50 (incl. 40 and excl. 50) 16
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Annual Report 2021
50-60 (incl. 50 and excl. 60) 1
60 and above 1
(3). Description
"□ Applicable" "√ Not applicable"
(4). Cause for significant changes in the composition of R&D personnel and impact on the future
development of the Company
"□ Applicable" "√ Not applicable"
5. Cash flow
"√ Applicable" "□ Not applicable"
Item Amount for Amount for Growth Description
the current the same rate (%)
period period last
year
(1) Factors increasing cash: sales
outstanding increased by RMB1.246
billion YOY (increased sales YOY and
reduced accounts receivable as of the end
of the period increased).
Net cash flow
(2) Factors reducing cash: payment for
from operating 829,670,943.82 331,550,109.14 150.24
goods increased by RMB161 million
activities
YOY, cash paid for other operating
activities increased by RMB442 million
(mainly due to increased image promotion
fees), and wages and taxes paid increased
by RMB116 million YOY.
(1) No financial products during the
current period;
Net cash flow (2) The disposal of 52% equity investment
-341,823,618.6
from investment 14,534,157.08 -2451.86 in Shanghai Healthlong Biotechnology
0
activities Co., Ltd., resulting in a decrease of
RMB130 million in the net cash flow from
investment activities.
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Annual Report 2021
(1) Factors increasing cash: In December
2021, the Company issued a Proya
convertible bond and raised RMB747
million.
(2) Factors decreasing cash: (1)
Net cash flow Short-term loans received from banks
Not
from financing 489615295.96 -43,382,734.32 decreased by RMB99 million YOY and
applicable
activities debt repayment expenditure increased by
RMB85 million YOY. Total net cash
outflow of the two items was RMB184
million; (2) Dividend distribution and
interest payments increased by RMB27
million YOY.
Mainly due to: (1) Increased revenue and
Cash received
rising sales outstanding; (2) The closing
from sales of
book value of accounts receivable
goods and 5,130,176,845.31 3,884,361,008.59 32.07
decreased by RMB146 million compared
rendering of
with the beginning book value and
services
increased amount outstanding.
Other cash Mainly due to a YOY decrease in current
received from accounts received by controlled
54,614,521.56 81,739,953.02 -33.19
operating subsidiaries.
activities
Mainly due to a YOY increase in revenue
Other cash paid
(online sales increased by 49.54% YOY),
for operating 1,864,985,801.02 1,422,965,037.76 31.06
an increase of RMB447 million or 36.45%
activities
in image promotion fees paid.
Cash back on No financial products during the current
213,200,000.00 -100.00
investment period.
Cash received No financial products during the current
2,266,301.37 -100.00
from investment period.
Mainly due to the disposal of 52% equity
Other cash
in Shanghai Healthlong and other cash of
received from
66,052,759.40 -100.00 RMB64.25 million received from
investment
investment activities in the same period of
activities
last year.
Other cash paid 77,739,374.88 1,035,148.02 7409.98 Mainly due to the disposal of equity in
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Annual Report 2021
from investment Shanghai Healthlong and payment of other
activities cash RMB64.25 million for investment
activities for the current period.
(1) In December 2021, the Company
issued Proya convertible bond and raised
RMB747 million, a YOY increase of
RMB747 million;
Cash received (2) During this period, the Company
946,996,018.87 299,000,000.00 216.72
from borrowings received short-term loans of RMB200
million from banks, a YOY decrease of
RMB99 million;
The above two items totaled an increase of
RMB648 million in the cash inflow.
Cash paid for An increase of RMB85 million in the
299,000,000.00 214,230,868.48 39.57
debt repayment repayment of short-term bank loans.
(II) Description on 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: RMB
In total Amount
In total
Amount as of assets as of as of the Change
assets as of the
Item the end of the the end of end of the ratio Description
end of the last
current period the current previous YOY (%)
period (%)
period (%) period
Cash and cash 2391048249.81 51.61 1416654640.93 38.95 68.78 Mainly due to the issuance
equivalents of Proya convertible bond
in December 2021 for
RMB747 million
Accounts 138626627.90 2.99 284878419.58 7.83 -51.34 Mainly because, in 2020,
receivable the Company granted
offline dealers greater
credit support, while in
2021, the Company settled
with offline dealers as
usual with no credit
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Annual Report 2021
support. The balance of
accounts receivable as of
the end of 2021 was lower
than that as of the end of
2020.
Receivables 3242000.00 0.07 5531997.32 0.15 -41.40 Mainly due to the reduced
financing balance of bank
acceptance bills as of the
end of the period
Other 66043707.81 1.43 48733527.35 1.34 35.52 Mainly including annual
receivables rebates to be paid as per
annual framework
contracts with
e-commerce platforms
Other current 53534962.39 1.16 35235811.27 0.97 51.93 Mainly including
assets RMB14.85 million more
in the balance of input tax
to be deducted
Long-term 169959536.27 3.67 58220059.60 1.60 191.93 Mainly due to: 1. See the
equity remarks below; 2.
investments additional investment in
Jiaxing Voyong of
RMB28.21 million
Investment in 56402400.00 1.22 20580000.00 0.57 174.06 Mainly due to additional
other equity strategic equity
instruments investment in LIPOTRUE
of RMB35.82 million
Construction 108678896.27 2.35 47324523.36 1.30 129.65 Mainly including
in progress RMB52.81 million
additional investment in
Huzhou Expansion
Production Base
Construction Project
(Phase I); RMB7.16
million additional
investment in Longwu
R&D Center Construction
Project
Goodwill 31034161.20 0.85 -100.00 See the remarks below for
details
Long-term 29756474.11 0.64 50576793.53 1.39 -41.17 Others including
deferred decreased balance of
expenses endorsement fees to be
amortized
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Other 44167303.56 0.95 87322780.03 2.40 -49.42 Mainly because: 1. The
non-current beginning balance
assets included RMB81.6
million spent to purchase
a land parcel in Longwu,
Hangzhou. After property
delivery procedures and
title certificates were
completed and obtained
for the land parcel and
property on the land
parcel during the current
period, such assets were
transferred to intangible
assets and construction in
progress; 2. RMB39.9
million trademarks
purchased were included
in other non-current assets
as the transfer of
trademark rights. The
purchased trademarks
have not been registered.
Short-term 200251506.85 4.32 299280435.09 8.23 -33.09 Mainly due to the net
borrowings repayment of RMB99
million bank loan this year
Contract 91151985.32 1.97 30618778.99 0.84 197.70 Mainly due to an increase
liabilities of RMB57.23 million in
advance receipts
Taxes payable 99893176.97 2.16 71335290.77 1.96 40.03 Mainly due to an increase
of the delayed tax
payment as of the end of
2021
Other current 9521415.32 0.21 1439262.02 0.04 561.55 Mainly due to increased
liabilities advance receipts in the
contract liabilities, and
rising output tax to be
transferred accordingly
Bonds payable 695586778.80 15.01 Not Mainly because Proya
applicable convertible bond issued in
December 2021 was
apportioned and included
in the bonds payable and
other equity instruments
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Annual Report 2021
in accordance with the
requirements of the
Accounting Standards for
Business Enterprises.
Other equity 50956622.11 1.10 Not Same reasons as above
instruments applicable
Treasury stock 5628128.21 0.12 12653905.25 0.35 -55.52 Mainly due to lifting of
restrictions on restricted
stock incentive plan phase
II and partial repurchase
of restricted shares during
the current period.
Undistributed 1696978064.52 36.63 1265671865.63 34.80 34.08 Mainly due to increased
profit net profit for the current
period
Minority 9864591.09 0.21 90326830.19 2.48 -89.08 See the remarks below for
interests details
Other description
Remarks: In April 2021, the Company signed a capital increase and share exchange agreement with
Zhuhai Healthlong Biotechnology Co., Ltd., whereby the Company added its capital to Zhuhai
Healthlong Biotechnology Co., Ltd. with its own 52% shares in Shanghai Healthlong Biotechnology Co.,
Ltd.; after that, the Company's original holding subsidiary Shanghai Healthlong Biotechnology Co., Ltd.
became a wholly-owned subsidiary of Zhuhai Healthlong Biotechnology Co., Ltd.; from May 2021,
Shanghai Healthlong Biotechnology Co., Ltd. was no longer be consolidated by the Company; the
Company holds 10% shares in Zhuhai Healthlong Biotechnology Co., Ltd.10% and would appoint a
director thereto.
To this end, the Company's investment in Zhuhai Healthlong Biotechnology Co., Ltd. is accounted in
long-term equity investments. As of the end of December 2021, the book value of long-term equity
investments amounted to RMB79.41 million. The Company simultaneously reduced the originally
recognized goodwill (i.e. the part of investment paid by the Company in the previous investment in
Shanghai Healthlong exceeding the fair value of the identifiable net assets to be owned according to the
shareholding ratio) and the interests to be owned by original minority shareholders according to the
shareholding ratio.
2. Overseas assets
"√ Applicable" "□ Not applicable"
(1) Scale of assets
Including RMB249,090,600, accounting for 5.38% of the total assets.
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(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"
Item Book value as of the end of the period Cause for restrictions
Including transformer deposit, L/C
Cash and cash equivalents 12,713,481.72 deposit, Tmall deposit and Alipay
deposit
Total 12,713,481.72
4. Other description
"□ Applicable" "√ Not applicable"
(IV) Analysis of industry operational information
"√ Applicable" "□ Not applicable"
Please see "Analysis of chemical operational information".
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Annual Report 2021
Analysis of chemical operational information
1 Basic industry information
(1). Industry policies and changes
"□ Applicable" "√ Not applicable"
(2). Major sub-industries and industry status of the Company
"√ Applicable" "□ Not applicable"
See description in (I) Industry pattern and trends, VI. Discussion and Analysis of the Company's Future
Development, Section III Management Discussion and Analysis.
Industry status of the Company:
It can be seen from comprehensive industry data analysis that 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 herein.
Adjusted business models during the reporting period
"□ Applicable" "√ Not applicable"
(2). Major products
"√ Applicable" "□ Not applicable"
Major upstream raw Major downstream Major price
Product Sub-industry
materials application areas influencing factors
Skincare Skincare Humectant, active, grease Skincare, cleansing Personal income,
(including wax, emulsifier, skin type, lifestyle
cleansing) surfactant, fragrance, habits, brand
packaging preference
Make-up Make-up Grease wax, emulsifier, Make-up, beauty, Personal income,
toner, essence, packaging contour living habits, brand
preference
(3). R&D innovation
"√ Applicable" "□ Not applicable"
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See 5. New R&D strategy, V. Primary Business Activities 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,
which are produced in the following process:
1. Production process for skincare cosmetics
Skincare raw Functional
materials components
Inspection of semi-finished
Heat preservation
Heating to Homogeneous
and mixing Cooling Filtration and
dissolve emulsification discharge
products
Warehousing Cartoning Packing Filling Storage
Inspection of
finished products
2. Production process for cleansing cosmetics
Cleansing raw
materials
Inspection of semi-finished
Filtration and
加热混合 Heating and
mixing
Cooling discharge
products
Warehousin Cartoning Packing Filling Storage
g
Inspection of
finished products
3. Production process for make-up cosmetics
(1) Cosmetic powder blocks:
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Powder raw Functional Inspection of
materials components semi-finished
products
Mixing Toning Crushing and Powder Warehousing
sieving storage
Warehousing Cartoning Packing Forming Filling
Aluminum
Inspection of Visual
finished products plate
inspection
(2) Lipsticks and lip gloss:
Wax-based raw Functional
materials components
products
Semi-finished
Inspection of
Heating to Toning Defoaming Filtration and
discharge
dissolve
Warehousing Cartoning Packaging Molding Storage
Inspection of Visual
finished products inspection
(3) Eyelashes and eyeliners:
Basic raw Functional
materials components
products
semi-finished
Inspection of
Homogeneous
Heating to dissolve Toning Cooling Discharge
emulsification
Warehousing Cartoning Packing Filling Storage
Inspection of finished
products
(5). Production capacity and status
"√ Applicable" "□ Not applicable"
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Annual Report 2021
In RMB10,000
Amount of Estimated time
Capacity Capacity
Main plant or Design investment in of completion of
utilization under
project capacity capacity under capacity under
(%) construction
construction construction
Huzhou Skincare 240 million 80.33 0.00 0.00 No
Factory pcs
Huzhou 40 million 25.37 0.00 0.00 No
Cosmetics pcs
Factory
Change in production capacity
"√ Applicable" "□ Not applicable"
During the reporting period, the Company's Make-up Factory was put into operation, increasing the
production capacity by 40 million pieces.
Adjustment to product line and capacity structure optimization
"□ Applicable" "√ Not applicable"
Unexpected shutdown
"□ Applicable" "√ Not applicable"
3 Procurement of raw materials
(1). Basic information on main raw materials
"√ Applicable" "□ Not applicable"
YOY price
Procurement Settlement Procurement
Major raw materials change ratio Consumption
model method quantity
(%)
Mainly
Settle within
competitive About 1,020 About 1,020
the payment
Packaging materials procurement, 18.32 million million
days as
except for some pieces pieces
agreed
strategic suppliers
Mainly through Settle within
Raw competitive the payment About 1,580 About 1,590
-7.93
material_humectant procurement, with days as tons tons
long-term agreed
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Annual Report 2021
strategic
cooperation with
advantageous
suppliers
Dominated by
price inquiry and
comparison, with Settle within
Raw diversified the payment About 520 About 510
61.12
materials_active cultivation of days as tons tons
suppliers of a agreed
single source of
supply
Mainly through
competitive
procurement, with Settle within
Raw
long-term the payment About 720 About 740
material_grease 24.37
strategic days as tons tons
wax
cooperation with agreed
advantageous
suppliers
Mainly through
competitive
Settle within
procurement, with
Raw the payment About 150 About 160
cooperation with -22.04
material_emulsifier days as tons tons
industry-leading
agreed
suppliers on some
raw materials
Mainly through
competitive
procurement, with Settle within
Raw long-term the payment About 95 About 93
31.42
materials_sunscreen strategic days as tons tons
cooperation with agreed
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.
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Annual Report 2021
(2). Basic information on major sources of energy
"√ Applicable" "□ Not applicable"
YOY price
Major Procurement Purchase
Settlement method change ratio Consumption
energy model quantity
(%)
Prepayment and
monthly settlement
Fixed agreement
or payment on
Water with the local 0.00 170,584 tons 170,584 tons
demand according
water company
to the local
requirements
Prepayment and
Fixed agreement monthly settlement
with the local or payment on 8.72 million 8.72 million
Electricity 0.00
power supply demand according kwh kwh
company to the local
requirements
Prepayment and
monthly settlement
Fixed agreement
or payment on
Gas with the local gas 15.23 295,436 cbm 295,436 cbm
demand according
supply company
to the local
requirements
The impact of changes in the prices of major energy on the Company's operating costs: Among the
energy prices, the price of gas rose by 15.23%. Due to the relatively small amount of gas consumption in
energy consumption, the increase in the operating cost was minor.
(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"
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Annual Report 2021
In RMB10,000
Gross
Change
profit
Gross Change in Change in in gross
margin for
Sub-indus Operating Operating profit operating operating profit
products in
try revenue cost margin revenue cost YOY margin
the same
(%) YOY (%) (%) YOY
industry
(%)
and field
Skincare No public
(including 397,806.22 125,711.27 68.40 22.70 10.29 3.56 informatio
cleansing) n available
No public
Make-up 61,827.94 26,341.86 57.39 32.97 33.32 -0.11 informatio
n available
No public
Others 2,409.00 2,456.72 -1.98 -41.05 -5.66 -38.25 informatio
n available
(2). Basic information on the Company's primary business activities by sales channel
"√ Applicable" "□ Not applicable"
In RMB10,000
Change in operating revenue YOY
Sales channel Operating revenue
(%)
Online 392,399.71 49.54
Offline 69,643.45 -38.03
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"
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Annual Report 2021
(V) Analysis of investment
Overall analysis of external equity investments
"√ Applicable" "□ Not applicable"
Ending amount Beginning amount
Provision
Item Carrying Provision for Carrying
Book value for Book value
amount impairment amount
impairment
Investmen
t in joint 3,074,758.68 3,074,758.68 3,306,630.57 3,306,630.57
ventures
Investmen
t in 181,555,246.18 14,670,468.59 166,884,777.59 54,913,429.03 54,913,429.03
associates
Total 184,630,004.86 14,670,468.59 169,959,536.27 58,220,059.60 58,220,059.60
For details, see description in 17. Long-term equity investments, VII. Notes to the Items of Consolidated
Financial Statements, Section X Financial 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"
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"
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Annual Report 2021
Currency: RMB 10,000
Major Nature of Major Registered Total Net assets Net Holding or
subsidiary business products capital assets profit shareholding
and
services
Hangzhou Cosmetics Cosmetics 5,000.00 29,066.40 10,741.57 -2,231.0 Holding
Proya sales 6
Trading Co.,
Ltd.
Zhejiang Cosmetics Cosmetics 1,000.00 40,962.43 15,974.17 6,817.87 Holding
Meiligu sales
Electronic
Commerce
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 2021, the total retail sales of consumer
goods reached RMB44,082.3 billion, up by 12.5% YOY; the total retail sales of cosmetics reached
RMB402.6 billion, up by 14.0% YOY (covering consumer goods above designated units).
(II) Development strategy of the Company
"√ Applicable" "□ Not applicable"
Winning Now Winning Later, "6*N" strategy, enhanced core competence, and enriched brand matrix.
"6" represents new consumption, new marketing, new organization, new mechanism, new technology
and new intelligent manufacturing; "N" represents N brands created.
(1) New consumption: Innovative services to meet more consumer needs and consumer value;
(2) New marketing: Digital marketing, fine omni-channel operation, and accurate and advanced
consumer insight;
(3) New organization: An efficient organization that is flat, platform-based, self-driven and
collaborative;
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(4) New mechanism: A flexible, diversified, business-oriented incentive mechanism to be established;
(5) New technology: Creation of R&D technology competitiveness with a focus on basic scientific
research in R&D; establishment of an intelligent operation and management system through the
company's informatization and digital transformation;
(6) New intelligent manufacturing: Creation of an agile and flexible supply chain to adapt to the
current fast pace of production and sales;
-- 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.
While Proya, as the main brand, maintained rapid, steady development, the Company has created,
replicated, enabled or incubated different brands to meet the different needs of different consumers
based on the successful experience and core competence, to enlarge the customer base, extend the
demand coverage of the customer life cycle, gradually build and improve the multi-brand matrix, and
achieve the Company's long-term sustainable growth.
(III) Business plan
"√ Applicable" "□ Not applicable"
In 2022, we will focus on the following aspects:
1. Construction of a multi-category and multi-brand matrix
Continuously strengthen the brand positioning and brand mindset construction to meet the different
needs of consumers.
(1) Skincare products - Proya
1) Continuously build a the Proya brand's matrix of hero products, focusing on categories such as
essence, face cream, eye cream, and mask. Meanwhile, Proya will optimize and upgrade the existing
hero products, and develop new hero products. The brand will further break circles and penetrate around
the "hero product" strategy.
2) Continuously build its brand around the "spirit of discovery", focusing on social issues such as gender
equality, mental health and intimate relationships, growth of younger generations and other issues
closely related to the target audience for content creation and mass communication.
(2) Make-up - TIMAGE
Continuously strengthen categories including primer, base make-up, powder and face contour and
highlight kit around the theory of Tang Yi IP make-up to seize the mid-end make-up market share.
Continuously penetrate through new media, strengthen cooperation with leading and intermediate KOLs
and junior amateur KOCs, constantly expand the influence, and convey product differentiation
advantages and the brand's professional make-up attributes.
(3) Body & Hair - Off&Relax (OR):
Satisfy the needs of mid-to-high-end consumers for scalp and hair care relying on the Japanese partner's
R&D advantages and the quality advantages of "made in Japan". In 2022, the Company will strengthen
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Annual Report 2021
offline expansion in the Japanese market, and increase promotion and marketing in the Chinese market
to guide the brand mindset of professional scalp care.
2. R&D construction
Based on the internationalization strategy, continuously strengthen R&D construction, systematically
upgrade the R&D system, and introduce professionals with international perspectives; overall plan for
R&D laboratories and other institutions at home and abroad; and deepen strategic cooperation with other
scientific research institutions.
(1) Basic R&D: Strengthen basic research on cells and dermatology, establish 3D skin models, study
the mechanism and solutions for the formation of problematic skin, and develop functional raw
materials.
(2) Applied research: Guided by market demand, develop effective, skin-friendly and cost-effective
skincare and make-up products.
(3) Clinical research: Establish clinical research methods for various efficacy, and carry out efficacy
demonstration and evaluation before product launch to meet the regulatory requirements for
efficacy product launch.
3. Precise operation
(1) Product development and marketing:
Develop products with scientific compounding and optimized raw materials based on industry big data
and consumer insight and by outperforming consumers' expectations. Meanwhile, based on consumer
media and content preferences, cooperate with mass media and bloggers to create high-quality content
and solve various problems in the consumer decision-making process.
(2) Channel operation:
Based on the final experience of consumers, to optimize and upgrade all aspects of operation, detail all
aspects, including front-end visual display, event mechanism design, and customer service experience,
as well as back-end warehousing logistics and after-sales service guarantee. Meanwhile, to provide more
customized products and solutions for different consumers.
(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 facing various brands in the industry;
(2) The control of digital and precise delivery costs fails to come up to expectations due to intensified
competition facing marketing and launch.
2. Project incubation risks
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(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 incompetent team.
3. Uncertain impact of COVID-19 on operations
4. Impact of the uncertainties of the international situation on the supply chain
(V) Others
"□ Applicable" "√ Not applicable"
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 the corresponding rules of procedure.
Such rules define the duties, powers, procedures and obligations of the 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 corporate governance and the requirements of laws,
administrative regulations and the CSRC's regulations on the governance of listed companies; if so,
explain the reasons.
"□ Applicable" "√ Not applicable"
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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
2020 Annual May 13, Announcement No. May 14, The meeting approved
General 2021 2021-029 on SSE 2021 proposals including the
Meeting of website Company's Annual Report 2020
Shareholders (www.sse.com.cn) and its Summary, and the
Company's 2020 Annual Profit
Distribution Plan. For details,
see the Announcement on
Resolutions of the 2020 Annual
General Meeting of
Shareholders (No.: 2021-029)
released on the SSE website on
May 14, 2021
(http://www.sse.com.cn) and
relevant media.
First September Announcement No. September The meeting approved the
Extraordinary 09, 2021 2021-055 on SSE 10, 2021 Proposal on Changing the
General website Company's Registered Capital,
Meeting of (www.sse.com.cn) Revising the Articles of
Shareholders in Association, and Applying for
2021 Business Change Registration,
the Proposal on Election of
Directors, the Proposal on
Election of Independent
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Annual Report 2021
Directors, and the Proposal on
Election of Supervisors. For
details, see the Announcement
on Resolutions of the 1st
Extraordinary General Meeting
of Shareholders in 2021
released by the Company on the
SSE website
(http://www.sse.com.cn) and
relevant media on September
10, 2021 (Announcement No.:
2021-055)
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
Total pre-tax Any
remuneration remuneration
received from the
Number of
Number of Change in from the Company's
shares held
Position Term start Term end shares held shares Cause for Company related
Name Gender Age at the
(Note) date date at the end of during the change during the parties
beginning
the year year reporting
of the year
period
(RMB
10,000)
Hou Chairman Male 58 July 30, September 72,640,500 69,764,815 -2,875,685 Reduced for 162.94 No
Juncheng 2015 08, 2024 personal
capital need
Fang Director, Male 53 July 30, September 44,819,118 36,347,843 -8,471,275 Reduced for 162.94 No
Yuyou General 2015 08, 2024 personal
Director capital need
Hou Director Male 34 September September 0 0 0 2.57 No
Yameng 09, 2021 08, 2024
Deputy September September
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Annual Report 2021
General 15, 2021 08, 2021
Manager
Ma Independent Male 52 May 13, September 0 0 0 7.70 No
Dongming Director 2021 08, 2024
Ge Independent Male 47 September September 0 0 0 4.63 No
Weijun Director 09, 2021 08, 2024
Hou Supervisor Female 33 May 02, September 0 0 0 18.67 No
Luting 2018 08, 2024
Fang Qin Supervisor Female 32 May 08, September 0 0 0 26.74 No
2018 08, 2024
Hu Lina Supervisor Female 34 September September 0 0 0 4.37
09, 2021 08, 2024
Jin Deputy Male 60 April 16, September 73,181 54,981 -18,200 Reduced for 60.94 No
Yanhua General 2018 14, 2024 personal
Manager capital need
Wang Li CFO Female 44 September September 44,200 32,322 -11,878 10,700 shares 82.69 No
03, 2018 14, 2024 reduced due
Deputy September September to personal
General 15, 2021 14, 2024 capital needs,
Manager, 1,178 shares
Secretary of repurchased
the Board through
of Directors equity
incentives
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Annual Report 2021
Cao Director Male 50 July 30, September 4,124,938 3,769,938 -355,000 Reduced for 94.73 No
Liangguo 2015 08, 2021 personal
Deputy July 30, September capital need
General 2015 14, 2021
Manager
Chu Xiuqi Independent Male 58 July 30, September 0 0 0 6.58 No
Director 2015 08, 2021
Chen Yan Independent Male 50 August 01, May 12, 0 0 0 3.50 No
Director 2017 2021
Ye Nana Chairman Female 38 September September 0 0 0 16.21 No
of the 03, 2018 08, 2021
Board of
Supervisors
Zhang Deputy Female 47 July 30, September 35,870 35,870 0 44.81 No
Yefeng General 2015 14, 2021
Manager,
Secretary of
the Board
of Directors
Total / / / / / 121,737,807 110,005,769 -11,732,038 / 700.02 /
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Notes:
1. During the reporting period, Cao Liangguo served as Director from January 1, 2021 to September 8, 2021 and as Deputy General Manager from January 1, 2021
to September 14, 2021; Chu Xiuqi served as Independent Director from January 1, 2021 to September 8, 2021; Chen Yan served as Independent Director from
January 1, 2021 to May 12, 2021; Ye Nana served as Chairman of the Board of Supervisors from January 1, 2021 to September 8, 2021; Zhang Yefeng served
as Deputy General Manager and Secretary of the Board of Directors from January 1, 2021 to September 14, 2021.
2. During the reporting period, Hou Yameng served as Director from September 9, 2021 to December 31, 2021 and Deputy General Manager
from September 15, 2021 to December 31, 2021; Ma Dongming served as Independent Director from May 13, 2021 to December 31, 2021;
Ge Weijun served as Independent Director from September 9, 2021 to December 31, 2021; Hu Lina served as Supervisor from September 9,
2021 to December 31, 2021.
3. The total pre-tax remuneration received by the above Directors, Supervisors and Senior Management from the Company during the reporting period is the total
pre-tax remuneration during their term of office in the reporting period.
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 served as Executive Director of the Company. From
August 2012, he has been Chairman of the Company and its predecessor. As of the end of the reporting period, he concurrently served as Executive
Director and General Manager of Proya Trading, 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 Danyang Hapsode, Executive Director and
General Manager of Mijing Siyu (Hangzhou), Chairman and General Manager of Hangzhou Kunyi Industrial Co., Ltd., Chairman of CBIC, Executive
Director and General Manager of Huzhou Beauty Town Technology Incubation Park Co., Ltd., Chairman of Huzhou Younimi, Director of Xinjiang
Huanyu New Silk Road Investment Development Co., Ltd., and Executive Director of Proya (Hainan).
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Fang He once worked in Shijiazhuang Liaoyuan Cosmetics Co., Ltd., Hangzhou Proya Cosmetics Co., Ltd., and Hangzhou Proya Holdings Co., Ltd. Since
Yuyou 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 end of the reporting period, he concurrently served as General Manager of Meiligu, General Manager of Yueqing Laiya,
Executive Director and Manager of Hangzhou Fangxiake Investment Co., Ltd., Inside Director of Korea Hanna, Director of Hangzhou Kunyi Industrial
Co., Ltd., Director of Hangzhou Tairentang Biotechnology Co., Ltd., Director of Huzhou Younimi, Director of Hong Kong Xinghuo, and Supervisor of
Zhejiang Poweihui Grapevine Technology Co., Ltd.
Hou He once worked in the E-commerce Department of Proya Cosmetics Co., Ltd., and has served as Director and Deputy General Manager of the
Yameng Company since September 2021. As of the end of the reporting period, he concurrently served as Supervisor of Hangzhou Yishan Design Co., Ltd., and
Executive Director and General Manager of Hainan Mengya Enterprise Consulting Co., Ltd.
Ma He used to be Deputy Director and Director of CSRC Zhejiang Branch, Director of the Commissioner's Office of CSRC Shanghai Branch, and Deputy
Dongming General Manager and Secretary of the Board of Directors of Yongan Futures Co., Ltd. Since May 2021, he has served as Independent Director of the
Company. As of the end of the reporting period, he concurrently served as Independent Director of Hangzhou Particle Culture Technology Co., Ltd.,
Independent Director of Transwarp Technology (Shanghai) Co., Ltd., and Independent Director of Zhejiang Shuangyuan Technology & Development
Co., Ltd.
Ge He once worked in Zhejiang Xingyun Law Firm and Xingyun Law Firm Shanghai Branch. From 2006 to December 2021, he served as Professor,
Weijun Doctoral Supervisor (in civil and commercial law), and Legal Adviser of Shanghai University of Finance and Economics. Since January 2022, he has
served as a full-time teacher at the Law School of Fudan University. Since September 2021, he has served 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, Executive Officer of the China Commercial Law Society, Vice President of the Commercial Research Branch of
the Shanghai Judicial Think Tank, Vice President of the Cultural Law Research Association of the Shanghai Law Society, Independent Director of
Shanghai Huace Navigation Technology Ltd., and Independent Director of Genecast Biotechnology Co., Ltd.
Hou From July 2013 to January 2014, she worked as an expatriate financial specialist at Zhonghui Accounting Firm, and from February 2014 to June 2017,
Luting she worked as a packaging material procurement specialist at the Purchasing Department of Proya Cosmetics Co., Ltd.; from June 2017 to April 2019,
she worked as a raw material procurement specialist at the Purchasing Department of Proya Cosmetics Co., Ltd., and since April 2019, she has served
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as a raw material evaluation engineer at the Company. 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. Since January 2018,
she has served as Planning Strategy Manager of the Company, and since May 2018, she has been Supervisor of the Company.
Hu Lina Female, born in December 1988, Chinese nationality, no overseas permanent residence, bachelor degree. 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 served as Supervisor of
the Company since September 2021.
Jin He once worked in Zhejiang Sanmen Fertilizer Factory, Zhejiang InBev Yandangshan Beer Co., Ltd., Zhejiang InBev Jinhua Beer Co., Ltd., Hangzhou
Yanhua 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 served as Deputy General Manager of the Company. As of the end 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 Biyouti, Executive Director of Shanghai Zhongwen, Executive Director and General
Manager of Ningbo Proya, Chairman of Ningbo Keshi, Chairman of Ningbo TIMAGE, Executive Partner of Peixian Deyi Network Technology
Partnership (Limited Partnership), Director of Hong Kong Keshi, Director of Hong Kong Wanyan, Director of Hong Kong Zhongwen, Executive
Director of Zhejiang Qingya, Executive Director 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 Oumisi, Director of Japan OR, Executive Director
and General Manager of Guangzhou Qianxi, Director of Ningbo Xiyou Interactive Entertainment Culture Media Co., Ltd., Executive Director and
General Manager of Huzhou Poyun, Executive Director and General Manager of Xuzhou Proya, General Manager of Proya (Hainan), Director of
Korea Hapsode, Executive Director and General Manager of Singuladerm (Hangzhou), and Chairman and General Manager of Ningbo Tangyu.
Wang Li She once worked in Guangzhou Yingtai Digital Power Technology Co., Ltd., US CELLSTAR (Phonest Star), Shanghai Ruili Sports Co., Ltd., Nanjing
B.C. Sports Products Co., Ltd., Vgrass Fashion Co., Ltd., Zhuoshang Clothing (Hangzhou) Co., Ltd., and Jiangsu Sunport Power Corp., Ltd. Since
May 2018, she has served as CFO of the Company, and since September 2021, she has served as the Company's Deputy General Manager and
Secretary of the Board of Directors.
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Cao He once worked in Leshan Chengbei Electric Appliance Factory, Hainan International United Cosmetics Co., Ltd., Chongqing Xielida Cosmetics Co.,
Liangguo Ltd., Chongqing Doyen Technology Industry Co., Ltd., Hangzhou Proya Cosmetics Co., Ltd., and Hangzhou Proya Holdings Co., Ltd. Since 2007, he
has worked in the Company and its predecessor; from August 2012 to September 2021, he served as Director and Deputy General Manager of the
Company and its predecessor; since September 2021, he has served as Executive Deputy General Manager of the Company. As of the end of the
reporting period, he concurrently served as Supervisor of Korea Hanna, Director of Hangzhou Kunyi Industrial Co., Ltd., Director of Hangzhou
Tairentang Biotechnology Co., Ltd., Director and General Manager of Korea Hapsode, Director of Huzhou Younimi, Director of Ningbo Keshi,
Director of Hong Kong Keshi, Director of Hong Kong Zhongwen, Director of Hong Kong Wanyan, Director of Japan OR, and Director of Ningbo
Tangyu.
Chu Xiuqi He used to be Deputy Director of the Department Store Bureau of the Ministry of Commerce of the PRC, Deputy General Manager of China National
General Merchandise and Textile Co., Ltd., and Executive Vice President and Secretary General of CCAGM. From July 2015 to September 2021, he
served as Independent Director of the Company. As of the end of the reporting period, he served as Honorary President of CCAGM, Vice Chairman of
China Sporting Goods Federation, President of Trade Fair Economy, Vice Chairman of Reed Huabai Exhibitions (Beijing) Co., Ltd., and Independent
Director of Tianjin Yishang Friendly Co., Ltd. Ltd.
Chen Yan He used to be Accountant at Huzhou Textile Import and Export Co., Ltd., Project Supervisor at OMEX, Vice Chairman, CFO, Secretary of the Board
of Directors, and Deputy General Manager of Zhejiang Unifull Industrial Fibre Co., Ltd., and Investment Director of Huzhou Youchuang Investment
Management Partnership (Limited Partnership). From August 2017 to May 2021, he served as Independent Director of the Company. As at the end of
the reporting period, he served as Executive Partner of Huzhou Haoyu Investment Management Partnership (Limited Partnership), Executive Partner of
Huzhou Juzhi Equity Investment Partnership (Limited Partnership), Supervisor of Hangzhou Quanzhimai E-Commerce Co., Ltd., Supervisor of
Huzhou Jingrui Management Consulting Co., Ltd, Supervisor of BackboneTech Shanghai Co., Ltd., Executive Partner of Huzhou Haorui Enterprise
Management Consulting Partnership (Limited Partnership), and Executive Partner of Huzhou Haoteng Equity Investment Partnership (Limited
Partnership).
Ye Nana She once worked in Zhejiang Dahua Co., Ltd. and Hangzhou Qiankun Industrial Co., Ltd. From September 2018 to September 2021, he served as
Supervisor of the Company. From 2010 to the end of the reporting period, he served as Senior Administrative Manager of the Company and its
predecessor, and now concurrently serves as Supervisor of Huzhou Younimi and Director of Japan OR.
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Zhang She once worked in Zhejiang Modern Industry and Trade Group Co., Ltd., Guangdong Robust Group Co., Ltd., Hangzhou Aupu Electric Co., Ltd.,
Yefeng Hangzhou Proya Cosmetics Co., Ltd., and Hangzhou Proya Holding Co., Ltd. From 2007 to January 2022, she worked in the Company and its
predecessor. From August 2012 to September 2021, she served as the Secretary of the Board of Directors and Director of the Public Relations
Management Department of the Company and its predecessor. From December 2015 to September 2021, she served as Deputy General Manager of the
Company.
Other description
"□ 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"
Name of Name of shareholder Position held in Term start
Term end date
employee entity shareholder entity date
Jin Yanhua Peixian Deyi Network Executive Partner August 2019
Technology Partnership
(Limited Partnership)
Description of No
position held in
shareholder entity
Note: Weifang Zhengyi Network Technology Partnership (Limited Partnership) was renamed Peixian
Deyi Network Technology Partnership (Limited Partnership) in May 2021.
2. Positions held in other entities
"√ Applicable" "□ Not applicable"
Name of Name of another Position held in another
Term start date Term end date
employee entity entity
Hou Executive Director and
Proya Trading June 2011
Juncheng General Manager
November
Meiligu Executive Director
2011
Chuangdai December
Executive Director
Electronics 2016
September
Yueqing Laiya Executive Director
2015
Inside Director and November
Korea Hanna
Representative Director 2011
Hapsode Executive Director and
February 2018
(Hangzhou) General Manager
Executive Director and
Huzhou Hapsode May 2016
General Manager
Executive Director and December
Danyang Hapsode
General Manager 2016
Mijing Siyu Executive Director and
February 2018
(Hangzhou) General Manager
Hangzhou Kunyi Chairman and General April 2014
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Industrial Co., Ltd. Manager
December
CBIC Chairman
2018
Huzhou Beauty
Town Technology Executive Director and
January 2019
Incubation Park Co., General Manager
Ltd.
Huzhou Younimi Chairman March 2019
Xinjiang Huanyu
New Silk Road
Investment Director March 2021
Development Co.,
Ltd.
Proya (Hainan) Executive Director January 2021
Fang November
Meiligu General Manager
Yuyou 2012
September
Yueqing Laiya General Manager
2015
Hangzhou
Executive Director and
Fangxiake May 2018
General Manager
Investment Co., Ltd.
November
Korea Hanna Inside Director
2011
Hangzhou Kunyi
Director April 2014
Industrial Co., Ltd.
Hangzhou
Tairentang December
Director
Biotechnology Co., 2014
Ltd.
Huzhou Younimi Director March 2019
Hong Kong Xinghuo Director March 2019
Zhejiang Poweihui
Grapevine November
Supervisor
Technology Co., 2021
Ltd.
Hou Hangzhou Yishan September January 2022
Supervisor
Yameng Design Co., Ltd. 2017
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Hainan Mengya
Executive Director and November
Enterprise
General Manager 2021
Consulting Co., Ltd.
Ma Particle Culture Independent Director October 2020
Dongming Technology Group
(Hangzhou) Co.,
Ltd.
Transwarp Independent Director December
Technology 2020
(Shanghai) Co., Ltd.
Zhejiang Independent Director December
Shuangyuan Science 2020
& Technology
Development Co.,
Ltd.
Ge Weijun Shanghai Huace Independent Director December
Navigation 2020
Technology Ltd.
Genecast Independent Director January 2020
Biotechnology Co.,
Ltd.
Jin Yanhua Hanya (Huzhou) Executive Director December
2016
Huzhou UZERO Executive Director January 2018
Chuangdai Manager February 2018
Electronics
Proya Commercial Executive Director and September
General Manager 2018
Huzhou Niuke Executive Director and December
General Manager 2018
Hangzhou Wanyan Executive Director and January 2019
General Manager
Zhejiang Biyouti Executive Director and March 2019
General Manager
Shanghai Chairman April 2019
Zhongwen
Ningbo Proya Executive Director and December
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General Manager 2019
Ningbo Keshi Director September
2019
Ningbo TIMAGE Director July 2019
Peixian Deyi Executive Partner August 2019
Network
Technology
Partnership (Limited
Partnership)
Hong Kong Keshi Director March 2019
Hong Kong
Director October 2019
Wanyan
Hong Kong
Director July 2019
Zhongwen
Zhejiang Qingya Executive Director May 2020
Luxiaotie Executive Director August 2020
Hangzhou Yizhuo Executive Director and July 2020
General Manager
Hangzhou Executive Director and July 2020
Weiluoke General Manager
Hangzhou Oumisi Executive Director and August 2020
General Manager
Japan OR Director August 2020
Guangzhou Qianxi Executive Director and October 2020
General Manager
Ningbo Xiyou Director September
Mutual 2020
Entertainment
Culture Media Co.,
Ltd.
Huzhou Poyun Executive Director and September
General Manager 2020
Xuzhou Pelaya Executive Director and January 2021
Information General Manager
Technology Co.,
Ltd.
Proya (Hainan) General Manager January 2021
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Korea Hapsode Director of the Company June 2021
Singuladerm Executive Director and October 2021
(Hangzhou) General Manager
Ningbo Tangyu Chairman and General October 2021
Manager
Cao Korea Hanna Supervisor November
Liangguo 2011
Hangzhou Kunyi Director February 2013
Industrial Co., Ltd.
Hangzhou Director December
Tairentang 2014
Biotechnology Co.,
Ltd.
Korea Hapsode Director and General August 2017
Manager of the Company
Shanghai Director April 2019 January 2021
Zhongwen
Huzhou Younimi Director March 2019
Hong Kong Keshi Director March 2019
Ningbo Keshi Director September
2019
Ningbo Segu Director June 2019 January 2021
Hong Kong Director July 2019
Zhongwen
Hong Kong Director October 2019
Wanyan
Japan OR Director August 2020
Ningbo Tangyu Director December
2021
Chu Xiuqi Tianjin Yishang
Independent Director October 2011
Friendly Co., Ltd.
Reed Huabai
Exhibitions Vice Chairman July 2018
(Beijing) Co., Ltd.
Chen Yan Huzhou Haoyu Executive Partner March 2018
Investment
Management
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Annual Report 2021
Partnership (Limited
Partnership)
Huzhou Juzhi Equity Executive Partner August 2019
Investment
Partnership (Limited
Partnership)
Hangzhou Supervisor March 2018
Quanzhimai
Electronic
Commerce Co., Ltd.
Huzhou Jingrui Supervisor November
Management 2019
Consulting Co., Ltd.
BackboneTech
Supervisor April 2019
Shanghai Co., Ltd.
Huzhou Haorui Executive Partner August 2019
Enterprise
Management
Consulting
Partnership (Limited
Partnership)
Huzhou Haoteng Executive Partner August 2021
Equity Investment
Partnership (Limited
Partnership)
Ye Nana Huzhou Younimi Supervisor March 2019
Japan OR Supervisor August 2020
Description No
of
positions
held in
other
entities
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Annual Report 2021
(III) Remuneration of directors, supervisors and senior management
"√ Applicable" "□ Not applicable"
Decision-making procedures for The remuneration of directors and supervisors of the Company
remuneration of directors, shall be approved by the Remuneration and Appraisal Committee
supervisors and senior of the Board of Directors, the Board of Directors and the Board of
management Supervisors respectively. Then, 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 of the Board of Directors
and the Board of Directors
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 Paid
of directors, supervisors and
senior management
Total remuneration actually During the reporting period, the Company's directors, supervisors
received by all directors, and senior management actually received a total remuneration of
supervisors and senior RMB7,000,200 from the Company (including current and resigned
management as of the end of the supervisors and senior management during the reporting period).
reporting period
(IV) Changes in the Company's directors, supervisors and senior management
"√ Applicable" "□ Not applicable"
Name Position held Change Cause for change
Hou Juncheng Chairman of the Board Election Change
Fang Yuyou Director Election Change
Fang Yuyou CEO Appointment Change
Hou Yameng Director Election Change
Hou Yameng Deputy General Manager Appointment Change
Ma Dongming Independent Director Election Election, change
Ge Weijun Independent Director Election Change
Hou Luting Chairman of the Board of Election Change
Supervisors
Fang Qin Employee Representative Election Change
Supervisor
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Hu Lina Shareholder Representative Election Change
Supervisor
Jin Yanhua Deputy General Manager Appointment Change
Wang Li CFO, Deputy General Appointment Change
Manager, Secretary of the
Board of Directors
Cao Liangguo Director, Deputy General Outgoing Change
Manager
Chu Xiuqi Independent Director Outgoing Change
Chen Yan Independent Director Outgoing Personal reasons
Ye Nana Chairman of the Board of Outgoing Change
Supervisors
Zhang Yefeng Deputy General Manager, Outgoing Change
Secretary of the Board of
Directors
(V) Description of punishments by the CSRC in the past three years
"□ Applicable" "√ Not applicable"
(VI) Others
"□ Applicable" "√ Not applicable"
V. Meetings of the Board of Directors held during the reporting period
Session Date Resolution
18th meeting of January 05, The meeting approved the Proposal on the Satisfaction of
the second session 2021 Conditions for Releasing the Sales Restrictions for the Second
of Board of Release Period of the Restricted Shares Granted for the First
Directors Time and Reserved Grant under the 2018 Restricted Share
Incentive Plan. For details, see the Announcement on the
Achievement of the Condition for the Release of Restrictions on
the 2nd Lock-up Period for the 1st Grant and Reserved Grant of
the 2018 Restricted Stock Incentive Plan and Listing (No.:
2021-004) disclosed by the Company on the SSE website
(http://www.sse.com.cn) and relevant media on January 6, 2021.
19th meeting of April 21, The meeting approved proposals including the Company's Annual
the second session 2021 Report 2020 and its Summary and the Company's 2020 Annual
of Board of Profit Distribution Plan. For details, see the Announcement on
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Annual Report 2021
Directors Resolutions of the 19th Meeting of the Second Board of Directors
(No.: 2021-012) disclosed by the Company on the SSE website
(http://www.sse.com.cn) and relevant media on April 23, 2021.
20th meeting of August 24, The meeting approved proposals including the Company's 2021
the second session 2021 Semi-annual Report and its Summary and the Proposal on the
of Board of General Election of the Company's Board of Directors. For
Directors details, see the Announcement on Resolutions of the 20th Meeting
of the Second Board of Directors (No.: 2021-043) disclosed by the
Company on the SSE website (http://www.sse.com.cn) and
relevant media on August 25, 2021.
1st meeting of the September The meeting approved proposals including the Proposal on the
third session of 15, 2021 Election of Chairman, the Proposal on the Election of Members of
Board of Directors Special Committees of the Company's Board of Directors and the
Proposal on the Appointment of the Company's Senior
Management and Securities Affairs Representatives. For details,
see the Announcement on Resolutions of the 1st Meeting of the
Third Board of Directors (No.: 2021-056) disclosed by the
Company on the SSE website (http://www.sse.com.cn) and
relevant media on September 16, 2021.
2nd meeting of the October 27, The meeting approved the Company's 2021 Third Quarter Report.
third session of 2021 For details, see the 2021 Third Quarter Report disclosed by the
Board of Directors Company on the SSE website (http://www.sse.com.cn) and
relevant media on October 28, 2021.
3rd meeting of the December 03, The meeting approved proposals including the Proposal on
third session of 2021 Further Clarifying the Company's Public Issuance of Convertible
Board of Directors Corporate Bonds and the Proposal on the Company's Public
Issuance of Convertible Corporate Bonds for Listing. For details,
see the Announcement on Resolutions of the 3rd Meeting of the
Third Session of Board of Directors (No.: 2021-075) disclosed by
the Company on the SSE website (http://www.sse.com.cn) and
relevant media on December 6, 2021.
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Annual Report 2021
VI. Performance of Duties by Directors
(I) Directors Attending Meetings of the Board of Directors and General Meetings of
Shareholders
Attendance at
General
Attendance at meetings of the Board of Directors
Meeting of
Shareholders
Independent
Director Number Number
Director or Number of Number Failure to Number of
Name of board Number of of board
not board of board attend two general
meetings board meetings meetings
meetings to meetings consecutive meetings of
attended attended by absent
be attended attended board meetings shareholders
in communication from
this year by proxy or not attended
person -
Hou No 6 0 0 0 No 2
6
Juncheng
Fang No 6 0 0 0 No 2
6
Yuyou
Hou No 3 1 0 0 No 0
3
Yameng
Ma Yes 4 3 0 0 No 1
4
Dongming
Ge Weijun Yes 3 3 2 0 0 No 0
Cao No 3 0 0 0 No 2
3
Liangguo
Chu Xiuqi Yes 3 3 3 0 0 No 2
Chen Yan Yes 2 2 2 0 0 No 1
Explanation on absence from two consecutive board meetings
"□ Applicable" "√ Not applicable"
Number of board meetings held during the year 6
Including: number of on-site meetings 1
Number of meetings held by communication 0
Number of meetings held on site and by communication 5
(II) Circumstances where directors object to the Company's relevant matters
"□ Applicable" "√ Not applicable"
(III) Others
"□ Applicable" "√ Not applicable"
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VII. Special Committees under the Board of Directors
"√ Applicable" "□ Not applicable"
(1). Members of special committees under the Board of Directors
Category of special
Name of member
committee
Hou Yameng, Ma Dongming, Ge Weijun, Cao Liangguo (resigned),
Audit Committee
Chen Yan (resigned), Chu Xiuqi (resigned)
Hou Juncheng, Ma Dongming, Ge Weijun, Chen Yan (resigned), Chu
Nomination Committee
Xiuqi (resigned)
Remuneration and Appraisal Fang Yuyou, Ma Dongming, Ge Weijun, Chen Yan (resigned), Chu
Committee Xiuqi (resigned)
Hou Juncheng, Ma Dongming, Ge Weijun, Chen Yan (resigned), Chu
Strategy Committee
Xiuqi (resigned)
(2). Four meetings held by the Audit Committee during the reporting period
Important Other
Date Description comments and performance
suggestions of duties
April 21, Held the 14th meeting of the second session of Audit Approve these No
2021 Committee, approved the Company's Annual Report proposals and
2020 and its Summary, the Company's 2021 Q1 agree to submit
Report, the Company's Annual Financial Final Report them to the Board
2020, the Performance Report 2020 of the Audit of Directors for
Committee under the Company's Board of Directors, deliberation
the Company's Internal Control Evaluation Report
2020, the Company's Profit Distribution Plan 2020,
the Proposal on Payment of Audit Fees for 2020 and
Further Employment of the Audit Firm for 2021, the
Proposal on Changes in Accounting Policies, the
Proposal on the Estimated Amount of Daily
Related-party Transactions for 2021, the Proposal on
the Company's Eligibility for the Public Issuance of
A-Share Convertible Corporate Bonds, the Proposal
on the Issuance Plan for the Company's Public
Issuance of A-Share Convertible Corporate Bonds
(revision), the Proposal on the Pre-arranged Plan for
the Company's Public Issuance of A-Share
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Annual Report 2021
Convertible Corporate Bonds (revision), the
Feasibility Analysis Report on the Company's Public
Issuance of A-Share Convertible Corporate Bonds to
Raise Funds for Investment Projects (revision), the
Proposal on the Report on the Use of the Company's
Previously Raised Funds, the Proposal on the Public
Issuance of A-Share Convertible Corporate Bonds to
Dilute Spot Returns and Remedial Measures and
Relevant Entities' Commitments (revision), the
Proposal on Extending the Valid Period of
Resolutions of the General Meeting of Shareholders
on A-Share Convertible Corporate Bonds and the
Validity Period of Authorization, the Rules of
Procedure for Meetings of the Company's A-Share
Convertible Corporate Bond Holders (revision), and
the Company's Annual Internal Audit Work Report
2020.
August Held the 15th meeting of the second session of Audit Approve these No
24, 2021 Committee and approved the Company's 2021 proposals and
Semi-annual Report and its Summary, the Proposal on agree to submit
Adjusting the Repurchase Price under the 2018 them to the Board
Restricted Stock Incentive Plan, the Proposal on the of Directors for
Repurchase and Cancellation of Some Restricted deliberation
Equity Incentive Shares, the Proposal on Adjusting the
Company's Public Issuance of A-Share Convertible
Corporate Bonds, the Proposal on the Pre-arranged
Plan for the Company's Public Issuance of A-Share
Convertible Corporate Bonds (second revision), and
the Proposal for the Feasibility Analysis Report
(second revision) on the Company's Public Issuance of
A Share Convertible Corporate Bonds to Raise Funds
for Investment Projects.
October Held the 1st meeting of the third session of Audit Approve these No
27, 2021 Committee, and approved the Company's 2021 Q3 proposals and
Report agree to submit
them to the Board
of Directors for
deliberation
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Annual Report 2021
December Held the 2nd meeting of the third session of Audit Approve these No
03, 2021 Committee and approved the Proposal on Further proposals and
Clarifying the Company's Public Issuance of agree to submit
Convertible Corporate Bonds, the Proposal on the them to the Board
Company's Public Issuance of Convertible Corporate of Directors for
Bonds for Listing, and the Proposal on Opening the deliberation
Special Account for Funds Raised from the Public
Issuance of Convertible Corporate Bonds and Signing
the Supervision Agreement for Raised Funds
(3). Two meetings held by the Remuneration and Appraisal Committee during the reporting
period
Important Other
Date Description comments and performance
suggestions of duties
January Held the 4th meeting of the second session of Approve these No
05, 2021 Remuneration and Appraisal Committee and approved proposals and
the Proposal on the Satisfaction of Conditions for agree to submit
Releasing the Sales Restrictions for the Second Release them to the Board
Period of the Restricted Shares Granted for the First of Directors for
Time and Reserved Grant under the 2018 Restricted deliberation
Share Incentive Plan
April 21, Held the 5th meeting of the second session of Approve these No
2021 Remuneration and Appraisal Committee and approved proposals and
the Proposal on Confirming the Remuneration of agree to submit
Directors for 2020 and the Proposal on Confirming the them to the Board
Remuneration of Senior Management for 2020 of Directors for
deliberation
(4). Three meetings held by the Nomination Committee during the reporting period
Other
Important comments
Date Description performance of
and suggestions
duties
April 21, Held the 2nd meeting of the second session of Approve these No
2021 Nomination Committee and approved the proposals and agree
Proposal on Proposing Candidates for to submit them to the
Independent Directors of the Company Board of Directors
for deliberation
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Annual Report 2021
August 24, Held the 3rd meeting of the second session of Approve these No
2021 Nomination Committee and approved the proposals and agree
Proposal on Proposing Candidates for to submit them to the
Directors of the Company's 3rd Board of Board of Directors
Directors for deliberation
September Held the 4th meeting of the second session of Approve these No
15, 2021 Nomination Committee and approved the proposals and agree
Proposal on Proposing Candidates for the to submit them to the
Company's Senior Management Board of Directors
for deliberation
(5). Two meetings held by the Strategy Committee during the reporting period
Important Other
Date Description comments and performance of
suggestions duties
April 21, Held the 4th meeting of the second session of Approve these No
2021 Strategy Committee and approved the Proposal proposals and agree
on the Company's Strategic Business Plan 2021, to submit them to
the Proposal on the Company's Eligibility for the the Board of
Public Issuance of A-Share Convertible Directors for
Corporate Bonds, the Proposal on the Issuance deliberation
Plan for the Company's Public Issuance of
A-Share Convertible Corporate Bonds (revision),
the Proposal on the Pre-arranged Plan for the
Company's Public Issuance of A-Share
Convertible Corporate Bonds (revision), the
Feasibility Analysis Report on the Company's
Public Issuance of A-Share Convertible
Corporate Bonds to Raise Funds for Investment
Projects (revision), the Proposal on the Report on
the Use of the Company's Previously Raised
Funds, the Proposal on the Public Issuance of
A-Share Convertible Corporate Bonds to Dilute
Spot Returns and Remedial Measures and
Relevant Entities' Commitments (revision), the
Proposal on Extending the Valid Period of
Resolutions of the General Meeting of
Shareholders on A-Share Convertible Corporate
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Bonds and the Validity Period of Authorization,
and the Rules of Procedure for Meetings of the
Company's A-Share Convertible Corporate Bond
Holders (revision).
December Held the 1st meeting of the third session of Approve these No
3, 2021 Strategy Committee and approved the Proposal proposals and agree
on Further Clarifying the Company's Public to submit them to
Issuance of Convertible Corporate Bonds, the the Board of
Proposal on the Company's Public Issuance of Directors for
Convertible Corporate Bonds for Listing, and the deliberation
Proposal on Opening the Special Account for
Funds Raised from the Public Issuance of
Convertible Corporate Bonds and Signing the
Supervision Agreement for Raised Funds
(6). Dissenting matters
"□ Applicable" "√ Not applicable"
VIII. Explanation on 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 960
company
Number of current employees of major 1,884
subsidiaries
Total number of employees 2,844
Number of retired employees to be supported by 5
the parent company and major subsidiaries
Specialty composition
Category Number of employees
Production workers 269
Sales specialists 2,173
Management 243
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R&D personnel 159
Total 2,844
Educational background
Education level Number (person)
Bachelor and above 910
Associate 590
High school and below 1,344
Total 2,844
(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 between employees and their performance evaluation with the 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 on and optimizing
training research, training topics, training forms, training implementation, training evaluation and
improvement, and trainer management. The Company fully enhances employee participation by
providing offline and online platform learning and sharing activities, so that employees can learn
targeted and independently.
(IV) Labor outsourcing
"√ Applicable" "□ Not applicable"
Total man-hours for labor outsourcing
Total remuneration paid for labor outsourcing RMB30,245,335.39
In January 2017, Proya Cosmetics Co., Ltd. Huzhou Branch signed the Service Project Contracting
Agreement with Jiangxi Puji Labor Service Co., Ltd., whereby Huzhou Branch would outsourced
auxiliary services including canteen, greening, cleaning, and goods handling, loading and unloading, and
packaging to Jiangxi Zhilian Outsourcing Service Co., Ltd. and pay consideration for the agreed
quantities.
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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 developed the planning for dividend distribution to shareholders
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 mechanism
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, by attaching importance to
reasonable investment returns to investors while allowing for the Company's sustainable development
and establishing a continuous and stable mechanism for returns to investors in combination with the
Company's profitability and as actually necessary 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. The Company shall
consider reasonable investment returns to investors and 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 should 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
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Company's Board of Directors shall propose a differentiated cash dividend policy in line with the
procedures 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 implementation of the plan for dividend distribution to shareholders.
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 2020 annual General Meeting of Shareholders approved the
2020 annual profit distribution plan, whereby to distribute a cash dividend of RMB7.20 (tax inclusive)
for each 10 shares to all shareholders registered as of the record date on the basis of the total share
capital as of the record date for dividend distribution for a total of RMB144,804,186.00 (tax inclusive).
The dividend distribution was completed on June 2, 2021.
(II) Special description of the cash dividend policy
"√ Applicable" "□ Not applicable"
Whether acceptable under the Company's Articles of Association or as required "√ Yes" "□ No"
by resolution at the General Meeting of Shareholders
Any clear and defined dividend distribution and ratio "√ Yes" "□ No"
Any complete decision-making procedures and mechanisms "√ Yes" "□ No"
Whether independent directors have discharged their duties and played their "√ Yes" "□ No"
roles
Whether minority shareholders have the opportunity to fully express their "√ Yes" "□ No"
opinions and demands, and whether their legitimate rights and interests are fully
protected
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(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"
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 the SSE website, Shanghai Securities News, Securities Times on
Achievement of the Condition for January 6, 2021
the Release of Restrictions on the
2nd Lock-up Period for the 1st
Grant and Reserved Grant of the
2018 Restricted Stock Incentive
Plan and Listing
Announcement on Adjusting the SSE website, Shanghai Securities News, Securities Times on
Repurchase Price of the 2018 August 25, 2021
Restricted Stock Incentive Plan
Announcement on the SSE website, Shanghai Securities News, Securities Times on
Repurchase and Cancellation of August 25, 2021
Some Equity Incentive Restricted
Shares
Announcement on Capital SSE website, Shanghai Securities News, Securities Times on
Reduction on the Repurchase and August 25, 2021
Cancellation of Some Restricted
Shares
Announcement on the SSE website, Shanghai Securities News, Securities Times on
Implementation of the November 16, 2021
Repurchase and Cancellation of
Equity Incentive Restricted
Shares
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(II) Incentives not disclosed in the interim announcement or with subsequent progress
Equity incentives
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
Employee stock ownership plans
"□ Applicable" "√ Not applicable"
Other incentives
"□ Applicable" "√ Not applicable"
(III) Equity incentives granted to directors and senior management during the reporting period
"□ Applicable" "√ Not applicable"
(IV) Evaluation mechanism for senior management and 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 with its 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 System, the External
Guarantee Decision-making Management System, the Related-party Transaction Management System,
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 improved the internal
control system and related processes, regulated the implementation of the internal control system,
strengthened the supervision and inspection of internal control, and promoted the healthy and sustainable
development of the Company.
Material deficiencies in internal control during the reporting period
"□ Applicable" "√ Not applicable"
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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,
whereby the Group HQ should be responsible for its finance, asset operation and overall strategic
planning and all subsidiaries should develop their strategic planning based on the Group'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 (Tian Jian Audit
[2022] No.2911), in which opinion the Company had maintained effective internal control over financial
reporting in all material aspects as of December 31, 2021 pursuant to the Basic Rules for Internal
Control and other applicable provisions.
Whether to disclose the internal control audit report: Yes
Type of opinion therein: standard unqualified opinion
XV. Correction of Problems Identified in the Listed Company's Special Campaign for
Self-inspection
The Company completed the special campaign for self-inspection as of April 30, 2021, with no
correction required.
XVI. Others
"□ Applicable" "√ Not applicable"
Section V Environmental and Social Responsibility
I. Environmental Information
(I) 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"
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(II) Explanation on environmental issues of the Company not included in the list of primary
pollutant discharge entities
"√ Applicable" "□ Not applicable"
1. Administrative punishment for environmental issues
"□ Applicable" "√ Not applicable"
2. Other environmental information disclosed by referencing to major dischargers of pollutant
"√ Applicable" "□ Not applicable"
During the reporting period, the Company responded actively to the goals of carbon peaking and carbon
neutrality by continuously advancing low-carbon environmental protection and green manufacturing
measures, including technological innovation, purchasing high-efficiency and low-energy-consumption
emulsification equipment, recycling process jacket hot water, adopting high-efficiency MBR membranes
in existing sewage treatment stations of up to the class A discharge standard to achieve low energy
consumption, low pollution, low emissions, realizing outstanding operating results of the Company and
effective environmental protection.
1. For the macro management of solid wastes, the Company's factories can track the whole process
data on solid wastes and prevent risks by requesting to report every year on hazardous waste
generated on the national management information system platform for solid wastes and chemicals,
selecting hazardous waste treating agencies through open bidding on the platform and requesting for
the treatment of hazardous wastes on the platform.
2. Huzhou Factory continuously gave reasonable suggestions for energy conservation and emission
reduction, and practiced its pursuit as a resource-saving and environment-friendly green factory.
3. Reason for other environmental information undisclosed
"□ Applicable" "√ Not applicable"
(III) The Company's performance in helping protect the environment, prevent pollution and fulfill
environmental responsibilities
"√ Applicable" "□ Not applicable"
During the reporting period, the Company reasonably managed its limited space and purchased special
safety facilities and emergency rescue equipment to ensure emergency rescue materials available in
limited space. Based on the actual conditions, the Company introduced an on-site online monitoring
system connected to the government's video monitoring platform and incorporate intelligent
management. Huzhou Production Base continuously offered safety training for employees. The factory's
employees can learn about work safety-related laws and regulations, understand accident prevention and
emergency response measures, and meet the strict requirements for full participation, full training and
full certification. The Company has implemented a new dual-control system controlling safety risk
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classification and hidden danger investigation and management, by organizing all employees to identify
hazard sources, making a list of safety risks, and developing relevant safety protection measures to
eliminate all potential risks.
(IV) Measures taken to reduce carbon emissions during the reporting period and their effects
"√ Applicable" "□ Not applicable"
For details, see the Proya ESG Report 2021. disclosed by the Company on the SSE website
(www.sse.com.cn) disclosed on the same day.
II. Social Responsibility
"√ Applicable" "□ Not applicable"
For details, see the Proya ESG Report 2021. disclosed by the Company on the SSE website
(www.sse.com.cn) disclosed on the same day.
III. Poverty Alleviation and Rural Revitalization Progress
"√ Applicable" "□ Not applicable"
For details, see the Proya ESG Report 2021.disclosed by the Company on the SSE website
(www.sse.com.cn) disclosed on the same day.
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Section VI Significant Issues
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"
Having The next
Cause for
timely step in the
Any time any
Commitment Commitment Date and and event of
Background Promisor line for failure to
Type Description duration strictly failure to
performance perform
performed perform
in time
or not in time
Restrictions The couple Hou (1) Within 36 months from the date of the Date: Yes Yes Not Not
on sales Juncheng and Company's IPO, Hou Juncheng and Fang November applicable applicable
Fang Aiqin, Aiqin shall not to transfer or authorize 15, 2017
controlling any other to manage their shares in the Duration:
shareholders Company or have the Company November
IPO-related and actual repurchase such shares. (2) If the closing 15, 2017 to
commitments controllers price of the Company's shares is lower November
than the offering price for 20 consecutive 14, 2020
trading days within 6 months after the
Company's IPO, or the closing price as of
the end of the six-month period after the
Company's IPO, the lock-up period for
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their shares in the Company will be
automatically extended for 6 months. (3)
If their shares in the Company are
reduced within two years upon expiration
of the lock-up period, the sales price shall
not be lower than the offering price. (4)
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 Director, CEO (1) Within 36 months from the date of the Date: Yes Yes Not Not
on sales Fang Yuyou Company's IPO, Hou Juncheng and Fang November applicable applicable
Aiqin shall not to transfer or authorize 15, 2017
any other to manage their shares in the Duration:
Company or have the Company November
repurchase such shares. (2) If the closing 15, 2017 to
price of the Company's shares is lower November
than the offering price for 20 consecutive 14, 2020
trading days within 6 months after the
Company's IPO, or the closing price as of
the end of the six-month period after the
Company's IPO, the lock-up period for
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their shares in the Company will be
automatically extended for 6 months. (3)
If their shares in the Company are
reduced within two years upon expiration
of the lock-up period, the sales price shall
not be lower than the offering price. (4)
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 12 natural (1) Within 36 months from the date of the Date: Yes Yes Not Not
on sales person Company's IPO, Hou Juncheng and Fang November applicable applicable
shareholders Aiqin shall not to transfer or authorize 15, 2017
including Li any other to manage their shares in the Duration:
Xiaolin, Xu Company or have the Company November
Junqing, Fang repurchase such shares. (2) If the closing 15, 2017 to
Aifen, Ye price of the Company's shares is lower November
Caifu, Li than the offering price for 20 consecutive 14, 2020
Jianqing, Chen trading days within 6 months after the
Dongfang, Li Company's IPO, or the closing price as of
Wenqing, Xu the end of the six-month period after the
Dongkui, Bao Company's IPO, the lock-up period for
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Qingfang, Fang their shares in the Company will be
Jiaqin, Fang automatically extended for 6 months. (3)
Shanming and If their shares in the Company are
Ye Hong reduced within two years upon expiration
of the lock-up period, the sales price shall
not be lower than the offering price. (4)
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 Directors, (1) During their terms as the Company's Date: No Yes Not Not
on sales senior director/senior management, they shall November applicable applicable
management not transfer more than 25% of their total 15, 2017
Hou Juncheng, shares directly or indirectly held in the Duration:
Fang Yuyou Company each year. Within six months November
and Cao after leaving office, they shall not transfer 15, 2017 to
Liangguo their shares directly or indirectly held in long-term
the Company. (2) If their shares in the
Company are sold within two years upon
expiration of the lock-up period, the sales
price shall not be lower than the offering
price. If the closing price of the
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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.
(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 date of the Date: No Yes Not Not
on sales management Company's IPO, they shall not transfer or November applicable applicable
Zhang Yefeng, authorize any other to manage their shares 15, 2017
Zhang Minhua directly or indirectly held in the Company Duration:
or have the Company repurchase such November
shares. (2) During their terms as the 15, 2017 to
Company's senior management, they shall long-term
not transfer more than 25% of their total
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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 sales
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/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
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for 6 months.
Restrictions Senior (1) Within 12 months from the date of the Date: April No Yes Not Not
on sales management Jin Company's IPO, they shall not transfer or 16, 2018 applicable applicable
Yanhua authorize any other to manage their shares Duration:
directly or indirectly held in the Company April 16,
or have the Company repurchase such 2018 to
shares. (2) During their terms as the long-term
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 two years upon
expiration of the lock-up period, the sales
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
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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/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 date of the Date: No Yes Not Not
on sales management Company's IPO, they shall not transfer or September applicable applicable
Wang Li authorize any other to manage their shares 03, 2018
directly or indirectly held in the Company Duration:
or have the Company repurchase such September
shares. (2) During their terms as the 03, 2018 to
Company's senior management, they shall long-term
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
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expiration of the lock-up period, the sales
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/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 Controlling (1) Within 24 months upon expiration of Date: No Yes Not Not
on sales shareholders the lock-up period, they shall not directly November applicable applicable
and actual or indirectly reduce their shares in the 15, 2017
controllers Hou Issuer by more than 6% of the total Duration:
Juncheng and number of shares of the Issuer before such November
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Fang Aiqin IPO. (2) They must sell shares in the 15, 2017 to
Company through methods including but long-term
not limited to collective trading through
bidding 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 his or her 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 media designated by the
CSRC and publicly apologize to the
Company's shareholders and public
investors.
Restrictions Shareholders (1) If they intend to reduce shares after Date: No Yes Not Not
on sales Fang Yuyou the lock-up period expires, they will November applicable applicable
and Li Xiaolin prudently make a share reduction plan as 15, 2017
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directly holding necessary for the Company to stabilize Duration:
more than 5% the share price and conduct operations November
shares in the and capital operations as required by the 15, 2017 to
Company CSRC and the exchange on shareholders long-term
for share reduction, whereby to reduce
shares gradually upon expiration of the
lock-up period. (2) They must sell shares
in the Company through methods
including but not limited to collective
trading through bidding 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 media designated by the
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CSRC and publicly apologize to the
Company's shareholders and public
investors.
Others The Company When the preconditions for enabling the Date: No Yes Not Not
share price stabilization plan are met, if November applicable applicable
the Company fails to take specific 15, 2017
measures to stabilize the share price, the Duration:
Company must explain the cause for November
failing to do so in the Company's General 15, 2017 to
Meeting of Shareholders and media long-term
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 the regulators; if 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 consideration, so as to protect the
interests of the Company's investors as
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much as possible. Within three years from
the date of the Company's IPO, if the
Company 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.
Others The Company's When the preconditions for enabling the Date: No Yes Not Not
controlling share price stabilization plan are met, if November applicable applicable
shareholders failing to take specific measures to 15, 2017
and actual stabilize the share price, they must Duration:
controllers explain the cause for failing to do so at November
the Issuer's General Meeting of 15, 2017 to
Shareholders and the media designated by long-term
the CSRC and publicly apologize to the
Issuer's shareholders and public investors.
Where no such commitment is made, they
will not receive shareholder dividends
from the Issuer within 5 working days
from the date of the said incident, and
they will not be able to transfer his or her
shares until they has taken and carried out
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measures to stabilize the share price as
per the said plan.
Others The Company's When the preconditions for enabling the Date: No Yes Not Not
directors share price stabilization plan are met, if November applicable applicable
(excluding failing to take specific measures to 15, 2017
independent stabilize the share price as per the plan to Duration:
directors) and stabilize the share price, they must November
senior explain the cause for failing to do so at 15, 2017 to
management the Issuer's General Meeting of long-term
Shareholders and the media designated by
the CSRC and publicly apologize to the
Issuer's shareholders and public investors.
Where no such commitment is made, they
will not receive remuneration and
shareholder dividends (if any) from the
Issuer within 5 working days from the
date of the said incident, and they will not
be able to transfer his or her shares until
they has taken and carried out measures to
stabilize the share price as per the said
plan.
Others The Company If the Company's prospectus contains Date: No Yes Not Not
false records, misleading statements or November applicable applicable
major omissions, which causes investors 15, 2017
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to suffer losses in securities transactions, Duration:
the Company will compensate investors November
for such losses by law. After such illegal 15, 2017 to
facts are identified by the CSRC or the long-term
stock exchange or the judicial authorities
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 simplifying procedures,
actively negotiating, compensating in
advance, and effectively protecting the
interests of investors, 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
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Shareholders and the media designated by
the CSRC and compensate investors for
actual losses identified by the CSRC and
the judicial authorities.
Others The Issuer's If the Issuer's prospectus contains false Date: No Yes Not Not
controlling records, misleading statements or major November applicable applicable
shareholders omissions, which causes investors to 15, 2017
and actual suffer losses in securities transactions, Duration:
controllers they will compensate investors for such November
losses by law. After such illegal facts are 15, 2017 to
identified by the CSRC or the stock long-term
exchange or the judicial authorities 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
simplifying procedures, actively
negotiating, compensating in advance,
and effectively protecting the interests of
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investors, 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 designated by the CSRC and will
not receive shareholder dividends from
the Issuer within 5 working days from the
date of the said commitments, and their
shares in the Issuer will not be transferred
until they have taken and carried out
compensation measures as per the said
commitments.
Directors, If the Issuer's prospectus contains false Date: No Yes Not Not
supervisors and records, misleading statements or major November applicable applicable
senior omissions, which causes investors to 15, 2017
management suffer losses in securities transactions, Duration:
they will compensate investors for such November
losses by law. After such illegal facts are 15, 2017 to
identified by the CSRC or the stock long-term
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exchange or the judicial authorities 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
simplifying procedures, actively
negotiating, compensating in advance,
and effectively protecting the interests of
investors, 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)
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and shareholder dividends (if any) from
the Issuer within 5 working days from the
date of the said commitments, and their
shares in the Issuer will not be transferred
until they have taken and carried out
compensation measures as per the said
commitments.
Others The Company In order to ensure the effective use of the Date: No Yes Not Not
proceeds from the IPO, effectively November applicable applicable
prevent the risk of diluting immediate 15, 2017
returns and improve future returns, the Duration:
Company intends to take measures November
including tightening operation 15, 2017 to
management and internal control, long-term
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
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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 approval by the Company's
General Meeting of Shareholders.
Others Controlling In order to ensure that the Company's Date: No Yes Not Not
shareholders measures to fill the diluted immediate November applicable applicable
and actual returns can be effectively performed, 15, 2017
controllers Hou they, as the Company's controlling Duration:
Juncheng and shareholder and actual controller, November
Fang Aiqin promises that: (1) Under no 15, 2017 to
circumstances will they abuse the position long-term
as the controlling shareholder and actual
controller by ultra vires interfering with
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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 such
commitments, if the Company's relevant
provisions and his or her 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 to
the requirements of the CSRC and
Shanghai Stock Exchange; (3) they will
fully, completely and timely perform the
Company's measures regarding filling the
diluted immediate returns and his or her
commitments regarding the measures to
fill the diluted immediate returns. If found
to have violated such commitments,
which causes losses to the Company or
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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.
Others Directors, In order to ensure that the Company's Date: No Yes Not Not
senior measures to fill the diluted immediate November applicable applicable
management returns can be effectively performed, 15, 2017
they, as the Company's director and Duration:
senior management, promise that: (1) they November
will not offer benefits to other entities or 15, 2017 to
individuals for free or on unfair terms, or long-term
otherwise harm the Company's interests;
(2) they will strictly follow the
Company's budget management by
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limiting his or her duty consumption to
the extent required, subject to the
Company's supervision, free from wastes
or excessive consumption; (3) they will
not use the Company's assets to engage in
investment and consumption activities
unrelated to his or her duties; (4) they will
actively promote the Company to
improve the compensation system, so as
to be more in line with the requirements
for filling the diluted immediate returns;
support the Company's Board of Directors
or Remuneration Committee linking the
implementation of the Company's
measures to fill the diluted immediate
returns in developing, revising and
supplementing the Company's
compensation system; 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) After the CSRC and Shanghai
Stock Exchange otherwise release the
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opinions and implementation rules on the
measures to fill the diluted spot returns
and their commitments, if the Company's
relevant provisions and his or her
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 to
the requirements of the CSRC and
Shanghai Stock Exchange; (6) they will
fully, completely and timely perform the
Company's measures regarding filling the
diluted immediate returns and his or her
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)
explain 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
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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
Issuer's future profits.
Avoiding Controlling 1. I do not and will not directly or Date: No Yes Not Not
horizontal shareholders indirectly engage in any activities November applicable applicable
competition and actual constituting horizontal competition with 15, 2017
controllers Hou the existing and future businesses of the Duration:
Juncheng and Company and its holding subsidiaries, November
Fang Aiqin including but not limited to the R&D, 15, 2017 to
production and sale of any products same long-term
as or similar to those of the Company and
its holding subsidiaries. I shall be liable
for the economic losses caused by
violation of the above commitments to the
Company. 2. For the enterprises under my
control, I will perform my obligations
under such commitments through the
agencies and personnel (including but not
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limited to directors and managers), and I
shall be liable for the economic losses
caused by violation of the above
commitments to the Company. 3. From
the date of signing this letter of
commitment, if the Company further
expands its product and business scope,
the enterprises under my control and I
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. My shareholding companies,
including Hangzhou Huazhuang
Industrial Investment Co., Ltd. and
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Huzhou Mogan Wangshu Cosmetics
Industry Phase I Venture Capital
Partnership (Limited Partnership), and
companies that they invest in engage in
no cosmetics business or upstream and
downstream business thereof. If they
engage in such businesses in the future, I
commit that I will withdraw my
investment in them 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 such enterprises.
Others Controlling In order to implement the Company's Date: April No Yes Not Not
shareholders recovery measures against dilution on 21, 2021 applicable applicable
and actual immediate return, I commit that: 1. I will Duration:
controllers Hou not interfere with the Company's April 21,
Commitments
Juncheng and operation and management activities 2021 to
on
Fang Aiqin beyond my authority or encroach on the long-term
refinancing
Company's interests; 2. From the date of
making these commitments to the
completion of the implementation of this
public offering by the Company of
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Annual Report 2021
A-share convertible corporate bonds, to
the extent the CSRC makes new
regulatory provisions concerning the
recovery measures against dilution on
immediate return and their commitments,
rendering the above commitments
non-conforming to the provisions, I will
make supplementary commitments in
accordance with the latest provisions of
the CSRC at that time; 3. I will fulfill the
Company's relevant recovery measures
against dilution on immediate return and
any of my commitments in this regard, or,
I shall be liable for the losses caused by
violation of the said commitments to the
Company and its investors. As one of the
parties responsible for the recovery
measures, should I violate or refuse to
fulfill the above commitments, I shall be
subject to the punishment or relevant
regulatory measures imposed on me by
the securities regulatory authorities such
as the CSRC and the SSE in accordance
with the relevant regulations and rules.
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Others Directors, In order to implement the Company's Date: April No Yes Not Not
senior recovery measures against dilution on 21, 2021 applicable applicable
management immediate return, I commit that: 1. I will Duration:
not transfer interests to other entities or April 21,
individuals free of charge or on unfair 2021 to
conditions, or otherwise damage the long-term
Company's interests; 2. I will restrict my
post-related consumption behavior; 3. I
will not use the Company's assets to
engage in investment and consumption
activities irrelevant to my performance of
duties; 4. The remuneration system
formulated by the Board of Directors or
the Remuneration and Appraisal
Committee will be linked to the
implementation of the Company's
recovery measures on return; 5. In case of
implementation of any equity incentive
by the Company in the future, the
exercise conditions of the Company's
equity incentive to be announced will be
linked to the implementation of the
Company's recovery measures on return;
6. From the date of making these
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commitments to the completion of the
implementation of this public offering by
the Company of A-share convertible
corporate bonds, should the CSRC make
new regulatory provisions concerning the
recovery measures against dilution on
immediate return and their commitments,
rendering the above commitments
non-conforming to the provisions, I will
make supplementary commitments in
accordance with the latest provisions of
the CSRC at that time. As one of the
parties responsible for the recovery
measures, should I violate or refuse to
fulfill the above commitments, I shall be
subject to the punishment or relevant
regulatory measures imposed on me by
the securities regulatory authorities such
as the CSRC and the SSE in accordance
with the relevant regulations and rules.
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(II) Where the Company has profit forecasts on assets or projects, and the Reporting Period was
within the term of profit forecasts, the Company has to state whether such profit forecasts
on assets or projects are fulfilled and the reasons thereof
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"
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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"
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IV. Explanation of the Company's Board of Directors on the "Non-Standard Opinions Audit
Report" from the Accounting Firm
"□ Applicable" "√ Not applicable"
V. Analysis and Explanation from the Company on the Reasons and Impact of the Change of
Accounting Policies, Accounting Estimates or Correction on Significant Accounting Errors
(I) Analysis and explanation from the Company on the reasons and impact of the change of
accounting policies or accounting estimates
"√ Applicable" "□ Not applicable"
Refer to "44. Changes in significant accounting policies and accounting estimates" in "V. Significant
accounting policies and accounting estimates" of "Section X Financial Report".
(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) Other description
"□ Applicable" "√ Not applicable"
VI. Appointment and Dismissal of the Accounting Firm
Unit: Yuan Currency: RMB
Current accounting firm
Name of domestic accounting firm Pan-China Certified Public Accountants (Special
General Partnership)
Remuneration of domestic accounting firm 1,200,000
Term of office of domestic accounting firm 11
Name Remuneration
Internal control audit accounting Pan-China Certified Public Accountants 200,000
firm (Special General Partnership)
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Explanation on appointment and dismissal of the accounting firm
"□ Applicable" "√ Not applicable"
Explanation on the change of accounting firm during the auditing period
"□ Applicable" "√ Not applicable"
VII. Particulars on Risk of Delisting
(I) Reasons for the delisting risk warning
"□ Applicable" "√ Not applicable"
(II) Measures to be taken by the Company
"□ Applicable" "√ Not applicable"
(III) Situation and causes for termination of listing
"□ Applicable" "√ Not applicable"
VIII. Issues Related to Bankruptcy and Reorganization
"□ Applicable" "√ Not applicable"
IX. Material Litigations and Arbitrations
"□ The Company had material litigations and arbitrations during the current year"
"√ The Company had no material litigations and arbitrations during the current year"
X. Suspected Violations, Penalties and Rectifications of the Listed Company and Its Directors,
Supervisors, Senior Executives, Controlling Shareholders and De Facto Controllers
"□ Applicable" "√ Not applicable"
XI. Integrity of the Company and its Controlling Shareholders and De Facto Controllers during
the Reporting Period
"√ Applicable" "□ Not applicable"
During the Reporting Period, the Company and its controlling shareholders and de facto controllers were
in good faith.
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XII. Significant Related Transactions
(I) Related-party transactions pertaining to daily operation
1. Issues that have been disclosed in the interim announcement without progress or change in
the follow-up implementation
"□ Applicable" "√ Not applicable"
2. Issues that have been disclosed in the interim announcement with progress or changes in the
follow-up implementation
"√ Applicable" "□ Not applicable"
The 19th meeting of the second session of Board of Directors and the 2020 annual general meeting of
shareholders were held by the Company on April 21, 2021 and May 13, 2021 respectively, at which the
Proposal on the Estimated Amount of Daily Related-party Transactions in 2021 was reviewed and
approved. For details, please refer to the Announcement on the Estimated Amount of Daily Related-party
Transactions in 2021 (Announcement No.: 2021-018) disclosed on the website of the SSE
(www.sse.com.cn) on April 23, 2021. In 2021, the daily related-party transactions of the Company were
basically the same as the amount estimated at the beginning of the year.
The estimated and actual amounts of the Company's daily related-party transactions in 2021 were as
follows:
Category of
related-party Related party Estimated amount in 2021 Actual amount in 2021
transactions
Deposits in
Zhejiang Yueqing Rural No more than
bank accounts
Commercial Bank Co., RMB150 million for daily RMB146,453,300
opened with the
Ltd. amount
related party
Huzhou Beauty Town
Related-party
Technology Incubation RMB800,000 RMB871,500
lease
Park Co., Ltd.
Note: The "actual amount in 2021" of Zhejiang Yueqing Rural Commercial Bank Co., Ltd. represents
the balance in the accounts as of December 31, 2021. In 2021, the Company obtained deposit interest of
RMB6,384,900 from Zhejiang Yueqing Rural Commercial Bank Co., Ltd.
3. Issues not disclosed in the interim announcement
"□ Applicable" "√ Not applicable"
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Annual Report 2021
(II) Related transactions arising from acquisition and disposal of assets or equity
1. Issues that have been disclosed in the interim announcement without progress or change in
the follow-up implementation
"□ Applicable" "√ Not applicable"
2. Issues that have been disclosed in the interim announcement with progress or changes in the
follow-up implementation
"□ Applicable" "√ Not applicable"
3. Issues not disclosed in the temporary announcement
"□ Applicable" "√ Not applicable"
4. Performance achievements ought to be disclosed during the Reporting Period when involved
with agreed-upon performance
"□ Applicable" "√ Not applicable"
(III) Significant related transactions pertaining to joint external investment
1. Issues that have been disclosed in the interim announcement without progress or change in
the follow-up implementation
"□ Applicable" "√ Not applicable"
2. Issues that have been disclosed in the interim announcement with progress or changes in the
follow-up implementation
"□ Applicable" "√ Not applicable"
3. Issues not disclosed in the temporary 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"
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2. Issues that have been disclosed in the interim announcement with progress or changes in the
follow-up implementation
"□ Applicable" "√ Not applicable"
3. Issues not disclosed in the temporary announcement
"□ Applicable" "√ Not applicable"
(V) Financial business between the Company and the related financial companies, holding
financial companies and related parties
"□ Applicable" "√ Not applicable"
(VI) Others
"□ Applicable" "√ Not applicable"
XIII. Significant Contracts and Performances Thereof
(I) Trusteeship, contracting and leasing matters
1. Trusteeship
"□ Applicable" "√ Not applicable"
2. Contracting
"□ Applicable" "√ Not applicable"
3. Leasing
"□ Applicable" "√ Not applicable"
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(II) Guarantee Situation
"√ Applicable" "□ Not applicable"
Unit: In RMB10,000 RMB
External guarantees of the Company (excluding guarantees for subsidiaries)
Relationship
between the Date of Has the Overdue
Amount Is the Related-party
guarantor Guaranteed guarantee Guarantee Guarantee Type of Collateral guarantee amount Counter Related
Guarantor of guarantee guarantee or
and the party (date of start date due date guarantee (if any) been under guarantee relationship
guarantee overdue not
listed agreement) fulfilled guarantee
company
Total amount of guarantees during the Reporting Period (excluding 0
guarantees for subsidiaries)
Total balance of guarantees at the end of the Reporting Period (A) 0
(excluding guarantee for subsidiaries)
Guarantees of the Company and its subsidiaries for its subsidiaries
Total amount of guarantees for subsidiaries during the Reporting Period 9,900
Total balance of guarantees for subsidiaries at the end of the Reporting 0
Period (B)
Total amount of the Company's guarantees (including guarantees for subsidiaries)
Total amount of guarantees (A + B) 0
Proportion of total amount of guarantees to the Company's net assets (%) 0
Including:
Amount of guarantees provided for shareholders, de facto controllers and 0
their related parties (C)
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Amount of debt-related guarantees provided directly or indirectly for the 0
guaranteed parties with asset-liability ratio exceeding 70% (D)
Amount of total guarantees exceeding 50% of net assets (E) 0
Total amount of guarantees in the above three items (C + D + E) 0
Explanation on possible joint and several liabilities for repayment under No
ongoing guarantees
Explanation on guarantees No
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(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
"√ Applicable" "□ Not applicable"
In RMB10,000
Overdue uncollected
Type Source of fund Amount incurred Undue balance
amount
Bank wealth Self-owned 3,000 0 0
management capital
products
Others
"□ Applicable" "√ Not applicable"
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(2) Individual entrusted wealth management
"√ Applicable" "□ Not applicable"
In RMB10,000
Whether Whether there Amount of
Type of Amount of Beginning date Termination date Method to it has will be an impairment
Annual Expected
entrusted entrusted of entrusted of entrusted Source of Usage of determine Actual Actual gone entrusted provisions
Trustee rate of return
wealth wealth wealth wealth fund fund return return or loss recovery through a wealth (if any)
return (if any)
management management management management method legal management
procedure plan in future
Bank of Price structure 3,000 July 20, 2018 November 01, Self-owned 1.80%-3.3 204.891781 Recovered Yes No
Communicat (principal 2021 capital 0%
ions guaranteed
Yunhe with floating
Sub-branch returns)
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Annual Report 2021
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"
(3) Impairment provisions of entrusted loans
"□ Applicable" "√ Not applicable"
3. Others
"□ Applicable" "√ Not applicable"
(IV) Other material contracts
"□ Applicable" "√ Not applicable"
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XIV. Explanation on Other Significant Issues that Have A Major Impact on Investors' Value
Judgments and Investment Decisions
"□ Applicable" "√ Not applicable"
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Section VII Changes in Shares and Shareholders
I. Changes in Share Capital
(I) Table of changes in shares
1. Table of changes in shares
Unit: 0'000 shares
Before this change Increase or decrease (+ or -) due to this change After this change
Shares
Percentage Issuance of Bonus Percentage
Number converted from Others Subtotal Number
(%) new shares shares (%)
capital reserve
I. Restricted shares 74.7425 0.3716 -40.0224 -40.0224 34.7201 0.1727
1. Shares held by the state
2. Shares held by
state-owned legal persons
3. Shares held by other -40.0224 -40.0224 34.7201 0.1727
74.7425 0.3716
domestic funds
Including: Shares held by
domestic non-state-owned
legal persons
Shares held by domestic -40.0224 -40.0224 34.7201 0.1727
74.7425 0.3716
natural persons
4. Shares held by foreign
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funds
Including: Shares held by
foreign legal persons
Shares held by foreign
natural persons
II. Unrestricted circulating 29.3265 20,066.2765 99.8273
20,036.9500 99.6284 29.3265
shares
1. Ordinary RMB Shares 20,036.9500 99.6284 29.3265 29.3265 20,066.2765 99.8273
2. Foreign-funded shares
listed domestically
3. Foreign-funded shares
listed overseas
4. Others
III. Total shares 20,111.6925 100.00 -10.6959 -10.6959 20,100.9966 100.00
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2. Explanation on changes in shares
"√ Applicable" "□ Not applicable"
On January 5, 2021, the Company held the 18th meeting of the second session of Board of Directors and
the 17th meeting of the second session of Board of Supervisors, reviewing and approving the Proposal
on the Satisfaction of Conditions for Releasing the Sales Restrictions for the Second Release Period of
the Restricted Shares Granted for the First Time and Reserved Grant under the 2018 Restricted Share
Incentive Plan, and agreeing to handle the release procedures for the incentive objects who meet the
conditions for releasing the sales restrictions. A total of 293,265 restricted shares were released from the
sales restrictions, which were allowed to be listed and circulated on January 14, 2021. The number of the
unrestricted circulating shares of the Company increased from 200,369,500 before the listing to
200,662,765, while the number of the restricted circulating shares decreased from 747,425 before the
listing to 454,160.
On November 18, 2021, the Company received the Securities Change Registration Certificate issued by
CSDC Shanghai Branch, and completed the repurchase and cancellation of 106,959 restricted shares
which have been granted but have not been released from the sales restrictions of the incentive objects
who are not eligible for the incentive conditions. The total number of shares of the Company was
reduced from 201,116,925 before the repurchase to 201,009,966, including 200,662,765 unrestricted
circulating shares and 347,201 restricted circulating shares.
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"
None.
4. Other content that the Company deems necessary and the securities regulatory authorities
require disclosing
"□ Applicable" "√ Not applicable"
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(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 sales
shareholder released increased the sales
beginning of the end of restrictions
during the during the restrictions
the year the year
current year current year
Jin Yanhua 68,810 29,490 0 39,320 The grant for -
the first time
under 2018
Restricted
Stock
Incentive
Plan
Zhang 34,020 14,580 0 19,440 The grant for -
Yefeng the first time
under 2018
Restricted
Stock
Incentive
Plan
Wang Li 41,230 17,670 -1,178 22,382 The grant for -
the first time
under 2018
Restricted
Stock
Incentive
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Annual Report 2021
Plan
25 persons 461,645 172,685 -69,021 219,939 The grant for -
granted for the first time
the first under 2018
time under Restricted
2018 Stock
Restricted Incentive
Stock Plan
Incentive
Plan
10 persons 141,720 58,840 -36,760 46,120 The grant -
granted with reserve
with under 2018
reserve Restricted
under 2018 Stock
Restricted Incentive
Stock Plan
Incentive
Plan
Total 747,425 293,265 -106,959 347,201 / /
Note: "Number of restricted shares increased during the current year" was negative due to the repurchase
of restricted shares for equity incentives.
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II. Issuance and Listing of Securities
(I) Issuance of securities in the reporting period
"√ Applicable" "□ Not applicable"
Unit: Share Currency: RMB
Category
of shares Issue
Number of
and their Issue price (or Issue Listing Terminatio
available-for-listing-and-tradi
derivatives date interest quantity date n date
ng shares
type of rate)
securities
Convertible corporate bonds and bonds with warrants
Convertibl Decembe RMB10 7,517,13 Januar 7,517,130 December
e corporate r 8, 2021 0 0 y 4, 7, 2027
bonds 2022
Explanation on issuance of securities in the reporting period (provide separate explanation on the bonds
with different interest rates during their duration):
"√ Applicable" "□ Not applicable"
With the Approval of the China Securities Regulatory Commission, 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 Shanghai Stock Exchange's
Self-Regulatory Supervision Decision Letter [2021] No. 503, the Company's convertible corporate
bonds amounting to RMB751,713,000 would be listed and traded on the Shanghai Stock Exchange from
January 4, 2022, with 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.
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(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
201,116,925 and 201,009,966 respectively.
At the beginning of the reporting period, the Company's total assets and total liabilities amounted to
RMB3,636,882,185.29 and RMB1,155,019,919.16 respectively, with the asset-liability ratio of 31.76%.
At the end of the period of the reporting period, the Company's total assets and total liabilities amounted
to RMB4,633,049,783.03 and RMB1,746,209,355.96 respectively, with the asset-liability ratio of
37.69%.
(III) Existing internal employee shares
"□ Applicable" "√ Not applicable"
III. Shareholder and Beneficial Controller
(I) Total number of shareholders
Total number of shareholders of ordinary shares as at the end of the reporting period 11,722
Total number of shareholders of ordinary shares at the end of last month prior to the 10,570
disclosure date of this annual report
Total number of shareholders of preferred shares whose voting rights have been 0
restored as at end of the reporting period
Total number of shareholders of preferred shares whose voting rights have been 0
restored at the end of last month prior to the disclosure date of the Annual Report
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(II) Table of shareholdings of the top ten shareholders and the top ten shareholders of circulating
shares (or unrestricted shareholders) as at the end of the reporting period
Unit: share
Shareholdings of the top ten shareholders
Change Number of Pledged, marked or
Name of Number of
during the shares held as Percentage frozen Nature of
shareholder restricted
reporting at the end of (%) Share shareholder
(full name) shares held Number
period the period status
Domestic
Hou Juncheng -2,875,685 69,764,815 34.71 0 No natural
person
Hong Kong
Securities
Clearing 30,396,357 47,156,040 23.46 0 No Others
Company
Limited
Domestic
Fang Yuyou -8,471,275 36,347,843 18.08 0 Pledged 6460000 natural
person
Domestic
Cao Liangguo -355,000 3,769,938 1.88 0 No natural
person
Industrial and
Commercial
Bank of China
Limited - GF
Multi-factor
Flexible 2,413,002 2,413,002 1.20 0 No Others
Allocation
Hybrid
Securities
Investment
Fund
Industrial and
Commercial
Bank of China
Limited –
Invesco Great -799,766 1,700,000 0.85 0 No Others
Wall
Emerging
Growth
Hybrid
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Annual Report 2021
Securities
Investment
Fund
Aberdeen
Standard
Investment
Management
(Asia) Co.,
1,699,323 1,699,323 0.85 0 No Others
Ltd. -
Aberdeen
Standard -
China A-share
Equity Fund
China
Construction
Bank Co., Ltd.
- China
Universal
Consumer 1,400,083 1,400,083 0.70 0 No Others
Industry
Hybrid
Securities
Investment
Fund
Domestic
Xu Junqing -4,634,802 1,308,999 0.65 0 No natural
person
China
Construction
Bank Co., Ltd.
- China
Universal
Consumption 1,200,087 1,200,087 0.60 0 No Others
Upgrade
Hybrid
Securities
Investment
Fund
Shareholdings of the top ten unrestricted shareholders
Number of Type and number of shares
unrestricted
Name of shareholder
circulating shares Type Number
held
Hou Juncheng 69,764,815 RMB ordinary shares 69,764,815
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Annual Report 2021
Hong Kong Securities Clearing Company Limited 47,156,040 RMB ordinary shares 47,156,040
Fang Yuyou 36,347,843 RMB ordinary shares 36,347,843
Cao Liangguo 3,769,938 RMB ordinary shares 3,769,938
Industrial and Commercial Bank of China Limited -
GF Multi-factor Flexible Allocation Hybrid Securities 2,413,002 RMB ordinary shares 2,413,002
Investment Fund
Industrial and Commercial Bank of China Limited –
Invesco Great Wall Emerging Growth Hybrid 1,700,000 RMB ordinary shares 1,700,000
Securities Investment Fund
Aberdeen Standard Investment Management (Asia)
Co., Ltd. - Aberdeen Standard - China A-share Equity 1,699,323 RMB ordinary shares 1,699,323
Fund
China Construction Bank Co., Ltd. - China Universal
1,400,083 RMB ordinary shares 1,400,083
Consumer Industry Hybrid Securities Investment Fund
Xu Junqing 1,308,999 RMB ordinary shares 1,308,999
China Construction Bank Co., Ltd. - China Universal
Consumption Upgrade Hybrid Securities Investment 1,200,087 RMB ordinary shares 1,200,087
Fund
Explanation on the special account for repurchase
No
among the top ten shareholders
Explanation on the above-mentioned shareholders'
entrusting voting rights, entrusted voting rights and No
abstention from voting rights
Explanation on the related relationship or parties acting Fang Yuyou is the younger brother of Hou Juncheng's spouse
in concert among the above shareholders Fang Aiqin, so Hou Juncheng and Fang Yuyou are related.
Explanation on the shareholders of preferred shares
No
with voting rights restored and their shareholdings
Shareholdings and sales restrictions of the top ten restricted shareholders
"√ Applicable" "□ Not applicable"
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Annual Report 2021
Available-for-listing-and-trading
conditions of restricted shares
Name of Number of Number of
Sales
Number shareholder of restricted Available-for-l new
restrictions
restricted shares shares isting-and-trad available-for-li
ing time sting-and-tradi
ng shares
1 Equity incentive 347,201 See the
object explanation
below for
details
Explanation on the related No
relationship or parties acting
in concert among the above
shareholders
Note: The restricted shares held by the equity incentive objects are those granted for the first time and
with reserve under the 2018 Restricted Stock Incentive Plan. The restricted period of those granted for
the first time and with reserve was 36 months and 37 months respectively from the completion of their
registration with CSDC Shanghai Branch (September 10, 2018).
(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 De Facto Controllers
(I) Controlling shareholders
1 Legal person
"□ Applicable" "√ Not applicable"
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Annual Report 2021
2 Natural person
"√ Applicable" "□ Not applicable"
Name Hou Juncheng and Fang Aiqin
Nationality China
Acquire residence permits in No
other countries or regions or not
Main job and title Hou Juncheng and Fang Aiqin are husband and wife. Hou
Juncheng serves as the Chairman of the Company, and Fang
Aiqin serves as the Senior Purchasing Consultant of the
Company.
3 Special explanation on the situation that the Company has no controlling shareholders
"□ Applicable" "√ Not applicable"
4 Explanation on 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"
Couple
Hou
Fang Aiqin
Juncheng
34.71%
Proya Cosmetics Co., Ltd.
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Annual Report 2021
(II) De facto controllers
1 Legal person
"□ Applicable" "√ Not applicable"
2 Natural person
"√ Applicable" "□ Not applicable"
Name Hou Juncheng and Fang Aiqin
Nationality China
Acquire residence permits in other countries No
or regions or not
Main job and title Hou Juncheng and Fang Aiqin are husband and wife.
Hou Juncheng serves as the Chairman of the
Company, and Fang Aiqin serves as the Senior
Purchasing Consultant of the Company.
Shareholdings in other domestic or overseas No
listed companies over the past 10 years
3 Special explanation on the situation that the Company has no de facto controllers
"□ Applicable" "√ Not applicable"
4 Explanation on changes in control of the Company during the reporting period
"□ Applicable" "√ Not applicable"
5 Diagram of the ownership and controlling relationship between the Company and its
beneficial controllers
"√ Applicable" "□ Not applicable"
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Annual Report 2021
Couple
Hou
Fang Aiqin
Juncheng
34.71%
Proya Cosmetics Co., Ltd.
6 Control of the Company by beneficial controllers by way of trust or other means of asset
management
"□ Applicable" "√ Not applicable"
(III) Other explanations on controlling shareholders and de facto 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. Explanation on Limitation on Reduction of Shareholding
"□ Applicable" "√ Not applicable"
VIII. Specific Implementation of Share Repurchase during the Reporting Period
"□ Applicable" "√ Not applicable"
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Section VIII Preferred Shares
"□ Applicable" "√ Not applicable"
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Annual Report 2021
Section IX Bonds
I. Enterprise Bonds, Corporate Bonds and Non-Financial Corporate Debt Financing
Instruments
"□ Applicable" "√ Not applicable"
II. Convertible Corporate Bonds
"√ Applicable" "□ Not applicable"
(I) Issuance of convertible bonds
"√ Applicable" "□ Not applicable"
With the Approval of the China Securities Regulatory Commission, 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 Shanghai Stock Exchange's
Self-Regulatory Supervision Decision Letter [2021] No. 503, the Company's convertible corporate
bonds amounting to RMB751,713,000 would be listed and traded on the Shanghai Stock Exchange from
January 4, 2022, with 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.
(II) Holders and guarantors of convertible bonds during the reporting period
"√ Applicable" "□ Not applicable"
Name of convertible corporate bonds Proya of convertible corporate bonds
Holders of convertible corporate bonds as at the end of 647,016
the reporting period
Guarantors of convertible bonds of the Company No
The top ten holders of convertible bonds are as follows:
Number of shares held as
Name of holders of convertible corporate bonds at the end of the period Holding ratio (%)
(RMB)
China Securities Co., Ltd. 7,587,000 1.01
Xu Junqing 6,992,000 0.93
Industrial and Commercial Bank of China Limited – 6,356,000 0.85
Invesco Great Wall Emerging Growth Hybrid
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Annual Report 2021
Securities Investment Fund
Industrial and Commercial Bank of China Limited - GF 6,107,000 0.81
Multi-factor Flexible Allocation Hybrid Securities
Investment Fund
Abu Dhabi Investment Authority (ADIA) 3,730,000 0.50
China Construction Bank Co., Ltd. - E Fund Vision 3,171,000 0.42
Growth Hybrid Securities Investment Fund
Li Xiaolin 2,912,000 0.39
Gao Xiufeng 2,767,000 0.37
Agricultural Bank of China Ltd. - CSI 500 ETF 2,330,000 0.31
Fang Xiao 2,244,000 0.30
(III) Changes in convertible bonds during the reporting period
"□ Applicable" "√ Not applicable"
Cumulative conversion of convertible bonds during the reporting period
"□ Applicable" "√ Not applicable"
(IV) Historical adjustments to the conversion price
"□ Applicable" "√ Not applicable"
(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"
Section X Financial Report
I. Auditor’s Report
"√ Applicable" "□ Not applicable"
Audit Report
Tian Jian Audit [2022] No.2908
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Annual Report 2021
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 at December 31,
2021, 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 2021, 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, 2021 and of its
consolidated and parent company's operating results and cash flows for the year of 2021.
II. Basis of audit opinion
We have conducted our audit in accordance with the Chinese Auditing Standards for Certified Public
Accountants. The "Responsibilities of CPA for the audit of the financial statements" in the audit report
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
Refer to Section X Financial Report, V Significant accounting policies and accounting estimates, 38.
Revenue, VII Notes on Items in Consolidated Financial Statements, 61. Operating income and operating
costs, and XVI. Other Significant Issues, 6. Division information herein for relevant information
disclosure.
The operating revenue of Proya primarily comes from the sale of cosmetics. For 2021, the operating
revenue shown in Proya's financial statements was RMB4,633,150,500.
Pursuant to the sales contract between Proya and its customer, under the distribution mode, Proya
recognizes the sales revenue after its products are delivered to and accepted by the buyers. In the proxy
sales mode, Proya recognizes the sales revenue after its products are delivered to the trustees and the
trustees achieve sales and issue the proxy sales list. In the direct sales mode, Proya recognizes the sales
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Annual Report 2021
revenue after its products are delivered to the consumers and the consumers confirm the receipt and
make the payment.
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) To understand the key internal controls related to the recognition of revenue, we evaluated the
design of these controls, determined whether these controls were implemented, and tested the
operational effectiveness of these controls.
(2) We sent letters to the main customers to confirm the sales volume in 2021 and the balance of
accounts receivable as at the end of 2021;
(3) We tested details and spot-check supporting documents for recognition of revenue (including sales
contract, delivery document, receipt, proxy sales list, and sales invoice) so as to understand major
contract terms or conditions and evaluate the appropriateness of the recognition method for
revenue.
(4) We implemented analysis procedures, including analysis on fluctuation in revenue of each month of
2021 and analysis on revenue from of sales of major customers.
(5) We obtained the rebate and subsidy policy, rebate and subsidy calculation sheet and other
information so as to check whether the withholding amount of rebate and subsidy as at the end of
2021 was sufficient. In addition, we 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 2021. We also checked the settlement after the rebate and subsidy withholding period as at the
end of 2021.
(6) We obtained the return and exchange policy, estimated balance sheet and other information so as to
check whether the estimated future return and exchange rate was reasonable. We checked the return
and exchange situation after the period and compare with the estimated return and exchange data.
(7) We learned about the inventory and stock age of the major dealer as at the end of 2021 so as to
check whether the inventory amount and structure of the dealer were reasonable.
(8) We 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 sales 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) We compared the background transaction data, Alipay receipt data and sales revenue data on
financial accounts of main online chain stores, and analyzed the matching attribute of data, so as to
check the authenticity of sales from the online chain stores.
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Annual Report 2021
(10) Ensure that the information related to operating income has been adequately presented in the
financial statements.
(II) Net realizable value of inventories
1. Description of matters
Refer to Section X Financial Report, V. Significant account policies and accounting estimates, 15.
Inventories and Notes on Items in Consolidated Financial Statements, 9. Inventories herein for relevant
information disclosure.
As at December 31, 2021, the carrying balance of inventories of Proya amounted to RMB475,368,700,
the provision for devaluation of inventories amounted to RMB27,429,900, and the carrying value of
inventories amounted to RMB447,938,800.
At the balance sheet date, inventories were measured at the lower of cost and net realizable value, and
provision for devaluation of inventories was accrued based on the positive difference between a single
inventory's cost and its net realizable value. On the basis of considering the purpose of holding
inventories, the management determines the estimated sales price based on the historical sales price,
actual sales 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) We learned about the 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) We obtained the accrual policy and calculation process for provision for net realizable value of
inventories, and re-checked the calculation process.
(3) We obtained the list of products that are no longer sold, counted the offline products 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) We checked whether the inventories as at the end of the period had long inventory 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) We checked whether the information related to the net realizable value of inventories was properly
presented in the financial statements.
IV. Other information
The management is responsible for other information which comprises all the information covered in the
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Annual Report 2021
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.
Based on our audit to the financial statements, our responsibility is to read the other information. During the
process, we considered whether there was material inconsistency or there was likely material misstatement
between the other information and the financial statements or the information we obtained during the audit.
As we have performed the work on the other information obtained before the date of our auditor's report,
we shall report if we confirmed there was a material misstatement among the other information. We
have nothing needed to be reported on this case.
V. Responsibilities of the management and governance for the financial statements
The management is responsible for the preparation of financial statements in accordance with the
Accounting Standards for Business Enterprises to enable them to be fairly reflected, and to design,
implement and maintain the necessary internal controls so that there is no material misstatement due to
fraud or error in the financial statements.
In the preparation of the financial statements, the management is responsible for assessing Proya's ability
to continue as a going concern, disclosing matters relating to continuous operations (if applicable), and
applying the going concern assumptions 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 CPA 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 the 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 exercised professional judgment and
maintained professional skepticism throughout the audit. We also performed the following works:
(1) We identified and assessed the risks of material misstatement of the financial statements, whether
due to fraud or error; designed and performed audit procedures responsive to those risks; and
obtained 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.
(2) We learned about the internal control related to the audit to design the appropriate audit
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Annual Report 2021
procedures.
(3) We evaluated the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) We drew a conclusion on the appropriateness of the management's use of the going concern basis
of accounting and, based on the audit evidence obtained, determined whether a material
uncertainty exists related to events or conditions that may significantly affect the ability of Proya
to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor's report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause Proya to cease to continue as a going concern.
(5) We evaluated the overall presentation, structure and content of the financial statements, and
determined whether the financial statements reflect the related transactions and events fairly.
(6) We obtained 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 communicated with the governing bodies 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 provided a statement to management on compliance with ethical requirements related to
independence, and communicated 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 had discussed with the governing bodies, we confirmed which matters were most
important to the audit of the financial statements for the current period and thus constituted the key audit
matters. We set out these matters in the auditor's report. Unless the disclosure of these matters are
forbidden by the laws and regulations, or, in rare cases, if it is reasonably expected that the negative
impacts caused by discussing certain matters in the auditor's report would be larger than the benefits for
public interest, we shall not disclose the matters in the auditor's report under such circumstances.
Pan-China Certified Public Accountants LLP Chinese CPA: Yin Zhibin
(Project Partner)
Hangzhou, China Chinese CPA: Wang Xiaokang
April 20, 2022
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II. Financial Statements
Consolidated Balance Sheet
December 31, 2021
Prepared by: Proya Cosmetics Co., Ltd.
Unit: Yuan Currency: RMB
Item Notes December 31, 2021 December 31, 2020
Current assets:
Cash and cash equivalents VII. 1 2,391,048,249.81 1,416,654,640.93
Transaction settlement funds
Lending funds
Trading financial assets
Derivative financial assets
Notes receivable
Accounts receivable VII. 5 138,626,627.90 284,878,419.58
Receivables financing VII. 6 3,242,000.00 5,531,997.32
Prepayment VII. 7 58,406,647.11 82,742,815.92
Premium receivable
Reinsurance premium receivable
Reserves for reinsurance contract
receivable
Other receivables VII. 8 66,043,707.81 48,733,527.35
Including: Interest receivable
Dividend receivable
Financial assets purchased under
agreements to resell
Inventories VII. 9 447,938,758.29 468,641,017.75
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets VII. 13 53,534,962.39 35,235,811.27
Total current assets 3,158,840,953.31 2,342,418,230.12
Non-current assets:
Loans and advances to customers
Debt investment
Other debt investments
Long-term receivables
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Annual Report 2021
Long-term equity investments VII. 17 169,959,536.27 58,220,059.60
Investment in other equity instruments VII. 18 56,402,400.00 20,580,000.00
Other non-current financial assets
Investment real estate VII. 20 70,321,868.00 72,237,610.10
Fixed assets VII. 21 558,981,209.20 565,864,152.62
Construction in progress VII. 22 108,678,896.27 47,324,523.36
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets VII. 26 397,145,124.29 314,643,323.97
Development expenses
Goodwill VII. 28 31,034,161.20
Long-term deferred expenses VII. 29 29,756,474.11 50,576,793.53
Deferred income tax assets VII. 30 38,796,018.02 46,660,550.76
Other non-current assets VII. 31 44,167,303.56 87,322,780.03
Total non-current assets 1,474,208,829.72 1,294,463,955.17
Total assets 4,633,049,783.03 3,636,882,185.29
Current liabilities:
Short-term borrowings VII. 32 200,251,506.85 299,280,435.09
Borrowings from central bank
Placements from banks and other financial
institutions
Trading financial liabilities
Derivative financial liabilities
Notes payable VII. 35 79,156,771.40 64,580,000.00
Accounts payable VII. 36 404,026,241.16 515,832,031.27
Accounts received in advance VII. 37 173,769.85
Contract liabilities VII. 38 91,151,985.32 30,618,778.99
Financial assets sold under repurchase
agreements
Deposits from customers and other banks
Brokerage for trading securities
Brokerage for underwriting securities
Employee benefits payable VII. 39 78,649,049.72 70,828,239.70
Taxes payable VII. 40 99,893,176.97 71,335,290.77
Other payables VII. 41 62,162,153.55 75,546,323.32
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Annual Report 2021
Including: Interest payable
Dividend payable
Fees and commissions payable
Reinsured accounts payable
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities VII. 44 9,521,415.32 1,439,262.02
Total current liabilities 1,024,986,070.14 1,129,460,361.16
Non-current liabilities:
Reserves for insurance contracts
Long-term borrowings
Bonds payable VII. 46 695,586,778.80
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payable
Long-term employee benefits payable
Estimated liabilities VII. 50 10,812,084.88 10,190,099.22
Deferred income VII. 51 6,416,263.33 8,495,353.33
Deferred income tax liabilities VII. 30 8,408,158.81 6,874,105.45
Other non-current liabilities
Total non-current liabilities 721,223,285.82 25,559,558.00
Total liabilities 1,746,209,355.96 1,155,019,919.16
Owners' equity (or shareholders' equity):
Share capital VII. 53 201,009,966.00 201,116,925.00
Other equity instruments VII. 54 50,956,622.11
Including: Preferred shares
Perpetual bonds
Capital reserve VII. 55 834,272,205.66 837,034,836.69
Less: Treasury shares VII. 56 5,628,128.21 12,653,905.25
Other comprehensive income VII. 57 -1,247,674.10 -269,066.13
Special reserve
Surplus reserve VII. 59 100,634,780.00 100,634,780.00
General risk provision
Undistributed profit VII. 60 1,696,978,064.52 1,265,671,865.63
Total equity attributable to the owners of the 2,876,975,835.98 2,391,535,435.94
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parent company
Minority interests 9,864,591.09 90,326,830.19
Total owners' equity (or shareholders' 2,886,840,427.07 2,481,862,266.13
equity)
Total liabilities and owner's equity (or 4,633,049,783.03 3,636,882,185.29
shareholders' equity)
The chairman of the Company: CFO of the Company: Wang Li Head of Accounting Department:
Hou Juncheng Wang Li
Parent Company's Balance Sheet
December 31, 2021
Prepared by: Proya Cosmetics Co., Ltd.
Unit: Yuan Currency: RMB
Item Notes December 31, 2021 December 31, 2020
Current assets:
Cash and cash equivalents 1,691,858,730.42 498,358,108.55
Trading financial assets
Derivative financial assets
Notes receivable
Accounts receivable XVII. 1 354,196,955.99 565,037,411.15
Receivables financing 3,092,000.00
Prepayment 24,580,460.37 9,389,481.27
Other receivables XVII. 2 222,452,930.42 236,585,409.48
Including: Interest receivable
Dividend receivable
Inventories 271,436,146.45 227,126,018.70
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 33,270,945.69 15,543,206.01
Total current assets 2,600,888,169.34 1,552,039,635.16
Non-current assets:
Debt investment
Other debt investments
Long-term receivables
Long-term equity investments XVII. 3 350,003,540.49 347,372,956.06
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Annual Report 2021
Investment in other equity instruments 20,580,000.00 20,580,000.00
Other non-current financial assets
Investment real estate 362,657,495.17 339,018,465.70
Fixed assets 253,209,471.02 291,193,420.67
Construction in progress 105,012,647.89 46,993,562.96
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 395,609,113.72 308,401,627.24
Development expenses
Goodwill
Long-term deferred expenses 20,075,870.93 34,817,495.54
Deferred income tax assets 22,968,793.93 15,889,636.90
Other non-current assets 4,493,322.95 87,545,799.42
Total non-current assets 1,534,610,256.10 1,491,812,964.49
Total assets 4,135,498,425.44 3,043,852,599.65
Current liabilities:
Short-term borrowings 200,251,506.85 200,163,972.59
Trading financial liabilities
Derivative financial liabilities
Notes payable 79,156,771.40 64,580,000.00
Accounts payable 282,934,452.33 403,605,887.84
Accounts received in advance
Contract liabilities 28,108,787.35 10,212,194.96
Employee benefits payable 33,926,736.55 29,624,549.78
Taxes payable 66,893,331.24 34,953,057.88
Other payables 8,546,397.66 24,771,086.23
Including: Interest payable
Dividend payable
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 699,817,983.38 767,910,749.28
Non-current liabilities:
Long-term borrowings
Bonds payable 695,586,778.80
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Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payable
Long-term employee benefits payable
Estimated liabilities
Deferred income 6,416,263.33 8,495,353.33
Deferred income tax liabilities 8,395,198.23 6,283,428.68
Other non-current liabilities
Total non-current liabilities 710,398,240.36 14,778,782.01
Total liabilities 1,410,216,223.74 782,689,531.29
Owners' equity (or shareholders' equity):
Share capital 201,009,966.00 201,116,925.00
Other equity instruments 50,956,622.11
Including: Preferred shares
Perpetual bonds
Capital reserve 834,563,920.32 837,075,425.32
Less: Treasury shares 5,628,128.21 12,653,905.25
Other comprehensive income
Special reserve
Surplus reserve 100,634,780.00 100,634,780.00
Undistributed profit 1,543,745,041.48 1,134,989,843.29
Total owners' equity (or shareholders' 2,725,282,201.70 2,261,163,068.36
equity)
Total liabilities and owner's equity 4,135,498,425.44 3,043,852,599.65
(or shareholders' equity)
The chairman of the Company: CFO of the Company: Wang Li Head of Accounting Department:
Hou Juncheng Wang Li
Consolidated Income Statement
January - December 2021
Unit: Yuan Currency: RMB
Item Notes 2021 2020
I. Total operating income VII. 61 4,633,150,538.43 3,752,386,849.02
Including: Operating revenue VII. 61 4,633,150,538.43 3,752,386,849.02
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Interest income
Premium received
Fee and commission income
II. Total operating costs 3,892,457,794.07 3,160,438,371.03
Including: Operating costs VII. 61 1,554,155,646.61 1,367,561,949.78
Interest expenses
Handling fees and commission expenses
Payment on surrenders
Net compensation expenses
Net provisions drawn for insurance
contract
Policy dividend expenses
Reinsurance expenses
Taxes and surcharges VII. 62 40,680,295.80 32,945,185.99
Sales expenses VII. 63 1,991,534,076.73 1,497,058,943.34
Administrative expenses VII. 64 236,988,519.23 204,279,378.68
R&D expenses VII. 65 76,583,650.83 72,200,028.77
Financial expenses VII. 66 -7,484,395.13 -13,607,115.53
Including: Interest expenses 9,759,260.83 9,190,674.26
Interest income 28,096,157.42 20,740,463.77
Add: Other gains VII. 67 16,458,269.45 13,491,509.72
Income from investment ("-" refers to loss) VII. 68 -7,337,735.84 1,769,391.50
Including: Investment income from -7,337,735.84 -646,615.60
associates and joint ventures
Derecognition of income from
financial assets at amortized cost
Exchange gain ("-" refers to loss)
Net gain on exposure hedging ("-" refers to
loss)
Gain on change in fair value ("-" refers to
loss)
Credit impairment loss ("-" refers to loss) VII. 71 -24,834,947.18 -23,908,722.39
Assets impairment loss ("-" refers to loss) VII. 72 -53,513,590.04 -28,234,605.50
Gain from asset disposal ("-" refers to loss) VII. 73 -112,183.24 854.57
III. Operating profit ("-" refers to loss) 671,352,557.51 555,066,905.89
Add: Non-operating profit VII. 74 249,852.89 1,542,594.25
Less: Non-operating expense VII. 75 3,801,835.06 9,037,929.71
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Annual Report 2021
IV. Total profits ("-" refers to total losses) 667,800,575.34 547,571,570.43
Less: Income tax expenses VII. 76 110,746,888.31 95,962,016.20
V. Net profit ("-" refers to net loss) 557,053,687.03 451,609,554.23
(I) Classified by operation continuity
1. Net profit from continuing activities ("-" 557,053,687.03 451,609,554.23
refers to net loss)
2. Net profit from discontinuing activities ("-"
refers to net loss)
(II) Classified by ownership
1. Net profits attributable to shareholders of 576,119,025.56 476,009,298.41
the parent company ("-" refers to net loss)
2. Profit or loss attributable to minority -19,065,338.53 -24,399,744.18
shareholders ("-" refers to net loss)
VI. Net amount of other comprehensive income -978,607.97 -56,437.91
after tax
(I) Net amount of other comprehensive income -978,607.97 -56,437.91
after tax attributable to owners of the parent
company
1. Other comprehensive income not to be
reclassified into profit or loss
(1) Change in re-measurement of defined benefit
plans
(2) Other comprehensive income that may not be
reclassified to profit or loss under equity method
(3) Change in fair value of other equity
instrument investments
(4) Change in fair value of enterprise's own credit
risk
2. Other comprehensive income to be -978,607.97 -56,437.91
reclassified into profit or loss
(1) Other comprehensive income that may be
reclassified to profit or loss under equity method
(2) Change in 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
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Annual Report 2021
(5) Cash flow hedging reserve
(6) Exchange differences from translation of -978,607.97 -56,437.91
financial statements
(7) Others
(II) Net amount of other comprehensive income
after tax attributable to minority shareholders
VII. Total comprehensive income 556,075,079.06 451,553,116.32
(I) Total comprehensive income attributable to 575,140,417.59 475,952,860.50
owners of the parent company
(II) Total comprehensive income attributable to -19,065,338.53 -24,399,744.18
minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share (Yuan/share) 2.87 2.37
(II) Diluted earnings per share (Yuan/share) 2.81 2.37
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: CFO of the Company: Wang Li Head of Accounting
Hou Juncheng Department: Wang Li
Parent Company's Income Statement
January - December 2021
Unit: Yuan Currency: RMB
Item Notes 2021 2020
I. Revenue XVII. 4 2,273,848,366.50 1,950,969,218.93
Less: Operating cost XVII. 4 1,076,826,259.92 918,617,344.96
Taxes and surcharges 19,398,763.14 17,071,963.70
Sales expenses 284,076,298.04 208,262,239.67
Administrative expenses 200,860,543.73 144,076,974.98
R&D expenses 80,793,699.46 77,218,796.44
Financial expenses -9,534,296.78 -7,606,803.28
Including: Interest expenses 7,909,483.79 5,563,830.24
Interest income 23,839,106.03 19,558,179.32
Add: Other gains 7,273,692.73 9,703,059.04
Income from investment ("-" refers to loss) XVII. 5 -18,567,432.77 1,039,199.20
Including: Investment income from -7,608,313.87 -1,112,228.47
associates and joint ventures
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Annual Report 2021
Derecognition of income from
financial assets at amortized cost
Net gain on exposure hedging ("-" refers to
loss)
Gain on change in fair value ("-" refers to
loss)
Credit impairment loss ("-" refers to loss) 45,090,048.44 -30,085,608.30
Assets impairment loss ("-" refers to loss) -25,486,816.12 -11,111,698.11
Gain from asset disposal ("-" refers to loss) -3,727.50
II. Operating profit ("-" refers to loss) 629,736,591.27 562,869,926.79
Add: Non-operating profit 25,856.69 783,184.91
Less: Non-operating expense 3,739,409.87 8,378,795.22
III. Total profits ("-" refers to total losses) 626,023,038.09 555,274,316.48
Less: Income tax expenses 72,463,653.90 79,828,772.97
IV. Net profit ("-" refers to net loss) 553,559,384.19 475,445,543.51
(I) Net profit from continuing activities ("-" 553,559,384.19 475,445,543.51
refers to net loss)
(II) Net profit from discontinuing activities ("-"
refers to net loss)
V. Net amount of other comprehensive income after
tax
(I) Other comprehensive income not to be
reclassified into profit or loss
1. Change in re-measurement of defined
benefit plans
2. Other comprehensive income that may not
be reclassified to profit or loss under equity
method
3. Change in fair value of investments in other
equity instruments
4. Change in fair value of 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
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Annual Report 2021
2. Change in 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 553,559,384.19 475,445,543.51
VII. Earnings per share:
(I) Basic earnings per share (Yuan/share)
(II) Diluted earnings per share (Yuan/share)
The chairman of the Company: CFO of the Company: Wang Li Head of Accounting Department:
Hou Juncheng Wang Li
Consolidated Cash Flow Statement
January - December 2021
Unit: Yuan Currency: RMB
Item Notes 2021 2020
I. Cash flow from operating activities:
Cash received from sales of goods and rendering 5,130,176,845.31 3,884,361,008.59
of services
Net increase in customer and interbank deposits
Net increase in borrowings from central bank
Net increase in placements from banks and other
financial institutions
Cash received from premiums under original
insurance contract
Net cash received from reinsurance business
Net increase in deposits of policy holders and
investments
Cash received from interest, fees and
commissions
Net increase in borrowings
Net increase in repurchase business capital
159/ 323
Annual Report 2021
Net cash received from securities trading agency
services
Tax rebates 80,005.56 1,344,632.09
Other cash received from operating activities VII. 54,614,521.56 81,739,953.02
78 (1)
Sub-total of cash inflows from operating 5,184,871,372.43 3,967,445,593.70
activities
Cash paid for goods and services 1,616,390,215.85 1,455,030,507.05
Net increase in customer loans and advances
Net increase in deposits with PBOC and
interbank deposits
Cash paid for compensation payments under
original insurance contract
Net increase in funds for lending
Cash paid for interests, handling charges and
commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 441,156,078.19 376,790,463.82
Taxes and fees paid 432,668,333.55 381,109,475.93
Other cash paid for operating activities VII. 1,864,985,801.02 1,422,965,037.76
78 (2)
Sub-total of cash outflows from operating 4,355,200,428.61 3,635,895,484.56
activities
Net cash flow from operating activities 829,670,943.82 331,550,109.14
II. Cash flow from investing activities:
Cash back on investment 213,200,000.00
Cash received from investment 2,266,301.37
Net cash received from disposal of fixed assets, 47,622.98 37,500.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries
and other operating entities
Other cash received from investment activities VII. 66,052,759.40
78 (3)
Sub-total of cash inflows from investing 47,622.98 281,556,560.77
activities
Cash paid for purchase and construction of fixed 194,102,666.70 184,057,255.67
assets, intangible assets and other long-term
160/ 323
Annual Report 2021
assets
Cash paid for investment 70,029,200.00 81,930,000.00
Net increase in pledged loans
Net cash paid for acquiring subsidiaries and other
operating entities
Other cash paid from investment activities VII. 77,739,374.88 1,035,148.02
78 (4)
Sub-total of cash outflows from investing 341,871,241.58 267,022,403.69
activities
Net cash flow from investment activities -341,823,618.60 14,534,157.08
III. Cash flow generated from financing activities:
Proceeds received from financing activities 700,000.00 2,266,300.00
Including: Proceeds received by subsidiaries 700,000.00 2,266,300.00
from minority shareholders' investment
Cash received from borrowings 946,996,018.87 299,000,000.00
Other cash received from financing-related
activities
Sub-total of cash inflows from financing 947,696,018.87 301,266,300.00
activities
Cash paid for debt repayment 299,000,000.00 214,230,868.48
Dividends paid, profit distributed or interest paid 154,245,329.79 127,734,055.29
Including: Dividend and profit paid by
subsidiaries to minority shareholders
Other cash paid for financing-related activities VII. 4,835,393.12 2,684,110.55
78 (6)
Sub-total of cash outflows from financing 458,080,722.91 344,649,034.32
activities
Net cash flow from financing activities 489,615,295.96 -43,382,734.32
IV. Effects of exchange rate fluctuations on cash -978,607.97 56,437.91
and cash equivalents
V. Net increase in cash and cash equivalents 976,484,013.21 302,757,969.81
Add: Cash and cash equivalents at the beginning 1,401,850,754.88 1,099,092,785.07
of the period
VI. Cash and cash equivalents at the end of the 2,378,334,768.09 1,401,850,754.88
period
The chairman of the Company: CFO of the Company: Wang Li Head of Accounting
Hou Juncheng Department: Wang Li
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Annual Report 2021
Parent Company's Cash Flow Statement
January - December 2021
Unit: Yuan Currency: RMB
Item Notes 2021 2020
I. Cash flow from operating activities:
Cash received from sales of goods and rendering 2,675,584,845.60 2,223,396,958.25
of services
Tax rebates
Other cash received from operating activities 58,197,895.33 20,551,684.95
Sub-total of cash inflows from operating 2,733,782,740.93 2,243,948,643.20
activities
Cash paid for goods and services 1,330,189,908.22 922,769,531.45
Cash paid to and on behalf of employees 180,867,131.86 142,663,372.92
Taxes and fees paid 197,049,919.18 226,100,654.30
Other cash paid for operating activities 380,848,687.45 332,949,353.49
Sub-total of cash outflows from operating 2,088,955,646.71 1,624,482,912.16
activities
Net cash flow from operating activities 644,827,094.22 619,465,731.04
II. Cash flow from investing activities:
Cash back on investment 211,750,000.00
Cash received from investment 2,266,301.37
Net cash received from disposal of fixed assets, 5,000.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries
and other operating entities
Other cash received from investment activities 196,608,800.56 1,000,000.00
Sub-total of cash inflows from investing 196,608,800.56 215,021,301.37
activities
Cash paid for purchase and construction of fixed 135,132,853.40 174,825,452.05
assets, intangible assets and other long-term
assets
Cash paid for investment 36,338,783.21 200,190,000.00
Net cash paid for acquiring subsidiaries and
other operating entities
Other cash paid from investment activities 59,230,243.83 219,330,066.00
Sub-total of cash outflows from investing 230,701,880.44 594,345,518.05
162/ 323
Annual Report 2021
activities
Net cash flow from investment activities -34,093,079.88 -379,324,216.68
III. Cash flow generated from financing activities:
Proceeds received from financing activities
Cash received from borrowings 946,996,018.87 200,000,000.00
Other cash received from financing-related
activities
Sub-total of cash inflows from financing 946,996,018.87 200,000,000.00
activities
Cash paid for debt repayment 200,000,000.00 85,130,289.87
Dividends paid, profit distributed or interest paid 152,530,597.10 124,276,855.87
Other cash paid for financing-related activities 4,653,409.91 2,584,110.55
Sub-total of cash outflows from financing 357,184,007.01 211,991,256.29
activities
Net cash flow from financing activities 589,812,011.86 -11,991,256.29
IV. Effects of exchange rate fluctuations on cash
and cash equivalents
V. Net increase in cash and cash equivalents 1,200,546,026.20 228,150,258.07
Add: Cash and cash equivalents at the beginning 484,019,222.50 255,868,964.43
of the period
VI. Cash and cash equivalents at the end of the 1,684,565,248.70 484,019,222.50
period
The chairman of the Company: CFO of the Company: Wang Li Head of Accounting Department:
Hou Juncheng Wang Li
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Annual Report 2021
Consolidated Statements of Changes in Owners' Equity
January - December 2021
Unit: Yuan Currency: RMB
2021
Equity attributable to owners of the parent company
Total equity
Item Minority
attributable to
Paid-up capital Other equity instruments Less: Other General interests
Special Surplus Undistributed owners
(or share Capital reserve Treasury comprehensive risk Others Subtotal
Preferred Perpetual reserve reserve profit
capital) Others shares income provision
shares bonds
I. Balance at the 201,116,925.00 837,034,836.69 12,653,905.25 -269,066.13 100,634,780. 1,265,671,865. 2,391,535,435.9 90,326,830.19 2,481,862,266.13
end of last year 00 63 4
Add: Changes in
accounting
policies
Correction
for previous
errors
Business
combination
under
common
control
Others
II. Balance at the 201,116,925.00 837,034,836.69 12,653,905.25 -269,066.13 100,634,780. 1,265,671,865. 2,391,535,435.9 90,326,830.19 2,481,862,266.13
beginning of the 00 63 4
year
III. Increase and -106,959.00 50,956,622.11 -2,762,631.03 -7,025,777.04 -978,607.97 431,306,198.89 485,440,400.04 -80,462,239.1 404,978,160.94
decrease for the 0
current period
("-" for decrease)
(I) Total -978,607.97 576,119,025.56 575,140,417.59 -19,065,338.5 556,075,079.06
comprehensive 3
income
(II) Owner's -106,959.00 -1,999,494.15 -7,025,777.04 4,919,323.89 700,000.00 5,619,323.89
contribution and
capital reduction
1. Ordinary -106,959.00 -1,626,846.39 -7,025,777.04 5,291,971.65 700,000.00 5,991,971.65
shares
164/ 323
Annual Report 2021
contributed by
the owners
2. Capital
contributions by
other equity
instrument
holders
3. Amount of -372,647.76 -372,647.76 -372,647.76
share-based
payments
credited to
owners' equity
4. Others
(III) Profit -144,804,186.0 -144,804,186.00 -144,804,186.00
distribution 0
1. Withdrawal of
surplus reserve
2. Withdrawal of
general risk
provision
3. Distribution to -144,804,186.0 -144,804,186.00 -144,804,186.00
owners (or 0
shareholders)
4. Others
(IV) Internal
carry-forward of
owners' equity
1. Transfer of
capital reserve to
capital (or share
capital)
2. Transfer of
surplus reserve to
capital (or share
capital)
3. Surplus
reserve to cover
loss
4. Changes in
defined benefit
scheme carried
165/ 323
Annual Report 2021
forward to
retained earnings
5. Carry-forward
of other
comprehensive
income to
retained earnings
6. Others
(V) Special
reserve
1. Withdrawal
for the period
2. Utilization for
the period
(VI) Others 50,956,622.11 -763,136.88 -8,640.67 50,184,844.56 -62,096,900.5 -11,912,056.01
7
IV. Balance at 201,009,966.00 50,956,622.11 834,272,205.66 5,628,128.21 -1,247,674.10 100,634,780. 1,696,978,064. 2,876,975,835.9 9,864,591.09 2,886,840,427.07
the end of the 00 52 8
period
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2020
Equity attributable to owners of the parent company
Total equity
Item Minority
Paid-up capital Other equity instruments Less: Other General attributable to
Special Undistributed interests
(or share Capital reserve Treasury comprehensive Surplus reserve risk Others Subtotal owners
Preferred Perpetual reserve profit
capital) Others shares income provision
shares bonds
I. Balance at the end of last 201,269,560.00 835,353,615.48 15,769,051.20 -212,628.22 100,634,780.00 908,411,607.62 2,029,687,883.68 40,370,159.89 2,070,058,043.57
year
Add: Changes in accounting
policies
Correction for previous
errors
Business combination
under common control
Others
II. Balance at the beginning 201,269,560.00 835,353,615.48 15,769,051.20 -212,628.22 100,634,780.00 908,411,607.62 2,029,687,883.68 40,370,159.89 2,070,058,043.57
of the year
III. Increase and decrease -152,635.00 1,681,221.21 -3,115,145.95 -56,437.91 357,260,258.01 361,847,552.26 49,956,670.30 411,804,222.56
for the current period ("-"
for decrease)
(I) Total comprehensive -56,437.91 476,009,298.41 475,952,860.50 -24,399,744.18 451,553,116.32
income
(II) Owner's contribution -152635.00 1,761,845.32 -3,115,145.95 4,724,356.27 2,266,300.00 6,990,656.27
and capital reduction
1. Ordinary shares -152635.00 -2,431,475.55 -3,115,145.95 531,035.40 2,266,300.00 2,797,335.40
contributed by the owners
2. Capital contributions by
other equity instrument
holders
3. Amount of share-based 4,193,320.87 4,193,320.87 4,193,320.87
payments credited to
owners' equity
4. Others
(III) Profit distribution -118,749,040.40 -118,749,040.40 -118,749,040.40
1. Withdrawal of surplus
reserve
2. Withdrawal of general
risk provision
3. Distribution to owners -118,749,040.40 -118,749,040.40 -118,749,040.40
(or shareholders)
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4. Others
(IV) Internal carry-forward
of owners' equity
1. Transfer of capital
reserve to capital (or share
capital)
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. Others
(V) Special reserve
1. Withdrawal for the
period
2. Utilization for the period
(VI) Others -80,624.11 -80,624.11 72,090,114.48 72,009,490.37
IV. Balance at the end of 201,116,925.00 837,034,836.69 12,653,905.25 -269,066.13 100,634,780.00 1,265,671,865.63 2,391,535,435.94 90,326,830.19 2,481,862,266.13
the period
The chairman of the Company: Hou Juncheng CFO of the Company: Wang Li Head of Accounting Department: Wang Li
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Parent Company's Statement of Changes in Owners' Equity
January - December 2021
Unit: Yuan Currency: RMB
2021
Paid-up capital Other equity instruments Other Total equity
Item Less: Treasury Special Surplus Undistributed
(or share Preferred Perpetual Capital reserve comprehensive attributable to
Others shares reserve reserve profit
capital) shares bonds income owners
I. Balance at the end of last year 201,116,925.0 837,075,425.32 12,653,905.25 100,634,780.0 1,134,989,843.29 2,261,163,068.36
0 0
Add: Changes in accounting policies
Correction for previous errors
Others
II. Balance at the beginning of the year 201,116,925.0 837,075,425.32 12,653,905.25 100,634,780.0 1,134,989,843.29 2,261,163,068.36
0 0
III. Increase and decrease for the -106,959.00 50,956,622.1 -251,1505.00 -7,025,777.04 408,755,198.19 464,119,133.34
current period ("-" for decrease) 1
(I) Total comprehensive income 553559384.19 553559384.19
(II) Owner's contribution and capital -106,959.00 -1,999,494.15 -7,025,777.04 4,919,323.89
reduction
1. Ordinary shares contributed by the -106,959.00 -1,626,846.39 -7,025,777.04 5,291,971.65
owners
2. Capital contributions by other equity
instrument holders
3. Amount of share-based payments -372,647.76 -372,647.76
credited to owners' equity
4. Others
(III) Profit distribution -144,804,186.00 -144,804,186.00
1. Withdrawal of surplus reserve
2. Distribution to owners (or -144,804,186.00 -144,804,186.00
shareholders)
3. Others
(IV) Internal carry-forward of owners'
equity
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1. Transfer of capital reserve to capital
(or share capital)
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. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others 50,956,622.1 -512,010.85 50,444,611.26
1
IV. Balance at the end of the period 201,009,966.0 50,956,622.1 834,563,920.32 5,628,128.21 100,634,780.0 1,543,745,041.48 2,725,282,201.70
0 1 0
2020
Paid-up capital Other equity instruments Other
Item Less: Treasury Special Undistributed Total equity attributable
(or share Preferred Perpetual Capital reserve comprehensive Surplus reserve
Others shares reserve profit to owners
capital) shares bonds income
I. Balance at the end of last year 201,269,560.0 834,592,133.74 15,769,051.20 100,634,780.00 778,293,340.18 1,899,020,762.72
0
Add: Changes in accounting policies
Correction for previous errors
Others
II. Balance at the beginning of the 201,269,560.0 834,592,133.74 15,769,051.20 100,634,780.00 778,293,340.18 1,899,020,762.72
year 0
III. Increase and decrease for the -152,635.00 2,483,291.58 -3,115,145.95 356,696,503.11 362,142,305.64
current period ("-" for decrease)
(I) Total comprehensive income 475,445,543.51 475,445,543.51
(II) Owner's contribution and capital -152,635.00 -2,431,475.55 -3,115,145.95 531,035.40
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reduction
1. Ordinary shares contributed by the -152,635.00 -2,431,475.55 -3,115,145.95 531,035.40
owners
2. Capital contributions by other
equity instrument holders
3. Amount of share-based payments
credited to owners' equity
4. Others
(III) Profit distribution -118,749,040.4 -118,749,040.40
0
1. Withdrawal of surplus reserve
2. Distribution to owners (or -118,749,040.4 -118,749,040.40
shareholders) 0
3. Others
(IV) Internal carry-forward of owners'
equity
1. Transfer of capital reserve to capital
(or share capital)
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. Others
(V) Special reserve
1. Withdrawal for the period
2. Utilization for the period
(VI) Others 4,914,767.13 4,914,767.13
IV. Balance at the end of the period 201,116,925.0 837,075,425.32 12,653,905.25 100,634,780.00 1,134,989,843. 2,261,163,068.36
0 29
The chairman of the Company: Hou Juncheng CFO of the Company: Wang Li Head of Accounting Department: Wang Li
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Annual Report 2021
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 Wuxing Branch of 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.
Its current registered capital amounts to RMB201,009,966.00, and its number of shares totals
201,009,966 (par value of RMB1 per share) in aggregate. The shares include 347,201 restricted
circulating A shares and 200,662,765 unrestricted circulating A shares, which were listed for trading on
SSE on November 15, 2017.
The Company is a beauty and personal care company mainly engaged in cosmetics research and
development, production, and sales. The products are mainly cosmetics.
The financial statements were approved for external disclosure by the 5th meeting of the third session of
the Board of Directors on April 20, 2022.
2. Scope of consolidated financial statements
"√ Applicable" "□ Not applicable"
The Company has incorporated 44 subsidiaries, including Hangzhou Proya Trading Co., Ltd., Anya
(Huzhou) Cosmetics Co., Ltd., Zhejiang Meiligu Electronic Commerce Co., Ltd., Huzhou Chuangdai
E-commerce Co., Ltd., Yueqing Laiya Trading Co., Ltd. and Hapsode (Hangzhou) Cosmetics Co., Ltd.,
into the consolidated financial statements of the reporting period. See "VIII. Change in Consolidation
Scope" and "IX. Equity in Other Entities" in "Section X Financial Report" of this report for details.
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 going-concern ability of the Company
within 12 months since the end of the reporting period.
V. Significant Accounting Policies and Accounting Estimates
Notes to specific accounting policies and accounting estimates:
"√ Applicable" "□ Not applicable"
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Refer to "44. Changes in significant accounting policies and accounting estimates" in "V. Significant
accounting policies and accounting estimates" of "Section X Financial Report".
1. Statement of compliance of accounting standards for business enterprises
The financial statements have been prepared by the Company in conformity with the China Accounting
Standards for Business Enterprises, and present truly and completely 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. Recording currency
The recording currency of the Company is RMB.
5. Accounting treatments for enterprise merger under or not under common control
"√ Applicable" "□ Not applicable"
1. Accounting treatments for enterprise merger under common control
The assets and liabilities acquired by the Company through enterprise merger are measured at the
carrying value of the acquiree in the consolidated financial statements of the ultimate controlling party at
the date of the merger. The Company adjusts the capital reserve in accordance with the difference
between the carrying value of the owner's equity of the acquiree in the final consolidated financial
statements of the ultimate controlling party and the carrying value of the consideration paid for the
merger or the total nominal value of the issued shares. If the capital reserve is insufficient to offset the
difference, the retained earnings shall be adjusted.
2. Accounting treatments for enterprise merger not under common control
Where the cost of the merger is higher than the fair value proportion of the net identifiable assets
acquired from the acquiree in the merger on the acquisition date, the Company recognizes such
difference as goodwill. Where the cost of merger is lower than the fair value of the net identifiable assets
acquired from the acquiree in the merger on the acquisition date, the measurement of the acquired fair
value of the acquiree's identifiable assets, liabilities or contingent liabilities, as well as the cost of merger
shall be rechecked. If the cost of the merger remains lower than the fair value of the net identifiable
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Annual Report 2021
assets acquired from the acquiree in the merger after the recheck, the difference shall be included in the
current profit or loss.
6. Preparation of consolidated financial statements
"√ Applicable" "□ Not applicable"
1. The parent company incorporates all its subsidiaries under its control into 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 methods for 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 plan
arrangements, etc., if the equity of the acquiree is disposed of in the second fiscal year to the point
of losing control over it, it will be excluded from the consolidation scope of the consolidated
financial statements when the control is lost.
7. Classification of joint venture arrangement and accounting treatment for joint operation
"√ Applicable" "□ Not applicable"
1. Joint venture arrangement can be divided into joint operation and joint venture.
2. When the Company is a joint venture party of joint operation, the following items related to the
quantum of interest in joint operation are recognized:
(1) Assets held alone, and jointly owned assets according to the holding shares;
(2) Liabilities undertaken alone, and jointly undertaken liabilities according to the holding shares;
(3) Income incurred from selling the Company's output share of joint operation;
(4) Income of joint operation incurred from selling assets according to the Company's share;
(5) Cost incurred alone, and cost incurred from joint operation according to the Company's share;
8. Determination of cash and cash equivalents
Cash listed in the cash flow statement refers to cash on hand and deposits that can be used at any time to
make payments. Cash equivalents represent short-term, highly liquid investments held by enterprises,
which can be readily converted into cash and whose value is unlikely to change.
9. Foreign currency transactions and translation of foreign-currency statements
"√ Applicable" "□ Not applicable"
1. Translation of foreign currency transactions
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Foreign currency transactions are translated into RMB at the approximate rate of spot rate on the
transaction date during initial recognition. On the balance sheet date, the foreign currency monetary
items are translated based on the spot rate on 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 profit" 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.
10. Financial instruments
"√ Applicable" "□ Not applicable"
1. Classification of financial assets and financial liabilities
The financial assets are classified into the following three categories during initial recognition: (1)
financial assets measured at amortized cost; (2) financial assets measured at fair value with changes
included in other comprehensive income; (3) financial assets measured at fair value with changes
included in current profit or loss.
Financial liabilities are divided into the following four categories during initial recognition: (1) financial
liabilities measured at fair value with changes included in current profit or loss; (2) financial liabilities
from failure of transfer of financial assets to meet the derecognition conditions or continued involvement
in transferred financial assets; (3) loan commitments given at a rate lower than market interest rate, not
belonging to the financial guarantee contracts mentioned in (1) or (2) above and not in the case
described (1) above; (4) financial liabilities measured at amortized cost.
2. Recognition basis, measurement method and derecognition conditions for financial assets and
financial liabilities
(1) Recognition basis and initial measurement method for financial assets and financial liabilities
One financial assets or financial liabilities are recognized when the Company becomes one party of
financial instrument contract. The financial assets and financial liabilities are measured at the fair value
during initial recognition. For financial assets and financial liabilities measured at fair value with
changes included in current profit or loss, relevant transaction expenses are directly included in the
current profit or loss; for other kinds of financial assets or financial liabilities, relevant transaction
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Annual Report 2021
expenses are included in the amount of 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 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 or 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 investment measured at fair value with changes included in other comprehensive
income
The method of subsequent measurement at fair value is adopted. The interest, impairment losses or gains,
and exchange gains and losses based on effective interest method are included in the current profit or
loss, and other gains or losses are included in other comprehensive income. During derecognition, the
accumulated gains or losses previously included in other comprehensive income are transferred from
other comprehensive income and included in the current profit or loss.
3) Equity instrument investment measured at fair value with changes included in other comprehensive
income
The method of subsequent measurement at the fair value is adopted. The dividends obtained (except for
the part from investment cost recovery) shall be included in the current profit or loss, and other gains or
losses are included in other comprehensive income. During derecognition, the accumulated gains or
losses previously included in other comprehensive income are transferred from other comprehensive
income and included in retained earnings.
4) Financial assets measured at fair value with changes included in the current profit or loss
The method of subsequent measurement at the fair value is adopted. 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 with changes included in the current profit or loss
Such financial liabilities include trading financial liabilities (including derivative instruments belonging
to financial liabilities) and those designated as financial liabilities measured at fair value with changes
included in the current profit or loss. As for such financial liabilities, the method of subsequent
measurement at the fair value is adopted. The change in fair value of financial liabilities measured at fair
value with changes included in the current profit or loss due to changes in the Company's own credit risk
are included in other comprehensive income unless said treatment will cause or enlarge the accounting
mismatch in the profit or loss. Other gains or losses (including interest, except the fair value changes
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Annual Report 2021
arising from the credit risk change of the Company) shall be included in the current profit or loss, unless
the financial liabilities belong to part of the hedging relationship. During de-recognition, the
accumulated gains or losses previously included in other comprehensive income are transferred from
other comprehensive income and included in retained earnings.
2) Financial liabilities from failure to transfer financial assets to meet the de-recognition conditions or
continued involvement in transferred financial assets
Measurement shall be performed in accordance with the Accounting Standards for Business Enterprises
No. 23 - Transfer of Financial Assets.
3) Loan commitments given at a rate lower than market interest rates not belonging to the financial
guarantee contracts mentioned in 1) or 2) above and not in the case described in 1) above.
Subsequent measurement is made at the higher 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
The measurement at amortized cost using the effective interest method is adopted. 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 de-recognition or amortization according to
the effective interest method.
(4) De-recognition of financial assets and financial 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;
(2) The financial assets have been transferred and satisfy 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 method for 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 de-recognized, and the rights and obligations resulting from or retained in
the transfer are separately recognized as assets or liabilities. In the case that nearly all risks and rewards
related to the ownership of the financial assets are retained, the recognition of the transferred financial
assets is continued. In the case that nearly all risks and rewards related to the ownership of the financial
assets are neither transferred nor retained, disposal shall apply depending on the following circumstances:
(1) if control over the financial assets is not retained, the financial assets shall be de-recognized, and the
rights and obligations resulting from or retained in the transfer are separately recognized as assets or
liabilities; (2) if control over the financial assets is retained, the relevant financial assets are recognized
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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 de-recognition, the difference
between the two amounts below shall be included in the current profit or loss: (1) Carrying value of the
transferred financial assets at the date of de-recognition; (2) The sum of consideration received for the
transfer of financial assets, plus the corresponding de-recognized portion of accumulated change at 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 a part of the financial assets is transferred and the transfer satisfies the conditions for
de-recognition, 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: (1) carrying value of the derecognized part; (2) the sum of consideration for the derecognized part,
plus the corresponding derecognized part of accumulated change in fair value previously included in
other comprehensive income (in cases where the transferred financial assets are debt instrument
investment measured at fair value with changes included in other comprehensive income).
4. Method of determining the fair value of financial assets and financial 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 financial liabilities. The Company divides the inputs for the estimation technique into the following
levels and uses them in turn:
(1) The input of the first level is the unadjusted quotation of the same assets or liabilities that can be
obtained on the measurement date in the active market;
(2) The input of the second level is the directly or indirectly observable input of related assets or
liabilities except the input of the first level, including: the quotation of similar assets or liabilities in
an active market; the quotation of the same or similar assets or liabilities in an inactive market;
other observable inputs other than quotation, such as the interest rate and yield curves that can be
observed during the normal quotation intervals; and the inputs for market validation;
(3) The input of the third level is the unobservable input of related assets or liabilities, including interest
rates that cannot be observed directly or cannot be verified according to observable market data,
stock volatility, future cash flows of retirement obligations borne during the business merger, and
financial forecasts based on its own data.
5. Impairment of financial instruments
(1) Impairment measurement and accounting treatment 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 with changes included in other comprehensive income, contract assets,
lease receivables, loan commitments other than financial liabilities measured at fair value with changes
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included in the current profit or loss, and financial guarantee contracts of financial liabilities not
measured at fair value with changes included in the current 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.
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 the contract 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 shall be discounted according to their
effective interest rate upon credit adjustment.
For purchased or underlying financial assets with credit impairment incurred, only cumulative changes
in the expected credit loss in the whole duration after initial recognition shall be recognized by the
Company as loss provision on the balance sheet date.
For 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 financing components in the contract of no more than one year, the
Company measures loss provision according to an amount equal to the expected credit loss in the whole
duration by applying the Simplified Measurement method.
For lease receivables as well as for receivables and contract assets from transactions in accordance with
the Accounting Standards for Business Enterprises No. 14 – Revenue, including significant financing
components, the Company measures loss provision according to an amount equal to the expected credit
loss in the whole duration by applying the Simplified Measurement method.
For financial assets other than the above measurement methods, the Company shall, on each balance
sheet date, assess 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 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 available, reasonable, and well-grounded information, including
forward-looking information, and comparing the default risks of financial instruments on the balance
sheet date and on the initial recognition date.
If the Company determines that the financial instruments bear a low credit risk on the balance sheet date,
it assumes that the credit risk of the financial instruments has not increased significantly since initial
recognition.
The Company evaluates the expected credit risk and the expected credit loss based on single financial
instrument or portfolio of financial instruments. When based on the portfolio of financial instruments,
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the Company divides financial instruments into different portfolios on the basis of common risk
characteristics.
The Company re-measures 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, shall be included in
the current profit or loss. For financial assets measured at amortized cost, the loss provision deducts the
carrying value of the financial assets listed in the balance sheet; 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.
(2) Financial instruments for evaluating expected credit risk and measuring expected credit loss by
portfolio
Item Basis for determining the Method for measurement of
portfolio expected credit loss
Calculating expected credit
loss by default risk exposure
and the expected credit loss
rate in next 12 months or in the
Other receivables - account age whole duration by referring to
Account age
portfolio historical experience in credit
loss and according to the
current situation as well as the
forecast on future economic
conditions.
(3) Receivables and contract assets with expected credit loss measured by portfolio
1) Portfolio details and method for measurement of expected credit loss
Item Basis for determining the Method for measurement of
portfolio expected credit loss
Calculating expected credit
loss by default risk exposure
and the expected credit loss
rate in the whole duration by
Receivables financing - bank
Bill type referring to historical
acceptance
experience in credit loss and
according to the current
situation and the forecast on
future economic conditions
Calculating expected credit
Accounts receivable - account
Account age loss by preparing a comparison
age portfolio
table between account age of
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accounts receivable and
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
2) Accounts receivable - Comparison between account age of account age portfolio and expected credit
loss rate in the whole duration
Accounts receivable
Account age
Expected credit loss rate (%)
Within 1 year (inclusive, same for below) 5
1-2 years 30
2-3 years 50
Above 3 years 100
6. Offset of financial assets and financial liabilities
Financial assets and financial liabilities are listed in the balance sheet respectively without offsetting.
However, when the following conditions are met, financial assets and liabilities are presented at the net
amount after mutual offset in the balance sheet: (1) the Company has the legal right to offset the
recognized amount and said 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 relevant liabilities.
11. Notes receivable
Determination and accounting treatment of the expected credit loss of notes receivable
"□ Applicable" "√ Not applicable"
12. Accounts receivable
Determination and accounting treatment of the expected credit loss of accounts receivable
"√ Applicable" "□ Not applicable"
Refer to "10. Financial instruments" in "V. Significant accounting policies and accounting estimates" of
"Section X Financial Report" of this report.
13. Receivables financing
"√ Applicable" "□ Not applicable"
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Refer to "10. Financial instruments" in "V. Significant accounting policies and accounting estimates" of
"Section X Financial Report" of this report.
14. Other receivables
Determination and accounting treatment of the expected credit loss of other receivables
"√ Applicable" "□ Not applicable"
Refer to "10. Financial instruments" in "V. Significant accounting policies and accounting estimates" of
"Section X Financial Report" of this report.
15. Inventories
"√ Applicable" "□ Not applicable"
1. Classification of inventories
Inventories include finished goods or commodities for sale in daily operations, goods in process during
production, and materials consumed during production or rendering of service.
2. Valuation method for delivered inventories
The Moving Weighted Average method is adopted for delivered inventories.
3. Basis for the determination of net realizable value of inventories
At the balance sheet date, inventories were measured at the lower of cost and net realizable value, and
provision for devaluation of inventories was accrued based on the positive difference between a single
inventory's cost and its net realizable value. The net realizable value of inventories directly for sale is
determined by the amount of the estimated sales price after subtracting the estimated sales expenses and
relevant taxes during normal production and operation; the net realizable value of inventories required to
be processed is determined by the amount of the estimated sales price of the finished products after
subtracting the estimated cost by the end of processing, the estimated sales expenses and relevant taxes
during normal production and operation. On 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 in order to separately determine the amount withdrawn or reversed for
inventory falling price reserve.
4. Inventory system
The Company adopts a perpetual inventory system.
5. Amortization of low-value consumables and packaging materials
(1) Low-value consumables
Amortization is performed by the Immediate Write-off method.
(2) Packaging materials
Amortization is performed by the Immediate Write-off method.
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16. Contract assets
(1). Recognition methods and standards of contract assets
"√ Applicable" "□ Not applicable"
The rights of the Company to collect consideration from the customer unconditionally (i.e. depending
only on time) are presented as receivables; the rights (depending on factors other than time) to collect
consideration for transferring goods to the customer are presented as contract assets.
(2). Determination and accounting treatment of the expected credit loss of contract assets
"□ Applicable" "√ Not applicable"
17. Assets held for sale
"□ Applicable" "√ Not applicable"
18. Debt investment
(1). Determination and accounting treatment of expected credit loss of debt investment
"□ Applicable" "√ Not applicable"
19. Other debt investments
(1). Determination and accounting treatment of expected credit loss of other debt investments
"□ Applicable" "√ Not applicable"
20. Long-term receivables
(1). Determination and accounting treatment of expected credit loss of long-term receivables
"□ Applicable" "√ Not applicable"
21. 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 an 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. It cannot control or jointly control the formulation
of such policies with other parties.
2. Determination of investment cost
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(1) For enterprise merger under common control: where the merging party pays cash, transfers non-cash
assets, bears debts or issues equity securities as consideration of merger, the initial investment cost is the
share with reference to the carrying value of the owners' equity of the acquiree in the consolidated
financial statements of the ultimate controlling party on the date of merger. The difference between the
initial investment cost of long-term equity investment and the carrying value of the consideration paid
for the merger or 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.
The Company judges whether the item is a "package deal" via long-term equity investment formed by
enterprise merger under common control through multiple transactions. For a package deal, multiple
deals are subject to accounting treatment as one deal that has acquired the right of control. For items that
do not belong to the package deal, the initial investment cost is determined on the basis of the share with
reference to the carrying value of the net asset of the acquiree in the consolidated financial statements of
the ultimate controlling party on the date of merger. The difference between initial investment cost of
long-term equity investment at the date of merger and the carrying amount of long-term equity
investment prior to merger and the sum of carrying value of newly paid consideration for additional
shares acquired on the date of merger is to adjust capital reserve. If the balance of capital reserve is
insufficient to offset the difference, the retained earnings are adjusted.
(2) For business mergers not under common control, the fair value of consideration paid for merger is
regarded as the initial investment cost on the acquisition date.
For long-term equity investment achieved by the Company via business merger not under common
control through several transactions, the relevant accounting treatment is based on individual financial
statements or consolidated financial statements:
1) In individual financial statements, the initial investment cost when changing to 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, it is determined whether an item is a package deal. For
package deals, multiple deals are subject to accounting treatment as one deal that has acquired the right
of control. For items that do not belong to the package deal, the equity of the acquiree held before the
acquisition date is re-measured at the fair value of this 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, other related comprehensive income is converted into current income on the acquisition
date, excluding other comprehensive income derived from changes of net liabilities or net assets due to
re-measurement on defined benefit plan by the investee.
(3) For cases other than business merger: If it is merged with cash, the initial investment cost shall be the
actual payment. If it is accomplished through issuing equity securities, the initial investment cost is the
fair value of the equity securities. If it is accomplished through debt restructuring, the initial investment
cost is determined based on the Accounting Standards for Business Enterprises No. 12 - Debt
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Restructuring. If it is accomplished 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 long-term equity investment controlled by the investee, the Cost method is adopted for accounting.
For long-term equity investment of associates and joint ventures, the Equity method is adopted for
accounting.
4. Treatment methods for loss of control upon stepwise disposal of investment to subsidiaries through
multiple transactions
(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 by Equity
method in case of significant influence on the investee or implementation of joint control with other
parties. However, in the 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 statement
1) Loss of control upon stepwise disposal of investment to subsidiaries through multiple transactions not
belonging to a package deal
Prior to 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 date of merger, is adjusted to capital reserve (capital premium). If the capital premium is
insufficient to offset the difference, the retained earnings are adjusted.
When control over the original subsidiary is lost, the remaining equity is re-measured at fair value as at
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 merger 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.
2) Loss of control upon stepwise disposal of investment to subsidiaries through multiple transactions,
belonging to a package deal
All transactions are regarded as one transaction disposing of the subsidiaries and losing the right of
control for accounting treatment. However, the difference between the amount received each time for
disposal before control is lost and the net assets of said 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 control is lost upon actual loss of control.
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22. Investment real estate
(1). 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 rental buildings.
2. The Cost method is employed for initial measurement of investment real estate, and the Cost model
for subsequent measurement. Depreciation or amortization shall be withdrawn using the same
method as that for fixed assets and intangible assets.
23. Fixed assets
(1). Conditions for recognition
"√ Applicable" "□ Not applicable"
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for
rental to others, or for administrative purposes, and have a useful life of more than one accounting year.
Fixed assets are recognized when the following conditions are satisfied at the same time: economic
benefit is likely to accrue to the Company and the cost of such fixed assets can be reliably measured.
(2). Method for depreciation
"√ Applicable" "□ Not applicable"
Method for Useful lives of Annual
Category Residual value
depreciation depreciation (year) depreciation rate
Property and Straight-line 10 or 30 5% 9.50% or 3.17%
buildings method
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
(3). Recognition basis, Valuation and Depreciation methods for fixed assets under a financial lease
"□ Applicable" "√ Not applicable"
24. Construction in progress
"√ Applicable" "□ Not applicable"
1. Construction in progress is recognized when the following conditions are satisfied at the same time:
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economic benefit is likely to accrue to the Company and the cost of such construction in progress
can be reliably measured. Construction in progress is measured at the actual cost incurred to make
the assets ready for their intended use.
2. Construction in progress is transferred to fixed assets at the actual cost when it reaches the expected
condition for service. When construction in progress has achieved serviceable conditions but final
settlement has not been completed, it is first transferred to fixed assets as per estimated value. After
final settlement is completed, the estimated value is adjusted based on actual cost, but the
depreciated amount will not be adjusted.
25. Borrowing costs
"√ Applicable" "□ Not applicable"
1. Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition and
construction or production of assets qualified for capitalization, costs will be capitalized and included in
the costs of the related assets. Other borrowing costs shall be recognized as expense in the period in
which they incur and are included in the current profit or loss.
2. Capitalization period of borrowing costs
(1) Capitalization of borrowing costs begins when the following three conditions are fully satisfied: 1)
expenditures for the assets have incurred; 2) borrowing costs have incurred; 3) acquisition and
construction or production have commenced that are necessary to enable the assets reach the
intended usable or saleable condition.
(2) Where abnormal interruption of the assets eligible for capitalization occurs during the acquisition
and construction or production process and said interruption has lasted for more than three
consecutive months, the capitalization of borrowing costs is suspended; 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 its 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, the interest amount to be capitalized is recognized after deducting bank interest
for the unused portion or the investment income for temporary investment from the interest costs
(including recognized depreciation or amortization of premiums 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 shall be determined by 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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26. Biological assets
"□ Applicable" "√ Not applicable"
27. Oil and gas assets
"□ Applicable" "√ Not applicable"
28. Right-of-use assets
"□ Applicable" "√ Not applicable"
29. Intangible assets
(1). Valuation method, useful life and impairment test
"√ Applicable" "□ Not applicable"
1. Intangible assets, including land use rights, patent rights, and non-patented technologies are
measured at cost.
2. Amortization for intangible assets with limited useful life is reasonably performed in the expected
realization pattern according to economic benefits related to an intangible asset within its useful life;
if the expected realization pattern cannot be reliably determined, the straight-line method shall be
adopted for amortization. The specific year information is shown as below:
Item Amortization period (year)
Land use rights 40 or 50
Unpatented 5
technology
Office software 3-10
Patent right 5
Customer resources 3
Trademark right 10
(2). Accounting policy regarding expenditures on internal research and development
"√ Applicable" "□ Not applicable"
Expenses incurred during the research phase of internal research and development projects are included
in current profit or loss. Expenses in the development phase are recognized as an intangible asset when
all of the following conditions are satisfied: (1) It is technically feasible to complete the intangible asset
so that it will be available for use or sale; (2) there is an intention to complete the intangible asset for use
or sale; (3) the intangible asset will produce economic benefit, including there is evidence that the
products produced using the intangible asset has a market or that the intangible asset itself has a market;
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if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset;
(4) there is sufficient support in terms of technology, financial resources, and other resources in order to
complete the development of the intangible asset, and there is capability to use or sell the intangible
asset; (5) the expenses attributable to the development phase of the intangible asset can be reliably
measured.
30. Impairment of long-term assets
"√ Applicable" "□ Not applicable"
For long-term assets such as long-term equity investment, investment real estate measured by the cost
model, fixed assets, construction in progress, and intangible assets with limited useful life, in the case
that there are signs indicating impairment on the balance sheet date, the recoverable amount shall be
estimated. Whether there is a sign of impairment or not, the goodwill acquired in an enterprise merger
and intangible assets with indefinite useful 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 the case that 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 is included in the current
profit or loss.
31. Long-term deferred expenses
"√ Applicable" "□ Not applicable"
Long-term prepaid expenses involve all expenses already paid with an amortization period of more than
one year (excluding one year). Long-term prepaid expenses are entered in an account at the actual
amounts, and are amortized by even amortization within the benefit period or the prescribed
amortization period. If the long-term prepaid expenses will not provide benefit to the future accounting
period, then all of the amortized value of the unamortized long-term prepaid expenses are transferred
into the current profit or loss.
32. Contract liabilities
(1). Recognition method for contract liabilities
"√ Applicable" "□ Not applicable"
The Company recognizes the obligation to transfer goods to customers for consideration received or
receivable from customers as contract liabilities.
33. Employee remuneration
(1). Accounting treatment for short-term remuneration
"√ Applicable" "□ Not applicable"
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During the accounting period when employees provide service for the Company, the short-term
remuneration actually incurred will be recognized as liabilities and will be included in the current profit
or loss or as cost of related assets.
(2). Accounting treatment for post-employment benefits
"√ Applicable" "□ Not applicable"
Post-employment benefits are divided into the defined contribution plan and defined benefit plan.
(1) During the accounting period when employees provide service for the Company, the amount to be
deposited as calculated according to the defined contribution plan shall be recognized as liabilities,
and will be included in the current profit or loss or as the cost of 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, etc. shall be 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 shall be
discounted, so as to determine the present value of defined benefit plan obligation and current
service cost;
2) In the case of assets 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 a net asset within the defined benefit plan. When the
defined benefit plan has a surplus, the net assets of the defined benefit plan are measured at the
lower of the surplus of defined benefit plan and the upper limit of the assets;
3) At the end of the period, the employee remuneration 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 cost of related assets,
and the changes generated by re-measurement of the net liabilities or net assets within the defined
benefit plan are included under other comprehensive income, and cannot be reversed to profit or loss
in the subsequent accounting period. However, the amount recognized under other comprehensive
income can be transferred within the equity scope.
(3). Accounting treatment methods of termination benefits
"√ Applicable" "□ Not applicable"
If termination benefits are provided to employees, the employee remuneration 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
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termination of a 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 for other long-term employee benefits
"√ Applicable" "□ Not applicable"
Other long-term employee benefits satisfying the conditions in the defined contribution plan are treated
in accounting as stipulated in the defined contribution plan and other long-term benefits beyond that are
treated in accounting as stipulated in the defined benefit plan. In order to simplify related accounting
treatment, the generated employee remuneration costs are recognized as the service cost. The total net
amount of item composed of the net interest of net liabilities or net assets of other long-term employee
benefits and the changes generated from re-measuring net liabilities or net assets of other long-term
employee benefits is included in the current profit or loss or the costs of the related assets.
34. Lease liabilities
"□ Applicable" "√ Not applicable"
35. Estimated liabilities
"√ Applicable" "□ Not applicable"
1. The obligations imposed by contingencies, such as providing external guarantee, lawsuits, product
quality assurance, and onerous contracts, become the current obligations assumed by the Company,
which are determined by the Company as estimated liabilities when their performance is very likely
to result in economic benefit outflow from the Company and their amount can be reliably measured.
2. 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 on the balance sheet
date.
36. 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 a 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 shall be included in relevant costs or expenses as per the fair value of the equity
instruments on the grant date, and the capital reserve shall be adjusted accordingly. For equity-settled
share-based payments that are vested only after the services within the waiting period are completed or
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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 acquisition if its reliable measurement is possible,
and as per the fair value of the equity instruments on the date of acquisition of the services if a reliable
measurement of the fair value of other parties' services is impossible, but that of the equity instruments is
possible, they are included in relevant costs or expenses, and the owner's equity is increased accordingly.
(2) Cash-settled share-based payments
Cash-settled share-based payments which vest immediately after the grant date in exchange for
employee services shall be included in relevant costs or expenses as per the fair value of the liability
assumed by the Company on the grant date, and liabilities shall be increased accordingly. For these
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 shall be included in relevant costs or expenses and
corresponding liabilities as per the fair value of the liability 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 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.
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 e
granted equity instruments is decreased, the Company treats the decreased portion 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
cancellation arising from a 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.
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37. Preferred shares, perpetual bonds, and other financial instruments
"√ Applicable" "□ Not applicable"
According to the relevant standards for financial instruments and the Regulations on the Distinction
between Financial Liabilities and Equity Instruments and Relevant Accounting Treatments (CS [2014]
No.13), for financial instruments such as convertible corporate bonds issued, the Company shall classify
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 definition of
financial assets, financial liabilities, and equity instruments.
On the balance sheet date, for financial instruments classified as equity instruments, the accounting
treatment for interest expense or dividend distribution as the Company's profit distribution, and for
repurchase, cancellation, etc. as changes in equity is carried out; for financial instruments classified as
financial liabilities, the accounting treatment for interest expense or dividend distribution as borrowing
costs is carried out, and the gains or losses from repurchase or redemption are included in the current
profit or loss.
38. Revenue
(1). Accounting policy applied for revenue recognition and measurement
"√ Applicable" "□ Not applicable"
1. Revenue recognition principle
The Company shall, on the commencement date of the contract, evaluate the contract, identify the
individual performance obligations provided in the contract and determine whether to perform them
within a period or at a time point.
The performance obligations shall be 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 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 shall recognize 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 shall be 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 shall be recognized at the time of the customer's
acquiring the control of related commodities or services. The Company shall take into account the
following when judging whether the customer has acquired commodity control: (1) The Company has
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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 acquired same; (3) the Company has transferred the physical commodity to the
customer, namely the customer has physical possession of the commodity; (4) the Company has passed
the main risks and return on the commodity's title to the customer, namely the customer has acquired
same; (5) the customer has accepted the commodity; and (6) there are other signs indicating that the
customer has acquired the commodity control.
2. Revenue measurement principle
(1) The Company shall measure the revenue according to the transaction price apportioned to the
individual performance obligations. The transaction price refers to the amount of consideration to
which the Company is expected to have the right of collection due to transfer of commodities or
services to the customer, excluding the amounts charged on behalf of the third party and expected to
be refunded to the customer.
(2) In the case of variable consideration in the contract, the Company shall determine 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 shall not exceed the amount
under the circumstance where the cumulatively recognized revenue will be highly unlikely to suffer
major reversal when relevant uncertainties are eliminated.
(3) In case of major financing composition in the contract, the Company shall determine the transaction
price according to the payable amount assumed to be paid by the customer in cash immediately after
he acquires control of the commodities or services. The difference between the transaction price and
the contract consideration shall be amortized by 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 shall not be taken into account.
(4) In the case of two or more performance obligations in the contract, the Company shall, on the
commencement date of the contract, apportion the transaction price to the individual performance
obligations according to the relative proportion of the individual sale price of the commodities
undertaken as per the individual performance obligations.
(2). Difference in accounting policy for revenue recognition resulting from different business
models for similar businesses
"√ Applicable" "□ Not applicable"
The Company mainly sells cosmetics. It has different sales models classified as distribution, direct sales,
and sales on commission.
(1) Distribution
Sales revenue shall be recognized after the Company delivers the products to the buyer according to the
provisions of the contract and the buyer accepts same.
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(2) Direct sales
Sales revenue shall be recognized after the Company delivers the commodities to the consumer and the
consumer confirms receipt and makes payment.
(3) Sales on commission
Sales revenue shall be 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.
39. Contract cost
"√ Applicable" "□ Not applicable"
The assets associated with the contract cost include the contract acquisition cost and contract
performance cost.
The incremental cost incurred by the Company for acquiring the contract that is expected to be
recoverable, as the contract acquisition cost, shall be recognized as an asset. If the amortization period of
the contract acquisition cost is no more than one year, it shall be directly included in the current profit or
loss when incurred.
The cost incurred by the Company for performing the contract that falls outside of the standard scope of
relevant criteria for stock, fixed assets, or intangible assets and that satisfies the following conditions as
the contract performance cost, shall be recognized as an asset:
1. The cost is directly related to one contract acquired currently or as expected, including direct labor,
direct materials and manufacturing expenses (or similar), costs expressly borne by the customer, and
other costs incurred solely in connection with the contract;
2. The cost increases the resources for the Company to perform its obligations in the future;
3. The cost is expected to be recoverable.
The Company shall amortize the assets related to the contract cost on the same basis as for recognizing
the revenue of commodities or services in connection with the assets and shall record same in the current
profit or loss.
If the carrying value of the assets related to the contract cost is more than the surplus consideration
expected to be acquired for transferring the commodities or services in connection with the assets minus
the cost expected to incur, the Company shall make provision for impairment against the excess portion
and recognize it as an asset impairment loss. If any changes in the factors for impairment in previous
periods make the surplus consideration expected to be acquired for transferring the commodities or
services in connection with the assets minus the cost expected to incur higher than the carrying value of
the assets, the provision for asset impairment made originally shall be reversed and included in the
current profit or loss, provided that the reversed carrying value of the assets is no more than that on the
reversal date without making the provision for impairment.
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40. Government grants
"√ Applicable" "□ Not applicable"
1. Government grants are recognized when all of the following conditions are satisfied: (1) The
Company is able to meet the conditions attached to the grant; (2) the Company is able to receive the
grant. In the case of government grants as monetary assets, they shall be measured as per the amount
received or receivable. In the case of government grants as non-monetary assets, they shall be
measured as per the fair value; in the case that the fair value cannot be acquired in a reliable way,
they shall be measured as per the nominal amount.
2. Basis of determination and accounting treatment method for government grants related to assets
Government grants that are used for purchasing and constructing or otherwise forming long-term assets
as specified in government documents are classified as government grants related to assets. In the case
of no provision in government documents, a government grant shall be determined on the basis of the
essential condition required for obtaining the grant, and shall be considered as related to assets if the
essential condition is purchasing and constructing or otherwise forming long-term assets. Government
grants related to assets shall offset the carrying value of relevant assets or be recognized as deferred
income. If a government grant related to assets is recognized as deferred income, it shall be included in
the profit and loss in a reasonable and systematic way within the useful life of relevant assets.
Government grants measured as per the nominal amount shall be directly included in the current profit
or loss. If related assets are sold, transferred, scrapped, or damaged before the end of their useful life, the
unallocated related deferred income balance shall be transferred into profit and loss in the current period
of asset disposal.
3. Basis of determination and accounting treatment method for government grants related to income
Government grants other than those related to assets are classified as government grants related to
income. If it is difficult to distinguish whether a government grant containing both the part related to
assets and the part related to income is related to assets or income, it shall be entirely classified as a
government grant related to income. Government grants related to income that are used for
compensation for relevant costs or losses in subsequent periods shall be 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 shall
be directly included in the current profit or loss or offset relevant costs.
4. Government grants related to daily business activities of the Company shall be included in other
income or offset relevant costs according to the nature of the economic business. Government grants
unrelated to the daily activities of the Company shall be included in non-operating income and
expenses.
41. Deferred income tax assets/liabilities
"√ Applicable" "□ Not applicable"
1. According to the difference between the carrying value of the assets and liabilities and their tax basis
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(if the tax basis of the items recognized not as assets and 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 shall be 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 on the balance sheet date, there is
conclusive evidence proving that it is very likely to obtain sufficient taxable income in future
periods to deduct the deductible temporary differences, the deferred income tax assets not
recognized yet in previous accounting periods shall be recognized.
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3. If the carrying value of the deferred income tax assets is reviewed on the balance sheet date and it is
very likely not to obtain sufficient taxable income in future periods to deduct their benefits, the
carrying value of the deferred income tax assets shall be written down. When it is very likely to
obtain sufficient taxable income, the amount written down shall be 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 merger; (2) transaction, or matters recognized directly in the owner's
equity.
42. Lease
(1). Accounting treatment method of operating lease
"□ Applicable" "√ Not applicable"
(2). Accounting treatment method of financing lease
"□ Applicable" "√ Not applicable"
(3). Determination method and accounting treatment method of leases under new lease standards
"√ Applicable" "□ Not applicable"
1. The Company as lessee
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
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 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 there is a lease incentive; 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.
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The Company depreciates right-of-use assets by the Straight-line method. If it can be reasonably
determined that the ownership of the leased assets will be acquired at expiration of the lease term, the
Company shall accrue depreciation over the remaining useful life of the leased assets. If it cannot be
reasonably determined that the ownership of the leased assets can be acquired at the expiration of the
lease term, the Company shall accrue depreciation over the lease term or the remaining useful 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.
Following 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 result 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 shall be included in the
current profit or loss.
2. The Company as lessor
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 lease
During each period of the lease term, the Company recognizes the lease receipts as rental income by 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 lease
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
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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.
Variable lease payments received 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.
43. Other significant accounting policies and accounting estimates
"□ Applicable" "√ Not applicable"
44. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
"√ Applicable" "□ Not applicable"
Contents and reasons for Remarks (name and amount of
Review and approval procedure
changes in accounting policies report items affected materially)
The Company has implemented On April 21, 2021, the Company This accounting policy change
the revised Accounting held the 19th meeting of the has no impact on the Company's
Standards for Business second session of the Board of financial statements.
Enterprises No. 21 - Lease since Directors and the 18th meeting of
January 1, 2021. the second session of the Board
of Supervisors. Both meetings
deliberated and adopted the
proposal on changing accounting
policies and the independent
directors issued their independent
opinions accordingly. The
change of the Company's
accounting policy does not need
to be submitted to the general
meeting of shareholders for
deliberation. Refer to Company
Notice No.: 2021-016
Other description
Since January 26, 2021, the Company has implemented Interpretation No. 14 of the Accounting
Standards for Business Enterprises issued by the Ministry of Finance in 2021. This accounting policy
change has no impact on the Company's financial statements. Since December 31, 2021, the Company
has implemented the Provisions on "Related Presentation of Centralized Management of Funds" in the
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Interpretation No. 15 of the Accounting Standards for Business Enterprises issued by the Ministry of
Finance. This accounting policy change has no impact on the Company's financial statements.
(2). Changes in significant accounting estimates
"□ Applicable" "√ Not applicable"
(3). Particulars on adjustment to financial statements at the beginning of the year for the first
implementation of new standards for lease from 2021
"□ Applicable" "√ Not applicable"
No
(4). Description on retrospective adjustment to previous comparative data for the first
implementation of new standards for lease from 2021
"□ Applicable" "√ Not applicable"
45. 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
Value added tax ("VAT") The output tax is calculated on the 13%, 9%, 6%, 1%
basis of income from sales of
products and taxable income from
rendering of services calculated
according to the provisions of the
tax law. The difference between
the output tax and the amount
after deducting the input tax
which is allowed to be deductible
in the current period is the payable
VAT.
Consumption tax Taxable sales (volume) 15%
Business tax
Urban maintenance and Actual turnover tax paid 7%, 5%
construction tax
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Enterprise income tax Taxable income [Note]
Property tax In the case of ad valorem taxation, 12%, 1.2%
it is calculated and paid as per
1.2% of the remaining value after
30% of the original value of the
property is deducted in a lump
sum; in the case of taxation
according to a lease, it is
calculated and paid as per 12% of
the rental income.
Education surcharge Actual turnover tax paid 3%
Local education surcharge Actual turnover tax paid 2%
[Note]: Descriptions of tax payers with different enterprise income tax rates
If there are taxpayers with different enterprise income tax rates, the disclosure will be made for
description
"√ Applicable" "□ Not applicable"
Name of taxpayer Income tax rate (%)
The Company 15
Huzhou Niuke Technology Co., Ltd. 20
Xuzhou Pelaya Information Technology Co., Ltd. 20
Relevant taxes are calculated and paid according
Korea Younimi Cosmetics Co., Ltd
to local tax regulations in South Korea
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 Limited
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
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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
P.R.O CO., LTD.
to local tax regulations in Japan
Tax payers other than the above 25
2. Tax preference
"√ Applicable" "□ Not applicable"
The Company was reviewed as a high-tech enterprise on December 1, 2020 and obtained a High-tech
Enterprise Certificate, with a validity of three years and a grace period for enterprise income tax in
2020-2022. The Company was subject to enterprise income tax at the preferential rate of 15% for the
reporting period.
According to the Notice of the Ministry of Finance and the State Taxation Administration on the
Implementation of Inclusive Tax Relief Policy for Small and Micro Enterprises (CS [2019] No.13), the
Announcement of the State Taxation Administration on Relevant Issues on the Implementation of
Inclusive Tax Relief Policy for Small and Micro Enterprises (Announcement No.2 of the State Taxation
Administration in 2019), and Announcement of the Ministry of Finance and the State Taxation
Administration on the Implementation of Preferential Income Tax Policies for Small and Micro
Enterprises and Individual Industrial and Commercial Households (CS [2021] No.12), Huzhou Niuke
Technology Co., Ltd. complies with the criteria for tax payment of small and micro enterprises, and
would calculate taxable income as per a reduced tax rate of 25% and pay the enterprise income tax as
per the tax rate of 20% in 2021. The subsidiary Xuzhou Proya Information Technology Co., Ltd.
complies with the criteria for tax payment of small and micro enterprises. The taxable income that does
not exceed RMB1 million shall be included in the taxable income at the reduced rate of 12.5% and shall
pay the enterprise income tax at the tax rate of 20%. The part of the taxable income that exceeds RMB1
million but not more than RMB3 million is entitled to a reduced rate of 50%, and the enterprise income
tax shall be paid at the tax rate of 20%.
In accordance with the provisions of the Announcement on Relevant Policies for Deepening the
Value-Added Tax Reform jointly issued by the Ministry of Finance, the State Taxation Administration,
and the General Administration of Customs (Announcement No.39 of the Ministry of Finance, the State
Taxation Administration and the General Administration of Customs in 2019), Hangzhou Proya
Commercial Management Co., Ltd., a subsidiary of the Company, complies with the conditions for
general tax payers engaged in consumer-oriented service industries, and the input tax deductible in the
current period plus 10% would be used for deducting the tax payable from October 1, 2019 to December
31, 2021.
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3. Others
"□ Applicable" "√ Not applicable"
VII. Notes on 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 22,348.23 26,853.58
Cash at bank 2,339,040,989.92 1,368,800,012.77
Other monetary capital 51,984,911.66 47,827,774.58
Total 2,391,048,249.81 1,416,654,640.93
Of which: Total cash deposited 69,786,305.02 83,771,568.02
outside China
Other description
At the end of the period, the scope of restricted use covered the margin for fixed-term deposits of
transformer of RMB293,481.72 in bank deposits, as well as an L/C deposit of RMB7,000,000.00, an
ETC vehicle deposit of RMB70,000.00, a Pinduoduo deposit of RMB5,000,000.00, and Tmall and
Alipay deposits of RMB350,000.00 in other monetary capital.
At the beginning of the period, the scope of restricted use covered the margin for fixed-term deposits of
transformer of RMB293,481.72 in bank deposits, as well as a land construction deposit of
RMB7,036,404.33, an L/C deposit of RMB7,000,000.00, an ETC vehicle deposit of RMB69,000.00, and
Tmall and Alipay deposits of RMB405,000.00 in other monetary capital.
2. Trading financial assets
"□ Applicable" "√ Not applicable"
3. Derivative financial assets
"□ Applicable" "√ Not applicable"
4. Notes receivable
(1). List by the classification of notes receivable
"□ 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). Notes that have been transferred to accounts receivable by the Company at the end of the
period due to the non-performance of the contract of the drawer
"□ Applicable" "√ Not applicable"
(5). Disclosed by the classification of bad debt accrual method
"□ Applicable" "√ Not applicable"
Provision for bad debts accrued by item:
"□ Applicable" "√ Not applicable"
Provision for bad debts by portfolio:
"□ Applicable" "√ Not applicable"
If bad debt provision is accrued according to the general model of expected credit loss, please refer to
other receivables disclosure:
"□ Applicable" "√ Not applicable"
(6). Information of bad-debt provision
"□ Applicable" "√ Not applicable"
(7). Notes receivable actually written off in the current period
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
5. Accounts receivable
(1). Disclosed by account receivable age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Book balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 141,934,418.24
1 to 2 years 5,534,941.10
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2 to 3 years 9,367,566.25
Above 3 years 6,233,959.11
3 to 4 years
4 to 5 years
Above 5 years
Total 163,070,884.70
(2). Disclosed by the classification of the Bad debt accrual method
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Category Provision Book Provision Book
Percentage Percentage
Amount Amount proportion value Amount Amount proportion value
(%) (%)
(%) (%)
Provision for 14,489,512.75 8.89 14,489,512.75 100.00 16,916,210.88 5.29 16,916,210.88 100.00
bad debts
accrued by
item
Including:
Provision for 148,581,371.95 91.11 9,954,744.05 6.70 138,626,627.90 303,007,487.69 94.71 18,129,068.11 5.98 284,878,419.58
bad debts by
portfolio
Including:
Total 163,070,884.70 / 24,444,256.80 / 138,626,627.90 319,923,698.57 / 35,045,278.99 / 284,878,419.58
Provision for bad debts accrued by item:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance
Name Provision for bad Provision ratio
Carrying amount Reason for accrual
debts (%)
Individual provision 14,489,512.75 14,489,512.75 100.00 Expected as unable
for bad debt reserves to recover
Total 14,489,512.75 14,489,512.75 100.00 /
Explanation of bad debt provision by item:
"□ Applicable" "√ Not applicable"
Provision for bad debts by portfolio:
"√ Applicable" "□ Not applicable"
Provision by portfolio: Aging portfolio
Unit: Yuan Currency: RMB
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Ending balance
Name
Accounts receivable Provision for bad debts Provision ratio (%)
Aging portfolio 148,581,371.95 9,954,744.05 6.70
Total 148,581,371.95 9,954,744.05 6.70
Confirmation standard and explanation of bad debts accrued by portfolio
"√ Applicable" "□ Not applicable"
Ending amount
Account age
Carrying amount Provision for bad debts Provision ratio (%)
Within 1 year 141,929,594.23 7,096,479.76 5.00
1-2 years 4,799,597.04 1,439,879.12 30.00
2-3 years 867,591.00 433,795.49 50.00
Above 3 years 984,589.68 984,589.68 100.00
Subtotal 148,581,371.95 9,954,744.05 6.70
If bad debt provision is accrued according to the general model of expected credit loss, please refer to
other receivables disclosure:
"□ Applicable" "√ Not applicable"
(3). Information of bad-debt provision
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Changes in amount of the current period
Withdr
Opening Ending
Category awal or Charge-off Other
balance Accrual balance
write-b or write-off changes
ack
Individual 16,916,210.8 2,423,301.87 4,850,000.0 14,489,512.7
provision 8 0 5
for bad
debt
reserves
Provision 18,129,068.1 -7,784,583.95 2,416.48 -387,323.63 9,954,744.05
for bad 1
debts by
portfolio
Total 35,045,278.9 -5,361,282.08 4,852,416.4 -387,323.63 24,444,256.8
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9 8 0
The RMB-387,323.63 recorded in the other change in the provision for bad debts by portfolio of the
current period involves the disposal of shares in Shanghai Healthlong Biochemical Technology Co., Ltd.
(hereinafter referred to as "Shanghai Healthlong") where the bad debt provision for account receivable is
transferred out.
Among them, a significant amount of bad-debt provision withdrawn or written back in the current
period:
"□ Applicable" "√ Not applicable"
(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 4,852,416.48
Among them, information of accounts receivable significantly written off
"□ Applicable" "√ Not applicable"
Explanation of the write-off of the account receivable
"□ Applicable" "√ Not applicable"
(5). Accounts receivable of the top five ending balances collected by debtor
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Proportion of total
balance of accounts Ending balance of bad
Company name Ending balance
receivable at the end of debt provision
the period (%)
Beijing Jingdong Century 88,195,266.10 54.08 4,409,763.31
Trading Co., Ltd.
Vipshop (China) Co., Ltd. 26,206,593.95 16.07 1,310,329.70
Shanghai Zimei Investment 5,372,504.78 3.29 268,625.24
Management Co., Ltd.
Hangzhou Yongyi Network 4,640,580.00 2.85 4,640,580.00
Technology Co., Ltd.
Shandong Chengtian 1,722,490.44 1.06 86,124.52
Trading Co., Ltd.
Total 126,137,435.27 77.35 10,715,422.77
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Other description
No
(6). Accounts receivable derecognized due to transfer of financial assets
"□ Applicable" "√ Not applicable"
(7). The amount of assets and liabilities formed by transferring accounts receivable and
continuing to be involved
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
6. Receivables financing
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Notes receivable 3,242,000.00 5,531,997.32
Total 3,242,000.00 5,531,997.32
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Changes in the current period of receivables financing and changes in fair value:
"□ Applicable" "√ Not applicable"
If bad debt provision is accrued according to the general model of expected credit loss, please refer to
other receivables disclosure:
"□ Applicable" "√ Not applicable"
Other explanations:
"√ Applicable" "□ Not applicable"
Notes receivable endorsed or discounted by the Company at the end of the period and not yet due on the
balance sheet date
Item Recognized amount terminated at the end of the period
Bank acceptance bills 6,531,222.00
Subtotal 6,531,222.00
It is unlikely that a bank acceptance bill will be overdue, as the acceptor of bank acceptance bill is a
high-credit commercial bank. Therefore, the Company has de-recognized endorsed or discounted bank
acceptance bills. If any of such bills is overdue, the Company will still be jointly and severally liable to
the holder according to the Negotiable Instruments Law.
7. Prepayment
(1). Prepayments are listed by age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Account age
Amount Percentage (%) Amount Percentage (%)
Within 1 year 57,284,969.16 98.08 81,149,897.32 98.07
1 to 2 years 1,062,309.95 1.82 802,393.47 0.97
2 to 3 years 59,368.00 0.10 790,525.13 0.96
Above 3 years
Total 58,406,647.11 100.00 82,742,815.92 100.00
Explanation of reasons why prepayments with more than 1 year's age and significant amount are not
settled in time:
No
(2). Prepayments of the top five ending balances collected by prepaid objects
"√ Applicable" "□ Not applicable"
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Ending Ratio of total ending
Company name
balance balance of prepayment (%)
Hangzhou Alimama Software Service Co., Ltd. 32,022,593.57 54.83
Guangxi Jingdong Xinjie E-commerce Co., Ltd. 6,467,532.61 11.07
Tianjin Xingyou Intalk Culture Co., Ltd. 1,590,025.00 2.72
Guangzhou Xiangjiao Culture Development Co., Ltd. 1,422,586.47 2.44
Wuhan Juliang Xingtu Technology Co., Ltd. 815,127.91 1.40
Total 42,317,865.56 72.46
Other description
No
Other description
"□ Applicable" "√ Not applicable"
8. Other receivables
List by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Interest receivables
Dividend receivables
Other receivables 66,043,707.81 48,733,527.35
Total 66,043,707.81 48,733,527.35
Other explanations:
"□ Applicable" "√ Not applicable"
Interest receivables
(1). Classification of interest receivables
"□ Applicable" "√ Not applicable"
(2). Significant overdue interest
"□ Applicable" "√ Not applicable"
(3). Provision for bad debts
"□ Applicable" "√ Not applicable"
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Other explanations:
"□ Applicable" "√ Not applicable"
Dividend receivables
(4). Dividend receivable
"□ Applicable" "√ Not applicable"
(5). Important dividends receivable with an age of more than one year
"□ Applicable" "√ Not applicable"
(6). Provision for bad debts
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
Other receivables
(7). Disclosed by account receivable age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Book balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 71,395,423.09
1 to 2 years 22,327,310.76
2 to 3 years 6,084,598.80
Above 3 years 1,211,141.49
3 to 4 years
4 to 5 years
Above 5 years
Total 101,018,474.14
212/ 323
Annual Report 2021
(8). Classification by nature of payment
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Book balance at the end of the Book balance at the beginning
Nature of payment
period of the period
Security deposits 24,126,373.18 15,177,436.77
Suspense payment receivables 74,931,769.08 39,073,769.81
Reserve funds 624,289.31 712,751.90
Others 1,336,042.57 744,011.86
Total 101,018,474.14 55,707,970.34
(9). Provision for bad debts
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
First stage Second stage Third stage
Expected credit loss Expected credit loss
Provision for bad Expected credit for the entire for the entire
Total
debts losses over the duration (credit duration (credit
next 12 months impairment not impairment has
occurred) occurred)
Balance as of 2,141,112.44 3,171,320.29 1,662,010.26 6,974,442.99
January 1, 2021
The balance as of
January 1, 2021 is
in the current
period
--Transferred to -295,221.34 295,221.34
the second stage
--Transferred to -1,145,169.47 -1,862,891.32 3,008,060.79
the third stage
--Returned to the
second stage
--Returned to the
first stage
Accrual in the 3,170,915.48 167,677.75 26,857,636.03 30,196,229.26
current period
Amount written
213/ 323
Annual Report 2021
back in the current
period
Current write-off
Amount written -73.40 -73.40
off in the current
period
Other changes -617,233.34 -1,254,200.30 -324,398.88 -2,195,832.52
Balance as of 3,254,330.37 517,127.76 31,203,308.20 34,974,766.33
December 31,
2021
Explanation of significant changes in book balance of other receivables with changes in provision for
loss in the current period:
"□ Applicable" "√ Not applicable"
The amount of bad debt provision in the current period and the basis for evaluating whether the credit
risk of financial instruments increases significantly:
"□ Applicable" "√ Not applicable"
(10). Information on bad-debt provision
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Changes in amount of the current period
Opening Withdrawal Charge-off Ending
Category Other
balance Accrual or or balance
changes
write-back write-off
Individual 26,987,367.33 26,987,367.33
provision
for bad
debt
reserves
Provision 6,974,442.99 3,208,861.93 -73.40 -2,195,832.52 7,987,399.00
for bad
debts by
portfolio
Total 6,974,442.99 30,196,229.26 -73.40 -2,195,832.52 34,974,766.33
214/ 323
Annual Report 2021
Other changes are the disposal of the equity of Shanghai Healthlong, and the bad debt reserves of other
receivables are transferred out accordingly.
Among them, a significant amount of bad-debt provision written back or withdrawn in the current
period:
"□ Applicable" "√ Not applicable"
(11). Other receivables actually written off in the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Written off amount
Other accounts receivable actually written off 73.40
Wherein, write-off of other important receivables:
"□ Applicable" "√ Not applicable"
Explanation on write-off of other receivables:
"□ Applicable" "√ Not applicable"
(12). Other receivables of the top five ending balances collected by debtor
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
As a proportion
Provision for
Company Nature of Ending Account of total ending
bad debts
name payment balance age balance in other
Ending balance
receivables (%)
Zhejiang Tmall Suspense 22,958,784.33 Within 1 22.73 1,147,939.22
Network Co., payment year
Ltd. receivable
Beijing Space Suspense 20,478,374.41 Within 1 20.27 1,023,918.72
Transformation payment year
Technology receivable
Co., Ltd.
EURL Suspense 19,606,379.23 [Note 2] 19.41 19,606,379.23
Pharmatica payment
[Note 1] receivable
215/ 323
Annual Report 2021
Wuxing Security 13,493,392.00 Within 1 13.36 674,669.60
District Daixi deposit year
Town People's
Government of
Huzhou City
Sikerom Suspense 7,380,988.10 1-2 years 7.31 7,380,988.10
Europe, payment
GMBH receivable
Total / 83,917,918.07 / 83.08 29,833,894.87
[Note 1] EURL Pharmatica amount is the consolidated amount of URL Pharmatica, Parisezhan HK, Ltd.,
SARL Ortus and SAS Aredis under the same control.
[Note 2] RMB6,308,815.77 in 1 year; RMB13,222,563.46 in 1-2 years; RMB75,000.00 in 2-3 years
(13). Receivables involving government subsidies
"□ Applicable" "√ Not applicable"
(14). Other receivables de-recognized due to transfer of financial assets
"□ Applicable" "√ Not applicable"
(15). The amount of assets and liabilities formed by transferring other receivables and continuing
to be involved
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
9. Inventories
(1). Classification of inventories
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Inventory falling Inventory falling
price reserves/ price reserves/
Item Carrying Provision for Carrying Provision for
Book value Book value
amount impairment of amount impairment of
contract contract
performance cost performance cost
Raw 29,764,865.65 1,131,843.45 28,633,022.20 25,023,198.10 790,191.51 24,233,006.59
materials
216/ 323
Annual Report 2021
Goods in 13,001,345.50 168,931.64 12,832,413.86 19,699,809.41 333,215.45 19,366,593.96
process
Inventory 373,318,017.1 25,067,162.01 348,250,855.13 402,419,036.40 21,221,419.14 381,197,617.26
commodities 4
Turnover
materials
Consumable
biological
assets
Performance
cost
Packaging 37,042,703.68 650,080.09 36,392,623.59 32,988,469.32 1,383,453.99 31,605,015.33
Low value 7,337,309.01 300,823.91 7,036,485.10 2,643,028.64 268,617.88 2,374,410.76
consumables
Outsourcing 14,904,454.81 111,096.40 14,793,358.41 11,494,429.58 1,630,055.73 9,864,373.85
gifts
Total 475,368,695.7 27,429,937.50 447,938,758.29 494,267,971.45 25,626,953.70 468,641,017.75
9
(2). Inventory falling price reserves and provision for impairment of contract performance cost
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increased amount in the Decreased amount in the
current period current period Ending
Item Opening balance
Write-back or balance
Accrual Other Other
charge-off
Raw materials 790,191.51 855,979.02 514,327.08 1,131,843.45
Goods in process 333,215.45 50,806.32 215,090.13 168,931.64
Inventory 21,221,419.14 36,751,801.64 32,449,929.84 456,128.9 25,067,162.01
commodities 3
Turnover materials
Consumable
biological assets
Performance cost
Packaging 1,383,453.99 674,166.02 1,407,539.92 650,080.09
Low-value 268,617.88 200,597.02 168,390.99 300,823.91
consumables
Outsourcing gifts 1,630,055.73 309,771.43 1,828,730.76 111,096.40
Total 25,626,953.70 38,843,121.45 36,584,008.72 456,128.9 27,429,937.50
3
The RMB456,128.93 recorded under “Other” items of the current period decrease in the provision for
inventory depreciation involves the disposal of shares in Shanghai Healthlong where the inventory
depreciation provision is transferred out.
217/ 323
Annual Report 2021
Some products have net realizable value lower than costs at the end of the current period, so the
provision for inventory depreciation is made at the difference between the costs and the net realizable
value.
(3). Explanation on the ending balance of inventory containing the capitalized amount of
borrowing costs
"□ Applicable" "√ Not applicable"
(4). Explanation on amortization amount of contract performance cost in current period
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
10. Contract assets
(1). Description of contract assets
"□ Applicable" "√ Not applicable"
(2). The amount and reasons of significant changes in book value during the reporting period
"□ Applicable" "√ Not applicable"
(3). Provision for impairment of contract assets in the current period
"□ Applicable" "√ Not applicable"
If bad debt provision is accrued according to the general model of expected credit loss, please refer to
other receivables disclosure:
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
11. Assets held for sale
"□ Applicable" "√ Not applicable"
12. Non-current assets due within one year
"□ Applicable" "√ Not applicable"
Significant debt investments and other debt investments at the end of the period:
"□ Applicable" "√ Not applicable"
Other description
No
218/ 323
Annual Report 2021
13. Other current assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Contract costs
Return cost receivable 3,425,429.44 4,434,684.01
Input VAT to be deducted 39,013,811.93 24,162,220.64
Advance payment of taxes 11,095,721.02 6,638,906.62
Total 53,534,962.39 35,235,811.27
Other description
No
14. Debt investment
(1). Description of debt investment
"□ Applicable" "√ Not applicable"
(2). Significant debt investments at the end of the period
"□ Applicable" "√ Not applicable"
(3). Impairment provision accrual
"□ Applicable" "√ Not applicable"
The amount of impairment provision in the current period and the basis for evaluating whether the credit
risk of financial instruments increases significantly
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
15. Other debt investments
(1). Description of other debt investments
"□ Applicable" "√ Not applicable"
(2). Other significant debt investments at the end of the period
"□ Applicable" "√ Not applicable"
(3). Impairment provision accrual
"□ Applicable" "√ Not applicable"
219/ 323
Annual Report 2021
The amount of impairment provision in the current period and the basis for evaluating whether the credit
risk of financial instruments increases significantly
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
16. Long-term receivables
(1). Description of long-term receivables
"□ Applicable" "√ Not applicable"
(2). Provision for bad debts
"□ Applicable" "√ Not applicable"
The amount of bad debt provision in the current period and the basis for evaluating whether the credit
risk of financial instruments increases significantly
"□ Applicable" "√ Not applicable"
(3). Long-term receivables de-recognized due to transfer of financial assets
"□ Applicable" "√ Not applicable"
(4). The amount of assets and liabilities formed by transferring long-term receivables and
continuing to be involved
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
17. Long-term equity investments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase or decrease in the current period
Declared Ending
Recognized Other
Initial Other payment of Ending balance of
Invested entity Additional Investment investment gain comprehensive Provision for
balance changes in cash Others balance impairment
investment decrease and loss under income impairment
equity dividends provision
equity method adjustments
or profits
I. Joint Venture
Huzhou Panrui 3,306,630.57 -231,871.89 3,074,758.68
Industry
220/ 323
Annual Report 2021
Investment
Partnership
(Limited
Partnership)
Subtotal 3,306,630.57 -231,871.89 3,074,758.68
II. Affiliated enterprises
Xiongke Culture 2,985,511.35 -196,050.69 2,789,460.66
Media
(Hangzhou) Co.,
Ltd.
Jiaxing Woyong 45,623,486.90 28,206,800.00 -1,148,553.52 72,681,733.38
Investment
Partnership
(Limited
Partnership)
Zhuhai 99,540,881.10 -5,456,530.14 14,670,468.59 79,413,882.37 14,670,468.5
Healthlong 9
Biotechnology
Co., Ltd.
Beijing Xiushi 6,000,000.00 -575,307.63 5,424,692.37
Culture
Development
Co., Ltd.
Metis Info Tech 6,304,430.78 270,578.03 6,575,008.81
(Guangzhou)
Co., Ltd.
Subtotal 54,913,429.03 133,747,681.1 -7,105,863.95 14,670,468.59 166,884,777.5 14,670,468.5
0 9 9
58,220,059.60 133,747,681.1 -7337735.84 14,670,468.59 169,959,536.2 14,670,468.5
Total
0 7 9
Other description
No
18. Investment in other equity instruments
(1). Description of investment in other equity instruments
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Hangzhou Regenovo Biotechnology, Ltd. 20,580,000.00 20,580,000.00
LipoTrue, SL 35,822,400.00
Total 56,402,400.00 20,580,000.00
(2). Description of non-transactional equity instrument investments
"□ Applicable" "√ Not applicable"
Other explanations:
"√ Applicable" "□ Not applicable"
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.
221/ 323
Annual Report 2021
19. Other non-current financial assets
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
20. Investment real estate
Measurement mode of investment properties
(1). Investment real estate adopting the Cost Measurement model
Unit: Yuan Currency: RMB
Building and Land use Construction
Item Total
construction rights in progress
I. Original book value
1. Balance at the beginning of the 76,860,032.10 76,860,032.10
period
2. Amount increased in the 960,547.30 960,547.30
current period
(1) Outsourcing 960,547.30 960,547.30
(2) Transfer-in of inventory\fixed
assets\construction in process
(3) Increase in enterprise merger
3. Decrease in the current period
(1) Disposal
(2) Others transferred out
4. Ending balance 77,820,579.40 77,820,579.40
II. Accumulated depreciation and accumulated amortization
1. Balance at the beginning of the 4,622,422.00 4,622,422.00
period
2. Amount increased in the 2,876,289.40 2,876,289.40
current period
(1) Provision or amortization 2,876,289.40 2,876,289.40
3. Decrease in the current period
(1) Disposal
(2) Others transferred out
4. Ending balance 7,498,711.40 7,498,711.40
III. Impairment Provision
1. Balance at the beginning of the
222/ 323
Annual Report 2021
period
2. Amount increased in the
current period
(1) Provision
3. Decrease in current period
(1) Disposal
(2) Others transferred out
4. Ending balance
IV. Book Value
1. Book value at the end of the 70,321,868.00 70,321,868.00
period
2. Book value at the beginning of 72,237,610.10 72,237,610.10
period
(2). Real estate held for investment with pending proprietorship certificate
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
21. Fixed assets
List by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Fixed assets 558,981,209.20 565,864,152.62
Disposal of fixed assets
Total 558,981,209.20 565,864,152.62
Other explanations:
"□ Applicable" "√ Not applicable"
Fixed assets
(1). Description of fixed assets
"√ Applicable" "□ Not applicable"
223/ 323
Annual Report 2021
Unit: Yuan Currency: RMB
Property and Special Means of General
Item Total
buildings equipment transportation equipment
I. Original book value:
1. Balance at the beginning of the
533,689,138.34 177,652,603.03 21,224,973.25 62,250,935.84 794,817,650.46
period
2. Amount increased in the current
6,112,077.65 18,999,249.35 265,221.24 14,910,468.14 40,287,016.38
period
(1) Purchase 6,112,077.65 6,846,572.87 265,221.24 14,910,468.14 28,134,339.90
(2) Transfer from construction in
12,152,676.48 12,152,676.48
progress
(3) Increase in enterprise merger
3. Decrease in the current period 1,612,387.59 2,525,173.77 4,137,561.36
(1) Disposal or scrapping 154,019.72 154,019.72
2) Other decreases [Note] 1,612,387.59 2,371,154.05 3,983,541.64
4. Ending balance 539,801,215.99 196,651,852.38 19,877,806.90 74,636,230.21 830,967,105.48
II. Accumulated depreciation
1. Balance at the beginning of the
89,221,072.09 101,568,423.97 12,505,940.35 25,658,061.43 228,953,497.84
period
2. Amount increased in the current
18,699,867.06 15,566,905.29 1,953,825.63 8,285,671.38 44,506,269.36
period
(1) Provision 18,699,867.06 15,566,905.29 1,953,825.63 8,285,671.38 44,506,269.36
3. Decrease in the current period 425,968.71 1,047,902.21 1,473,870.92
(1) Disposal or scrapping 71,332.84 71,332.84
2) Other decreases [Note] 425,968.71 976569.37 1,402,538.08
4. Ending balance 107,920,939.15 117,135,329.26 14,033,797.27 32,895,830.60 271,985,896.28
III. Impairment Provision
1. Balance at the beginning of the
period
2. Amount increased in the current
period
(1) Provision
3. Decrease in the current period
(1) Disposal or scrapping
4. Ending balance
IV. Book Value
1. Book value at the end of the
431,880,276.84 79,516,523.12 5,844,009.63 41,740,399.61 558,981,209.20
period
2. Book value at the beginning of
444,468,066.25 76,084,179.06 8,719,032.90 36,592,874.41 565,864,152.62
period
[Note] The RMB3,983,541.64 recorded under other decrease of original value of fixed assets and the
RMB1,402,538.08 recorded under Other decrease of accumulated depreciation involve the disposal of
shares in Shanghai Healthlong where the original value of fixed assets and the accumulated depreciation
are transferred out.
224/ 323
Annual Report 2021
(2). Description of temporarily idle fixed assets
"□ Applicable" "√ Not applicable"
(3). Description of fixed assets rented through finance lease
"□ Applicable" "√ Not applicable"
(4). Fixed assets leased out through operating lease
"□ Applicable" "√ Not applicable"
(5). Fixed assets without property right certificate
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
Disposal of fixed assets
"□ Applicable" "√ Not applicable"
Construction in progress
List by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Construction in progress 108,678,896.27 47,324,523.36
Project goods and material
Total 108,678,896.27 47,324,523.36
Other explanations:
"□ Applicable" "√ Not applicable"
Construction in progress
(1). Description of construction in progress
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Item Carrying Provision for Carrying Provision for
Book value Book value
amount impairment amount impairment
Huzhou Production Base 55,292,163.04 55,292,163.04 2,483,716.82 2,483,716.82
Expansion Project (Phase
I)
Make-up Factory 26,447,530.33 26,447,530.33 28,236,822.35 28,236,822.35
225/ 323
Annual Report 2021
Longwu R&D Center 7,157,088.81 7,157,088.81
Construction Project
Decoration engineering 5,374,335.45 5,374,335.45 1,725,308.02 1,725,308.02
Information System 641,190.64 641,190.64
Upgrade Project
Other sporadic projects 13,766,588.00 13,766,588.00 14,878,676.17 14,878,676.17
Total 108,678,896.27 108,678,896.27 47,324,523.36 47,324,523.36
226/ 323
Annual Report 2021
(2). Changes of items under important construction in progress in the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount Proportion of Interest
Increased amount Other decreased Accumulated amount Including: Amount of
Initial transferred to Ending accumulated capitalization rate in
Item Budget in the current amount in the Progress of works of interest interest capitalization Source of fund
balance fixed assets in balance project investment the current period
period current period capitalization in the current period
current period to budget (%) (%)
Huzhou RMB416,783,300 2,483,716.82 56,398,711.61 3,590,265.39 55,292,163.04 14.13 14.13% 916,247.40 916,247.40 4.57 Raised funds and owned
Production Base funds
Expansion
Project (Phase I)
Make-up RMB66,110,000 28,236,822.35 405,575.23 2,194,867.25 26,447,530.33 90.70 97.31% Self-owned capital
Factory
Longwu R&D RMB128,611,300 7,157,088.81 7,157,088.81 5.56 5.56% 526,470.07 526,470.07 4.57 Raised funds and owned
Center funds
Construction
Project
Information RMB112,395,000 641,190.64 641,190.64 0.57 0.57% 244,964.22 244,964.22 4.57 Raised funds and owned
System Upgrade funds
Project
Total RMB723,899,600 30,720,539.17 64,602,566.29 5,785,132.64 89,537,972.82 / / 1,687,681.69 1,687,681.69 / /
227/ 323
Annual Report 2021
(3). Provision for impairment of construction in progress in the current period
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
Project goods and material
(4). Project goods and materials
"□ Applicable" "√ Not applicable"
22. Productive biological assets
(1). Productive biological assets with Cost Measurement mode
"□ Applicable" "√ Not applicable"
(2). Productive biological assets with Fair Value Econometric mode
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
23. Oil and gas assets
"□ Applicable" "√ Not applicable"
24. Right-of-use assets
"□ Applicable" "√ Not applicable"
25. Intangible assets
(1). Description of intangible assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Land use Unpatented Customer Trademark
Item Software Patent right Total
rights technology resources right
I. Original book value
1. Balance at the 376,212,928.4 19,559,130.8 420,000.00 659,500.00 12,833,684.0 137,131.75 409,822,375.0
beginning of the 7 4 0 6
period
2. Amount 96187201.63 4415332.73 26367.92 30693.07 100,659,595.3
increased in the 5
current period
(1) Purchase 96,187,201.63 4,415,332.73 26,367.92 30,693.07 100,659,595.3
228/ 323
Annual Report 2021
5
(2) Internal R&D
(3) Increase in
business mergers
3. Decrease in 427,966.61 126,900.00 554,866.61
the current
period
(1) Disposal
12) Other 427,966.61 126,900.00 554,866.61
decreases [Note]
4. Ending 472,400,130.1 23,546,496.9 446,367.92 563,293.07 12,833,684.0 137,131.75 509,927,103.8
balance 0 6 0 0
II. Accumulated amortization
1. Balance at the 68,955,031.99 17,764,824.3 420,000.00 528,525.00 7,486,315.67 24,354.06 95,179,051.09
beginning of the 7
period
2. Amount 11,382,886.90 2,172,967.49 3,582.17 26,060.64 4,277,894.66 27,612.17 17,891,004.03
increased in the
current period
(1) Provision 11,382,886.90 2,172,967.49 3,582.17 26,060.64 4,277,894.66 27,612.17 17,891,004.03
3. Decrease in 266,553.85 21,521.76 288,075.61
the current
period
(1) Disposal
1(2) Other 266,553.85 21,521.76 288,075.61
decreases [Note]
4. Ending 80,337,918.89 19,671,238.0 423,582.17 533,063.88 11,764,210.3 51,966.23 112,781,979.5
balance 1 3 1
III. Impairment Provision
1. Balance at the
beginning of the
period
2. Amount
increased in the
current period
(1) Provision
3. Decrease in
the current
period
(1) Disposal
4. Ending
balance
IV. Book Value
1. Book value at 392,062,211.2 3,875,258.95 22,785.75 30,229.19 1,069,473.67 85,165.52 397,145,124.2
the end of the 1 9
period
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2. Book value at 307,257,896.4 1,794,306.47 130,975.00 5,347,368.33 112,777.69 314,643,323.9
the beginning of 8 7
period
[Note] The RMB554,866.61 recorded under Other decrease of original value of intangible assets and the
RMB288,075.61 recorded under Other decrease of accumulated amortization, involve the disposal of
shares in Shanghai Healthlong where the original value of intangible assets and the accumulated
depreciation are transferred out.
At the end of this period, the proportion of intangible assets formed through internal research and
development of the Company to the balance of intangible assets is 0.00%.
(2). Land use right without a property ownership certificate
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
26. Development expenses
"□ Applicable" "√ Not applicable"
27. Goodwill
(1). Original book value of goodwill
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase in the current Decrease in the current
Name of the invested period period
Opening Ending
unit or items forming Formed by
balance balance
goodwill business Disposal
combination
Shanghai Healthlong 31,034,161.2 31,034,161.20
Biochemical 0
Technology Co., Ltd.
31,034,161.2 31,034,161.20
Total
0
(2). Provision for impairment of goodwill
"□ Applicable" "√ Not applicable"
(3). Information about the asset group or combination of asset groups of goodwill
"□ Applicable" "√ Not applicable"
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(4). Explain the goodwill impairment test process, key parameters (such as the forecast period
growth rate, stable period growth rate, profit rate, discount rate, forecast period when the
present value of future cash flow is expected, if applicable) and the Recognition method of
goodwill impairment loss
"□ Applicable" "√ Not applicable"
(5). Impact of goodwill impairment test
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
28. Long-term deferred 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 33,212,097.21 10,724,782.99 14,728,760.61 1,172,897.07 28,035,222.52
costs
Endorsement 16,863,206.69 15,566,037.72 1,297,168.97
fee
Garage use 385,900.48 192,949.92 192,950.56
fee
Software 115,589.15 446,294.55 191,637.50 139,114.14 231,132.06
service fee
Total 50,576,793.53 11,171,077.54 30,679,385.75 1,312,011.21 29,756,474.11
Other explanations:
The Other decrease of long-term prepaid expense includes: 1) RMB1,177,497.94, involving the disposal
of shares in Shanghai Healthlong where the long-term prepaid expense is transferred out; and 2)
RMB134,513.27, involving the Company's disposal of unfinished amortized store equipment where the
fitting-out expense is transferred out.
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29. Deferred income tax assets/deferred income tax liabilities
(1). Deferred income tax assets without offset
"√ Applicable" "□ Not applicable"
232/ 323
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Unit: Yuan Currency: RMB
Ending balance Opening balance
Deductible Deferred income Deductible Deferred income
Item
temporary taxes temporary taxes
difference Assets difference Assets
Provision for impairment
of assets
Unrealized profit from 51,427,566.52 11,315,875.56 28,021,116.50 7,005,279.12
internal transactions
Deductible loss 24,661,711.36 6,165,427.84 14,342,610.24 3,585,652.56
Provisions for bad debts 12,133,125.37 3,033,245.75 27,188,715.77 6,796,972.50
of accounts receivable
Inventory valuation 13,851,297.64 2,192,173.55 15,796,150.28 2,634,264.73
reserve
Impact of share-based 64,709,836.24 13,951,922.23 103,953,760.07 22,803,327.25
payments
Asset-related government 6,416,263.33 962,439.50 8,495,353.33 1,274,303.00
subsidies
Unused membership 4,487,591.14 1,121,897.79
credits
Anticipated return losses 4,699,734.32 1,174,933.59 5,755,415.21 1,438,853.81
Total 177,899,534.78 38,796,018.02 208,040,712.54 46,660,550.76
(2). Deferred income tax liabilities without offset
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Taxable Deferred income Taxable Deferred income
Item
temporary taxes temporary taxes
difference Liabilities difference Liabilities
Asset appreciation
assessment in businesses
consolidation under
common control
Changes in the fair value
of other creditors'
investment
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Changes in the fair value
of other equity
instruments
One-time deduction for 56,019,830.45 8,408,158.81 44,252,231.66 6,874,105.45
depreciation of fixed
assets
Total 56,019,830.45 8,408,158.81 44,252,231.66 6,874,105.45
(3). Deferred income tax assets or liabilities listed in net amount after offset
"□ Applicable" "√ Not applicable"
(4). Details of unrecognized deferred income tax assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Deductible temporary 86,680,894.07 25,362,258.78
difference
Deductible loss 328,350,840.97 379,300,493.32
Total 415,031,735.04 404,662,752.10
(5). The 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
2021 48,812,246.22
2022 36,720,246.07 62,924,802.76
2023 54,275,434.81 63,485,783.30
2024 92,977,432.81 99,748,285.21
2025 80,408,649.72 104,329,375.83
2026 63,969,077.56
Total 328,350,840.97 379,300,493.32 /
Other explanations:
"□ Applicable" "√ Not applicable"
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30. Other non-current assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Carrying Provision Carrying Provision
Item
amount for Book value amount for Book value
impairment impairment
Contract costs
Performance
cost
Return cost
receivable
Contract assets
Prepaid for 39,897,000.00 39,897,000.00 83,203,303.76 83,203,303.76
long-term asset
purchase funds
Other long-term 4,270,303.56 4,270,303.56 4,119,476.27 4,119,476.27
assets
Total 44,167,303.56 44,167,303.56 87,322,780.03 87,322,780.03
Other explanations:
No
31. Short-term borrowings
(1). Classification of short-term loans
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Pledge loans
Mortgage loan
Guaranteed loan 99,116,462.50
Credit loans 200,251,506.85 200,163,972.59
Total 200,251,506.85 299,280,435.09
Explanation on the classification of short-term loans:
No
(2). Overdue and outstanding short-term loans
"□ Applicable" "√ Not applicable"
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Particulars of important overdue but yet unrepaid short-term borrowings:
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
32. Trading financial liabilities
"□ Applicable" "√ Not applicable"
33. Derivative financial liabilities
"□ Applicable" "√ Not applicable"
34. Notes payable
(1).Presentation of notes payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Type Ending balance Opening balance
Trade acceptances
Bank acceptance bills 79,156,771.40 64,580,000.00
Total 79,156,771.40 64,580,000.00
The amount of bills payable due and unpaid at the end of this period is RMB0.00.
35. Accounts payable
(1). List by accounts payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Payment for goods 309,697,429.86 428,697,891.17
Expenses payable 84,316,536.83 69,493,675.06
Payment for engineering equipment 10,012,274.47 17,640,465.04
Total 404,026,241.16 515,832,031.27
(2). Important accounts payable with an aging of more than one year
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
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36. Accounts received in advance
(1). List by advance accounts
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Rents receivable in advance 173,769.85
Total 173,769.85
(2). Important advance accounts with an aging of more than one year
"□ Applicable" "√ Not applicable"
Other description
"□ Applicable" "√ Not applicable"
37. Contract liabilities
(1). Information of contract liability
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Advance payment 82,548,148.92 25,430,738.70
Unused membership credits 8,603,836.40 5,188,040.29
Total 91,151,985.32 30,618,778.99
(2). The amount and reasons for significant changes in book value during the reporting period
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
38. Employee benefits payable
(1). List by employee pay payable
"√ Applicable" "□ Not applicable"
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Annual Report 2021
Unit: Yuan Currency: RMB
Opening Increase in the Decrease in the
Item Ending balance
balance current period current period
I. Short-term compensation 70,254,622.82 429,154,291.95 421,339,109.67 78,069,805.10
II. Post-employment 573,616.88 22,579,188.61 22,573,560.87 579,244.62
benefits - defined
contribution plans
III. Dismissal Benefit
IV. Other benefits due
within one year
Total 70,828,239.70 451,733,480.56 443,912,670.54 78,649,049.72
(2). List by short-term compensation
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Opening Increase in the Decrease in the
Item Ending balance
balance current period current period
I. Salaries, bonuses, 68,643,838.60 385,853,200.13 377,326,904.66 77,170,134.07
allowances, and subsidies
II. Welfare expense of 6,815.56 15,643,674.87 15,643,798.87 6,691.56
employee
III. Social insurance 882,228.00 14,854,750.86 15,218,853.67 518,125.19
premium
Incl.: Medical insurance 776,190.95 14,154,214.39 14,445,606.46 484,798.88
premium
Industrial injury 57,859.33 478,761.18 523,610.82 13,009.69
insurance premium
Maternity insurance 48,177.72 221,775.29 249,636.39 20,316.62
premium
IV. Housing provident fund 721,740.66 10,831,471.83 11,178,358.21 374,854.28
V. Trade union fund and 1,971,194.26 1,971,194.26
staff education fund
VI. Short-term paid leave
VII. Short-term
profit-sharing plan
Total 70,254,622.82 429,154,291.95 421,339,109.67 78,069,805.10
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Annual Report 2021
(3). List by defined contribution plan
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Opening Increase in the Decrease in the
Item Ending balance
balance current period current period
1. Basic endowment insurance 546,117.72 21,815,875.75 21,806,474.75 555,518.72
2. Unemployment insurance 27,499.16 763,312.86 767,086.12 23,725.90
expense
3. Enterprise annuity payment
Total 573,616.88 22,579,188.61 22,573,560.87 579,244.62
Other explanations:
"□ Applicable" "√ Not applicable"
39. Taxes payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Value added tax ("VAT") 23,812,907.23 25,557,167.53
Consumption tax 3,547.12 359.31
Business tax
Enterprise income tax 63,190,175.54 32,994,016.76
Personal income tax 1,481,039.09 1,193,830.42
Urban maintenance and construction tax 4,705,718.03 2,971,080.02
Property tax 2,133,274.27 5,822,344.89
Surtax for education expenses 2,598,933.67 1,469,430.26
Local education surcharge 1,732,622.45 979,620.14
Stamp duties 175,861.55 330,703.60
Disabled security fund 14,175.52 16,737.84
Land use tax 44,922.50
Total 99,893,176.97 71,335,290.77
Other explanations:
No
239/ 323
Annual Report 2021
40. Other payables
List by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Dividends payable
Dividend payable
Other payables 62,162,153.55 75,546,323.32
Total 62,162,153.55 75,546,323.32
Other explanations:
"□ Applicable" "√ Not applicable"
Dividends payable
(1). Presentation by category
"□ Applicable" "√ Not applicable"
Dividend payable
(2). Presentation by category
"□ Applicable" "√ Not applicable"
Other payables
(1). List other payables by nature of payment
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Security deposit 52,827,845.96 54,289,062.52
Restricted stock repurchase obligations 5,628,128.21 12,653,905.25
Other 3,706,179.38 8,603,355.55
Total 62,162,153.55 75,546,323.32
240/ 323
Annual Report 2021
(2). Important other payables with an aging of more than one year
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Reasons for outstanding or carry-over
Restricted stock repurchase 5,628,128.21 The restricted stock repurchase
obligations obligations have not been fulfilled
Total 5,628,128.21 /
Other explanations:
"□ Applicable" "√ Not applicable"
41. Holding liabilities for sale
"□ Applicable" "√ Not applicable"
42. Non-current liabilities due within one year
"□ Applicable" "√ Not applicable"
43. Other current liabilities
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 9,521,415.32 1,439,262.02
Total 9,521,415.32 1,439,262.02
Changes in short-term bonds payable:
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
44. Long-term borrowings
(1). Classification of long-term loans
"□ Applicable" "√ Not applicable"
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Annual Report 2021
Other explanations, including interest rate range:
"□ Applicable" "√ Not applicable"
45. Bonds payable
(1). Bonds payable
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Convertible corporate bonds 695,586,778.80
Total 695,586,778.80
242/ 323
Annual Report 2021
(2). Increase and decrease of bonds payable: (excluding other financial instruments such as preferred shares and perpetual bonds classified as financial
liabilities)
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Interest Premium or Current Issuance Equity
Bond Initial Issuance
Bond Face Issuance Issuance accrued discount period expense division Ending
perio balanc in the current
Name value date amount by face amortizatio repayme Balance
d e period
value n nt
Proya 100.0 Decemb 6 751,713,000. 751,713,000. 148,283.1 1,886,443.8 7,204,326.0 50,956,622. 695,586,778.
Convertibl 0 er 08, 00 00 0 7 6 11 80
e 2021
Corporate
Bond
Total / / / 751,713,000. 751,713,000. 148,283.1 1,886,443.8 7,204,326.0 50,956,622. 695,586,778.
00 00 0 7 6 11 80
243/ 323
Annual Report 2021
(3). Explanation on conversion conditions and tranches of convertible bonds
"√ Applicable" "□ Not applicable"
With the approval issued by China Securities Regulatory Commission in the Approval on Public Issue of
Convertible Corporate Bonds of Proya Cosmetics Co., Ltd. (ZJXK [2021] No. 3408), on December 8,
2021, the Company issued 7,517,130 convertible corporate bonds to unspecified targets at RMB100.00
par value per share for total consideration of 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 third 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 interest payment date of
each year, pay the interest 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 in this tranche (including the annual interest of the last
tranche).
The convertible period of convertible bonds starts from the first trading day after the expiration of 6
months from the issuance date of convertible bonds until the maturity date of convertible bonds. The
initial conversion price shall be RMB195.98 per 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 shall not be adjusted up.
As at December 31, 2021, the convertible bonds have not yet reached the end of convertible period.
(4). Explanation on other financial instruments classified as financial liabilities
Basic information of other financial instruments such as preferred stocks and perpetual bonds issued at
the end of the period
"□ Applicable" "√ Not applicable"
Statement of changes in financial instruments such as preferred stocks and perpetual bonds issued at the
end of the period
"□ Applicable" "√ Not applicable"
Explanation on the basis of classifying other financial instruments into financial liabilities:
"□ Applicable" "√ Not applicable"
Other explanations:
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Annual Report 2021
"□ Applicable" "√ Not applicable"
46. Lease liabilities
"□ Applicable" "√ Not applicable"
47. Long-term accounts payable
List 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
(2). Special payables presented by nature
"□ Applicable" "√ Not applicable"
48. Long-term employee benefits payable
"□ Applicable" "√ Not applicable"
49. 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
10,190,099.22 10,812,084.88 Estimated future
Return payment payable
potential return losses
Others
Total 10,190,099.22 10,812,084.88 /
245/ 323
Annual Report 2021
Other particulars, including the particulars on key assumptions and estimates concerning estimated
significant liabilities
No
50. Deferred income
Information of deferred income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Decrease in
Opening Increase in the Ending Cause of
Item the current
balance current period balance formation
period
Government 84,95,353.33 2,079,090.00 6,416,263.33 Government
grants grants
Total 8,495,353.33 2,079,090.00 6,416,263.33 /
Items involving government subsidies:
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount Amount
Amount of
included in included in
new
Liability Opening non-operating other income Other Ending
subsidies Asset-related/income-related
item balance revenue of in current changes balance
in current
the current period
period
period
Grants for 8,495,353.33 2,079,090.00 6,416,263.33 Asset-related
modified
cosmetic
technology
Other explanations:
"√ Applicable" "□ Not applicable"
For the details on inclusion of government grants of the current period into profit or loss of the current
period, please see the particulars contained in "84. Government Grants", "VII. Notes to the Consolidated
Financial Accounts", "Section X Financial Report".
51. Other non-current liabilities
"□ Applicable" "√ Not applicable"
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Annual Report 2021
52. Share capital
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase or decrease in the change (+, -)
Provident
Opening Ending
Issuance Bonus fund
balance Others Subtotal balance
of shares shares Share
conversion
Total 201,116,925 -106,959 -106,959 201,009,966
shares
Other explanations:
According to the provisions in the Resolution of the 20th meeting of the second session of Board of
Directors in 2021, the Resolution of the 1st Extraordinary Meeting of Shareholders in 2021 and the
amended Articles of Association, the Company applied for repurchase in cash of 106,959 restricted RMB
ordinary shares (A shares) granted but not yet issued and paying total repurchase price of
RMB1,733,805.39, whereby share capital would be reduced by RMB106,959.00 and the capital reserve
(share premium) would be reduced by RMB1,626,846.39. The above matter has been verified by
Pan-China Certified Public Accountants LLP (Special General Partnership) which has issued the Capital
Verification Report (TJY (2021) No. 693).
(3) Particulars on equity pledges
The following is a schedule of frozen shares of key shareholders of the Company as of December 31,
2021:
Name of shareholder Number of Frozen shares Type of freeze
shareholding (share)
(shares)
Fang Yuyou 38,669,643 6,460,000 Pledged
Subtotal 38,669,643 6,460,000
53. Other equity instruments
(1). Basic information of other financial instruments such as preferred stocks and perpetual
bonds issued at the end of the period
"□ Applicable" "√ Not applicable"
(2). Statement of changes in financial instruments such as preferred stocks and perpetual bonds
issued at the end of the period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
247/ 323
Annual Report 2021
Increase in the current Decrease in the current
Outstanding Initial Ending
period period
financial
Book Book
instruments Number Number Book value Number Number Book value
value value
Proya convertible 7,517,130 50,956,622.11 7,517,130 50,956,622.11
corporate bonds
Total 7,517,130 50,956,622.11 7,517,130 50,956,622.11
Changes to other equity instruments in the current period, explanation of reasons for changes, and basis
for relevant accounting treatment:
"□ Applicable" "√ Not applicable"
Other notes:
"√ Applicable" "□ Not applicable"
The RMB50,956,622.11 recorded in the current period increase is the amount of convertible corporate
bonds of the Company issued in 2021 apportioned into equity instruments according to the Accounting
Standards for Business Enterprises.
For details on the convertible corporate bonds of the Company issued in the period, please see the
particulars contained in "46. Bonds Payable", "VII. Notes to the Consolidated Financial Accounts",
"Section X Financial Report"
54. Capital reserve
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase in the Decrease in the
Item Opening balance Ending balance
current period current period
Capital premium 794,285,959.20 9,046,766.01 3,658,192.45 799,674,532.76
(Equity
premium)
Other capital 42,748,877.49 664,956.26 8,816,160.85 34,597,672.90
reserves
Total 837,034,836.69 9,711,722.27 12,474,353.30 834,272,205.66
Other explanations, including the increase and decrease in the current period and the explanation of the
reasons for the changes:
1) Increase/decrease in capital premium
The increase of RMB9,046,766.01 in capital premium (share premium) of the current period includes: (1)
RMB8,816,160.85, involving the released part of restricted shares issued under the equity incentive plan,
for which other capital reserve recognized during the waiting period is transferred to share premium and
(2) RMB230,605.16, involving the difference between the payment made for acquiring minority shares
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Annual Report 2021
of a subsidiary, Zhejiang Biyouti Cosmetics Co., Ltd., and the identifiable share of net assets of the
subsidiary, as calculated at the newly-increased shareholding ratio.
The decrease of RMB3,658,192.45 in capital premium (share premium) of the current period includes:
(1) RMB1,626,846.39, involving the repurchase in cash of restricted RMB ordinary shares granted but
not yet released. Please see Section X Financial Reports, VII. Notes on Items in Consolidated Financial
Statements, 53. Share capital for details; and (2) RMB2,031,346.06, involving the difference between
the payment made for acquiring minority shares of the subsidiaries, Shanghai Zhongwen Electronic
Commerce Co., Ltd., Hong Kong Zhongwen Electronic Commerce Co., Limited, Hangzhou Wanyan
Culture Media Co., Ltd. and Hong Kong Wanyan Electronic Commerce Co., Limited, and the
identifiable share of net assets of the subsidiaries, as calculated at the newly-increased shareholding ratio,
for which the capital reserve is written down RMB2,031,346.06 and the undistributed profit is written
down RMB8,640.67.
2) Other decrease or increase in capital reserves
The increase of RMB664,956.26 in other capital reserves of the current period includes: (1)
RMB-66,494.65, involving the recognition of RMB-372,647.76 as 2021 restricted stock incentive fee
and the inclusion of same into other capital reserves; the recognition of RMB306,153.11 as deferred tax
asset the portion of which the estimated pre-tax deductible amount in future period is higher than the
recognized restricted stock incentive fee and the inclusion of same into other capital reserves; (2)
RMB731,450.91, involving the adjustment of capital reserves for the difference between the actual
pre-tax deductible amount of the released portion and the recognized amount of previous years.
The decrease of RMB8,816,160.85 in other capital reserves of the current period involves the released
portion of restricted shares issued under the equity incentive plan, for which other capital reserves
recognized during the waiting period are transferred to share premium.
55. Treasury stock
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase in the Decrease in the
Item Opening balance Ending balance
current period current period
Restricted shares 12,653,905.25 7,025,777.04 5,628,128.21
with repurchase
obligation
Total 12,653,905.25 7,025,777.04 5,628,128.21
Other explanations, including the increase and decrease in the current period and the Explanation on the
reasons for the changes:
The decrease of RMB7,025,777.04 in the current period includes: 1) RMB4,964,976.45, involving the
Company's release of 293,265 restricted shares according to the Proposal on the Satisfaction of
Conditions for Releasing the Sales Restrictions for the Second Release Period of the Restricted Shares
249/ 323
Annual Report 2021
Granted for the First Time and Reserved Grant under the 2018 Restricted Share Incentive Plan
deliberated and approved at the 18th meeting of the second session of board of directors of the Company
held on January 5, 2021, with the grant price after distributed cash dividends are deducted being
RMB16.93 per share; 2) RMB1,733,805.39, involving the repurchase in cash of 106,959 restricted RMB
ordinary shares (A shares) granted but not yet released; and 3) RMB326,995.20, involving the
write-down of treasury stocks for distributed dividends attributable to 106,959 restricted shares
repurchased in the current period and 347,201 restricted shares locked and the resulting adjustment of
other payables.
56. Other comprehensive income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the current period
Less: Less:
Included in Included in
other other
comprehens comprehensi
Amount
ive income ve income
incurred Attributed Attributed to
Initial for the for the Less: Ending
Item before to parent minority
balance previous previous Income tax balance
income tax in company shareholders
period and period and expenses
the current after tax after tax
transferred transferred in
period
in profit or retained
loss for the earnings for
current the current
period period
I. Other
comprehensive income
that will not be
subsequently
reclassified into profit
and loss
Including:
Remeasuring of the
variation amount of
defined benefit plan
Other comprehensive
income that can't be
reversed through profit
and loss under the
Equity method
Changes in the fair
value of other equity
instruments
Changes in fair value
of enterprise's own
credit risk
II. Other -269,066.13 -978,607.97 -978,607.97 -1,247,674.1
comprehensive income 0
that will be reclassified
250/ 323
Annual Report 2021
into profit or loss
Including: other
comprehensive income
that can be converted
into gains and losses
under the Equity
method
Changes in the fair
value of other
creditors' investment
The amount of
financial assets
reclassified into other
comprehensive income
Credit impairment
provision for other
credits investment
Cash flow hedge
reserve
Difference from -269,066.13 -978,607.97 -978,607.97 -1,247,674.1
translation of financial 0
statements in foreign
currency
Total other -269,066.13 -978,607.97 -978,607.97 -1,247,674.1
comprehensive 0
incomes
Other explanations, including the adjustment of the effective portion of cash flow hedging gains and
losses into the initially-recognized amount of the hedged item:
No
57. Special reserve
"□ Applicable" "√ Not applicable"
58. Surplus reserve
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Opening balance Increase in the Decrease in the Ending balance
current period current period
Legal surplus 100,634,780.00 100,634,780.00
Discretionary
surplus reserve
Reserve fund
Enterprise
development fund
251/ 323
Annual Report 2021
Other
Total 100,634,780.00 100,634,780.00
Explanation on surplus reserves, including the increase and decrease in the current period and the
explanation of the reasons for the change:
Pursuant to the Company Law, the Company does not need to allocate further amounts if the cumulative
amount of the statutory reserve reaches fifty percent or more of registered capital.
59. Undistributed profit
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Current period Prior period
Undistributed profit at the end of last 1,265,671,865.63 908,411,607.62
period before adjustment
Total undistributed profit at the beginning
of the adjustment period (+ for increase, -
for decrease)
Unappropriated earnings at the beginning 1,265,671,865.63 908,411,607.62
of period after adjustment
Plus: net profit attributable to the owner of 576,119,025.56 476,009,298.41
the parent company in the current period
Less: Withdrawal of statutory surplus
reserve
Withdrawal of any surplus reserves
Withdrawal of general risk provision
Dividends payable on common stock 144,804,186.00 118,749,040.40
Common stock dividends converted
to share capital
Other decreases [Note] 8640.67
Undistributed profit at the end of the 1,696,978,064.52 1,265,671,865.63
period
[Note] For relevant details, please see the particulars contained in "55. Capital Reserve", "VII. Notes to
the Consolidated Financial Accounts", "Section X Financial Report".
According to the Resolution of the 2020 Annual General Meeting of the Company, the Company
distributed a cash dividend of RMB7.20 (tax inclusive) per 10 shares to all shareholders based on the
total share capital of 201,116,925 shares registered on the registration date of dividend-paying equity,
totaling RMB144,804,186.00 (tax inclusive).
Details of the adjustment of the undistributed profit at the beginning of the period:
252/ 323
Annual Report 2021
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 the 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.
60. Operating income and operating costs
(1). Information of operating income and operating costs
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the current period Amount incurred in the last period
Item
Revenue Cost Revenue Cost
Main business 4,620,431,686.01 1,545,098,469.32 3,747,924,600.60 1,363,486,774.26
Other business 12,718,852.42 9,057,177.29 4,462,248.42 40,751,75.52
Total 4,633,150,538.43 1,554,155,646.61 3,752,386,849.02 1,367,561,949.78
253/ 323
Annual Report 2021
(2). Information of income generated by the contract
"□ Applicable" "√ Not applicable"
Income generated by the contract:
"□ Applicable" "√ Not applicable"
(3). Explanation of performance obligations
"□ Applicable" "√ Not applicable"
(4). Explanation of remaining performance obligations allocated
"□ Applicable" "√ Not applicable"
Other explanations:
1) Income breakdown by goods or service type
Main product type Amount
Products sales 4,620,431,686.01
Others 12,718,852.42
Subtotal 4,633,150,538.43
2) Income breakdown by goods or service transfer time
Amount for the Amount for the
Item
current period same period last year
Income recognized at a certain point 4,630,019,693.64 3,750,668,733.61
Income recognized at a certain point 3,130,844.79 1,718,115.41
Subtotal 4,633,150,538.43 37,52,386,849.02
3) Revenue included in the opening book value of contract liabilities during the reporting period is
RMB26,458,932.65.
61. Taxes and surcharges
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the last
Item
period period
Consumption tax 67,697.81 66,493.56
Business tax
Urban maintenance and 17,952,927.40 13,634,530.33
construction tax
254/ 323
Annual Report 2021
Education surcharge 9,040,908.31 6,988,508.15
Resource tax
Property tax 6,121,024.24 5,822,344.89
Land use tax 44,922.50
Vehicle and vessel use tax 19,195.60 15,600.00
Stamp duties 1,391,884.80 1,758,703.64
Local education surcharge 6,041,735.14 4,659,005.42
Total 40,680,295.80 32,945,185.99
Other explanations:
No
62. Sales expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the last
Item
period period
Image promotion expense 1,673,478,545.28 1,226,430,935.32
Employee remuneration 259,892,827.21 216,021,800.31
Office allowances 26,009,040.14 22,228,325.98
Travel expenses 13,885,848.84 15,220,908.88
Meeting affair charges 8,691,079.85 6,610,405.20
Survey consulting fees 5,815,173.17 7,764,271.67
Other 3,761,562.24 2,782,295.98
Total 1,991,534,076.73 1,497,058,943.34
Other explanations:
No
63. Administrative expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in Amount incurred in the
the current period last period
Employee remuneration and service fees 127,971,906.74 99,248,945.51
Expenses for depreciation, amortization, and leases 43,230,494.44 40,809,336.86
Office allowance and business entertainment 45,243,541.73 33,851,704.91
expenses
255/ 323
Annual Report 2021
Consultation and intermediary fees 10,207,746.14 17,799,433.91
Travel expense and conference fees 4178358.16 3,368,329.40
Equity incentive expense for restricted shares -372,647.76 4,193,320.87
Others 6,529,119.78 5,008,307.22
Total 236,988,519.23 204,279,378.68
Other explanations:
No
64. R&D expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in Amount incurred in the
the current period last period
Labor cost 40,214,757.14 42,457,484.59
Outsourced R&D expense 26,453,748.31 22,198,043.50
Expenses for depreciation, amortization, and leases 4,857,429.74 3,976,173.74
Direct input cost 3,452,688.42 2,232,870.29
Others 1,605,027.22 1,335,456.65
Total 76,583,650.83 72,200,028.77
Other explanations:
No
65. Financial expenses
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in Amount incurred in the
the current period last period
Interest expenses 9,759,260.83 9,190,674.26
Interest income -28,096,157.42 -20,740,463.77
Handling fees 757,405.88 963,155.58
Exchange gains and losses 10,095,095.58 -3,020,481.60
Total -7,484,395.13 -13,607,115.53
Other explanations:
No
66. Other income
"√ Applicable" "□ Not applicable"
256/ 323
Annual Report 2021
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the last
current period period
Government subsidies related to assets 2,079,090.00 1,995,756.67
[Note]
Government subsidies related to 13,369,872.01 10,202,653.51
income [Note]
Refund of service charges for 473,539.34 684,529.89
withholding personal income tax
VAT input tax addition and reduction 535,768.10 608,569.65
Total 16,458,269.45 13,491,509.72
Other explanations:
[Note] For details on government grants included in other income of the current period, please see the
particulars contained in "84. Government Grants", "VII. Notes to the Consolidated Financial Accounts",
"Section X Financial Report".
67. Investment income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the last
Item
current period period
Return on long-term equity investments -7,337,735.84 -646,615.60
measured by the Equity method
Investment income from disposal of 149,705.73
long-term equity investment.
Investment income of tradable financial
assets during holding period
Dividend income from investment in
other equity instruments 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
tradable financial asset
Investment income from disposal of
257/ 323
Annual Report 2021
investment in other equity instruments
Investment income from disposal of
debt investment
Investment income from disposal of
other debt investment
Gains of debt restructuring
Gains of financial products 2,266,301.37
Total -7,337,735.84 1,769,391.50
Other explanations:
No
68. Net exposure hedging income
"□ Applicable" "√ Not applicable"
69. Income from the change in fair value
"□ Applicable" "√ Not applicable"
70. Credit impairment loss
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the last
Item
current period period
Bad debt loss on notes receivable
Bad debt loss on accounts receivable -5,361,282.08 24,292,116.38
Bad debt loss on other receivables 30,196,229.26 -383,393.99
Impairment losses of creditors'
investment
Other impairment losses of creditors'
investment
Bad debt loss on long-term receivables
Loss from impairment of contract assets
Total 24,834,947.18 23,908,722.39
Other explanations:
No
258/ 323
Annual Report 2021
71. Asset impairment loss
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the last
Item
current period period
I. Loss on bad debts
II. Loss of inventory falling price and 38,843,121.45 28,234,605.50
impairment loss of contract performance
cost
III. Impairment loss of long-term equity 14,670,468.59
investment
IV. Impairment loss of investment real
estate
V. Asset impairment losses
VI. Impairment loss from construction
materials
VII. Impairment loss of projects under
construction
VIII. Impairment loss of productive
biological assets
IX. Loss of impairment of oil and gas
assets
X. Impairment loss of intangible assets
XI. Impairment loss of goodwill
XII. Others
Total 53,513,590.04 28,234,605.50
Other explanations:
No
72. Income from disposal of assets
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in the current Amount incurred in the last
period period
Gains on disposal of fixed assets -112,183.24 854.57
Total -112,183.24 854.57
259/ 323
Annual Report 2021
Other explanations:
No
73. Non-operating revenue
Non-operating revenue
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount included in
Amount incurred in Amount incurred in
Item current non-recurring
the current period the last 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
Government grants
Revenue from fines and/or 160,694.23 1,438,505.28 160,694.23
liquidated damages
Others 89,158.66 104,088.97 89,158.66
Total 249,852.89 1,542,594.25 249,852.89
Government subsidies included in current profit and loss
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
74. Non-operating expenditure
"√ Applicable" "□ Not applicable"
260/ 323
Annual Report 2021
Unit: Yuan Currency: RMB
Amount incurred Amount included in
Amount incurred in
Item in the current current non-recurring
the last period
period gains and losses
Total loss from disposal of
non-current assets
Including: Loss from disposal of
fixed assets
Loss from disposal of
intangible assets
Non-monetary asset exchange
losses
External donation 3,700,000.00 8,419,034.02 3,700,000.00
Other 101,835.06 614,781.74 101,835.06
Loss through damage and/or 4,113.95
scrapping of non-current assets
Total 3,801,835.06 9,037,929.71 3,801,835.06
Other explanations:
No
75. Income tax expenses
(1).Income tax expense statement
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the current Amount incurred in the last
Item
period period
Current income tax expense 104,812,397.97 97,265,732.16
Deferred income tax expense 5,934,490.34 -1,303,715.96
Total 110,746,888.31 95,962,016.20
(2).Adjustment process of accounting profit and income tax expense
"√ Applicable" "□ Not applicable"
261/ 323
Annual Report 2021
Unit: Yuan Currency: RMB
Item Amount incurred in the current period
Total profit 667,800,575.34
Income tax expense calculated at statutory/applicable 166,950,143.84
tax rate
Influence of different tax rates applied to subsidiaries -52,139,068.10
Influence of adjusting income tax in previous periods 1,339,459.90
Influence of non-taxable income
Influence of non-deductible costs, expenses, and losses 1,999,922.97
Influence of deductible loss of unrecognized deferred -19,851,929.38
income tax assets in previous period
Influence of deductible temporary differences or 22,436,367.49
deductible losses of unrecognized deferred income tax
assets in this period
Additional deductions for R&D expenditures -9,988,008.41
Income tax expenses 110,746,888.31
Other explanations:
"□ Applicable" "√ Not applicable"
76. Other comprehensive income
"√ Applicable" "□ Not applicable"
For details on other comprehensive income, please see the particulars contained in "57. Other
Comprehensive Income", "VII. Notes to the Consolidated Financial Accounts", "Section X Financial
Report".
77. Items in cash flow statement
(1).Other cash receipts relating to operating activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the last
current period period
Interest income from bank deposits 28,096,157.42 20,755,011.64
Government grants 13,369,872.01 12,198,410.18
Receivables, payables, and other 13,148,492.13 48,786,531.20
262/ 323
Annual Report 2021
Total 54,614,521.56 81,739,953.02
Explanation of other cash received related to business activities:
No
(2).Other cash receipts paid relating to operating activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in the Amount incurred in the last
current period period
Image promotion expense 1,543,547,383.40 114,644,0191.10
Other expenses paid in cash 303,165,221.29 241,438,672.23
Receivables, payables, and other 18,273,196.33 35,086,174.43
Total 1,864,985,801.02 1,422,965,037.76
Explanation of Other cash paid related to business activities:
No
(3).Other cash receipts relating to investment activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in the current Amount incurred in the last
period period
Net cash received from acquisition of 66,052,759.40
subsidiaries
Total 66,052,759.40
Other cash received related to investment activities:
No
(4).Other cash paid related to investment activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in the current Amount incurred in the
period previous period
Net cash payment for disposal of 1,035,148.02
subsidiaries 64,245,982.88
Payment of construction deposits 13,493,392.00
263/ 323
Annual Report 2021
Total 77,739,374.88 1,035,148.02
Other cash paid related to investment activities:
No
(5).Other cash received related to fund-raising activities
"□ Applicable" "√ Not applicable"
(6).Other cash payments relating to financing activities
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount incurred in the current Amount incurred in the last
period period
Payment for share repurchases 1,733,805.39 2,584,110.55
Amount for acquisition of minority 100,000.00
equity 181,983.21
Expense fee for issuing convertible
bonds 2,919,604.52
Total 4,835,393.12 2,684,110.55
Other cash payments relating to financing activities:
No
78. Supplementary information on cash flow statement
(1). Supplementary information on cash flow statement
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount for the previous
Supplementary information Amount for the current period
period
1. Reconciliation of net profit to cash flows from operating activities:
Net profit 557,053,687.03 451,609,554.23
Add: provision for impairment of 53,513,590.04 23,908,722.39
assets
Credit impairment loss 24,834,947.18 28,234,605.50
Depreciation of fixed assets, depletion 47,382,558.76 41,946,043.10
of oil and gas assets, and depreciation
of productive biological assets
264/ 323
Annual Report 2021
Amortization of right to use assets
Amortization of intangible assets 17,891,004.03 14,982,350.71
Amortization of long-term 30,679,385.75 30,864,025.47
unamortized expenses
Losses on disposal of fixed assets, 112,183.24 -854.57
intangible assets and other long-term
assets ("-" for income)
Loss on retirement of fixed assets ("-" 4,113.95
for income)
Losses on changes in fair value ("-"
for income)
Financial expenses ("-" for income) 9,759,260.83 9,190,674.26
Investment loss ("-" for income) 7,337,735.84 -1,769,391.50
Decrease in deferred income tax assets 4,400,436.98 -3,045,810.03
("-" for increase)
Increase in deferred income tax 1,534,053.36 1,742,094.07
liabilities ("-" for decrease)
Decrease in inventory ("-" for -30,645,504.60 -174,795,286.43
increase)
Decrease of operational receivable 62,613,217.00 -145,846,608.97
items ("-" for increase)
Increase in operational payables ("-" 42,845,585.19 48,171,169.04
for decrease)
Others 358,803.19 6,354,707.92
Net cash flow from operating 829,670,943.82 331,550,109.14
activities
2. Major investment and financing activities that do not involve cash receipts and/or payments:
Conversion of debt into capital
Convertible corporate bonds due
within one year
Fixed assets under finance leases
3. Net changes in cash and cash equivalents:
Ending balance of cash 2,378,334,768.09 1,401,850,754.88
Less: Opening balance of cash 1,401,850,754.88 1,099,092,785.07
Add: Ending balance of cash
equivalents
Less: Opening balance of cash
265/ 323
Annual Report 2021
equivalents
Net increase in cash and cash 976,484,013.21 302,757,969.81
equivalents
(2). Net cash paid to acquire subsidiaries in the current period
"□ Applicable" "√ Not applicable"
(3). Net cash received from disposal of subsidiaries in the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount
Cash or cash equivalents received from disposal of subsidiaries
during current period
Including: Shanghai Healthlong [Note]
Less: Cash and cash equivalents held by subsidiary on date of loss 64,245,982.88
of control
Including: Shanghai Healthlong 64,245,982.88
Plus: Cash or cash equivalents received from disposal of
subsidiaries during current period
Net cash amount received from disposal of subsidiaries -64,245,982.88
Other notes:
[Note] In April 2021, the Company contributed to the capital increase of Zhuhai Healthlong
Biotechnology Co., Ltd. with its 52.00% equity held in Shanghai Healthlong.
(4). Composition of cash and cash equivalents
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
I. Cash 2,378,334,768.09 1,401,850,754.88
Including: cash in vault 22,348.23 26,853.58
Bank deposits that can be used for 2,338,747,508.20 1,368,515,531.05
payment at any time
Other monetary funds that can be 39,564,911.66 33,308,370.25
used for payment at any time
Funds deposited with the central bank
for payment
266/ 323
Annual Report 2021
Deposits in other banks
Funds for interbank lending
II. Cash equivalents
Including: Bond investment due within three
months
III. Ending balance of cash and cash equivalents 2,378,334,768.09 1,401,850,754.88
Including: Cash and cash equivalents with
restricted use by the parent company or a
subsidiary of the group
The transferred amount of commercial bill endorsement that does not involve cash receipts and/or
expenditures
Amount for the Amount in prior
Item
current period period
Amount of trade bills transferred by endorsement 27,230,343.90 12,176,952.00
Including: Payment of goods 27,230,343.90 12,176,952.00
Other explanations:
"√ Applicable" "□ Not applicable"
Supplementary information to cash flow statement
Point in time Balance of Cash and cash Difference Cause of difference
monetary capital equivalents
RMB293,481.72
fixed-term deposit
margin for transformers,
RMB7,000,000.00 L/C
December 31, deposit, RMB70,000.00
2,391,048,249.81 2,378,334,768.09 12,713,481.72
2021 ETC vehicle deposit,
RMB5,000,000.00
Pinduoduo deposit, and
RMB350,000.00 Tmall
and Alipay deposits
RMB293,481.72
fixed-term deposit
December 31,
1,416,654,640.93 1,401,850,754.88 14,803,886.05 margin for transformers,
2020
RMB69,000.00 ETC
vehicle deposit,
267/ 323
Annual Report 2021
RMB7,036,404.33 land
construction deposit,
RMB7,000,000.00 L/C
deposit, and
RMB405,000.00 Tmall
and Alipay deposits
79. Notes on items in changed statement of owner's equity
Explanation on the names of Other items for adjusting the ending balance of last year and adjustment
amounts:
"□ Applicable" "√ Not applicable"
80. Assets with limited ownership or use rights
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Book value as of the end of the Cause for restrictions
period
Cash and cash equivalents 12,713,481.72 Including transformer , L/C,
Tmall , and Alipay deposits
Notes receivable
Inventories
Fixed assets
Intangible assets
Total 12,713,481.72 /
Other explanations:
No
268/ 323
Annual Report 2021
81. Foreign monetary currency items
(1). Foreign monetary currency items
"√ Applicable" "□ Not applicable"
Unit: RMB
Converted RMB at the end of
Ending foreign Converted
Item period
currency balance exchange rate
balance
Cash and cash equivalents - - 61,634,042.13
Including: SF 22,953.26 6.9776 160,158.67
EUR 5,024,661.44 7.2197 36,276,548.20
HKD 6,676,215.00 0.8176 5,458,473.39
JPY 127,773,201.08 0.0554 7,080,551.94
KRW 333,524,876.00 0.0054 1,787,693.34
USD 1,705,007.54 6.3757 10,870,616.59
Accounts receivable - - 5,454,130.54
Including: EUR 293,483.12 7.2197 2,118,860.07
HKD 1,646,407.90 0.8176 1,346,103.10
JPY 33,957,880.00 0.0554 1,881,775.92
KRW 20,035,718.76 0.0054 107,391.45
Long-term borrowing - -
Including: USD
EUR
HKD
Other receivables - - 6,614,462.93
Including: EUR 873,833.51 7.2197 6,308,815.77
JPY 1,604,938.00 0.0554 88,937.64
USD 33,989.92 6.3757 216,709.52
Accounts payable - - 7,190,839.39
Including: EUR 849,875.42 7.2197 6,135,845.55
HKD 236,938.20 0.8176 193,720.67
KRW 160,685,293.49 0.0054 861,273.17
Other payables - - 1,032,101.36
Including: HKD 5,975.00 0.8176 4,885.16
KRW 191,644,813.43 0.0054 1,027,216.20
Other explanations:
No
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(2). Explanation of overseas operating entities, including for important overseas operating entities,
main overseas operating places, bookkeeping base currency and selection basis shall be
disclosed, and the reasons for changes in bookkeeping base currency shall also be disclosed.
"√ Applicable" "□ Not applicable"
Hapsode Co., Ltd., Hanna Cosmetics Co., Ltd. and Korea Younimi Cosmetics Co., Ltd. are located in
South Korea, with business income and expenditures denominated in Korean Won which is used as their
accounting currency. Hong Kong Xinghuo Industry Limited, Hong Kong Zhongwen Electronic
Commerce Co., Limited, Hong Kong Xuchen Trading Limited, Hong Kong Keshi Trading, Ltd., Boya
(Hong Kong) Investment Management Co., Ltd. and Hong Kong Wanyan Electronic Commerce Co.,
Ltd. are located in Hong Kong and use RMB as their accounting currency. P.R.O Co., Ltd. is located in
Japan, with business income and expenditures denominated in Japanese Yen, and adopts JPY as its
accounting currency.
82. Hedging
"□ Applicable" "√ Not applicable"
83. Government subsidies
(1). Basic information of government subsidies
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount included in
Type Amount Reported items current profits and
losses
Asset-related 2,079,090.00 Other incomes 2,079,090.00
government subsidies
Benefit-related 13,369,872.01 Other incomes 13,369,872.01
government subsidies
(2). Return of government subsidies
"□ Applicable" "√ Not applicable"
Other explanations:
1) Government subsidies related to assets
Initial Current Ending Amortization in
Amortization in
Item deferred period deferred the current period Notes
the current period
income new subsidy income Reported items
Grants for 8,495,353.33 2,079,090.00 6,416,263.33 Other income
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Annual Report 2021
Initial Current Ending Amortization in
Amortization in
Item deferred period deferred the current period Notes
the current period
income new subsidy income Reported items
modified
cosmetic
technology
Subtotal 8,495,353.33 2,079,090.00 6,416,263.33
According to the Decision on the Award for Technical Transformation of Proya Cosmetics Co., Ltd.
Huzhou Branch issued by the People's Government of Daixi Town, Huzhou,
the Company received technical a transformation subsidy of RMB14,561,400.00 from the Government
of Daixi Town in 2014, and apportioned the subsidy on an average basis over the service life of the asset.
RMB1,456,140.00 was recorded under Other Income in the current period.
According to the Notice on Issuing Construction and Development Fund (First Batch) for Powerful
Industrial City in 2015 (HCQ [2015] No. 150) issued by Huzhou Finance and Huzhou Economy and
Information Bureau, a technical transformation subsidy of RMB2,350,000.00 was paid by Huzhou
Finance in 2015. The Company apportioned the subsidy on an average basis over the service life of the
asset. RMB235,000.00 was recorded under Other Income in the current period.
According to the Notice on Issuing Special Funds (Second Batch) for the "Machine Substitution for
Humans" Project in 2014 (WFG [2015] No. 18) issued by Development and Reform Commission of
Wuxing District, Huzhou and the Finance Bureau of Wuxing District, a technical transformation subsidy
of RMB500,000.00 was paid by the Finance Bureau of Wuxing District, Huzhou in 2015. The Company
apportioned the subsidy on an average basis over the service life of the asset. RMB50,000.00 was
recorded under Other Income in the current period.
According to the Notice on Issuing Special Funds (Second Batch) for Industrial Development in Huzhou
in 2018 (HCQ [2018] No. 319) issued by Huzhou Finance and Huzhou Economy and Information
Bureau, the technical transformation subsidy of RMB1,379,500.00 was paid by Huzhou Finance in
December 2018. The Company apportioned the subsidy on an average basis over the service life of the
asset. RMB137,950.00 was recorded under Other Income in the current period.
According to the Notice on Appropriating Special Subsidy Fund for Demonstration Intelligent Workshop
in Wuxing District in 2019 (WCQH [2020] No. 145) issued by the Huzhou Finance and Development,
Reform and Economic Information Technology Commission of Wuxing District, the technical
transformation subsidy of RMB2,000,000.00 was paid by the Finance Bureau of Wuxing District,
Huzhou in May 2020. The Company apportioned the subsidy on an average basis over the service life of
the asset. RMB200,000.00 was recorded under Other Income in the current period.
2) Government subsidies related to income and used to compensate the Company for relevant costs or
losses incurred
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Annual Report 2021
Reported
Item Amount Notes
items
According to the Supporting Opinions of Xihu
District on Supporting Gazelle Enterprise
Development (Trial) (XFGJX (2019) No. 40)
Enterprise issued by the Xihu District Development, Reform,
Other
development 7,973,000.00 and Economic Informatization Bureau of
incomes
support fund Hangzhou City and other documents, it was paid by
the Xihu District Development, Reform, and
Economic Informatization Bureau of Hangzhou
City.
According to the Opinions on Implementing the
Special fund Strategy of Strengthening Wuxing District with
subsidies for Other Talents in the New Era to Serve the High-quality
1,270,000.00
talents incomes Development (WWF (2020) No. 8) and other
development documents, it was paid by the Wuxing District
Finance Bureau of Huzhou City.
According to the Notice on Issuing the Financial
Subsidy Fund for 2020 Factory Internet of Things
IoT project Other
800,000.00 Project (XFGJX (2021) No. 38), it was paid by the
subsidy incomes
Xihu District Development, Reform, and Economic
Informatization Bureau of Hangzhou City.
According to the Notice on Issuing the Policy
Policy support Support Fund for Live-streaming and E-commerce
fund for Other Industry in Xihu District in 2021 (XWC (2021) No.
500,000.00
E-commerce incomes 9), it was paid by the Xihu District Development,
industry Reform, and Economic Informatization Bureau of
Hangzhou City.
Position stability
subsidy, special They were paid by the Wuxing District Human
fund subsidy for Resources and Social Security Bureau of Huzhou
service business, Other City, the Hangzhou Employment Management
2,826,872.01
IP subsidy and incomes Service Center, the Xihu District Administration
fiscal grants of the for Market Regulation of Hangzhou, and the
Qingpu District Qingpu District Finance Bureau of Shanghai, et al
Finance Bureau
Subtotal 13,369,872.01
3) The amount of government subsidies included in the current profits and losses in the current period is
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RMB15,448,962.01.
84. Others
"□ Applicable" "√ Not applicable"
VIII. Change of Combination Scope
1. Business combination not under common control
"□ Applicable" "√ Not applicable"
2. Business combination under common control
"□ Applicable" "√ Not applicable"
3. Counter purchase
"□ Applicable" "√ Not applicable"
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Annual Report 2021
4. Disposal of subsidiaries
Is there a single disposal of investment in a subsidiary, that is, is there a loss of control?
"√ Applicable" "□ Not applicable"
Unit: Currency: RMB
Difference in
The Amount of
net assets of
determination other
the subsidiary Book Fair value
The basis Ratio of method and comprehensive
at the value of of Gain or loss
Time for remaining main income related
Payment Equity consolidated residual residual from
Equity point determining equity on assumption to the equity
Name of for disposal statement equities equities surplus
disposal of the time the date of the fair investment of
subsidiary equity ratio level at time at time equity
method losing point when of loss of value of the previous
disposal (%) corresponding point of point of re-measured
control the control control remaining subsidy
to the losing losing at fair value
right is lost (%) equity on the transferred to
disposal price control control
date of loss the investment
and disposal
of control profit and loss
investment
Shanghai 52.00 Equity April Equity
Healthlong transfer 2021 closing
Biochemical
Technology
Co., Ltd.
[Note] In April 2021, the Company contributed to the capital increase of Zhuhai Healthlong Biotechnology Co., Ltd. with its 52.00% equity held in Shanghai
Healthlong. After the completion of the capital increase, Shanghai Healthlong became a wholly-owned subsidiary of Zhuhai Healthlong Biotechnology Co., Ltd.,
and the Company held 10.00% equity of Zhuhai Healthlong Biotechnology Co., Ltd. and appointed one director to Zhuhai Healthlong Biotechnology Co., Ltd.
Other explanations:
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Annual Report 2021
"□ Applicable" "√ Not applicable"
5. Change of combination scope for other reasons
Explain the changes in the combination scope caused by other reasons (for example, newly established subsidiaries, liquidation subsidiaries, etc.) and the specific
information:
"√ Applicable" "□ Not applicable"
1. Increase of consolidation scope
Company name Equity acquisition method Time point of equity acquisition Amount of contribution Contribution ratio
Xuzhou Pelaya Information Technology Co., Ltd. New subsidiaries January 2021 500,000.00 100.00%
Singuladerm (Hangzhou) Cosmetics Co., Ltd. New subsidiaries October 2021 500,000.00 100.00%
Ningbo Tangyu Trading Co., Ltd. New subsidiaries October 2021 100.00%
Proya (Hainan) Cosmetics Co., Ltd. New subsidiaries January 2021 100.00%
2. Decrease in merger scope
From the beginning to the disposal
Equity disposal Time point of equity Net assets as at the disposal
Company name date
method disposal date
Net profit
Shanghai Tiyu Cosmetics Co.,
Cancel April 2021 -2729077.89 -676.18
Ltd.
6. Others
"□ Applicable" "√ Not applicable"
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Annual Report 2021
IX. Interests in Other Entities
1. Interests in subsidiaries
(1). Composition of enterprise group
"√ Applicable" "□ Not applicable"
Shareholding
Subsidiary Main place Registration Nature of Mode of
ratio (%)
Name of business place business Acquisition
Direct Indirect
Hangzhou Proya Hangzhou Hangzhou Wholesale 100.00 Establishment
Trading Co., Ltd. and retail
Zhejiang Meiligu Hangzhou Hangzhou Wholesale 100.00 Establishment
Electronic and retail
Commerce Co.,
Ltd.
Huzhou Chuangdai Huzhou Huzhou Wholesale 100.00 Establishment
E-commerce Co., and retail
Ltd.
Hapsode Hangzhou Hangzhou Wholesale 100.00 Establishment
(Hangzhou) and retail
Cosmetics Co., Ltd.
Huzhou Uzero Huzhou Huzhou Wholesale 100.00 Establishment
Trading Co., Ltd. and retail
Hong Kong Hong Kong Hong Kong Wholesale 100.00 Establishment
Xinghuo Industry, and retail
Ltd.
Hong Kong Keshi Hong Kong Hong Kong Wholesale 52.00 Establishment
Trading, Ltd. and retail
Ningbo Keshi Ningbo Ningbo Wholesale 52.00 Establishment
Trading, Ltd. and retail
Ningbo Timage Ningbo Ningbo Wholesale 61.36 Establishment
Cosmetics Co., Ltd. and retail
Huzhou Younimi Huzhou Huzhou Wholesale 51.00 Establishment
Cosmetics Co., Ltd. and retail
Explanation of the shareholding ratio in subsidiaries different from the voting ratio;
No
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Annual Report 2021
Basis for holding 50% or less of voting rights but still controlling the investee, and holding more than 50%
of voting rights but not controlling the investee:
No
Basis for controlling important structured entities included in the combination scope:
No
Basis for determining whether a company is an agent or a principal:
No
Other explanations:
No
(2). Important non-wholly-owned subsidiaries
"√ Applicable" "□ Not applicable"
Unit: Currency: RMB
Dividends
Shareholding Balance of
declared and
ratio of the Gain or loss attributable minority
Name of distributed to
minority to minority shareholders interest at the
subsidiary minority
shareholder in the current period end of the
shareholders in the
Percentage period
current period
Hong Kong Keshi 48.00% -9,016,360.58 8,349,220.68
Trading, Ltd.
Ningbo Keshi 48.00% -1,702,865.42 -7,317,021.06
Trading, Ltd.
Ningbo Timage 38.64% 3,898,740.76 -4,737,887.27
Cosmetics Co.,
Ltd.
Huzhou Younimi 49.00% -2,482,012.99 10,759,919.41
Cosmetics Co.,
Ltd.
Explanation of the shareholding ratio of minority shareholders in subsidiaries different from the voting
ratio:
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
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Annual Report 2021
(3). Major financial information of important non-wholly-owned subsidiaries
"√ Applicable" "□ Not applicable"
Unit: Currency: RMB
Ending balance Opening balance
Name of Non-curre
Current Non-current Current Non-current Total Current Non-current Current Total
subsidiary Total assets Total assets nt
assets assets liabilities liabilities liabilities assets assets liabilities liabilities
liabilities
Hong Kong 49,200,15 49,200,15 32,875,41 32,875,41 81,655,12 81,655,123.4 50,824,197. 50,824,
Keshi Trading,
3.47 3.47 7.41 7.41 3.48 8 54 197.54
Ltd.
Ningbo Keshi 4,292,368 4,292,368 19,536,16 19,536,16 10,518,76 10,518,765.4 22,214,923. 22,214,
Trading, Ltd.
.90 .90 2.78 2.78 5.49 9 08 923.08
Ningbo Timage 83,031,78 94,867.22 83,126,65 94,774,66 94,774,66 42,477,96 85,010.0 42,562,977.1 64,300,899. 64,300,
Cosmetics Co.,
5.97 3.19 6.19 6.19 7.12 7 9 00 899.00
Ltd.
Huzhou 13,500,28 59,858.63 13,560,14 6,192,958 6,192,958 17,778,43 132,572. 17,911,012.6 5,478,497.8 5,478,4
Younimi
1.62 0.25 .05 .05 9.65 99 4 0 97.80
Cosmetics Co.,
Ltd.
Shanghai 163,008,5 3,945,88 166,954,404. 20,775,875. 20,775,
Healthlong
18.70 5.57 27 45 875.45
[Note]
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Annual Report 2021
Amount incurred in the current period Amount incurred in the last period
Total Cash flows Total Cash flows
Name of subsidiary Operating Operating
Net profit comprehensive generated from Net profit comprehensive generated from
revenue revenue
incomes operating activities incomes operating activities
Hong Kong Keshi Trading, Ltd. 18,832,962. -14,506,189.8 -14,506,189 6,863,938.82 115,636,625. -8,183,739 -8,183,739.3 3,713,547.69
09 8 .88 15 .30 0
Ningbo Keshi Trading, Ltd. 6,867,017.1 -3,547,636.29 -3,547,636. 1,465,348.01 11,342,789.1 -8,161,793 -8,161,793.7 -3,229,770.29
5 29 4 .79 9
Ningbo Timage Cosmetics Co., Ltd. 280,899,630 10,089,908.81 10,089,908. 36,200,196.82 176,461,811. -18,666,43 -18,666,438. 4,907,611.95
.28 81 57 8.28 28
Huzhou Younimi Cosmetics Co., Ltd. 97,362,407. -5,065,332.64 -5,065,332. 1,169,298.05 94,703,225.0 -3,638,665 -3,638,665.3 2,243,889.53
34 64 3 .37 7
Shanghai Healthlong [Note] 127,309,397 -14,434,836.7 -14,434,836 -37,058,480.61 181,257,879. -6,640,391 -6,640,391.9 -72,438,611.71
.91 2 .72 50 .94 4
Other explanations:
In April 2021, the Company signed a capital increase and share exchange agreement with Zhuhai Healthlong Biotechnology Co., Ltd., under which the Company
contributed to the capital increase of Zhuhai Healthlong Biotechnology Co., Ltd. with its 52% equity in Shanghai Healthlong. After the capital increase and share
exchange, Shanghai Healthlong which had been controlled by the Company became a wholly-owned subsidiary of Zhuhai Healthlong Biotechnology Co., Ltd.
Shanghai Healthlong has been excluded from the consolidated scope since May 2021.
The amount in the current period of Shanghai Healthlong represents the profit or loss and cash flow amount incurred from January to April 2021, and the amount in
the same period of the last year represents the profit or loss and cash flow amount incurred from October to December 2020.
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Annual Report 2021
(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. The share of owner's equity in the subsidiary has changed and still controls transactions of
the subsidiary
"√ Applicable" "□ Not applicable"
(1). Explanation of changes in the share of owners' equity in subsidiaries on equity
"√ Applicable" "□ Not applicable"
Shareholding ratio Shareholding ratio
Name of subsidiary Time of change
before change after change
Zhejiang Biyouti Cosmetics
December 2021 95.00% 100.00%
Co., Ltd.
Shanghai Zhongwen Electronic
January 2021 83.00% 100.00%
Commerce Co., Ltd.
Hong Kong Zhongwen
January 2021 83.00% 100.00%
Electronic Commerce Co., Ltd.
Hangzhou Wanyan Culture
December 2021 80.00% 100.00%
Media Co., Ltd.
Hong Kong Wanyan Electronic
December 2021 80.00% 100.00%
Commerce Co., Ltd.
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Annual Report 2021
(2). The impact of transactions on minority shareholder equity and equity attributable to the
parent company
"√ Applicable" "□ Not applicable"
Unit: Currency: RMB
Zhejiang Shanghai Hong Kong Hangzhou Hong Kong
Biyouti Zhongwen Zhongwen Wanyan Wanyan
Cosmetics Electronic Electronic Culture Electronic
Co., Ltd. Commerce Commerce Media Co., Commerce
Co., Ltd. Co., Ltd. Co., Ltd.
Ltd.
Purchase cost/disposal 181,983.21
consideration
--Cash 181,983.21
--Fair value of non-cash
assets
Total purchase 181,983.21
cost/disposal
consideration
Less: The net asset share 412,588.37 -706,570.34 -84,104.71 -681,624.37 -567,687.31
of a subsidiary
calculated according to
the proportion of the
equity acquired/disposed
of
Difference -230,605.16 706,570.34 84,104.71 681,624.37 567,687.31
Including: adjustment of -230,605.16 706,570.34 75,464.04 681,624.37 567,687.31
capital reserves
Adjusted surplus
reserves
Undistributed 8,640.67
profits after
adjustment
Other description
"□ Applicable" "√ Not applicable"
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Annual Report 2021
3. Rights and interests in cooperative enterprises or joint ventures
"√ Applicable" "□ Not applicable"
(1). Important joint ventures and affiliated enterprises
"□ Applicable" "√ Not applicable"
(2). Main financial information of important cooperative enterprises
"□ Applicable" "√ Not applicable"
(3). Major financial information of important joint ventures
"□ Applicable" "√ Not applicable"
(4). Summary financial information of unimportant joint ventures and affiliates
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance/amount incurred Beginning balance/amount
in current period incurred in previous period
Joint ventures:
Total book value of investment 3,074,758.68 3,306,630.57
Total of the following items calculated according to the shareholding ratio
--Net profit -231,871.89 -7,859.00
--Other comprehensive income
--Total comprehensive income -231,871.89 -7,859.00
Joint ventures:
Total book value of investment 166,884,777.60 54,913,429.03
The total of the following items calculated according to the shareholding ratio
--Net profit -7,105,863.95 -638,756.60
--Other comprehensive income
--Total comprehensive income -7,105,863.95 -638,756.60
Other description
No
(5). Statement of important restrictions on the ability of joint ventures or associates to transfer
capital to the Company
"□ Applicable" "√ Not applicable"
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Annual Report 2021
(6). Excessive losses incurred by joint ventures or affiliated enterprises
"□ Applicable" "√ Not applicable"
(7). Unconfirmed commitments related to the investment to joint ventures
"□ Applicable" "√ Not applicable"
(8). Contingent liabilities related to investments in joint ventures or associates
"□ Applicable" "√ Not applicable"
4. Important joint operation
"□ Applicable" "√ Not applicable"
5. Rights and interests in structured entities not included in the scope of consolidated financial
statements
Explanation of structured entities not included in the scope of consolidated financial statements:
"□ Applicable" "√ Not applicable"
6. Other
"□ Applicable" "√ Not applicable"
X. Risks related to Financial Instruments
"√ Applicable" "□ Not applicable"
The Company's risk management aims to reach a balance between risk and benefits, to minimize the
negative impact of risk 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 in order to 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 loss to the other party.
1. Approach to credit risk
(1) Assessment method of credit risk
The Company, on each balance sheet date, assesses whether the credit risk of relevant financial
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Annual Report 2021
instruments has increased significantly since initial recognition. In determining whether said credit risk
has increased significantly since initial recognition, the Company takes into account reasonable and
well-founded information available without unnecessary additional cost or effort, including qualitative
and quantitative analysis based on historical data, external credit risk ratings, and forward-looking
information. The Company determines 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 the combined
financial instruments with similar credit risk characteristics.
The Company deems that the credit risk of the financial instruments has increased significantly if any
one or more of the following quantitative and qualitative standards are triggered:
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 a financial instrument meets any one or more of the following conditions, the Company defines that
financial asset 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 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, and repayment method) and
forward-looking information.
3. For the details of the Reconciliation Statement of Beginning Balance and Ending Balance of
Financial Instrument Loss Reserves, please see the particulars contained in "5. Account Receivable;
6. Receivable Financing; and 8. Other Receivables", "VII. Notes to the Consolidated Financial
Accounts", "Section X Financial Report".
4. Credit risk exposure and credit risk concentration
The credit risk of the Company is derived mainly from monetary capital and accounts receivable. To
control the above-related risk, the Company has taken the following measures.
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(1) Monetary capital
Bank deposits and other monetary capital of the Company were deposited with financial institutions with
high credit ratings; therefore, the credit risk was low.
(2) Accounts receivable
The Company continuously carries out credit assessment on customers who trade on credit. According
to the result of said credit assessment, 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 third parties.
Credit risk concentration is managed as per customers. As of December 31, 2021, there was certain
credit concentration risk in the Company and 77.35% (December 31, 2020: 49.42%) of the accounts
receivable of the Company were concentrated on its top five customers in the balance of accounts
receivable. 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.
To control such risk, the Company applies various financing methods, such as bill settlement and bank
loans, in appropriate combination of long-term and short-term financing methods in order to optimize
the financing structure and to maintain a balance between financing sustainability and flexibility. The
Company has obtained lines of credit from several commercial banks to satisfy its working capital
demands and capital expenditures.
Classification of financial liabilities by the remaining due days
Ending amount
Item Undiscounted
Book value Within 1 year 1-3 years Above 3 years
contract value
Bank loans 200,251,506.85 201,745,068.49 201,745,068.49
Notes payable 79,156,771.40 79,156,771.40 79,156,771.40
Accounts 404,026,241.16 404,026,241.16
404,026,241.16
payable
Other
62,162,153.55 62,162,153.55 62,162,153.55
payables
Bonds 695,586,778.80 902,807,313.00
2,255,139.00 11,275,695.00 889,276,479.00
payable
Subtotal 1,441,183,451.76 1,649,897,547.60 749,345,373.60 11,275,695.00 889,276,479.00
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Annual Report 2021
(Continued)
Balance at the end of the previous year
Item
Book value Undiscounted contract value Within 1 year 1-3 years Above 3 years
Bank loans 299,280,435.09 306,965,009.72 306,965,009.72
Notes payable 64,580,000.00 64,580,000.00 64,580,000.00
Accounts payable 515,832,031.27 515,832,031.27 515,832,031.27
Other payables 75,546,323.32 75,546,323.32 75,546,323.32
Subtotal 955,238,789.68 962,923,364.31 962,923,364.31
(III) Market risk
Market risk refers to the fact that the fair value or future cash flow of financial instruments may fluctuate
due to changes in market prices. Market risk includes interest rate and foreign exchange risks.
1. Interest rate risk
Interest rate risk refers to the fact that the fair value or future cash flow of financial instruments may
fluctuate 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
environment and maintains an appropriate combination of financial instruments through regular review
and monitoring.
2. Foreign exchange risk
Foreign exchange risk refers to the fact that the fair value or future cash flow of financial instruments
will fluctuate due to the change in foreign exchange rates. The risk of change 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 its main activities valuated in
RMB. Therefore, the market risk of foreign exchange fluctuation faced by the Company is minor.
For the details on the monetary assets and liabilities of the Company in foreign currency at the end of the
period, please see the particulars contained in "82. Monetary Items in Foreign Currency", "VII. Notes to
the Consolidated Financial Accounts", "Section X Financial Report".
XI. Disclosure of Fair Value
1. The ending fair value of assets and liabilities measured at fair value
"√ Applicable" "□ Not applicable"
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Unit: Currency: RMB
Ending fair value
The first The second
Item level of fair level of fair The third level of fair
Total
value value value measurement
measurement measurement
I. Continuous
fair value
measurement
(I)Tradable
financial assets
1. Financial
assets measured
at fair value
with changes
included in
current profits
and losses
(1) Debt
instrument
investment
(2) Equity
instrument
investment
(3) Derivative
financial assets
2. Financial
assets
designated as
measured at fair
value and the
changes of
which are
accounted in
current profit or
loss
(1) Debt
287/ 323
Annual Report 2021
instrument
investment
(2) Equity
instrument
investment
(II) Other debt
investments
(III) Other 56,402,400.00 56,402,400.00
equity
instrument
investments
(IV) Real estate
investment
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
(VI) 3,242,000.00 3,242,000.00
Receivables
financing
Total assets 59,644,400.00 59,644,400.00
consistently
measured at
fair value
(VI) Financial
liabilities held
288/ 323
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for trading
1. Financial
liabilities
measured at fair
value through
profit or loss
Including:
Trading bonds
issued
Derivative
financial
liabilities
Other
2. Financial
liabilities
designated to be
measured at fair
value through
profit or loss
Total liabilities
continuously
measured in
terms of fair
value
II.
Non-continuous
Fair Value
Measurement
(1) Assets held
for sale
Total assets
measured by
non-continuous
fair value
Total liabilities
not
continuously
289/ 323
Annual Report 2021
measured in
terms of 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 third-level fair value measurement items
"√ Applicable" "□ Not applicable"
The fair value of notes receivable held by the Company is determined according to their nominal amount.
The fair value of other equity instrument investments is determined according to their historic cost.
5. Adjustment information and sensitivity analysis of non-observable parameters between
beginning and ending book value for continuous third-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"
8. Fair value of financial assets and financial liabilities not measured at fair value
"□ Applicable" "√ Not applicable"
290/ 323
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9. Other
"□ Applicable" "√ Not applicable"
XII. Related Parties and Related Transactions
1. Information about the parent company of the Company
"□ Applicable" "√ Not applicable"
2. Information on subsidiaries of the Company
See the notes for details of subsidiaries of the Company
"√ Applicable" "□ Not applicable"
For details on subsidiaries of the Company, please see the particulars contained in "IX. Interests in Other
Entities", "Section X Financial Report".
3. Information on joint ventures and associated enterprises of the Company
See the notes for details of important joint ventures or associated enterprises of the Company
"□ Applicable" "√ Not applicable"
Information about other joint ventures or associated enterprises that have related transactions with the
Company in the current period, or that maintain a balance resulting from related transactions with the
Company in the previous period is as follows
"□ Applicable" "√ Not applicable"
Other description
"□ 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
Chu Xiuqi Other
Zhejiang Yueqing Rural Commercial Bank Co., Ltd. Other
Huzhou Beauty Town Technology Incubation Park Co., Ltd. Other
China Commerce Association for General Merchandise Other
Xiongke Culture Media (Hangzhou) Co., Ltd. Other
Metis Info Tech (Guangzhou) Co., Ltd. Other
Beijing Mitangpai Cosmetics Co., Ltd. Other
Ningbo Weiman Cosmetics Co., Ltd. Other
CBIC Other
Zhuhai Healthlong Biotechnology Co., Ltd. Other
291/ 323
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Shaoxing Keqiao Qingteng Culture Investment Co., Ltd. Other
Parisezhan HK, Ltd. Other
EURL Pharmatica Other
SARL Ortus Other
SAS Aredis Other
Korea Youke Co., Ltd. Other
Shanghai Youke Brand Management Co., Ltd. Other
Pan Xiang Other
Beauty Hi-tech Innovation Co., Ltd Other
Other description
No
5. Information of related transactions
(1). Related transactions of purchasing and selling goods, providing and receiving labor services
Statement of purchasing goods/accepting labor services
"√ Applicable" "□ Not applicable"
In RMB10,000
Related transaction Amount incurred in the Amount incurred in the
Related party
content current period previous period
Zhuhai Healthlong Procurement of goods 2456.11 2914.13
Biotechnology Co., Ltd.
EURL Pharmatica Procurement of goods 2908.10
SARL Ortus Procurement of goods 959.72
Metis Info Tech Advertising and 203.88
(Guangzhou) Co., Ltd. communication service
fees
SAS Aredis Procurement of goods 117.16
Shaoxing Keqiao Procurement of goods 54.08
Qingteng Culture
Investment Co., Ltd.
Beijing Mitangpai Procurement of goods 10.00
Cosmetics Co., Ltd.
Xiongke Culture Media Consulting fees, video 0.53
(Hangzhou) Co., Ltd. production service
292/ 323
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China Commerce Membership fee 0.50
Association for General
Merchandise
Beauty Hi-tech Innovation Procurement of goods 35.16
Co., Ltd
Ningbo Weiman Procurement of goods 12.22
Cosmetics Co., Ltd.
Statement of sales of goods/provision of services
"□ Not applicable"
In RMB10,000
Related transaction Amount incurred in the Amount incurred in the
Related party
content current period last period
Shanghai Youke Brand Sales of goods 8,198.31 5,672.40
Management Co., Ltd.
Parisezhan HK Ltd. Sales of goods 842.97
Korea Youke Co., Ltd. Sales of goods 136.06 630.03
Beijing Mitangpai Sales of goods, agent 224.53
Cosmetics Co., Ltd. operation service
Shaoxing Keqiao Sales of goods 2.62 0.71
Qingteng Culture
Investment Co., Ltd.
Ningbo Weiman Sales of goods 6.99
Cosmetics Co., Ltd.
Zhejiang Yueqing Rural Sales of goods 1.41
Commercial Bank Co.,
Ltd.
CBIC Sales of goods 0.30
Explanation of related party transactions in purchasing and selling goods, providing and receiving labor
services
"□ Applicable" "√ Not applicable"
(2). Related entrusted management/contracting and entrusted management/outsourcing
Statement of entrusted management/contracting of the Company:
"□ Applicable" "√ Not applicable"
Explanation of related trusteeship/contracting
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Annual Report 2021
"□ Applicable" "√ Not applicable"
Statement of entrusted management/outsourcing of the Company
"□ Applicable" "√ Not applicable"
Explanation of related management/outsourcing
"□ Applicable" "√ Not applicable"
(3). Related-party lease
The Company as the lessor:
"□ Applicable" "√ Not applicable"
The Company as the lessee:
"√ Applicable" "□ Not applicable"
In RMB10,000
Rental expenses Rental expenses
Types of
Name of lessor recognized in current recognized in last
leased assets
period period
Huzhou Beauty Town Venue 87.15 65.26
Technology Incubation Park Co.,
Ltd.
Shanghai Youke Brand Venue 27.41
Management Co., Ltd.
Explanation of related lease
"□ Applicable" "√ Not applicable"
(4). Information on related guarantees
The Company as the warrantee
"□ Applicable" "√ Not applicable"
Explanation of related guarantees
"□ Applicable" "√ Not applicable"
Information on related guarantees
"□ Applicable" "√ Not applicable"
(5). Borrowing of related-party funds
"□ Applicable" "√ Not applicable"
(6). Information on asset transfers and debt restructuring of related parties
"□ Applicable" "√ Not applicable"
294/ 323
Annual Report 2021
(7). Remuneration of key management personnel
"√ Applicable" "□ Not applicable"
In RMB10,000
Amount incurred in the current Amount incurred in the
Item
period previous period
Remuneration of key management 700.02 734.87
personnel
(8). Other related-party transactions
"√ Applicable" "□ Not applicable"
The Company and its subsidiaries have opened bank accounts with Zhejiang Yueqing Rural
Commercial Bank Company Ltd and have collected interest accrued on their deposits at market interest
rates.
(1) Deposits with related-party banks
Unit: RMB '0,000
Related transaction Ending Beginning
Related parties
content amount amount
Zhejiang Yueqing Rural Commercial Bank
Cash at bank 14,645.33 14,390.77
Co., Ltd.
(2) Interests collected from related parties
Unit: RMB '0,000
Related transaction Amount for the Amount in prior
Related party
content current period period
Zhejiang Yueqing Rural Commercial
Interest income 638.49 593.97
Bank Co., Ltd.
6. Accounts receivable and payable from related parties
(1). Accounts receivable items
"√ Applicable" "□ Not applicable"
Unit: Currency: RMB
Ending balance Opening balance
Item Related party
Carrying Provision for Carrying Provision for
295/ 323
Annual Report 2021
amount bad debts amount bad debts
Accounts
receivable
Ningbo Weiman 79,007.60 3,950.38
Cosmetics Co., Ltd.
Subtotal 79,007.60 3,950.38
Prepayment
Huzhou Beauty 43,000.00 44,000.00
Town Technology
Incubation Park
Co., Ltd.
Zhuhai Healthlong 21,432,452.28
Biotechnology Co.,
Ltd.
Shanghai Youke 39,150.95
Brand Management
Co., Ltd.
Subtotal 43,000.00 21,515,603.23
Other
receivables
EURL Pharmatica 19,606,379.23 19,606,379.23 24,242,639.75 1,230,881.99
Huzhou Beauty 133,568.20 121,334.10 132,568.20 61,770.46
Town Technology
Incubation Park
Co., Ltd.
Subtotal 19,739,947.43 19,727,713.33 24,375,207.95 1,292,652.45
[Note] EURL Pharmatica amount is the consolidated amount of EURL Pharmatica, Parisezhan HK Ltd.,
SARL Ortus and SAS Aredis under the same control.
(2). Payable items
"√ Applicable" "□ Not applicable"
296/ 323
Annual Report 2021
Unit: Currency: RMB
Item Related party Book balance Book balance at the
at the end of beginning of the period
the period
Accounts
payable
SAS Aredis 236,930.48 263,358.19
Ningbo Weiman Cosmetics Co., Ltd. 121,884.94
Metis Info Tech (Guangzhou) Co., LTD. 99,718.88
Subtotal 358,815.42 363,077.07
Contract
liabilities
Shanghai Youke Brand Management 34,200.00
Co., Ltd.
Subtotal 34,200.00
7. Commitment of related parties
"□ Applicable" "√ Not applicable"
8. Other
"□ Applicable" "√ Not applicable"
XIII. Share-based Payments
1. Overall situation of share-based payment
"√ Applicable" "□ Not applicable"
Unit: Share Currency: RMB
Total amount of equity instruments granted by the Company in the current Not applicable
period
Total amount of equity instruments exercised by the Company in the current 293,265
period
Total amount of equity instruments of the Company which are invalid in the 106,959
current period
The range of exercise pricing of stock options issued by the Company at the Not applicable
end of the period and their remaining period of contract
The range of exercise pricing of other equity instrument options issued by The price for granted
the Company at the end of the period and their remaining period of contract restricted shares is
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Annual Report 2021
RMB17.95 per share, and
the grant period is 60
days from the grant date.
Other description
On July 12, 2018, according to the Proposal on 2018 Restricted Share Incentive Plan of the Company
(Draft) and Its Summary deliberated and approved at the First Extraordinary General Meeting of the
Company in 2018, under the Incentive Plan, the Company proposed to grant up to 1,467,200 restricted
shares to incentive objects, of which 1.2011 million shares would be initially granted and 266,100 shares
would be reserved. The initial grant date of the restricted shares is July 12, 2018. The incentive objects
include senior management, middle-level managers, and backbone employees working for the Company
(excluding independent directors and supervisors and shareholders or actual controllers severally or
jointly holding more than 5% shares of the Company and their spouses, parents, and children), 32
persons in total, and the grant price is RMB17.95 per share. The subject shares under the Incentive Plan
are derived from ordinary shares A 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 longer than 60 months. The granted restricted
shares will be released in three tranches (30%:30%:40%) over 36 months after the end of 12 months
following the initial grant of the restricted shares. The performance condition for the initial release is
that: On the basis of the operating revenue and net profit in 2017, the growth rate of operating revenue
and net profit in 2018 was no less than 30.8% and 30.1%, respectively. The performance condition for
the second release is that: On the basis of the operating revenue and net profit in 2017, the growth rate of
operating revenue and net profit in 2019 was no less than 74.24% and 71.21%, respectively. The
performance condition for the third release is that: On the basis of the operating revenue and net profit in
2017, the growth rate of operating revenue and net profit in 2020 was no less than 132.61% and
131.99%, respectively.
On July 12, 2018, the Proposal on Initial Grant of Restricted Shares to Incentive Objects was deliberated
and approved at the 22nd meeting of the first session of the board of directors of the Company,
determining July 12, 2018 as the initial grant date. Some incentive objects voluntarily waived their right
of subscription in practice and the number of restricted shares actually granted by the Company was
1,096,200.
On December 12, 2018, the Proposal on Grant of Reserved Part of Restricted Shares to Incentive
Objects was deliberated and approved at the 3rd meeting of the second session of the board of directors
of the Company, determining December 12, 2018 as the grant date of the reserved restricted shares. The
incentive objects completed the subscription in practice and the number of restricted shares actually
granted by the Company was 266,100.
On December 30, 2019, the Proposal on Satisfying the Conditions for Release from Sales Restrictions in
the First Release Period for Initially Granted Shares and Reserved Shares Under 2018 Restricted Share
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Annual Report 2021
Incentive Plan deliberated and approved at the 10th meeting of the second session of the board of
directors of the Company released the 369,500 restricted shares held by the incentive objects who had
satisfied the first release conditions. The circulating date of the sales was January 6, 2020.
According to the Proposal on Repurchasing and De-registering the Granted but Unreleased Restricted
Shares of the Incentive Objects Who Become Ineligible for the Incentive deliberated and approved at the
4th meeting of the second session of the board of directors of the Company in 2019 and the 1st
Extraordinary General Meeting of the Company in 2019 and the Proposal on Repurchasing and
De-registering Part of Restricted Incentive Shares deliberated and approved at the 8th meeting of the
second session of the board of directors of the Company in 2019, the Company repurchased and
de-registered 92,740 restricted shares and paid the repurchase price of RMB1,657,699.80, as some
incentive objects left the Company or their performance did not satisfy the condition for releasing all the
restricted shares.
On July 6, 2020, according to the Proposal on Adjusting 2020 Company-level Performance Assessment
Indicators Under 2018 Restricted Share Incentive Plan and Related Documents deliberated and
approved at the 2nd Extraordinary General Meeting of the Company in 2020, the Company adjusted the
original three performance assessment indicators for release from sales restrictions as: On the basis of
the operating revenue in 2017, the growth rate of operating revenue in 2020 was no less than 110.22%;
and on the basis of the net profit in 2017, the growth rate of net profit in 2020 was no less than 131.99%.
According to the Proposal on Repurchasing and De-registering Part of Restricted Incentive Shares
deliberated and approved at the 15th and 16th meetings of the second session of the board of directors of
the Company in 2020 and the 3rd Extraordinary General Meeting of the Company in 2020, the Company
repurchased and de-registered 152,635 restricted shares and paid the repurchase price of
RMB2,584,110.55 in 2020, as some incentive objects left the Company or their performance did not
satisfy the condition to release all the restricted shares.
The equity instruments exercised by the Company in the current period represent, according to the
Proposal on the Satisfaction of Conditions for Releasing the Sales Restrictions for the Second Release
Period of the Restricted Shares Granted for the First Time and Reserved Grant under the 2018
Restricted Share Incentive Plan deliberated and approved at the 8th meeting of the second session of the
board of directors of the Company, the release by the Company of 293,265 restricted shares held by the
incentive objects who satisfy the second release conditions, and the circulating date is January 14, 2021.
According to the Proposal on Repurchasing and De-registering Part of Restricted Incentive Shares
deliberated and approved by the resolution of the 20th meeting of the second session of the board of
directors of the Company in 2021 and by resolution of the 1st Extraordinary General Meeting of the
Company in 2021, the Company repurchased and de-registered 106,959 restricted shares and paid the
repurchase price of RMB1,733,805.39, as some incentive objects left the Company or their performance
did not satisfy the condition for releasing all the restricted shares.
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Annual Report 2021
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 grant date date and the grant price of restricted shares
Basis for determining the quantity of feasible equity Determined according to the estimated
instruments performance conditions in the release period
Reason for significant difference with estimation in Not applicable
the current period and estimation in the previous
period
Cumulative amount of equity-settled share-based 54,608,529.39
payment included in capital reserves
Pay confirmed total expenses settled with equities in -372,647.76
current period
Other description
No
3. Share-based payment settled in cash
"□ Applicable" "√ Not applicable"
4. Modification and termination of share-based payment
"□ Applicable" "√ Not applicable"
5. Other
"□ Applicable" "√ Not applicable"
XIV. 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, 2021, the investment projects of the Company's public offering for fund raising are
as follows:
300/ 323
Annual Report 2021
Unit: RMB’0,000
Total Ending
Fund raising Project Filing
Item investment accumulated
commitment or Approval No.
amount investment
Huzhou Production
Base Expansion 43,752.54 33,850.00 8,608.46 2011-330502-04-01-178735
Project (Phase I)
Longwu R&D Center
21,774.45 19,450.00 9,007.13 2101-330106-04-02-307916
Construction Project
Information System
11,239.50 9,050.00 476.06
Upgrade Project
Additional working
18,000.00 12,821.30
capital
Total 94,766.49 75,171.30 18,091.65
[note] As of December 31, 2021, the Company's raised funds have not been used, and the Company has
invested RMB180,916,500 yuan of the raised funds in the investment projects of raised funds in
advance.
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 shall also state:
"□ Applicable" "√ Not applicable"
3. Other
"□ Applicable" "√ Not applicable"
XV. Events after Balance Sheet Day
1. Important non-adjustment matters
"□ Applicable" "√ Not applicable"
2. Profit distribution
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Profits or dividends to be distributed 172,868,570.76
Profits or dividend declared after deliberation and approval 144,804,186.00
301/ 323
Annual Report 2021
3. Sales return
"□ Applicable" "√ Not applicable"
4. Explanation of other events after the balance sheet date
"□ Applicable" "√ Not applicable"
It is to be decided at the 5th meeting of the third session of the board of directors of the Company held
on April 20, 2022 that, based on the total share capital of the Company as of the dividend payment date
of record, that a cash dividend of RMB8.60 (including tax) will be distributed to all registered
shareholders at the date of record for every 10 shares. A total cash dividend of RMB172,868,570.76
(including tax) will be distributed. At the same time, four shares will be issued for every 10 shares to all
shareholders through capitalization of the capital reserve. The abovementioned matter is to be
deliberated and approved by the General Meeting.
XVI. Other Significant Issues
1. Correction of early accounting errors
(1). Retrospective restatement
"□ Applicable" "√ Not applicable"
(2). Prospective application
"□ Applicable" "√ Not applicable"
2. Debt restructuring
"□ Applicable" "√ Not applicable"
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 operations
"□ Applicable" "√ Not applicable"
302/ 323
Annual Report 2021
6. Division information
(1). Determination basis and accounting policy of reportable division
"√ Applicable" "□ Not applicable"
The Company does not have diversified operations or cross-regional operations, so there is no
division-based reporting. Details of main business income and main business costs of the Company
classified by brand are as follows:
2021
Brand Income from main Cost of main business Gross profit
business
Proya brand 3,829,139,612.21 1,173,186,069.95 2,655,953,542.26
Other brands 791,292,073.80 371,912,399.37 419,379,674.43
Subtotal 4,620,431,686.01 1,545,098,469.32 3,075,333,216.69
2020
Brand Income from main Cost of main Gross profit
business business
Proya brand 2,985,608,479.56 986,945,516.11 1,998,662,963.45
Other brands 762,316,121.04 376,541,258.15 385,774,862.89
Subtotal 3,747,924,600.60 1,363,486,774.26 2,384,437,826.34
(2). Financial information of the reportable division
"□ Applicable" "√ Not applicable"
(3). If the Company has no reportable division, or cannot disclose the total assets and liabilities of
each reportable division, the reasons shall be explained
"□ Applicable" "√ Not applicable"
(4). Other description
"□ Applicable" "√ Not applicable"
7. Other important transactions and matters that have an impact on investors' decisions
"□ Applicable" "√ Not applicable"
8. Other
"√ Applicable" "□ Not applicable"
Lease
1. The Company as lessee
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Annual Report 2021
For details on accounting policies for short-term leases and low-value asset leases of the Company,
please see the particulars contained in "42. Lease", "V. Significant Accounting Policies and Estimates",
"Section X Financial Report". Short-term lease charges included in current profits and losses are as
below:
Item Amount for the current period
Short-term rental fee 6,675,815.55
Low-value asset leasing fees (except for
402,597.20
short-term rental fees)
Total 7,078,412.75
2. The Company as lessor
Operating lease
(1) Lease income
Item Amount for the current period
Lease income 3,130,844.79
(2) Assets under operating lease
Item Ending amount
Investment real estate 70,321,868.00
Subtotal 70,321,868.00
For details on the operation and rental of investment real estate, please see the particulars contained in
"20. Investment Real Estate", "VII. Notes on Consolidated Financial Accounts", "Section X Financial
Report".
XVII. Notes on Main Items in Financial Statements of the Parent Company
1. Accounts receivable
(1). Disclosed by account receivable age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Book balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 410,747,781.21
1 to 2 years 55,196,327.39
2 to 3 years
Above 3 years
3 to 4 years
304/ 323
Annual Report 2021
4 to 5 years
Above 5 years
Total 465,944,108.60
305/ 323
Annual Report 2021
(2). Disclosed by classification of bad debt accrual method
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Ending balance Opening balance
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Category Provision Book Provision Book
Percentage Percentage
Amount Amount proportion value Amount Amount proportion value
(%) (%)
(%) (%)
Provision for 108,670,171. 23.32 80,084,373.8 73.69 28,585,797.1
bad debts 06 8 8
accrued by
item
Including:
Provision for 357,273,937. 76.68 31,662,778.7 8.86 325,611,158. 617,474,114.3 100.00 52,436,703. 8.49 565,037,411.
bad debts by 54 3 81 6 21 15
portfolio
Including:
465,944,108. / 111,747,152. / 354,196,955. 617,474,114.3 / 52,436,703. / 565,037,411.
Total
60 61 99 6 21 15
306/ 323
Annual Report 2021
Provision for bad debts accrued by item:
"√ Applicable" "□ Not applicable"
Unit: RMB Currency: RMB
Ending balance
Name Provision for bad Provision ratio
Carrying amount Reason for accrual
debts (%)
Hapsode (Hangzhou) 56,798,448.89
Cosmetics Co., Ltd. Expected as unable
80,084,373.88 73.69
Huzhou Hapsode 51,871,722.17 to recover
Trading Co., Ltd.
Total 108,670,171.06 80,084,373.88 73.69 /
Explanation of bad debt provision by item:
"□ Applicable" "√ Not applicable"
Provision for bad debts by portfolio:
"√ Applicable" "□ Not applicable"
Provision by portfolio: Aging portfolio
Unit: Yuan Currency: RMB
Ending balance
Name
Accounts receivable Provision for bad debts Provision ratio (%)
Within 1 year 302,077,610.15 15,103,880.51 5.00
1-2 years 55,196,327.39 16,558,898.22 30.00
Total 357,273,937.54 31,662,778.73 8.86
Confirmation standard and explanation of bad debts accrued by portfolio
"□ Applicable" "√ Not applicable"
If bad debt provision is accrued according to the general model of expected credit loss, please refer to
other receivables disclosure:
"□ Applicable" "√ Not applicable"
(3). Information on bad-debt provision
"√ Applicable" "□ Not applicable"
307/ 323
Annual Report 2021
Unit: Yuan Currency: RMB
Changes in amount of the current period
Opening Withdrawal Charge-off
Category Other Ending balance
balance Accrual or or
changes
write-back write-off
Individual 80,084,373.88 80,084,373.88
provision
for bad debt
reserves
Provision 52,436,703.21 -20,773,924.48 31,662,778.73
for bad
debts by
portfolio
Total 52,436,703.21 59,310,449.40 111,747,152.61
Among them, significant amount of bad-debt provision withdrawn or written back in the current period:
"□ Applicable" "√ Not applicable"
(4). Accounts receivable actually written off in the current period
"□ Applicable" "√ Not applicable"
Among them, information of accounts receivable significantly written off
"□ Applicable" "√ Not applicable"
(5). Accounts receivable of the top five ending balances collected by debtor
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Proportion of total
balance of accounts Ending balance of
Company name Ending balance
receivable at the end bad debt provision
of the period (%)
Zhejiang Meiligu Electronic 110,043,461.55 23.62 5,502,173.08
Commerce Co., Ltd.
Huzhou UZERO Trading Co., 80,866,449.58 17.36 15,624,839.02
Ltd.
Hapsode (Hangzhou) Cosmetics 56,798,448.89 12.19 41,857,560.10
Co., Ltd.
308/ 323
Annual Report 2021
Huzhou Hapsode Trading Co., 51,871,722.17 11.13 38,226,813.78
Ltd.
Hangzhou Proya Trading Co., 47,876,767.57 10.28 2,393,838.38
Ltd.
Total 347,456,849.76 74.58 103,605,224.36
Other description
No
(6). Accounts receivable de-recognized due to transfer of financial assets
"□ Applicable" "√ Not applicable"
(7). The amount of assets and liabilities formed by transferring accounts receivable and
continuing to be involved
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
2. Other receivables
List by item
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Ending balance Opening balance
Interest receivable
Dividends receivable
Other receivables 222,452,930.42 236,585,409.48
Total 222,452,930.42 236,585,409.48
Other explanations:
"□ Applicable" "√ Not applicable"
Interest receivable
(1). Classification of interest receivable
"□ Applicable" "√ Not applicable"
309/ 323
Annual Report 2021
(2). Significant overdue interest
"□ Applicable" "√ Not applicable"
(3). Provision for bad debts
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
Dividends receivable
(4). Dividends receivable
"□ Applicable" "√ Not applicable"
(5). Important dividends receivable with an age of more than 1 year
"□ Applicable" "√ Not applicable"
(6). Provision for bad debts
"□ Applicable" "√ Not applicable"
Other explanations:
"□ Applicable" "√ Not applicable"
Other receivables
(1). Disclosed by account receivable age
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Account age Book balance at the end of the period
Within 1 year
Including: Sub-item within 1 year
Sub-total within 1 year 86,870,983.61
1 to 2 years 193,245,412.33
2 to 3 years 9,307,414.72
Above 3 years 87,000.00
3 to 4 years
4 to 5 years
Above 5 years
Total 289,510,810.66
310/ 323
Annual Report 2021
(2). Classification by nature of payment
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Nature of payment Book balance at the end of the Book balance at the beginning
period of the period
Security deposits 269,104,993.77 402,005,709.08
Suspended payments receivable 19,187,006.72 5,100,314.72
Reserve funds 416,500.00 932,910.70
Other 802,310.17 4,924.76
Total 289,510,810.66 408,043,859.26
(3). Provision for bad debts
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
First stage Second stage Third stage
Expected credit loss Expected credit loss
Provision for bad Expected credit for the entire for the entire Total
debts losses over the duration (credit duration (credit
next 12 months impairment not impairment has
occurred) occurred)
Balance as of 8,005,556.84 2,792,224.42 160,660,668.52 171,458,449.78
January 1, 2021
Balance as of
January 1, 2021 in
the current period
--Transferred to -9,662,270.62 9,662,270.62
the second stage
--Transferred to -2,792,224.42 2,792,224.42
the third stage
--Returned to the
second stage
--Returned to the
first stage
Accrual in the 6,000,262.96 48,311,353.08 -158,712,185.58 -104,400,569.54
current period
Amount written
311/ 323
Annual Report 2021
back in the current
period
Current write-off
Amount written
off in the current
period
Other changes
Balance as of 4,343,549.18 57,973,623.70 4,740,707.36 67,057,880.24
December 31,
2021
Explanation of significant changes in the book balance of other receivables with changes in provision for
loss in the current period:
"□ Applicable" "√ Not applicable"
Amount of bad debt provision in the current period and the basis for evaluating whether the credit risk of
financial instruments has increased significantly:
"□ Applicable" "√ Not applicable"
(4). Information on bad-debt provision
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Changes in amount of the current period
Opening Withdrawal Charge-off Ending
Category Other
balance Accrual or or balance
changes
write-back write-off
Individual 160,573,168.52 -160,573,168.52
provision
for bad
debt
reserves
Provision 10,885,281.26 56,172,598.98 67,057,880.24
for bad
debts by
portfolio
Total 171,458,449.78 -104,400,569.54 67,057,880.24
312/ 323
Annual Report 2021
Among them, a significant amount of bad-debt provisions written back or withdrawn in the current
period:
"□ Applicable" "√ Not applicable"
(5). Other receivables actually written off in the current period
"□ Applicable" "√ Not applicable"
(6). Other receivables of the top five ending balances collected by debtors
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
As a
proportion of
total ending Provision for
Company Nature of Account
Ending balance balance in bad debts
name payment age
other Ending balance
receivables
(%)
Hong Kong Intercourse 140,666,088.54 1-2 years 48.59 40,986,144.97
Xinghuo funds of
Industry, related
Ltd. parties
within the
scope of
consolidation
Hapsode Intercourse 58,877,290.54 1-2 years 20.34 13,556,060.20
(Hangzhou) funds of
Cosmetics related
Co., Ltd. parties
within the
scope of
consolidation
Boya (Hong Intercourse 34,654,560.00 Within 1 11.97 1,732,728.00
Kong) funds of year
Investment related
Management parties
Co., Ltd. within the
scope of
consolidation
313/ 323
Annual Report 2021
Ningbo Intercourse 16,768,050.04 1-2 years 5.79 5,720,529.17
Timage funds of
Cosmetics related
Co., Ltd. parties
within the
scope of
consolidation
Wuxing Security 13,493,392.00 Within 1 4.66 674,669.60
District deposit year
Daixi Town
People's
Government
of Huzhou
City
Total / 264,459,381.12 / 91.35 62,670,131.94
(7). Receivables involving government subsidies
"□ Applicable" "√ Not applicable"
(8). Other receivables de-recognized due to transfer of financial assets
"□ Applicable" "√ Not applicable"
(9). The amount of assets and liabilities formed by transferring other receivables and continuing
to be involved
"□ 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 Provision for Carrying Provision for
Book value Book value
amount impairment amount impairment
Investments 229,119,013 42,500,000. 186,619,013. 337,957,327. 42,500,000 295,457,327.2
in .03 00 03 24 .00 4
subsidiaries
314/ 323
Annual Report 2021
Investments 178,054,996 14,670,468. 163,384,527. 51,915,628.8 51,915,628.82
in associates .05 59 46 2
and joint
ventures
407,174,009 57,170,468. 350,003,540. 389,872,956. 42,500,000 347,372,956.0
Total
.08 59 49 06 .00 6
(1). Investments in subsidiaries
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Provision
for Ending
Increase in
Decrease in the impairment balance of
Invested entity Opening balance the current Ending balance
current period in the impairment
period
current provision
period
Hangzhou Proya Trading 30,875,097.64 102,109.32 30,772,988.32
Co., Ltd.
Hanna Cosmetics Co., Ltd. 2,094,048.00 2,094,048.00
Zhejiang Meiligu 16,383,777.51 1,426,900.3 14,956,877.14
Electronic Commerce
Co., Ltd. 7
Yueqing Laiya Trading 1,000,000.00 1,000,000.00
Co., Ltd.
Hapsode (Hangzhou) 42,500,000.00 42,500,000.00 42,500,0
Cosmetics Co., Ltd. 00.00
Mijing Siyu (Hangzhou) 18,000,000.00 18,000,000.00
Cosmetics Co., Ltd.
Huzhou Uzero Trading 5,568,795.63 108,518.93 5,460,276.70
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 20,308,163.00 20,308,163.00
Cosmetics Co., Ltd.
Shanghai Zhongwen 5,400,000.00 5,400,000.00
Electronic Commerce Co.,
Ltd.
Korea Younimi Cosmetics 5,046,455.61 5,046,455.61
Co., Ltd
Hong Kong Keshi 24,736,491.00 24,736,491.00
Trading, Ltd.
Hong Kong Xinghuo 10,185,924.00 10,185,924.00
Industry, Ltd.
Ningbo TIMAGE 15,902,200.00 15,902,200.00
Cosmetics Co., Ltd.
Ningbo Keshi Trading, 520,000.00 520,000.00
Ltd.
315/ 323
Annual Report 2021
Zhejiang Biyouti 10,000,000.00 181,98 10,181,983.21
Cosmetics Co., Ltd. 3.21
Ningbo Proya Enterprise 4,186,374.85 1,167,2 5,353,606.05
Consulting Management
Co., Ltd. 31.20
Hangzhou Yizhuo Culture 1,000,000.00 1,000,000.00
Media Co., Ltd.
Hangzhou Oumisi Trading 2,000,000.00 400,00 2,400,000.00
Co., Ltd. 0.00
Guangzhou Qianxi 1,000,000.00 1,000,000.00
Network Technology Co.,
Ltd
Zhejiang Qingya Culture 550,000.00 550,00 1,100,000.00
Art Communication C 0.00
Huzhou Poyun Electronic 1,200,000.00 1,200,000.00
Commerce Co., Ltd.
Shanghai Healthlong 110,500,000.00 110,500,000
Biochemical Technology
Co., Ltd. .00
Hangzhou Weiluoke 500,000.00 500,000.00
Cosmetics Co., Ltd.
Xuzhou Pelaya 500,00 500,000.00
Information Technology
Co., Ltd. 0.00
Singuladerm (Hangzhou) 500,00 500,000.00
Cosmetics Co., Ltd. 0.00
337,957,327.24 3,299,2 112,137,528 229,119,013.03 42,500,0
Total
14.41 .62 00.00
316/ 323
Annual Report 2021
(2). Investments in associates and joint ventures
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Increase or decrease in the current period
Recognized Declared Ending
Other
Investment Initial investment Other payment of Ending balance of
Additional Investment comprehens Provision for
Unit balance gain and loss changes in cash Other balance impairment
investment decrease ive income impairment
under equity equity dividends or provision
adjustments
method profits
I. Joint Venture
Huzhou 3,306,630. -231,871.8 3,074,758.
Panrui 57 9 68
Industry
Investment
Partnership
(Limited
Partnership)
Subtotal 3,306,630. -231,871.8 3,074,758.
57 9 68
II. Affiliated enterprises
Xiongke 2,985,511. -196,050.6 2,789,460.
Culture Media 35 9 66
(Hangzhou)
Co., Ltd.
Jiaxing 45,623,486 28,206,800 -1,148,553. 72,681,733
Woyong .90 .00 52 .38
317/ 323
Annual Report 2021
Investment
Partnership
(Limited
Partnership)
Zhuhai 99,540,881 -5,456,530. 14,670,468 79,413,882 14,670,46
Healthlong .10 14 .59 .37 8.59
Biotechnology
Co., Ltd.
Beijing Xiushi 6,000,000. -575,307.6 5,424,692.
Culture 00 3 37
Development
Co., Ltd.
Subtotal 48,608,998 133,747,68 -7,376,441. 14,670,468 160,309,76 14,670,46
.25 1.10 98 .59 8.78 8.59
51,915,628 133,747,68 -7,608,313. 14,670,468 163,384,52 14,670,46
Total
.82 1.10 87 .59 7.46 8.59
Other explanations:
No
318/ 323
Annual Report 2021
4. Operating income and operating costs
(1). Information of operating income and operating 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 2,239,048,621.69 1,059,535,186.57 1,877,388,044.31 906,212,295.56
Other business 34,799,744.81 17,291,073.35 73,581,174.62 12,405,049.40
Total 2,273,848,366.50 1,076,826,259.92 1,950,969,218.93 918,617,344.96
(2). Information on income generated by the contract
"□ Applicable" "√ Not applicable"
(3). Explanation of performance obligations
"□ Applicable" "√ Not applicable"
(4). Explanation of remaining performance obligations allocated
"□ Applicable" "√ Not applicable"
Other explanations:
1) Income breakdown by goods or service type
Main product type Amount
Products sales 2,240,616,768.07
Other 33,231,598.43
Subtotal 2,273,848,366.50
2) Income breakdown by goods or service transfer time
Amount for the Amount for the same
Item
current period period last year
Income recognized at a certain point 2,240,732,805.87 1,878,501,274.23
Income recognized at a certain point 33,115,560.63 72,467,944.70
Subtotal 2,273,848,366.50 1,950,969,218.93
3) Revenue included in the opening book value of contract liabilities during the reporting period is
RMB10,212,194.96.
319/ 323
Annual Report 2021
5. Investment income
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Amount incurred in the Amount incurred in the last
Item
current period period
Long-term equity investment income
calculated by Cost method
Return on long-term equity investments -7,608,313.87 -1,112,228.47
measured by the Equity method
Investment income from disposal of -10,959,118.90 -114,873.70
long-term equity investment.
Investment income of tradable financial
assets during holding period
Dividend income from investment in
other equity instruments 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
tradable financial assets
Investment income from disposal of
investment in other equity instruments
Investment income from disposal of
debt investments
Investment income from disposal of
other debt investments
Gains on debt restructuring
Gains on financial products 2,266,301.37
Total -18,567,432.77 1,039,199.20
Other explanations:
No
6. Others
"□ Applicable" "√ Not applicable"
320/ 323
Annual Report 2021
XVIII. Supplementary Information
1. Statement of non-recurring gains and losses for the current period
"√ Applicable" "□ Not applicable"
Unit: Yuan Currency: RMB
Item Amount Notes
Gain or loss on disposal of non-current assets -112,183.24
Tax refund and reduction with ultra vires
approval or without formal approval
documents
Government subsidies included in the current 15,448,962.01
profits and losses (except those closely
related to the business of the enterprise and
enjoyed in accordance with the national
unified standard quota or quantitative
amount)
Fund occupation fees charged from
non-financial businesses included in current
profit and loss
Gains arising from investment costs for
acquisition of subsidiaries, associates, and
joint ventures at less than fair value of
attributable identifiable net assets of the
invested entity at the time of acquisition
Gain or loss from exchange of
non-monetary assets
Gain or loss on entrusted investment or asset
management
Provision for various asset impairments
due to force majeure factors such as
natural disasters
Gain or loss from restructuring of debt
Restructuring expenses such as re-settlement
costs, integration costs, etc.
Profit or loss of the portion exceeding
fair value generated from transactions with
unreasonable transaction pricing
Net profit or loss of subsidiaries generated
321/ 323
Annual Report 2021
from the merger of companies under
common control from the beginning of the
period to the date of merger
Profit or loss generated from contingencies
unrelated to the Company's normal
operations
Profit or loss from changes in fair value
arising from holding of trading financial
assets, derivative financial assets, trading
financial liabilities and derivative financial
liabilities, and investment gains from
disposal of trading financial assets, derivative
financial assets, trading financial liabilities,
derivative financial liabilities, and other debt
investments, except for effective hedging
related to the Company's normal operations
Reversal of provision for impairment of
receivables and contract assets individually
tested for impairment
Profit or loss from entrusted loans
Profit or loss arising from changes in the
fair value of investment property
subsequently measured with the Fair Value
model
Impact of one-time adjustments to the current
profit and loss according to the requirements
of tax and accounting laws and regulations
on the current profit and loss
Custody fee income from entrusted
operations
Other non-operating revenue and expenses -3,078,442.83
other than said items
Other profit or loss items under the definition
of non-recurring profit and loss
Less: Income tax impact 1,917,310.27
Affected amount of minority shareholder 2,314,480.49
equity
322/ 323
Annual Report 2021
Total 8,026,545.18
The reasons for non-recurring gain and loss items defined by the Company are explained according to
the definitions contained in the Explanatory Announcement on Information Disclosure for Companies
Offering Their Securities to the Public No.1--Non-recurring Gains and Losses, and the non-recurring
profit and loss items listed in Explanatory Announcement on Information Disclosure for Companies
Offering Their Securities to the Public No.1--Non-recurring Gains and Losses as recurring gain and loss
items.
"□ Applicable" "√ Not applicable"
2. Net asset income rate and earnings per share
"√ Applicable" "□ Not applicable"
Earnings per share
Profit during the reporting Weighted average
Basic earnings per Diluted earnings per
period ROE (%)
share share
Net profit attributable to 22.25 2.87 2.81
ordinary shareholders of the
Company
Net profit attributable to 21.94 2.83 2.78
ordinary shareholders of the
Company after deducting
non-recurring gains and losses
3. Differences between Chinese and International Accounting Standards Concerning Accounting
Data
"□ Applicable" "√ Not applicable"
4. Other
"□ Applicable" "√ Not applicable"
Chairman: Hou Juncheng
Date of submission approved by the Board of Directors: April 20, 2022
Revision information
"□ Applicable" "√ Not applicable"
323/ 323
